Saturday, July 31, 2010

"A pistol defends your property and your person from unanticipated and barely anticipated threats from thieves and robbers. With it, you can control your immediate environment. A rifle defends your freedom from oppressors and tyrants. With it, you can enforce your will."
- Gabe Suarez

This is just the start...

Niall Ferguson: Sun Could Set Suddenly on Superpower as Debt Bites.

When the lid blows off this powder keg, even I will be amazed at how fast and how high it will go...Read the next 2 stories to find out why...

Gold in BIS swaps said to have come from looted bank customers' deposits

Adrian Douglas: What's unravelling is gold price suppression

Jim Sinclair’s Commentary
3 bank failures so far this weekend
Bank Closing Information – July 30, 2010
These links contain useful information for the customers and vendors of these closed banks.
Coastal Community Bank, Panama City, FL
Bayside Savings Bank, Port Saint Joe, FL
NorthWest Bank & Trust, Acworth, GA

Jim Sinclair’s Commentary
Both you and I need to follow the real stats.
This for payment service is an absolute necessity to me.
Harry Schultz, Shadow Stats and JSMineset should provide all you need for gold.
- Worst Economic Downturn Since World War II Just Got Worst
- Bulk of First-Half GDP Growth Due to Inventories, Setting Up Likely Third-Quarter Contraction
- Lingering Market Hopes for Recovery Should Fade Quickly

"No. 313: Second-Quarter GDP and Revisions "

BULLSHIT...They knew/know all the data is one big LIE...and the mainstream media continues to lie to you daily...
Recession was deeper than government previously thought

China Becomes Second Biggest World Economy

Fed's Bullard:Worried About Possible Deflationary Outcome For US

Top Hedge Funds That Dodged Crash, Rode Market Back Turn Gloomy

Ron Paul Goes After The SEC's FOIA Exclusivity, Introduces SEC Transparency Act

Your future....
BBC News article: Greek police clash with hauliers amid crippling strike. Mike's comment: "The truckers' strike is in its fourth day, gas stations are empty, and the government is implementing emergency measures originally intended for wartime or natural disasters. Does any of this sound familiar?" Reader Tom G. sent a link to a fascinating companion article: Greece Haulier Strike - Your Experiences.

100 Million Facebook Users Learn True Meaning of Going Public. I told you so! Also from K.A.F.: White House proposal would ease FBI access to records of Internet activity. Let's face it, folks: There is no expectation of privacy for anything you do on the Internet. None. Zilch. Nada. Henceforth, try to envision your Internet forum posts and e-mails being printed in 10 foot tall letters on a billboard sign in Times Square.

Posted: Jul 30 2010 By: Jim Sinclair Post Edited: July 30, 2010 at 8:35 pm
Filed under: Jim's Mailbox
Wall Street edges lower as investors mull slow recovery
Stocks fell on Friday, rebounding for a second day in a row from more substantial losses, as concerns about slower economic growth held trading to a tight range.
Do not associate a technical sell-off with any significant economic conclusions. The direction for stocks, sitting at or near support, will have little to do with lie and deny economic data series. Capital flows, seeking protection against further currency debasement, are driving this market.
As for the slow recovery, my response to that is what did you expect? Consumption, the main driver of US national income, is beginning to fade as the size of the stimulus begins to fade and America begin to defy pop culture by saving. That’s right saving a portion of their incomes. In addition, the engine of future growth, domestic private investment, remains flat at best, and the structural trade deficit is beginning to reassert itself. Government consumption and investment, based largely federal spending, continues to support a weakening private sector.
In other words, the massive quantitative easing to date has done affect the economic trends that are just beginning to intensify.
Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947:
Gross Domestic Private Investment (GDPI) As A %GDP and Gross Domestic Private Investment (GDPI) As A %GDP Average from 1947:
Net Exports (NETEX) As A %GDP and Net Exports (NETEX) As A %GDP Average from 1947:
Government Consumption Expenditures and Gross Investment (GCEI) As A %GDP Average from 1947:
Federal Consumption Expenditures and Gross Investment (FED) As A %GDP and Federal Consumption Expenditures and Gross Investment (FED) As A %GDP Average from 1947
Savings (SAV) As A %GDP and Savings (SAV) As A %GDP Average from 1947:

Friday, July 30, 2010

George Bernard Shaw said: “A government that robs Peter to pay Paul can always count on Paul’s support.” According the American Enterprise Institute, federal spending accounts for 25% of GDP. State and local bring the government slice to nearly 50%. Ninety-seven percent (97%) of personal income taxes are paid by 50% of the population, and 70% is paid by only the top 10%. Based on these numbers, the constituency for more government spending and further income redistribution would seem to be well entrenched.

John Embry: Gold nears parabolic move up

Posted: Jul 30 2010 By: Jim Sinclair Post Edited: July 30, 2010 at 11:44 am

Filed under: In The News

U.S. Economy Grew 2.4% in Second Quarter, Below Forecast
By Timothy R. Homan – Jul 30, 2010 6:41 AM MST

Growth in the U.S. slowed to a 2.4 percent annual rate in the second quarter, less than forecast, reflecting a larger trade deficit and an easing in consumer spending.

The increase in gross domestic product compared with a median forecast of 2.6 percent of economists surveyed by Bloomberg News and follows an upwardly revised 3.7 percent pace in the first quarter that showed a jump in inventories, according to figures from the Commerce Department today in Washington. Business investment climbed at the fastest rate since 1997.

“The economy is muddling through,” Ethan Harris, head of North America economics at Bank of America-Merrill Lynch Global Research in New York, said in an interview after the report. “We’re probably not going to see a really strong number for a while. We need to see some pickup in job growth.”

A slower pace of growth means employers may be reluctant to hire workers and more likely to keep a lid on prices in order to boost sales. Federal Reserve Chairman Ben S. Bernanke last week said the central bank is prepared to take further policy actions if the world’s largest economy “doesn’t continue to improve.”

The Standard & Poor’s 500 Index dropped 1.1 percent to 1,089.97 at the 9:36 a.m. in New York. The yield on the 10-year Treasury note fell 6 basis points, or 0.06, to 2.92 percent.

Median Forecast

The projected gain in GDP was based on the median estimate of 81 economists surveyed. Forecasts ranged from gains of 1 percent to 4 percent.

The worst U.S. recession since the 1930s was even deeper than previously estimated, reflecting bigger slumps in consumer spending and housing, according to the Commerce Department’s annual revisions also issued today.


Buffet knows we are screwed

Chinese-American Investor Emerges as Likely Buffett Successor

Gingrich: Obama Repeating Mistakes From the Great Depression

Deutsche Bank: If Bush Tax Cuts Go, Recovery Dies

Fed's Bullard: US at Danger of Japan-Style Financial Crisis.

Dr. Housing Bubble: Banks cherry picking individual foreclosures that show up on the MLS.

SEC Provision Shocks Observers

"A modern day depression" Rosenberg sees "tough slogging" for the economy.

Rep. Bachmann: U.S. Faces 'Disaster' From Financial Reform Bill

AP survey: A bleaker outlook for economy into 2011

Tight budgets and fewer cops; time for citizens to 'arm up'

Gel that can help decayed teeth grow back could end fillings and pain

Today St. Louis Federal Reserve Bank President James Bullard warned that the U.S. is closer to succumbing to a Japanese-style deflation than any recent time, which he urged be countered with "quantitative easing."

Is he on drugs?

Quantitative easing is nothing more than Federal Reserve Ph.D. doublespeak for "printing money out of thin air."

You can put lipstick on a pig in an attempt to dress up the pig and make it beautiful, but in the end it's still an unattractive pig.

Likewise, you can dress up "printing money from thin air" with fancy Ph.D. language, but in the end it's still destructive currency debasement.

The Fed cannot print our way to prosperity. Period.

It's never been done in the history of the world.

Attempting to do so is like trying to drink yourself sober with a gallon of whiskey.

I have a stack of 100 $100 trillion dollar bills issued from the central bank of Zimbabwe on my desk to remind of the end result of "quantitative easing."

The Fed seems dead set to destroy the value of the U.S. Dollar. Printing money and handing it to their friends will only enrich their friends, while at the same time bringing about poverty for the average citizen.

The Fed is powerless to stop the economy from collapsing, and their announced plan to fight the natural course of the economy is only going to have very bad consequences.

We are still experiencing the effects
of the "great recession" and the economy is again sinking rapidly.

The alleged "recovery" was nothing more than a temporary mirage created with "stimulus" money and lots of media hype.

If you listen to the "happy talk" about "recovery," (remember, even the President himself is on tour hyping the recovery mirage in his not-so-cleverly-named "recovery summer") you'll be completely unprepared for the economic suffering that is heading straight for us.

while the majority will see their wealth devastated by the economic calamity, you need not be part of that group.

“A prudent man foresees the difficulties ahead and prepares for them;
the simpleton goes blindly on and suffers the consequences.” – Proverbs 22:3

To this I will add that you need to IMMEDIATELY get your money out of the bank system and sell your extra dollars for real money(Gold and Silver) as fast as you can...This will preserve your wealth.

If you haven't yet filled your pantry and freezer to full capacity... you are making a huge mistake and one you could pay dearly for as prices rise...Buy what you eat and eat what you buy, rotate rotate rotate...first in first out, try to get at least a 3-6 months supply... Make sure you have at least a months supply of water for each person.

By doing these simple things, you can protect yourself from the coming uncontrollable inflation headed your way... If and I don't think it's possible, that we avoid hyper-inflation you will have groceries that saved you money, and you will have an investment that will outpace inflation...

Better safe then sorry...

Posted: Jul 30 2010 By: Jim Sinclair Post Edited: July 30, 2010 at 3:29 pm

Filed under: Jim's Mailbox

Time to Accumulate metals and mining stocks-UBS

Word continues to leak out, buried within the deep recesses of the Internet, despite the selling-induced fear created by the paper operation. As we have been saying for awhile, it will be today’s enemy of gold – bullion banks and agents rather than the gold community that will profit most from gold’s secular rise.

Positive View on Gold

"We believe that ongoing pressure on sovereign debt markets, combined with persistent concerns over private sector credit contraction will raise the spectre of debt monetization repeatedly over the next few years," the analysts advised. "We expect that this background will remain very supportive for gold prices over the period, and that informs our above consensus gold price outlook and our inclusion of two gold stocks in our top ten picks…"



"Whoever looks upon them merely as an irregular mob will find himself much mistaken. They have men among them who know very well what they are about, having been employed as rangers against the Indians and Acadians; and this country being much covered with wood and hilly is very advantageous for their method of fighting." - Hugh Percy, 2nd Duke of Northumberland, from a letter written April 20, 1775

Thursday, July 29, 2010

"We can guarantee cash benefits as far out and at whatever size you like,
but we cannot guarantee their purchasing power."

--Alan Greenspan

Download the eBook

"Dying of Money: Lessons of the Great German and American Inflations"

FREE by clicking here

GoldMoney's Turk interviewed by GoldSeek Radio on the death of money


10:55p ET Wednesday, July 28, 2010

Dear Friend of GATA and Gold:

GoldSeek Radio's Chris Waltzek this week interviewed GoldMoney founder and GATA consultant James Turk about the death of government currencies, with emphasis on the experience of Weimar Germany. The interview is about 20 minutes long and you can listen to it here:

Posted: Jul 29 2010 By: Jim Sinclair Post Edited: July 29, 2010 at 2:56 pm

Filed under: In The News

Dear CIGAs,

"Currency Induced Cost Push Inflation" cannot be avoided. It will happen overnight as confidence in currency breaks. All of this has happened before.

There was a major dollar rally in 1931 as many European countries defaulted on their debt. The dollar looked outrageously bullish as a mirror image of the weak European currencies. The media spoke of the USA in the manner of a refuge currency in 1931. Then it all changed as it has here and now.

The dollar returned to its previous bear market, plumbing new lows in 1932 and 1933.

We are, here and now, continuing on QE to infinity. Here and now, the Fat Cat insiders of Wall Street know this and are NOW shifting to massive longs under cover of a paper gold game.

The Fat Cat Wall Street demons will make the most money over the shortest period of time in gold just as they did in 1979-80 and in the 1930s. It is totally obvious to the objective observer of the history of gold and currency.

It is here and now. It has all happened before in the same cyclical time frame as now. But here and now, so many are blind to reality.

So many have become gambleholics. So many have lost emotional balance. So many are being fooled daily by the manipulation of the paper gold market.

The trend of dollar value, here and now, is illustrated below. It is all happening again, here and now.

Harry Schultz knows it. I know this. Few have a clue of the spread of the cancerous economic entity known as "QE to Infinity" in the entire Western World.

History lesson: Huge quantities of cash were needed in Weimar Germany

Jim Sinclair’s Commentary

This is the 2nd state of (economic) Emergency in California.

California ‘fiscal emergency’ declared
29 July 2010 Last updated at 06:49 ET

California governor Arnold Schwarzenegger has declared a fiscal state of emergency, putting pressure on lawmakers to pass a state budget that is now more than a month overdue.

California’s economy, which is the eighth largest in the world, faces a budget deficit of $19bn (£12bn).

Mr Schwarzenegger said that without a budget in place the state’s government would run out of cash by October.

He also ordered most state employees to take three days unpaid leave a month.

Earlier this month, the governor ordered 200,000 state workers to be paid the minimum wage because no budget had been passed.

‘Fiscal meltdown’

The "furlough Friday", which will start in August, requires state workers to take three Fridays off a month until a new budget is enacted.


Jim Sinclair’s Commentary

The US has much more threatening problems than the EU.

1.65 Million Properties Receive Foreclosure Filings in First Half of 2010
Bank Repos Hit Another Record High in Q2 While Defaults and Auctions Decrease; June Marks Third Straight Monthly Decrease in Overall Foreclosure Filings
By RealtyTrac Staff

IRVINE, Calif. – July 15, 2010 – RealtyTrac® (, the leading online marketplace for foreclosure properties, today released its Midyear 2010 U.S. Foreclosure Market Report, which shows a total of 1,961,894 foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 1,654,634 U.S. properties in the first six months of 2010, a 5 percent decrease in total properties from the previous six months but an 8 percent increase in total properties from the first six months of 2009. The report also shows that 1.28 percent of all U.S. housing units (one in 78) received at least one foreclosure filing in the first half of the year.

Foreclosure filings were reported on 313,841 U.S. properties in June, a decrease of nearly 3 percent from the previous month and a decrease of nearly 7 percent from June 2009. June was the sixteenth straight month where the total number of properties with foreclosure filings exceeded 300,000.

Foreclosure filings were reported on 895,521 U.S. properties during the second quarter, a decrease of nearly 4 percent from the previous quarter and an increase of less than 1 percent from the second quarter of 2009.Default and auction notices were down on a quarter-over-quarter and year-over-year basis in the second quarter, but bank repossessions (REOs) increased 5 percent from the previous quarter and 38 percent from Q2 2009 to 269,962 — a new quarterly high for the report.

“The second quarter was a tale of two trends,” said James J. Saccacio, chief executive officer of RealtyTrac. “The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009.


Jim Sinclair’s Commentary

And more and more as we head, without any doubt, into currency induced cost push inflation.

Bank of England chief says stimulus still needed
Bank of England governor says degree of continuing stimulus is key issue
Robert Barr, Associated Press Writer, On Wednesday July 28, 2010, 6:27 am EDT

LONDON (AP) — The governor of the Bank of England said Wednesday that the need to stimulate the economy still takes precedence over concerns about high inflation at a time when the outlook for the global economy remains uncertain.

Governor Mervyn King told Parliament’s Treasury Committee that Britain cannot be confident that a sustained recovery is under way despite last week’s report that the economy grew 1.1 percent in the second quarter — the third quarter of recovery from a deep recession.

"The debate is about the appropriate degree of stimulus, not about applying brakes," King said.

The Bank’s Monetary Policy Committee has kept its key interest rate at an all-time low of 0.5 percent, though one member — Andrew Sentance — is advocating a hike to 0.75 percent because of his concerns about inflation remaining above the official 2 percent target.

"We continue to face the challenge of rebalancing our economy away from consumption towards net exports, and raising our national savings rate. During the rebalancing, there is a risk that the level of money spending in the U.K. will remain weak, with the economy operating below capacity. That would push down on inflation potentially to a rate that is significantly below the 2 percent target," King said.


Jim Sinclair’s Commentary

You heard it from the Brits today. Now hear it from the Fed.

Currency Induced Cost Push Inflation is on its way.

Fed Board Member’s Deflation Warning Hints at Policy Shift
Published: July 29, 2010

WASHINGTON — A subtle but significant shift appears to be occurring within the Federal Reserve over the course of monetary policy, amid increasing signs that the economic recovery is weakening.

On Thursday, James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the Fed’s current policies were putting the American economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”

The warning by Mr. Bullard, who is a voting member of the Fed committee that determines interest rates, comes days after Ben S. Bernanke, the Fed chairman, said the central bank was prepared to do more to stimulate the economy if needed, though it had no immediate plans to do so.

Mr. Bullard had been viewed as a centrist, and associated with the camp that sees inflation, the Fed’s historic enemy, as a greater threat than deflation.

But with inflation now very low, about half of the Fed’s unofficial target of 2 percent, and with the European debt crisis having roiled the markets, even self-described inflation “hawks” like Mr. Bullard have gotten worried that growth has slowed so much that the economy is at risk of a dangerous cycle of falling prices and wages.


Jim Sinclair’s Commentary

If Moody wishes to self destruct, downgrading US debt is the express lane method.

Moody’s: U.S. needs debt plan.
The U.S. government needs to lay out a credible plan to address its rising debt if it wants to maintain its triple-A credit rating, said Steve Hess, Moody’s top sovereign analyst for the U.S., East Asia and Australasia. At present, the U.S. appears to have "no plan" to deal with its fiscal outlook. The U.S. rating remains on a stable outlook at Moody’s.

Jim Sinclair’s Commentary

The fear "D" word is finding its way into the Halls of Ivy. You can anticipate QE to infinity which is the means of producing currency induced cost push inflation.

Beige Book shows economic fragility.
U.S. economic activity continued to be "weak" in June and into July, the Federal Reserve said in its Beige Book report, in the latest sign that the recovery may be running out of steam. Though most districts reported continued improvements in economic conditions, the improvements were modest; gains were limited for retail sales, housing and construction remained weak, and banking lending remained tight.


The Coming Silver Supernova

Lorimer Wilson

“Few investment opportunities arise in our lifetime like silver. The stage is set for a silver price percentage gain of extraordinary magnitude! Forget the popular refrain of ‘Got Gold?’ and make some additions to your portfolio to take advantage of the coming silver supernova!” So said author Donald Poitras in an email sent to Wilson after reading Wilson’s article on the possible impact the historical gold:silver ratio could have on the price of silver if gold goes parabolic. In addition to the gold:silver ratio, there are other sound reasons why silver can expect to experience a percentage gain of extraordinary magnitude in the years to come: diminishing supply and increasing demand; a massive short position exists; in-ground silver is limited and will become much more expensive to mine. As a result, the price of silver can only increase dramatically. It is time, writes Wilson, to embrace the new refrain, ‘Got silver?’

a CBO report on the U.S. debt crisis that is a must read. The key word: unsustainable levels of debt. There are some articles discussing the CBO report in The American Spectator and in The New American.

Posted: Jul 29 2010 By: Monty Guild Post Edited: July 29, 2010 at 7:05 pm

Filed under: Guild Investment

Dear Monty,

China knows the evil of over the counter derivatives. They handle substantial financial fraud as a capital crime.

Going forward, listed derivatives with a clearinghouse function, margin requirements and standardized contract points can exist without endangering either China or the world. China has no significant backlog of the OTC type weapons of mass financial destruction. The Western World is overhung by $1.4 quadrillion dollars of notional value OTC derivatives before the BIS went to the cartoon value of "value to maturity," the ultimate Pollyanna computer fabrication. The size of the OTC weapons of mass financial destruction has grown during the crisis that they are in fact responsible for.

China, who considers major white collar crimes as capital crimes ( punishable by death), will not screw up themselves and the world in their version of the credit default LISTED derivatives.

Asia and Africa is where the future is. Now it is go East young man, go East.

China in Asia, and Tanzania in East Africa are the pots of gold at the end of the rainbow.


Dear CIGAs,


China appears to have a huge "grey" economy, meaning that it is fueled by grey or unreported income. On July 19th, China’s most famous researcher on grey income, Dr. Wang Xiaolu, stipulated that actual urban household income may be 100 percent higher than the official data reported by the government. He also concluded that China’s per capita disposable income in 2008 should have been 67 percent higher than the official data.

Dr. Wang goes on to say that China’s national housing affordability ratio (the ratio of average home prices to average income) should have been about 2.8x in 2008, and is about 3.5x currently, which are lower than in many developed countries. His research concludes that the income gap between the top 10 percent and bottom 10 percent of the population was 26x; considerably higher than the government’s estimate of 9x.

In our opinion, this goes a long way to explain why the wealthy continue to buy real estate, and how they can afford the high prices. It also explains why the government is so intent to spend national resources to build low income housing and to stop the speculation in high priced status properties so the wealth gap does not continue to escalate. China’s leaders consider, among other things, the Confucian ideal of moderation and a cohesive society in their planning. Clearly, huge income and wealth disparities undermine these Confucian ideals.


China’s National Association of Financial Market Institutional Investors (NAFMII) recently announced their plan to launch a market for credit default swaps. In China, these will be known as credit risk mitigation (CRM) contracts. The NAFMII report said Chinese credit derivatives must follow the principles of simplicity and transparency and cater to the ‘real’ economy.

Economical management is paramount in China. For years, the central government has allowed local governments to create economic growth through activities such as selling real estate to developers who in turn create housing and large commercial developments. The ultimate effect of this has been more employment and more demand for raw materials. Now, the Central Government is reigning in local government flexibility, and is going to manage the money supply by growing it and shrinking it in a manner similar to the U.S. Federal Reserve. Furthermore, they will expand a bond market for Chinese government bonds and begin to use bond issuance as a method to control the money supply in China.


China has taken on a new policy approach translated by some as ‘loose fiscal policy and tight monetary policy’. Loose fiscal policy refers to the bevy of tax incentive and other fiscal measures to stimulate spending by government and private developers on affordable public housing and other public works.

Tight monetary policy means government will continue to reign in loan growth, especially to Local Government Funding Vehicles. Total loans in the economy are expected to decline over the remainder of 2010 and in future years. The commencement of a government bond market in coming months will create another policy tool for government planners.


Many rumors are swirling around about these vehicles, most of which are inaccurate. They argue for the potential of a meltdown in Chinese economic activity. We disagree with most of these confused analyses.

On July 20, 2010, China’s CBRC (China Banking Regulatory Commission) published information about outstanding bank loans including the loans to the local government funding vehicles. Total loans outstanding to these vehicles were about 1 trillion U.S. dollars on June 30, 2010. The report states that 27 percent were fully viable, 50 percent need to be serviced by secondary sources (legal guarantors or secondary cash flows), and 23 percent could pose a risk of default if cash flows do not improve or new guarantors are not found. Let us focus upon the 23 percent with potential problems, which is about $230 billion U.S. dollars.

Of these loans, we assume that about 2/3 will benefit from rising land prices or cash flows from completed projects already under construction. We estimate that about $75 billion U.S. dollars in bad loans will need to be written off or re-capitalized. Assuming all of the questionable loans go bad (a very unlikely occurrence in our view) write offs would total $230 billion.

On a national level, China has about $1.4 trillion in cash reserves available. In addition, the formation of a bond market, stock sales and cash held by provincial and local governments can also be used to restructure the bad debts. Bad debts are likely to be anywhere from $75 billion to $230 billion in the worst case scenario. While this is serious, such figures are not unmanageable given the size of their reserves.


India will continue to grow rapidly. We expect India’s high inflation (and rising interest rates) which have frightened many investors, will moderate after September when a successful monsoon season finishes with good rainfall, moderating food prices.


We believe that all of the serious economic and political problems that have argued for a strong gold price continue to support rising demand for gold over the long-term. India, Russia, China, and Persian Gulf countries are all accumulating gold. A few weak, fiscally unsound institutions have been selling some of their gold to raise cash. Demand has far outstripped supply over the last eight years and we have repeatedly seen that using periods of price decline to add to long term positions in gold is wise.

Gold recently approached $1,140 an ounce, which many technical analysts believe is a good buy point. We suggest that gold taking partial profits in holdings on rallies and taking a larger percentage of your profits at $1650 per ounce.

We have been buyers during every prolonged period of gold weakness for years, and we continue to be buyers of gold during the current bout of weakness. A word to the wise is sufficient.


Markets have been volatile and we believe that they will remain volatile until the U.S. Securities and Exchange Commission begins to rein in the activities of the high frequency trading community. These fast traders create unstable markets, increase volatility, and are scaring individual investors away from the markets. When their actions are moderated, market movements will be more driven by fundamentals, and the individual investor will return, making the U.S. stock and bond market much healthier.


We believe that higher volatility warrants high cash balances as volatility leads to market dislocations and good buying opportunities.

In our opinion, gold is approaching attractive prices for additions to portfolios. We also find some high-yielding oil related shares to be attractive on price declines. Longer term, China, India, Malaysia, Thailand, Singapore, and Brazil continue to be attractive destinations for investment capital.

Thanks for listening. We hope you are enjoying the summer season, and we encourage you to contact us if we can be of service.

Monty Guild and Tony Danaher

Wednesday, July 28, 2010

Download the eBook

"Dying of Money: Lessons of the Great German and American Inflations"

FREE by clicking here

On August 12th 2010, citizens across the world will be withdrawing $ 500.00 each from their local ATM's...
This action will cause no problems with the financial institutions, but will send a clear message to the Banks...
PLEASE HELP, This is one simple way to have your voice heard, where it will do the most good...

Posted: Jul 28 2010 By: Jim Sinclair Post Edited: July 28, 2010 at 1:49 pm
Filed under: In The News
My Dear Friends,
The following note preceding the excellent article written by Ambrose Evans-Pritchard is from the man who I consider the "Dean of Gold," Harry Schultz.
This is what the Goldmans of the world are in the process of positioning themselves for at your expense.
At the same time many in the gold community are in the bathtub with their razor blade kit. Please, no cutting yet.
Dear CIGAs,
Hyperinflation will come overnight as Jim predicts. Forget gradual.
How do you protect assets and food? Hide stuff. Avoid medium profile. The following article describes how bad it got in German hyperinflation and how dangerous it was to even own a painting. Read it all, then plan appropriately.
Harry Schultz
The Death of Paper Money
As they prepare for holiday reading in Tuscany, City bankers are buying up rare copies of an obscure book on the mechanics of Weimar inflation published in 1974.
By Ambrose Evans-Pritchard
Published: 7:05PM BST 25 Jul 2010

Ebay is offering a well-thumbed volume of "Dying of Money: Lessons of the Great German and American Inflations" at a starting bid of $699 (shipping free.. thanks a lot).
The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation — whether the early 1920s in Germany, or the Korean and Vietnam wars in the US — starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.
People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason" , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.
"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".
Some might smile at the Bank of England "surprise" at the recent the jump in Brtiish inflation. Across the Atlantic, Fed critics say the rise in the US monetary base from $871bn to $2,024bn in just two years is an incendiary pyre that will ignite as soon as US money velocity returns to normal.
Morgan Stanley expects bond carnage as this catches up with the Fed, predicting that yields on US Treasuries will rocket to 5.5pc. This has not happened so far. 10-year yields have fallen below 3pc, and M2 velocity has remained at historic lows of 1.72.
As a signed-up member of the deflation camp, I think the Bank and the Fed are right to keep their nerve and delay the withdrawal of stimulus — though that case is easier to make in the US where core inflation has dropped to the lowest since the mid 1960s. But fact that O Parsson’s book is suddenly in demand in elite banking circles is itself a sign of the sort of behavioral change that can become self-fulfilling.
As it happens, another book from the 1970s entitled "When Money Dies: the Nightmare of The Weimar Hyper-Inflation" has just been reprinted. Written by former Tory MEP Adam Fergusson — endorsed by Warren Buffett as a must-read — it is a vivid account drawn from the diaries of those who lived through the turmoil in Germany, Austria, and Hungary as the empires were broken up.
Near civil war between town and country was a pervasive feature of this break-down in social order. Large mobs of half-starved and vindictive townsmen descended on villages to seize food from farmers accused of hoarding. The diary of one young woman described the scene at her cousin’s farm.
"In the cart I saw three slaughtered pigs. The cowshed was drenched in blood. One cow had been slaughtered where it stood and the meat torn from its bones. The monsters had slit the udder of the finest milch cow, so that she had to be put out of her misery immediately. In the granary, a rag soaked with petrol was still smouldering to show what these beasts had intended," she wrote.
Grand pianos became a currency or sorts as pauperized members of the civil service elites traded the symbols of their old status for a sack of potatoes and a side of bacon. There is a harrowing moment when each middle-class families first starts to undertand that its gilt-edged securities and War Loan will never recover. Irreversible ruin lies ahead. Elderly couples gassed themselves in their apartments.
Foreigners with dollars, pounds, Swiss francs, or Czech crowns lived in opulence. They were hated. "Times made us cynical. Everybody saw an enemy in everybody else," said Erna von Pustau, daughter of a Hamburg fish merchant.
Great numbers of people failed to see it coming. "My relations and friends were stupid. They didn’t understand what inflation meant. Our solicitors were no better. My mother’s bank manager gave her appalling advice," said one well-connected woman.
"You used to see the appearance of their flats gradually changing. One remembered where there used to be a picture or a carpet, or a secretaire. Eventually their rooms would be almost empty. Some of them begged — not in the streets — but by making casual visits. One knew too well what they had come for."
Corruption became rampant. People were stripped of their coat and shoes at knife-point on the street. The winners were those who — by luck or design — had borrowed heavily from banks to buy hard assets, or industrial conglomerates that had issued debentures. There was a great transfer of wealth from saver to debtor, though the Reichstag later passed a law linking old contracts to the gold price. Creditors clawed back something.
A conspiracy theory took root that the inflation was a Jewish plot to ruin Germany. The currency became known as "Judefetzen" (Jew- confetti), hinting at the chain of events that would lead to Kristallnacht a decade later.
While the Weimar tale is a timeless study of social disintegration, it cannot shed much light on events today. The final trigger for the 1923 collapse was the French occupation of the Ruhr, which ripped a great chunk out of German industry and set off mass resistance.
Lloyd George suspected that the French were trying to precipitate the disintegration of Germany by sponsoring a break-away Rhineland state (as indeed they were). For a brief moment rebels set up a separatist government in Dusseldorf. With poetic justice, the crisis recoiled against Paris and destroyed the franc.

Nassim "Black Swan" Taleb: The government is a ponzi scheme Tuesday, July 27, 2010
Text Size: increase text size decrease text size

From Business Week:

... What are are potential sources of fragility or danger that you're keeping an eye on?

The massive one is government deficits. As an analogy: You often have planes landing two hours late. In some cases, when you have volcanos, you can land two or three weeks late. How often have you landed two hours early? Never. It's the same with deficits. The errors tend to go one way rather than the other.

When I wrote The Black Swan, I realized there was a huge bias in the way people estimate deficits and make forecasts. Typically things costs more, which is chronic. Governments that try to shoot for a surplus hardly ever reach it.

The problem is getting runaway. It's becoming a pure Ponzi scheme. It's very nonlinear: You need more and more debt just to stay where you are. And what broke [convicted financier Bernard] Madoff is going to break governments. They need to find new suckers all the time. And unfortunately the world has run out...

Read full article...

"Trichet Challenges Inflationism". His essay on this issue is about three quarters of the way down in his commentary... and is an absolute must read. Noland states that "Washington – or the states – can’t spend its way to fiscal recovery. Instead, we’re witnessing a fiscal train wreck. Our policymakers, economists, and pundits should read Mr. Trichet carefully and contemplate a course other than inflationism." I thank reader U.D. for bringing it to my attention... and the link is here.

Marty Weiss: Four Shocking Bombshells Bernanke Did Not Tell Congress About Last Week

Hussman: Betting on a Bubble, Bracing for a Fall.

GIC (Singapore ) Says World May See Recession Sooner Than Expected.

Six Reasons to Expect Slow Economic Growth Ahead

How to Buy Your Kids a House

The US Constitution - Article 1 Section 10

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

Gold Coins

Hundred dollar bill

Hundred dollar bill


The New $100 bill Pros:
3-D Security Ribbon - Bell in The Inkwell - Portrait Watermark - Security Thread - Color Shifting 100
The New $100 bill Cons:
Will become Worthless - Controlled and Issued by a Cartel - Backed by nothing of Intrinsic Value - Not a Store of Value
Gold coin & Silver coin
Gold & Silver Money Pros:
One Troy Ounce of Gold or .999 fine Silver - Backed by the US Mint - Legal Tender - True Stores of Value Which Will Always Have Worth - No Counter-Party Risks
Gold & Silver Money Cons:

To produce an ounce of gold requires 38 man hours and enough electricity to maintain a large house for ten days. In other words, neither cartels nor computers can create gold or silver out of thin air.

Gold and silver are honest money, true stores of value that have withstood the test of time:
"We learn from history that we do not learn from history."
- Georg Wilhelm Friedrich Hegel

Tuesday, July 27, 2010

Marc Faber: Relax, This Will Hurt A Lot


On August 12th 2010, citizens across the world will be withdrawing $ 500.00 each from their local ATM's...
This action will cause no problems with the financial institutions, but will send a clear message to the Banks...
PLEASE HELP, This is one simple way to have your voice heard, where it will do the most good...

The Coming Rise in Prices

Al thinks you're crazy if you don't Consider Buying Gold - Roger Wiegand Agrees and Tells Listeners Why

The U.S. Mint's lame excuse for rationing gold and silver coins

FOFOA: Lease rates falsified to hide gold backwardation

Major German business magazine publicizes gold price suppression scheme

The Scariest Unemployment Graph I've Seen Yet

Any deflation will be temporary...Helicopter Ben Bernanke has a printing press and he will print money to infinity...Believe it...Inflation is the ONLY thing the Fed knows how to do...
U.S. may face deflation, a problem Japan understands too well

Uncle Sam has worse woes than Greece

U.S. Rescue May Reach $23.7 Trillion, Barofsky Says

Geithner: Let Tax Cuts Die. (Can you detect the desperate need for revenue?)

Desperate cities try giving away land, to get any taxes later. Here is a quote: "Around the nation, cities and towns facing grim budget circumstances are grasping at unlikely — some would say desperate — means to bolster their shrunken tax bases. Like Beatrice, places like Dayton, Ohio, and Grafton, Ill., are giving away land for nominal fees or for nothing in the hope that it will boost the tax rolls and cut the lawn-mowing bills."

View is Bleaker than Official Portrayal of War in Afghanistan

Posted: Jul 27 2010 By: Jim Sinclair Post Edited: July 27, 2010 at 6:27 pm
Filed under: General Editorial
My Dear Friends,
I have said to you many times that the entities that will make the most profit on the gold price will not be the gold community, but rather just those that the community identifies as the enemy, the gold banks.
What is happening now is the setup to that event.
Recently Armstrong questioned publicly if the Goldmans of the world were using his cyclical analysis. Judging from what we have seen the answer is yes by intention or coincidence.
Those wishing to offset their pain on me today have to be defined as the public. The only bulls today are the stone professionals who can see what is taking place in the published numbers.
The gold banks are engineering their short cover and will shift to the long side of gold. It is in fact happening right now as the public panics. The currency market and media will be called into service in order to take gold to and through $1650.

Posted: Jul 27 2010 By: Jim Sinclair Post Edited: July 27, 2010 at 5:19 pm
Filed under: In The News
Jim Sinclair’s Commentary
When you shrink wrap piles of money and air ship them to Afghanistan what the hell do you expect?
Big business is the result for all the connector airlines.
SIGIR: Defense can’t account for $8.7 billion
July 27, 2010 – 4:59am
Rachel Stevens

The Defense Department is unable to account for $8.7 billion of the $9.1 billion in Development Fund for Iraq monies in received for reconstruction in Iraq. This according to a study published today by the Special Inspector General for Iraq Reconstruction.
"This situation occurred because most DoD organizations receiving DFI (Development Fund for Iraq) funds did not establish the required Department of the Treasury accounts and no DoD organization was designated as the executive agent for managing the use of DFI funds," the report states.
The Special Inspector General for Iraq Reconstruction (SIGIR) finds that only one Defense organization actually set up the accounts required by the Treasury.
"The breakdown in controls left the funds vulnerable to inappropriate uses and undetected loss," SIGIR says.
The study recommends that the Secretary of Defense create new accounting and reporting procedures to avoid such mistakes in the future. It also recommends designating an executive agent to oversee progress, establishing measurable milestones, and determining whether any DoD organizations are still holding DFI funds.

Posted: Jul 27 2010 By: Jim Sinclair Post Edited: July 27, 2010 at 5:14 pm
Filed under: Jim's Mailbox
I understand the logic in today’s article of how much overvalued a bank’s assets may be.
Though, I do get lost in the article when the writer says that the FDIC entered in an additional and other loss share arrangements for 1.5 billion.
Where did those assets come from? It doesn’t seem that they were part of the stated assets of the failed banks.
I would appreciate you helping me gain better insight to this issue.
Dear Don,
The assets are failed bank assets, primarily OTC derivatives.
The guarantee is made by the FDIC who does not have that money to make such a guarantee.
Those that are guaranteed are the Fat Cats buying all these failed banks now with no or infinitesimal risk.
While the gold market will be “pressed” as long as possible, it will change direction when time is up
Housing prices are rising according to economic reports this morning. The source of this economic miracle was not identified, but has to be primarily in the minds of those so reporting. The Euro traded over $1.30 before running into selling. Consensus see this as solved problems in the EU, not a hint of greater problems in the US. FASB capitulation and creative accounting impacting banks earnings are the subject of Eric’s contribution below. Calls I am getting this morning are total capitulation calls. Emails are worse. Gold will trade at $1650 and beyond.
Those that buy strength and sell weakness will lose in gold.
The three steps of paper operations
(1) Setup sentiment with bearish stories on F-TV before and during the operation.
(2) Since the shorts are few in number, well-organized and coordinated, it’s easy to press the market through short-term technical triggers.
(3) Once the technical trigger is generated, the numerous and high uncoordinated computers do all the work.

As I wrote on Sunday, "while the gold market will be “pressed” as long as possible, it will change direction when time is up." Those controlling the operation understand the limitation of time. Retail money does not, so watch them closely (see chart below). They will be setup on the wrong side at the wrong time for the benefit of connected money. Who are they? They are the ones with the smirk on their face during the decline.
Gold London P.M Fixed and the Nonreportable Traders COT Futures and Options Stochastic Weighted Average of Net Long As A % of Open Interest:
This game will be repeated again and again in the future because the sheeple are determined to remain asleep until moments before the slaughter.

Posted: Jul 27 2010 By: Dan Norcini Post Edited: July 27, 2010 at 2:32 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini

Posted: Jul 27 2010 By: Jim Sinclair Post Edited: July 27, 2010 at 12:11 pm
Filed under: General Editorial
Dear Friends,
Housing prices are rising according to economic reports this morning. The source of this economic miracle was not identified, but has to be primarily in the minds of those so reporting it.
The Euro traded over $1.30 before running into selling. The consensus this morning sees this as solved problems in the EU, not a hint of greater problems in the US.
FASB capitulation and creative accounting impacting bank earnings are the subject of Eric’s contribution below.
Calls I am getting this morning are total capitulation calls. Emails are worse.
Gold will trade at $1650 and beyond.
The timing remains the same. Gold will trade at $1650 on or before January 14th 2011. Martin Armstrong is eyeing a higher number, but later in June of 2011.
CIT Q2 profit beats Street view
Business must be great! That is, the business of creative, fictional accounting.
CIT Group (NYSE:CIT – News), the commercial lender that last year emerged from bankruptcy, on Tuesday reported a quarterly profit that dwarfed analysts’ estimates.
CIT said gains from asset sales and recoveries from written-off loans boosted its second-quarter profit, offsetting costs it reported related to an employee retention program and higher credit costs.

Sunday, July 25, 2010

"When injustice becomes law, rebellion becomes duty." - Thomas Jefferson

Ambrose Evans-Pritchard: The Death of Paper Money

White House predicts record $1.47 trillion deficit

India warned of stagflation risk as price of food soars

The Middle Class in America Is Radically Shrinking. Here Are the Stats to Prove it

Treasury Plans to Sell 30% More of Citi Stake.

Got seeds? you might find them useful one day soon...
Growing number people growing their own groceries.

Posted: Jul 26 2010 By: Jim Sinclair Post Edited: July 26, 2010 at 12:01 pm

Filed under: In The News

Jim Sinclair’s Commentary

This financial world is loaded with time bombs. One major device is surfacing over the balance of the year.

The financial problems of the euro are always expressed as total debt outstanding. This is nothing compared to the financial problems of the MOPEd US that are always presented as the potential State Budget Deficit for fiscal year 2010.

The Death of Paper Money
As they prepare for holiday reading in Tuscany, City bankers are buying up rare copies of an obscure book on the mechanics of Weimar inflation published in 1974.
By Ambrose Evans-Pritchard
Published: 7:05PM BST 25 Jul 2010

Ebay is offering a well-thumbed volume of "Dying of Money: Lessons of the Great German and American Inflations" at a starting bid of $699 (shipping free.. thanks a lot).

The crucial passage comes in Chapter 17 entitled "Velocity". Each big inflation — whether the early 1920s in Germany, or the Korean and Vietnam wars in the US — starts with a passive expansion of the quantity money. This sits inert for a surprisingly long time. Asset prices may go up, but latent price inflation is disguised. The effect is much like lighter fuel on a camp fire before the match is struck.

People’s willingness to hold money can change suddenly for a "psychological and spontaneous reason" , causing a spike in the velocity of money. It can occur at lightning speed, over a few weeks. The shift invariably catches economists by surprise. They wait too long to drain the excess money.

"Velocity took an almost right-angle turn upward in the summer of 1922," said Mr O Parsson. Reichsbank officials were baffled. They could not fathom why the German people had started to behave differently almost two years after the bank had already boosted the money supply. He contends that public patience snapped abruptly once people lost trust and began to "smell a government rat".

Some might smile at the Bank of England "surprise" at the recent the jump in Brtiish inflation. Across the Atlantic, Fed critics say the rise in the US monetary base from $871bn to $2,024bn in just two years is an incendiary pyre that will ignite as soon as US money velocity returns to normal.


Jim Sinclair’s Commentary

Here is the MOPE as the "Fat Cats" get ready to see the dollar back at .7200

Europe’s prospects brighten as U.S. fades
By Emily Kaiser
WASHINGTON | Sun Jul 25, 2010 3:01pm EDT

(Reuters) – What’s odd about this scenario?

German business confidence is soaring while U.S. consumer sentiment sinks.

Britain’s second-quarter economic growth was almost twice as fast as expected, the strongest in four years.

Meanwhile, economists have steadily marked down forecasts for Friday’s U.S. gross domestic product report.

What happened to Europe being the weak link in the global economic recovery?

Whatever the explanation and despite the divergence, there are signs that both regions will cool down in the second half of the year.

The U.S. "economy entered the second quarter with plenty of momentum but exited with very little," said IHS Global Insight economist Brian Bethune.

Economists polled by Reuters think U.S. growth slowed to a 2.5 percent annual rate in the second quarter, down from 2.7 percent in the first quarter and 5.6 percent in the final quarter of last year.


Jim Sinclair’s Commentary

What derivatives do not do to international investment banks litigation will.

Here is a 2 for 1.

FCIC threatens Goldman audit.
The Financial Crisis Inquiry Commission is threatening to bring in outside accountants to comb through Goldman Sachs’ (GS) systems for data on derivatives. "We have a deep level of questioning about whether we’re getting the straight scoop here and whether Goldman is working with us on information that they surely have," said Phil Angelides, the FCIC’s chairman; Goldman has said its accounting systems didn’t break out trading revenue generated strictly from derivatives, and therefore it can’t provide the requested information to the commission.

Dear CIGAs,

Friday evening, July 23, 2010, the FDIC announced seven more bank failures, bringing the totals to 103 so far this year and 270 since 2007. The seven banks closed this week had collective assets of $2.16 billion and deposits of $2.02 billion.

Their closings cost the FDIC an estimated $431 million, about 21% of deposits. So far this year, bank closings have cost the FDIC an estimated $18.55 billion.

Five of the seven closings were accomplished with the FDIC entering into loss-share agreements with the acquiring banks. That means, in effect, that the FDIC makes a guarantee to the acquiring bank that assets it has taken over from the failed bank will not decrease in value beyond a pre-agreed limit.

In connection with those five closings this week, the FDIC entered into loss share agreements covering an additional $1.25 billion in assets. So far in this crisis, the FDIC has entered into loss share agreements covering about $180 billion.

How Loss Share Agreements Figure Into Bank Failures:

Loss share agreements save the FDIC money at the time of the closing, because the FDIC does not have to pay the acquiring bank as much money up front to honor the failed bank’s deposits. However, a loss share agreement is by nature a bet.

The FDIC is betting that over the next ten years, the failed bank’s assets will turn out to be worth more than any party was willing to bid for the assets at the time each bank was closed. Future asset values are calculated net of selling expenses, meaning that things like foreclosure costs, property taxes, utilities and maintenance fees paid by the acquiring bank in disposing of the assets is deducted from their eventual sales price.

This is why it is important to keep track of the total value of assets the FDIC has guaranteed under loss share agreements throughout this financial crisis. It is similar to keeping track of the total dollar value of mortgages guaranteed by Fannie Mae or Freddie Mac. The two major distinctions are that the FDIC’s assets under loss share are, by definition, distressed assets and their value has already been significantly discounted.

The FDIC’s future exposure lies in the possibility that these assets may turn out to be worth even less than the discounted value agreed to at the time of each bank failure. This is a distinct possibility; otherwise the acquiring bank would not insist on the loss share agreement. In the event the assets turn out to be worth less than the amount agreed to by the parties up front, the FDIC’s losses could grow dramatically beyond its original projections.

Remember, the assets in question are illiquid and difficult to value, and their future value depends in large part on how this financial crisis plays out. You can bet the FDIC’s loss projections assume the current downturn is over and we will be experiencing income growth, less foreclosure activity and recoveries in the residential and commercial real estate markets going forward.

The parties that have acquired these assets under loss share agreements can afford to be indifferent as to what happens going forward. They are protected either way.

This is yet another avenue of quantitative easing. The US Treasury, by way of the FDIC, is guaranteeing a value for the Country’s most distressed bank assets much higher than anyone is actually willing to pay for them. In the process, it is helping disguise how “worth-less or worth-little” (Jim’s words) these assets have become.

More Evidence of FASB-Blessed Overvaluations:

Each bank failure announcement allows us a peek into how extensively bank management have been exaggerating the value of their least liquid assets since the FASB’s roll-back last year of fair value accounting requirements. Four of the worst examples of asset overvaluation exposed by this week’s closings were as follows:

SouthwestUSA Bank, Las Vegas, Nevada, had stated assets of $214 million and deposits of $186.7 million. The FDIC estimated its closing cost $74.1 million (40% of deposits). Based on that estimate, the bank’s assets were really only worth $112.6 million, and had been overvalued by 90%.

SouthwestUSA Bank’s situation was so bad, the acquiring bank was only willing to take over $137.3 million (stated value) of its assets, with its losses on $111.3 million of those assets limited by a loss share agreement with the FDIC. The FDIC had to take the remaining $76.7 million (stated value) of assets onto its own books for later disposition. Under these circumstances, the FDIC’s loss estimate could only be called a “guesstimate,” because its eventual losses are made uncertain both by the loss share agreement and the difficulty gauging how much it will be able to realize on the sale of the assets it was forced to take over.

Crescent Bank and Trust Company, Jasper, Georgia, had stated assets of $1.01 billion and deposits of $965.7 million. The FDIC estimated its closing cost $242.4 million. Based on that estimate, the bank’s assets were really only worth $723.3 million, and had been overvalued by 40%.

Thunder Bank of Sylvan Grove, Kansas, had stated assets of $32.6 million and deposits of $28.5 million. The FDIC estimated its closing cost $4.5 million. Based on that estimate, the bank’s assets were really only worth $24 million, and had been overvalued by 36%.

Community Security Bank of New Prague, Minnesota, had stated assets of $108 million and deposits of $99.7 million. The FDIC estimated its closing cost $18.6 million. Based on that estimate, the bank’s assets were really only worth $81.1 million, and had been overvalued by 33%.

Respectfully yours,
CIGA Richard B.

Saturday, July 24, 2010


The Right to Nothing.

Neithercorp Press

Economic Meltdown: The Final Phase

By Giordano Bruno

Neithercorp Press
- 07/18/2010

In the financial life of every culture built upon faulty monetary policy, there are points at which the thin thread of economic faith; the thread that ties the entire failing system together, the thread made tangible by the hopes (and sometimes ignorance) of the general populace, finally snaps. From Ancient Rome, to Weimar Germany, to Argentina, to modern day America, no society fueled by unsustainable debt and fiat inflation can duck the ‘Fiscal Reaper’ for very long. The U.S. alone has survived since the early 1970’s (after Nixon removed the last vestiges of the gold standard) on nothing but questionable credit practices and baseless optimism, but there is a limit to the power of fantasy. This is a fact that most mainstream financial analysts and some in the American public refuse to grasp. Mere belief in the enduring nature of the marketplace is not enough; the fundamentals must also support that belief.

Today, we face an atmosphere in which the fundamentals are fiercely opposed to the publicly promoted perception of the economy, and it is moments in history like this that present a clear primer for total collapse. Financial disaster is bad enough when it is at least partially anticipated. When the masses are caught completely unaware and unprepared in the midst of misguided conviction, this leads to the worst kind of tragedy: the ironic and Shakespearian kind. To avoid this brand of tragedy is one of the primary reasons why we in the Liberty Movement do what we do. We may not be able to stop the current crisis from developing, but we can create awareness, and through this we can lessen the cultural shock, and thereby lessen the impact.

Mainstream economists crowed about the “invincible” rise of globalism and the unstoppable U.S. financial juggernaut for years while more level headed and intelligent men tried to warn the public of danger. The initial derivatives collapse in 2007 / 2008 should have put all of these pathetic establishment cheerleaders to shame, not to mention out of work. Yet three years later, amazingly, we are asked, even expected, to continue to look to such sad and useless people for predictions on market stability that always turn out absolutely inaccurate, and advice on savings and investment that they are not equipped to give.

I suppose we should not be surprised by the continued lifespan of MSM parrots and puppets. They may not be helpful to the average American, but they are very helpful to international banks and the globalist companies that pay their salaries. They distract and confuse us. They comfort when they should caution, and contradict when they should pay heed. Our financial house is burning from the bottom floor up, and they assure us that the warm orange glow is just the dawning of a new and beautiful day. We are told to “look to the future”, a return to normalcy is “just around the corner”. Never would they dare to weigh the cold hard factors of the present, or the ruse would be up. Whether they are aware of it or not the lies media pundits perpetuate set the stage for even greater upheaval, to the detriment of most, and the benefit of only a handful.

In this article, as we have in so many others, we will examine those lies, as well as the truths they are meant to hide. The most important truth of all being, that not only are we not in the middle of a recovery, but that the final phase of the economic meltdown is about to commence…

Distractions, Half-Truths, And Outright Lies

“We will not have any more crashes in our time.”
- John Maynard Keynes in 1927

“I see nothing in the present situation that is either menacing or warrants pessimism… I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.”
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929

“[1930 will be] a splendid employment year.”
- U.S. Dept. of Labor, New Year’s Forecast, December 1929

“While the crash only took place six months ago, I am convinced we have now passed through the worst — and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us.”
- Herbert Hoover, President of the United States, May 1, 1930

Most of us were not alive to witness the throws of the Great Depression, but for many, the quotes above sound strangely familiar. Pundits and government officials of our fateful era have taken to spewing the same kind of nonsense on a daily basis, and one begins to wonder if they are TRYING to top the ridiculous statements of their forebears in an attempt of ultimate mockery. Today, not only are we told that “green shoots” abound, but that if those green shoots fail, it will only be because we did not “believe” hard enough in their existence!

It is this kind of idiocy that led us to the state of affairs we are in now, and it is the same idiocy that will leave millions of Americans in extended financial ruin in the near future. The absurd idea that prosperity is driven merely by blind optimism must be put to rest if we are ever to rebuild. Transparency, the pure and unadulterated truth, must be present in every aspect of government and finance without question for a culture to succeed. No longer can we operate in a system built upon the premise that the American people must be kept in the dark “for their own good”.

The essence of the recovery argument lay in unsubstantiated rhetoric, skewed statistics, and the over-promotion of news items that in reality are very minor economic indicators. Wall street reform has been heralded as a fix-all, yet the language of the legislation does little to nothing in reigning in the toxic derivatives trading practices that fomented the housing bubble, nor does it take any measures against the root cause of the mortgage crisis; the private Federal Reserve Bank, which artificially lowered interest rates and lending standards during the 1990’s knowing full well that this would amass pockets of poisonous debt securities throughout the economy. International banks have not been truly punished for their practices of market rigging and faulty accounting, nor will they be. The recent and laughable lawsuit settlements of AIG and Goldman Sachs prove that no bankers will be held accountable, only penalized with fines that amount to little more than pocket change to these monstrous global corporations:

This means that the conditions which triggered the initial collapse have not been mended in any way. Absolutely nothing has changed since 2007. Americans have only been temporarily shielded from the effects and the particulars of continuing financial corruption. For instance, it has been revealed that the SEC itself has known since at least April that Citigroup has been hiding assets and debts on its books by counting Repurchase Agreements as actual sales. For those of you not familiar with such slight-of-hand, this is the same kind of accounting trick that led to the fall of Lehman Brothers:

Citigroup claims, of course, that these Repurchase Agreements are only a small part of their operation and will not affect their ability to function. The problem is that like Lehman Brothers and Citigroup, it is probable that most global banks have used false accounting procedures to hide the true measure of their leveraged capital. It certainly is not in their best interest to reveal the whole truth, so why would they? Due to the continuing dilemma of hidden and unreported bank debts, it is only a matter of time before we witness yet another credit implosion, followed by even more taxpayer funded bailouts, and even greater stress on the stability of the U.S. Dollar.

While empty promises of reform and the hidden accounting practices of banks have kept markets malleable for the moment, it is really the exaggeration of consumer spending and retail gains, along with rigged unemployment reports from the Labor Department, that have kept the false recovery wheel spinning for over a year. Any profit or production increase by almost any company has been held up as a rallying cry for a bull market, even though in most cases these companies increased profits by cutting their labor force, and increased production by forcing their remaining employees to work harder for the same amount of money. They did not expand profits because the U.S. consumer is spending once again with wild abandon as has been suggested every time new quarterly profit reports are released. After a year of this misrepresentation of the facts, finally, the truth is starting to come out.

Retail stocks are beginning to shed value as they take hits from decreasing sales and profits, meaning, the cost cutting strategy has run its course and retailers are still losing money:

Service sector employment has remained stagnant. The excitable talk that started at the beginning of this year of a hiring resurgence has now faded:

The bottom line; the TRUE unemployment rate of around 20% has become perpetual, and some economists are even suggesting that we accept it as a standard. The American public is now coming to realize that healthy job creation is a very distant goal, one that the government alone has no ability to achieve, bailout or no bailout:

On the international scene, news from Europe has gone abruptly quiet. After months of blaring reports on the Greek sovereign debt crisis, and the imploding Euro, suddenly, we are told that the situation is stabilized? But how? What measures were taken and how did they affect a balancing of the EU economy? The fact is, no measures have been taken. No effective adjustments have been made. The MSM has only muted the reports, and for many Americans, out-of-sight truly is out-of-mind.

Greece is still right where it was six months ago, and the debt to GDP ratios of EU member countries continue to rise.

The mere mention that Spain’s Aaa credit rating was coming under review for a possible downgrade jolted stocks at the beginning of July. The review is not set to conclude for three months, but the market reaction shows that some of the larger investment firms are keenly aware of the weakness in Spain, and the chance that it will become the next in a long line of Greek style implosions:

Portugal’s credit rating was downgraded by Fitch in March, and now it has been downgraded by Moody’s as well:

And, the IMF and the EU have suspended a review of Hungary’s funding program while the country is in the midst of meltdown. This means Hungary will no longer have access to the $25.1 billion loan package made available by the IMF to see them through the crisis. Frankly, I think all countries are much better off not taking money from the demon spawn over at the IMF, but many of the citizens of Hungary may not see it that way. The suspension of the loan package almost ensures a national default:

Most European countries are in the same predicament as Greece to varying degrees, Greece just happened to be the first to fall. The combined weight of sovereign debts in all EU countries is now threatening the very framework of the European Central Bank itself. The ECB is now facing higher interest rates, which means increased funding costs that they cannot afford without inflating the Euro:

What is this leading to? A situation we have been warning about for years; either the default of numerous EU member nations, or the inflationary collapse of the Euro. In each case, the EU will eventually be forced to turn towards the only avenue left available to them; the IMF and full austerity measures. This, of course, was the plan all along….

We have just covered the broader problems in the world economy that have been obscured by the establishment media in order to perpetuate a false sense of security in the masses. However, these are simply ongoing problems that some may dismiss as “par for the course”, troubles that could go on for years without causing immediate damage to America itself. Other recent events, though, now show that the likelihood of a final phase meltdown of the U.S. economy may begin before the end of this year.

The Signs Of Final Phase Collapse

It is difficult to write about economic indicators of collapse for many reasons, but the primary issue is one of relativity. Most Americans alive today have never suffered through an extended depression and few if any have ever witnessed a full fledged meltdown of a country’s finance and infrastructure. Therefore, many people in this country have no point of reference with which to compare and contrast the events of the new millennium. The unfortunate reality is, when a society enjoys an extended period of affluence, they often become conditioned to take prosperity for granted. They become unable or unwilling to interpret warning signs of a collapse until the event is already near its end, and they have lost everything.

The signals listed below I believe are truly the last straw, the final alarm before the global financial system spirals completely out of control. It is impossible to say exactly when this larger secondary breakdown will occur, however, when one studies the economic disasters of the past, these same primers tend to appear preceding very fast moving financial decay.

Secondary Real Estate Bubble: If you think you’ve seen a catastrophe in the real estate market so far, just wait another six months. Now that the government home buyer tax credit has ended, we are starting to see how much the real estate market really was being propped up by taxpayer dollars. Mortgage bond yields have plummeted to their lowest level on record while bond sales have slumped, all in anticipation of another massive round of mortgage defaults:

Sales of new U.S. homes have plunged to the lowest level on record:

And, nearly 1 in 3 homes sales in the first quarter of 2010 were foreclosures at rock bottom prices:

Home foreclosures are on track to reach 1 Million or more by the end of 2010, and home seizures have risen 38% as banks process a backlog of mortgage defaults. This is despite efforts by banks to reduce foreclosure numbers by modifying loans and attempting short sales of properties:

This is nothing compared to the nightmare that is brewing in the commercial real estate market. Commercial real estate transactions have collapsed by 90% as many people are aware:

However, most analysts tend to overlook retail land occupancy rates. Commercial property vacancies have hit a ten year high:

In the past, owners of commercial real estate have enjoyed extra credit and loan extensions from banks because financiers hope that by supporting the commercial market through the downturn they might retrieve profits once the economic uncertainty has ended and businesses start making money again. But what happens when the downturn does not end? Banks are only going to extend loans for so long before they pull the plug, even on commercial borrowers. It would seem that the time has come for the commercial real estate bubble to finally burst.

Why are these recent problems in the real estate market an indicator of a final phase collapse in the near term? The issue is one of prolonged instability. The recession / depression that we face today should have transpired sometime in the early 1990’s, but the engineered low interest rates supplied by the private Federal Reserve during that decade created the property value boom. Any American could buy a home regardless of whether or not they could actually afford it, and anyone with a home could then use it as collateral for enormous credit lines. This new artificial debt bubble prolonged the collapse for around fifteen years. As of the second quarter of 2010, though, this credit source has been exhausted completely. There is officially nothing left to support the general economy (except, of course, fiat inflation). The effects of this lack of national capital should become very visible by the end of this year.

Unemployment Visibility: It did not come as a surprise to this researcher that the jobs market began to crumble once again in June and July, but it did come as a surprise to some. We’ve talked on numerous occasions about how the Labor Department hides the true level of unemployment from the public, and I won’t beat that poor dead horse any further. Suffice to say, real unemployment counting the U6 measurement is around 20%. The length of the average American’s unemployment has reached incredible levels. Many millions have remained jobless for 6 to 12 months. In response, the Federal Government has extended unemployment benefits several times over the past year. While this has been painted as a necessary action to save the livelihood of jobless citizens, it is less about “compassion” from the government and more about obscuring the effects of unemployment until they are ready to let the cradle fall. That time has come.

Congress has not renewed extensions of benefits as of this month, and it looks as though they do not plan to do so again. Barack Obama (or his handlers) have tried to turn this issue into another false left / right paradigm argument, claiming that it is the Republicans that are to blame for the loss of unemployment benefits. This is a distraction from the real matter at hand. The truth is, the ENTIRE government is responsible for the disruption of benefits due to the unchecked and insane deficit spending BOTH parties have enacted over the years. Extending benefits again would add billions if not trillions to the already unsustainable U.S. debt and cannot be continued indefinitely.

Unemployment benefits hide the visible scars of national job loss. Now that millions of Americans have run out, expect to see those scars in all their terrible glory. Expect homeless numbers to skyrocket. Expect crime to skyrocket. Expect suicides to skyrocket. Expect all the problems that were once muted and hidden to now parade across the street where you live. Expect things to deteriorate from the comparably nice, polite, and civil situation we have currently. Expect things to get ugly.

Municipal Debt Implosion: As we have been warning about for the past couple years, municipal bonds are in dire straights. Cities and some states are ready to implode and they are ready to implode now. Look for city defaults to rise to record levels in the next year.

California and Illinois are broke, make no mistake. When Arnold calls for state employee pay to be reduced to minimum wage and Illinois lets $5 Billion in bills go unpaid, there is no turning back:

Municipal Bond Defaults now continue at triple the typical rate:

This not only sets the stage for statewide bankruptcies, it also threatens to bring down large holders of municipal securities, such as Citigroup and U.S. Bancorp:

Usually, muni-bonds are used by investors as a tax haven and hedge to weather credit storms like that which we are seeing now, yet, investors in the past few months have begun dumping their municipals like a bad date. I believe we will begin hearing about state defaults before the end of the year.

The Dollar? Stick A Fork In It, It’s Done: As we recently predicted, the dollar has broken its traditional relationship with the stock market. Usually, when investors pull their money out of stocks, they then place it in dollar based securities as a safe haven. This causes the dollar to increase in value. In the past few weeks, though, the dollar has plummeted at the same time as stocks! This means investors no longer trust the dollar as a safe haven investment during a market crisis. As we have said for years, when this signal happens, the dollar is ripe for meltdown.

Central banks across the world are beginning to abandon the U.S. dollar:

Despite the uncertainty in Europe, the dollar has still sunk against the Euro faster than it has in the past year:

In 2008, I predicted that China would radically re-engineer its economy, changing it from an export based hub to a self sustaining consumer hub. I predicted that they would depeg the Yuan from the Dollar after this move was done, and following that, they would dump their vast holdings of U.S. treasuries, causing the dollar to lose its world reserve status, destroying its value, and creating hyperinflation in prices here in the U.S. So far, the first two events have already occurred. China has depegged its currency from the dollar and is allowing it to begin appreciating. They have also almost finished converting their economy into a consumer system while continuing exports through the ASEAN trading bloc:

The Yuan is now being globalized by the Chinese in an effort to strengthen its base and make it viable as a reserve currency:

Some analysts have suggested that the globalization of the Yuan could take years, however, this is not necessarily so. If the U.S. dollar were to collapse, or the Euro, or both, the Yuan suddenly would look extremely viable as a reserve currency. I believe this is exactly what will happen, and, I believe China will begin depleting its U.S. Treasury holdings in the next 6 months.

Interestingly, some in China have gone out of their way to deny that such plans are in the wings, and the MSM has helped to facilitate this fallacy:

Set aside the fact that others in China are calling for the government to dump U.S. Treasuries:

Now would be the perfect time considering the dollar’s recent rise due to the problems in the EU. A bond dump at this time would mean China could reap maximum profits before a final monetary breakdown. China is reverting to a consumer hub and is no longer relying on exports to the U.S., so the idea that they have any reason whatsoever to continue holding onto U.S. Treasuries is absurd.

The final key to the coming Chinese treasury dump, I feel, is in the relationship between China and Germany. Germany is really the primary pillar of the EU, without it, the EU could not exist. A barely publicized visit by German Chancellor Angela Merkel on July 15th may be the final piece of a long escalating financial relationship between China and the stronger countries of the EU:

A Chinese / German financial alliance could create a core economic “shell” which might withstand an anticipated disintegration in the U.S. and some of the more indebted European nations. I do not expect the dollar as we know it to survive past 2011.

The Line Has Been Crossed

I have never seen so many indicators of total meltdown, when compared to past economic collapses throughout history, as I see today. Not to sound melodramatic, but I’m really not certain if I will be writing these financial analysis articles for much longer. I suspect that before the year is out there will be no more need, being that every facet I have laid out over the years will become glaringly obvious to everyone.

As I have stated so many times, we may not be able to stop these events from unfolding, but we can determine their final outcome. Prepare for the worst, because I have no doubt you are liable to see it before the next few years are done. Stand by your principles. Never compromise your conscience. And above all else, survive. No ending culminates without the graces of a new life, one full of possibility. It is up to you, the staunch and independent American individual, to see that that possibility is realized regardless of any obstacle or enemy. A fiscal catastrophe will not stop us, it will not break our spirits, it will not enslave us. It will only strengthen our resolve to remain forever defiant, and forever free.

Special Note To Readers: For the past four weeks or more, our website has come under heavy attack by hackers or agencies employing hackers. Due to the sophistication of these attacks, we are unable to properly secure the site at this time. In order to protect you, our readers, I will be posting my articles to this page until the problem can be resolved. I hope you will continue to follow our efforts here at blogspot while is on hiatus. Thank you for your continued patronage. It will take more than web attacks to shut me up...

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"Bullion buyers bank on gold coins". The reporter tried to be as condescending as possible in this article... and it shows in a few spots... along with the usual negative comments from the Tokyo Rose of the gold world... Jon Nadler over at Kitco. But, regardless of that, this 2-page article is a must read... and the link is here.

Monday edition of The Washington Post... and I must admit that I was surprised to see this sort of essay appear in the pages of an establishment newspaper. If you think that 'big brother' is watching you, dear reader... you're probably right about that. And if you didn't think so before you read this article, you probably will long before your finished. The headline reads "TOP SECRET AMERICA: A hidden world, growing beyond control". This is another must read story... and the link is here.