Dear Comrades In Golden Arms,
I sent an email to you awhile ago saying "This Is It," when it wasn't apparent. Now, I am sorry to say, THIS IS THE END because it is becoming apparent. Everything stands on the foundation of CONFIDENCE which is cracking rapidly.
Respectfully,Jim
Just How Ugly Is The Sovereign Default Truth? How Self Delusions Prevent Recognition Of RealitySubmitted by Tyler Durden on 02/11/2010 13:55 -0500
Today SocGen's Dylan Grice shares his perspectives on popular delusions, and why these may soon be coming to an abrupt end. Dylan begins: Behavioural psychology applies to central bankers, regulators and politicians as much as it does to investors. In promising to 'fiscally retrench tomorrow', finance ministers are exhibiting the behavioural phenomenon of overconfidence in their future self-control. The bitter fiscal medicine required to stabilise debt levels won't become more palatable today relative to tomorrow until the bond market makes it so. It can only do this through higher yields. Thus, Ireland and perhaps now Greece lead the way. For the Japanese it's too late. Why should behavioural psychology be seen as something applying only to investors? "Behavioural" finance is a well defined sub-discipline in its own right. But where is ?behavioural? politics, ?behavioural? central banking, or "behavioural" regulation? Remember the Fed policy statements around the end of the 1990s? The ones that kept referring to the "technology-enhanced" rate of GDP growth? Wasn?t this herding around a bad idea the very same herding then fuelling the NASDAQ bubble? Nowhere is self delusion more prevalent that in the workings of the Federal Reserve duo of Greenspan and Bernanke. The issue is that any weakness, or any affirmation of faulty policy by the head money printer, will immediately be seen as weakness that could destabilize the reserve currency format. For a monetary system based on flawed assumptions that would be the beginning of the end. Apparently heroin addicts can become so drug dependent their bodies cannot withstand the shock of withdrawal, and failure to continue taking the drug triggers multiple organ failures. I just wonder how apt that analogy is to our governments? debt dependency today. As long as governments think that taking these difficult decisions to end the addiction will be easier in the future than it is today, they will never take the decision "today." At the very least, there will have to be a sufficiently large bond market "event" to force the issue. Today we finally saw a crack in the 30 Year Auction. And as the crack belongs to an ever more brittle wall holding back trillions in debt just begging to be revalued to fair value, and to an unmanipulated supply and demand curve, more and more fissures in the smooth and fake facade of sovereign debt will soon appear, only this time not somewhere out of sight and out of mind like Greece, but in our own back yard. At that point the financial oligarchy will very much wish the Methadone had been administered sooner (roughly about March 2009, when we first suggested it). It will however be far too late, and the decades of self delusion will finally end. More...


Morgan Stanley: The Inevitable Debtflation Ahead


Goldman Sachs may be rigging more than markets


Jim Sinclair’s Commentary
You have heard that this is desired by the Chinese military. You have heard that the Chinese have issued instructions to retire from all agency paper and deal only in clearly guaranteed US Treasuries.
Clearly China anticipate difficulties, yet so many sleep on, not recognizing the writing on the wall.
China orders retreat from risky assets China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets. By Ambrose Evans-Pritchard Published: 1:31PM GMT 10 Feb 2010
A Communist Party directive leaked to the Chinese-language edition of the Asia Times said dollar reserves should be limited to US Treasuries or agency mortgage debt such as Freddie Mac that enjoys Washington’s implicit backing.
BNP Paribas said the move has major implications for global risk assets. "The message from Beijing is that we don’t like this environment," said Hans Redeker, the bank’s currency chief.
"When the world’s biggest investor turns risk-averse, that is something you take notice of. We think this could become the new theme for the markets in the medium-term," he said.
The directive covers both the State Administration of Foreign Exchange (SAFE) and China’s state-controlled commercial banks. Together they have an estimated $3 trillion (£1.9 trillion) of foreign holdings.
The exact break-down of China’s holdings are a state secret but it is understood that SAFE bought large amounts of corporate debt as well as municipal and state bonds during the boom years of 2006 and 2007. Any move to liquidate holding of California debt at this crucial juncture could have serious implications.
More…


Treasury hides lots more Plunge Protection Team minutes


Let the devaluations begin (or continue) with Vietnam


Niall Ferguson: A Greek crisis is coming to America


Egon von Greyerz: Sovereign alchemy will fail


Foreclosures Down in Jan, but Surge on Way?



Why Sovereign Debt Pain Has Only Just Started


Greece ‘Dress Rehearsal’ for U.S. and U.K., Deutsche Bank Says


Super-wealthy Investors Move Billions Out of Greece


World Bankers Meet in Sydney as Recovery Fears Intensify


Bank Failures to Keep Rising in 2010


Seven US States that are Worse Off than Greece, Portugal, Ireland, and Spain


Greek Ouzo Crisis Escalates into Global Margin Call as Confidence Ebbs


A Greek-style Crisis is Coming to America


'PIGS' in Rescue Lipstick Are Uglier than Default


Treasury Recognizes $2.3B TARP Loss From CIT Group


Smaller Banks at Risk If Comm RE Falters