Bank of England tells savers: Screw you; we're debasing the currency

 

Ambrose Evans-Pritchard: Fed is out of control, arranging debt default by stealth

 

CNBC Europe explains the Plunge Protection Team in action

 

Goldman Releases Most Bearish 2011 Outlook Presentation Yet, Sees S&P In 725-800 Range In QE2 Case

 

Gross, El-Erian Rumored Replacements For Larry Summers

 

POMO Completed, New York Fed Injects $550 Million To Get Apple, Amazon And Netflix Back To Unchanged

 

In The News Today

Posted: Sep 28 2010     By: Jim Sinclair      Post Edited: September 28, 2010 at 5:37 am
Filed under: In The News

Jim Sinclair’s Commentary

Here is the flow of money:
1. Banks mark up their junk paper to full value.
2. This mark up was accounted for in the prop trading accounts.
3. Because it was a mark up there was no cash income but only a balance sheet change and artificial prop trading department profit.
4. Major sickening bonuses were paid to all members of these firms because it was the last draw from the well.
5. TARP money came into the firms to pay for the bonuses.
6. Where TARP was repaid it came from stock and bond issue.
7. Therefore the public paid for the bonuses on a flow of funds basis.
8. Flow of funds is the true measure.
9. Now all investment banks will have to do business to profit. Their only business left that can generate real money are credit default swaps and tax fiddling OTC derivatives. Now the prop trading department must be sold so you do not witness the daily major winner flopping big time. The buyers of bank prop trading departments are in for a shock.

Morgan Stanley Said to Freeze Investment-Bank Hiring for 2010 By Michael J. Moore – Sep 27, 2010 10:40 PM PT
Morgan Stanley, the sixth-largest U.S. bank by assets, halted hiring at its investment-banking group for the rest of 2010, a person briefed on the decision said.
The firm ruled out layoffs through the end of the year, the person said, speaking anonymously because the matter hasn’t been publicly disclosed. Jim Wiggins, a spokesman for Morgan Stanley, declined to comment on the hiring freeze. He said the company intends to hire brokers for the Morgan Stanley Smith Barney unit, a joint venture with Citigroup Inc.
The freeze, which includes the New York-based firm’s sales and trading units, comes as weak trading and equity underwriting volume may lead the five largest Wall Street banks to post their lowest revenue from investment banking and trading since the fourth quarter of 2008. Bank of America Corp. is firing as many as 400 employees in its global banking and markets division, a person briefed on the matter said last week.
Fox Business Network reported Morgan Stanley’s decision to suspend hiring yesterday.
Companies including Barclays Capital and Credit Suisse Group AG also have started reducing staff in Europe. Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, bank analyst Meredith Whitney of Meredith Whitney Advisory Group LLC said in a report dated Aug. 31.
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Jim Sinclair’s Commentary
The isn’t a snowballs chance in hell that this will happen, although it should.

Shut Down the Fed (Part II) By Ambrose Evans-Pritchard Economics Last updated: September 27th, 2010
I apologise to readers around the world for having defended the emergency stimulus policies of the US Federal Reserve, and for arguing like an imbecile naif that the Fed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of quantitative easing.
My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America.
We now learn from last week’s minutes that the Fed is willing “to provide additional accommodation if needed to … return inflation, over time, to levels consistent with its mandate.”
NO, NO, NO, this cannot possibly be true.
Ben Bernanke has not only refused to abandon his idee fixe of an “inflation target”,  a key cause of the global central banking catastrophe of the last twenty years (because it can and did allow asset booms to run amok, and let credit levels reach dangerous extremes).
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Jim Sinclair’s Commentary
The legislators pandering to the voters on this issue are both insane and dumb.
What do you expect China to do, sit there and smile?

China May Retaliate for Currency Measure, U.S. Businesses Say By Mark Drajem – Sep 27, 2010 3:41 PM PT
China may retaliate against U.S. businesses operating in the country if Congress passes legislation intended to force a revaluation of the yuan, representatives of those companies said.
China “is looking for another bad guy” after decades of tension with Japan, Robert Roche, the chairman of the American Chamber of Commerce in Shanghai, said at a briefing in Washington yesterday. “We are going to fit that bill.”
The House of Representatives is set to consider legislation this week that would let companies petition for higher duties on imports from China to compensate for the effects of a weak yuan. Representatives of the American Chambers of Commerce in China were in Washington warning congressional aides, administration officials and lobbyists about rising commercial tensions between the nations.
The group includes representatives from the China offices of General Electric Co., Citigroup Inc. and Baxter International Inc.
“This step would make it harder for us to export to China, not easier,” Timothy Stratford, a partner in Beijing at Covington & Burling LLP and a former U.S. trade official, said of the legislation that was approved by the House Ways and Means Committee on a voice vote last week.
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Jim Sinclair’s Commentary
Effort to fight terrorism? Sure.

Money transfers could face anti-terrorism scrutiny By Ellen Nakashima
Washington Post Staff Writer
Monday, September 27, 2010; 2:50 AM
The Obama administration wants to require U.S. banks to report all electronic money transfers into and out of the country, a dramatic expansion in efforts to counter terrorist financing and money laundering.
Officials say the information would help them spot the sort of transfers that helped finance the al-Qaeda hijackers who carried out the Sept. 11, 2001, attacks. They say the expanded financial data would allow anti-terrorist agencies to better understand normal money-flow patterns so they can spot abnormal activity.
Financial institutions are now required to report to the Treasury Department transactions in excess of $10,000 and others they deem suspicious. The new rule would require banks to disclose even the smallest transfers.
Treasury officials plan to post the proposed regulation on their Web site Monday and in the Federal Register this week. The public could comment before a final rule is published and the plan takes effect, which officials say will probably not be until 2012.
The proposal is a long-delayed response to the 2004 Intelligence Reform and Terrorism Prevention Act, which specified reforms to better organize the intelligence community and to avoid a repeat of the 20S01 attacks. The law required that the Treasury secretary issue regulations requiring financial institutions to report cross-border transfers if deemed necessary to combat terrorist financing.
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Jim Sinclair’s Commentary
Your children and grandchildren must learn Mandarin so they can speak with their boss.

US Is ‘Practically Owned’ by China: Analyst Published: Monday, 27 Sep 2010 | 6:08 AM ET
By: Antonia Oprita
Web Producer, CNBC.com
The US supremacy as the top world economy will end sooner than many people believe, so gold is a better investment than the dollar despite it hitting a new record, Tom Winnifrith, CEO at financial services firm New Rivington Street Holdings, told CNBC.com Monday.
Gold hit a new record high Monday and silver rose to another 30-year peak as investors were worried about the dollar weakening further after the Federal Reserve hinted at more quantitative easing last week.
The US trade deficit and debt continue to grow and the authorities are reluctant to address the problem, preferring to print money, Winnifrith said.
"America is practically owned by China," he said.
He reminded of the fact that in 1900, sterling was the world’s reserve currency but by 1948, that was no longer the case as the British Empire collapsed.
"America is doing what Britain did," Winnifrith said. "America spends much more than it can afford and it’s not addressing the issue."
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Jim Sinclair’s Commentary
Now let’s see European central bankers turn buyers, which they will.

European Central Banks Halt Gold Sales Published: Monday, 27 Sep 2010 | 4:27 AM ET
By: Jack Farchy, Financial Times
Europe’s central banks have all but halted sales of their gold reserves, ending a run of large disposals each year for more than a decade.
The central banks of the euro zone plus Sweden and Switzerland are bound by the Central Bank Gold Agreement, which caps their collective sales.
In the CBGA’s year to September, which expired on Sunday, the signatories sold 6.2 tons, down 96 per cent, according to provisional data.
The sales are the lowest since the agreement was signed in 1999 and well below the peak of 497 tons in 2004-05.
The shift away from gold selling comes as European central banks reassess gold amid the financial crisis and Europe’s sovereign debt crisis.
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