Third Hindenburg Omen Confirmation

Gerald Celente: We Are Heading For The GREATEST Depression


Rense And Celente Prepare For The Worst


Broke US Cities Sell Parking, Airports, Zoos


A Permanent Housing Collapse?


Golden Rule (The Mogambo Guru)

In The News Today

Posted: Aug 24 2010     By: Jim Sinclair      Post Edited: August 24, 2010 at 5:08 pm
Filed under: In The News
Dear CIGAs,

The smoke and mirrors modest upturn in economic statistics primarily due to the FASB capitulation in April of 2009 comes to an end as the Ski Jumper gets airtime.

All the MOPE about recoveries and double dip comes into question with the violent nature of major economic statistic dissolution.

Central Banks around the world, knowing full well that the assets of financial entities are as weak as they were during the 2008-2009 crash, immediately revert to QE to infinity. This lights fires to the Western World currencies making the dollar weak and the euro outrageously volatile. This gives rise to Currency Induced Cost Push Inflation, better known as the Yellow Brick Road to Hyper Inflation. Central banks are depicted as the devils as QE to infinity is thrown onto the pile in hopes of another illusionary soft landing.
This can easily happen so fast that your hair will catch fire and you get whiplash trying to catch it. When this event occurs it will be lightening speed. The evil deeds are done and there are no exits. Gold will trade at $1650 and beyond.

Jim Sinclair’s Commentary
Two hedgies short of gold and gold shares?


Jim Sinclair’s Commentary
Today’s exercise in MOPE (Management of Perception Economic) and plausible denial, also known as “BS.”

Fed divided over policy direction, WSJ reports By MarketWatch
TEL AVIV (MarketWatch) — At its Aug. 10 meeting, at least seven of 17 Federal Reserve officials opposed or hesitated over the decision to stimulate the economy by keeping the Fed’s securities portfolio from winding down, The Wall Street Journal reported Tuesday.
At issue was whether to reinvest principal payments to the Fed back into the markets.
The Wall Street Journal report said Fed members were divided into two camps.
New York Fed President William Dudley, Boston Fed President Eric Rosengren, San Francisco Fed President Janet Yellen and others were concerned about the economy and "more inclined to act," it said.
But Fed Gov. Kevin Warsh, Dallas Fed President Richard Fisher and other officials were concerned about the effectiveness of such a move or the message it would send to markets, the report said.
Fed Chairman Ben Bernanke pushed for the move and ultimately prevailed, the Journal reported, based on interviews with several participants at the meeting.
More…



Jim Sinclair’s Commentary
This is a straw man to hold up and knock down, a common political strategy.
Note that the so called fight is over banks. What you want to see is the non-banks that received bailouts.

Fed Loses Bid to Review Bailout Disclosure Ruling By Grant McCool and Jonathan Stempel
August 23, 2010
NEW YORK (Reuters) – The Federal Reserve will have to appeal to the Supreme Court if it wants to avoid having to disclose details of its emergency lending programs to banks bailed out with taxpayer money during the financial crisis.
The U.S. 2d Circuit Court of Appeals denied the Fed’s motion on Friday to rehear the case in which Bloomberg LP, the parent of Bloomberg News and News Corp’s Fox News Network sought information on the U.S. central bank’s emergency lending programs that began in late 2007.
The programs, designed to shore up the financial markets, more than doubled the Fed’s balance sheet to well over $2 trillion, especially in the wake of the September 2008 collapse of Lehman Brothers Holdings Inc.
The Fed maintained that disclosing the information sought by the news outlets under the Freedom of Information Act (FOIA) could stigmatize banks, causing a loss of confidence that could lead to deposit runs and the demise of some lenders.
The Clearing House Association, a group of major U.S. and European banks, supported the Fed’s efforts.
More…

Cumulative Bank Failures Reported By FDIC

Posted: Aug 24 2010     By: Dan Norcini      Post Edited: August 24, 2010 at 12:19 am
Filed under: Trader Dan Norcini

Dear CIGAs,
Click the chart to enlarge today’s Cumulate Bank Failures as reported by FDIC in PDF format with commentary from Trader Dan Norcini

Market Commentary From Monty Guild

Posted: Aug 24 2010     By: Monty Guild      Post Edited: August 24, 2010 at 12:14 am
Filed under: Guild Investment

Dear CIGAs,
HOW “CONSERVATIVE” IS YOUR MUNICIPAL BOND PORTFOLIO?
The municipal bond market has performed well in recent years.  A long period of declining U.S. interest rates and growing fears of rising tax rates have helped them outperform other investments.  In our opinion, there are many under-disclosed risks and problems in municipal bonds of which investors who own them should be made aware.  Muni bonds are a nearly $3 trillion market, and are often sold as conservative assets.  The following opinion piece from today’s Wall Street Journal by Steve Malanga discusses how some states have been less than forthcoming about their fiscal health.
Due to years of fiscal manipulations, many states, counties, municipalities, school districts, and public utilities are going to have trouble refinancing their debt in the coming years.  It is not just the Wall Street banks and large public companies who have used financial trickery with their balance sheets.
Some municipal bond investors, underwriters, and issuers are hoping that the Federal Government money printing machine will come to the rescue of insolvent states, counties, and municipalities.  We do not believe that hope is an investment strategy.  If you have a municipal bond portfolio, please feel free to call us and we can help you understand what investment actions you might consider.


How States Hide Their Budget Deficits By Steve Malanga 23 August 2010 The Wall Street Journal
In April, the New York State Comptroller, Thomas DiNapoli, issued a damning report on the Empire State’s financial practices. Albany’s budgets, he observed, increasingly employ "fiscal manipulations" to present a "distorted view of the State’s finances." Money shuffled among accounts to hide deficits, loans made by the state to itself, and other maneuvers Mr. DiNapoli called a "fiscal shell game" are meant to "mask the true magnitude of the State’s structural budget deficit."
The comptroller’s report produced yawns. Last week, however, the Securities and Exchange Commission (SEC) filed fraud charges against New Jersey for misrepresenting its financial obligations, particularly its pension obligations, and misleading investors in its bonds. New York — and many other states — had better sit up and take notice.
The Citizens Budget Commission of New York recently measured states’ obligations against their economic resources. New Jersey was rated in the worst fiscal shape, but it judged other states that employ questionable budget practices, including New York, California, Illinois and Rhode Island, to be only marginally better. Closer SEC scrutiny of these states’ muni offerings should be welcomed by investors, and also by taxpayers from whom legislators often try to hide the true depth of fiscal problems until they grow unmanageable.
New Jersey is an object case in how such manipulations eventually backfire. The problems go back nearly 15 years, to when the then-relatively healthy state decided to borrow $2.8 billion and stick it in its pension funds in lieu of making contributions from tax revenues. To make the gambit seem reasonable, Trenton projected unrealistic annual investment returns — between 8% and 12% per year — on the borrowed money. The maneuver temporarily made the funds seem well-off.
In 2001, when legislators wanted to further enhance rich pension benefits, they valued the state’s plan at its richest point: 1999, when the system was flush with borrowing and the tech bubble hadn’t yet burst. The scheme proved disastrous, of course, because the stock market has since gone sideways, and New Jersey has achieved nowhere near the returns it needed on that borrowed money.
Meanwhile, New Jersey compounded its woes with other ploys. In 2004, the state broke the cardinal rule of municipal budgeting when it borrowed nearly $2 billion to close a budget deficit, which is like borrowing on your credit card to pay off your mortgage. (The state supreme court ruled this move unconstitutional but allowed it to go forward anyway because it didn’t want to "disrupt" government operations.) Over time, New Jersey’s combination of overspending in its budget and underfunding of its pensions resulted in a tidal wave of tax increases and spending cuts.
Now, even if Gov. Chris Christie can solve the state’s long-term, structural budget problems, New Jersey will have to find some $3 billion a year in new revenues to begin contributing again to its pensions.
Municipal bondholders seem complacent in the face of such problems. They like to assert that they have first dibs on any tax revenues. But New Jersey has written so many "guarantees" into its constitution — whether regarding pensions or citizens’ right to a "quality" education — that sorting out the competing interests in a fiscal crisis could keep the courts busy for years.
As alarming is how Jersey-style fiscal practices have proliferated in other states.
The manipulations date back to the late 1970s, when taxpayer revolts produced spending caps and constitutional limits on tax increases in states. Rather than hew to these restrictions, politicians found increasingly inventive ways around them.
State officials have acknowledged such practices are growing common. During the 2002 recession, a report by the National Association of State Budget Officers admitted that states were employing "creative, innovative . . . adjustments" to budgets. They include financing current operations with debt, moving money from trust funds dedicated to specific tasks (like highway maintenance) into general funds, and pushing payments to vendors into future fiscal years.
"The long-running use of gimmicks is part of the reason most state budgets are in crisis today," noted Eileen Norcross of the Mercatus Center at George Mason University in a recent study.
The federal government has served as enabler. Although the special tax-free status it bestows on municipal bonds amounts to a subsidy, Washington does little to enforce responsible budgeting. In its fiscal stimulus packages of 2009 and 2010, for instance, the federal government funneled hundreds of billions of dollars to the states without regard for their fiscal practices, treating irresponsibility in New Jersey and New York the same as prudence in, say, Texas and Indiana.
California granted its workers big pension and benefit enhancements in 1999. As in New Jersey, those benefits were based on unrealistic projections of stock-market returns over the long term. Now the costs of those pension enhancements — which have added some $4 billion annually to the state budget and hundreds of millions more to municipal costs — have deepened Sacramento’s fiscal woes, which it is solving with more ploys, like pushing tax refunds and payments to vendors into future years.
These maneuvers often don’t make it into bond presentations. Like New Jersey, Illinois used extensive borrowing — including a whopping $10 billion offering in 2003 — to make its pensions appear well-funded. The state then skipped contributions into the system for several years, creating additional funding problems. A recent study by Joshua Rauh of Northwestern University projects that Illinois’s pension system is among a handful that, like New Jersey’s, could run out of money in the next decade.
Yet a presentation made by Illinois officials to potential investors in June mentioned the pension borrowings only briefly, then painted a rosy picture of the state’s fiscal practices. "Does the state have the Will To Govern needed to address its challenges?" the presentation asked. "YES" it answered in big, bold letters. The presentation then touted modest pension reforms that the state had enacted, even though legislators are doing little to ensure the system’s long-term viability.
The SEC should demand, at the very least, that states acknowledge the unease of their own in-house experts. There is nothing in the nearly 200 pages of New York’s current disclosure document for investors, for instance, that hints at the state comptroller’s concerns over the direction of the state budget. In refreshingly candid language, Mr. Napoli describes in his report a growing lack of transparency, which hides the state’s true fiscal condition, as a "deficit shuffle."
If that’s a new dance step, it’s one that investors and taxpayers everywhere need to work harder to ban. The SEC should help.
Please don’t hesitate to call us about this or any other issue. Thanks for listening.
Monty Guild and Tony Danaher
www.GuildInvestment.com