Posted: Oct 04 2010 By: Jim Sinclair Post Edited: October 4, 2010 at 4:53 pm
Filed under: General Editorial
Dear CIGAs,
The following is BREAKING NEWS:
Racketeering suits (RICO), now as civil class action suits in two states, have hit the nail on the head. The civil suit says the banks do not have proper title to the homes on which they are foreclosing. This by direct inference questions if securitized debt on mortgages have real collateral behind them.
Simply stated a long time ago by Marie McDonnell and myself, THEY DO NOT.
That means legacy assets are cooked, dead, and worthless, yet are now marked up in value to cost and above. This is all thanks to FASB’s capitulation that now represents a large amount of capital for the Western world’s financial entities.
The you know what hit the fan today for those that understand. October 4th 2010, the essence of securitized debt on mortgages died!
That alone gives you gold at $1650.
Exclusive: Recording Of Brian Lenihan's Citi Conference Call With Perturbed Investors
Submitted by Tyler Durden on 10/04/2010 12:38 -0500Filed under: General Editorial
Dear CIGAs,
The following is BREAKING NEWS:
Racketeering suits (RICO), now as civil class action suits in two states, have hit the nail on the head. The civil suit says the banks do not have proper title to the homes on which they are foreclosing. This by direct inference questions if securitized debt on mortgages have real collateral behind them.
Simply stated a long time ago by Marie McDonnell and myself, THEY DO NOT.
That means legacy assets are cooked, dead, and worthless, yet are now marked up in value to cost and above. This is all thanks to FASB’s capitulation that now represents a large amount of capital for the Western world’s financial entities.
The you know what hit the fan today for those that understand. October 4th 2010, the essence of securitized debt on mortgages died!
That alone gives you gold at $1650.
Exclusive: Recording Of Brian Lenihan's Citi Conference Call With Perturbed Investors
Hussman: Current Market Is a Ponzi Scheme
Economist John Hussman says the current market is a Ponzi scheme. “The U.S. financial system appears to be a nicely painted dam, behind which a massive pool of delinquent debt is obscured,” he says.
GENEVA (Reuters) - The world's wealthiest people have responded to economic worries by buying bars of gold, sometimes by the ton, and moving assets out of the financial system, bankers catering to the
Jim Sinclair’s Commentary
The game I outlined to you on follow the money to understand what happened with rescue money and fake mark up profits of trash assets is as true in Switzerland as it is in the USA.
Don’t rule out that all major financial entities in the Western world will need another bailout.
Don’t Rule Out Swiss Banking Bailout, Despite Tougher Capital Rules OCTOBER 4, 2010, 10:01 AM GMT
By Goran Mijuk
The Swiss, fearing their economy could collapse under the failure of one of their large banks, have roughly doubled up capital requirements for UBS and Credit Suisse, asking each bank to hold some 75 billion Swiss francs in capital, in common equity and new financial instruments called contingent convertible bonds.
The strict rules, known as “Swiss finish” to the new Basel III banking rules, are, however, less stringent than many investors and analysts had feared, because the amount of common equity to be held by the two banks is only slightly higher than prescribed under the international rules.
Instead of holding 7% in common equity against risk-weighted assets, UBS and Credit Suisse will have to own 10% of common equity, something which both banks are expected to attain shortly after the new measures are expected to come into effect in 2013.
More…
Jim Sinclair’s Commentary
Here is a pregnant crisis just waiting to give delivery of another spiritual experience to the Western world.
Credit default swaps are truly the spawn of Satan. They grow and grow until they have consumed all life on planet Earth. Rumor has it this is what ended life on Mars.
DERIVATIVES: Rates compression hits US$40trillon 04 October 2010
Notional volume of interest rate swap terminations has hit more than US$40trn so far this year, easily surpassing the US$26.7trn completed through the whole of 2009 according to the latest figures from derivatives trade processing company TriOptima.
More…
Jim Sinclair’s Commentary
First all is getting better, then things are recovering slowly, and now the USA is stuck as in going sideways.
Next comes the admission of an economic freefall.
IMF admits that the West is stuck in near depression
If you strip away the political correctness, Chapter Three of the IMF’s World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time. By Ambrose Evans-Pritchard
Published: 8:00PM BST 03 Oct 2010
The IMF report – "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation" – implicitly argues that austerity will do more damage than so far admitted.
Normally, tightening of 1pc of GDP in one country leads to a 0.5pc loss of growth after two years. It is another story when half the globe is in trouble and tightening in lockstep. Lost growth would be double if interest rates are already zero, and if everybody cuts spending at once.
"Not all countries can reduce the value of their currency and increase net exports at the same time," it said. Nobel economist Joe Stiglitz goes further, warning that damn may break altogether in parts of Europe, setting off a "death spiral".
The Fund said damage also doubles for states that cannot cut rates or devalue – think Spain, Portugal, Ireland, Greece, and Italy, all trapped in EMU at overvalued exchange rates.
"A fall in the value of the currency plays a key role in softening the impact. The result is consistent with standard Mundell-Fleming theory that fiscal multipliers are larger in economies with fixed exchange rate regimes." Exactly.
More…
Jim Sinclair’s Commentary
The fizz is out of the bottle for fiscal and monetary stimulus.
Cheap Debt for Corporations Fails to Spur Economy By GRAHAM BOWLEY
Published: October 3, 2010
As many households and small businesses are being turned away by bank loan officers, large corporations are borrowing vast sums of money for next to nothing — simply because they can.
Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.
The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.
This situation underscores the limits of Washington policy makers’ power to stimulate the economy. The Federal Reserve has held official interest rates near zero for almost two years, which allows corporations to sell bonds with only slightly higher returns — even below 1 percent. But most companies are not doing what the easy monetary policy was intended to get them to do: invest and create jobs.
The Fed’s low rates have in fact hurt many Americans, especially retirees whose incomes from savings have fallen substantially. Big companies like Johnson & Johnson, PepsiCo and I.B.M. seem to have been among the major beneficiaries.
More…
Jim Sinclair’s Commentary
This is an interesting, but not necessarily a viable comparison, but the point he is making is correct
‘Black Swan’ Author Says Dubai More Robust Than U.S. October 04, 2010, 5:12 AM EDT
By Camilla Hall
(Updates with quote in second paragraph)
Oct. 4 (Bloomberg) — Nassim Nicholas Taleb, whose book “The Black Swan” described how unforeseen events can roil global markets, said Dubai’s economy is more robust than that of the U.S. as its debt problem can be “controlled.”
“Even if you take perhaps the worst of emerging markets, a place like Dubai, you realize Dubai is more robust than the United States,” Taleb said at a mutual funds conference in Manama, Bahrain today. “Dubai has been borrowing to put buildings on postcards. It can stop that, but America needs to borrow just to open the doors in the morning. That’s why I’m not comfortable with the United States.”
Prior to the collapse of Lehman Brothers Holdings Inc. in September 2008, Taleb warned that bankers were relying too much on probability models and were disregarding the potential for unexpected catastrophes. His book labeled these events black swans, referring to the widely held belief that only white swans existed until black ones were discovered in Australia in 1697, and said that they were becoming more severe.
“Dubai, they’re not depending on debt, it’s not a chronic debt, it’s not like the American person who has this dependency on debt and has been building it since the 80s,” Taleb, a former derivatives trader, said. “It’s not a great model but it’s more robust than the United States, simply because their debt situation can be controlled a lot better than the U.S.”
More…
The game I outlined to you on follow the money to understand what happened with rescue money and fake mark up profits of trash assets is as true in Switzerland as it is in the USA.
Don’t rule out that all major financial entities in the Western world will need another bailout.
Don’t Rule Out Swiss Banking Bailout, Despite Tougher Capital Rules OCTOBER 4, 2010, 10:01 AM GMT
By Goran Mijuk
The Swiss, fearing their economy could collapse under the failure of one of their large banks, have roughly doubled up capital requirements for UBS and Credit Suisse, asking each bank to hold some 75 billion Swiss francs in capital, in common equity and new financial instruments called contingent convertible bonds.
The strict rules, known as “Swiss finish” to the new Basel III banking rules, are, however, less stringent than many investors and analysts had feared, because the amount of common equity to be held by the two banks is only slightly higher than prescribed under the international rules.
Instead of holding 7% in common equity against risk-weighted assets, UBS and Credit Suisse will have to own 10% of common equity, something which both banks are expected to attain shortly after the new measures are expected to come into effect in 2013.
More…
Jim Sinclair’s Commentary
Here is a pregnant crisis just waiting to give delivery of another spiritual experience to the Western world.
Credit default swaps are truly the spawn of Satan. They grow and grow until they have consumed all life on planet Earth. Rumor has it this is what ended life on Mars.
DERIVATIVES: Rates compression hits US$40trillon 04 October 2010
Notional volume of interest rate swap terminations has hit more than US$40trn so far this year, easily surpassing the US$26.7trn completed through the whole of 2009 according to the latest figures from derivatives trade processing company TriOptima.
More…
Jim Sinclair’s Commentary
First all is getting better, then things are recovering slowly, and now the USA is stuck as in going sideways.
Next comes the admission of an economic freefall.
IMF admits that the West is stuck in near depression
If you strip away the political correctness, Chapter Three of the IMF’s World Economic Outlook more or less condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Britain and America in slump for a long time. By Ambrose Evans-Pritchard
Published: 8:00PM BST 03 Oct 2010
The IMF report – "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation" – implicitly argues that austerity will do more damage than so far admitted.
Normally, tightening of 1pc of GDP in one country leads to a 0.5pc loss of growth after two years. It is another story when half the globe is in trouble and tightening in lockstep. Lost growth would be double if interest rates are already zero, and if everybody cuts spending at once.
"Not all countries can reduce the value of their currency and increase net exports at the same time," it said. Nobel economist Joe Stiglitz goes further, warning that damn may break altogether in parts of Europe, setting off a "death spiral".
The Fund said damage also doubles for states that cannot cut rates or devalue – think Spain, Portugal, Ireland, Greece, and Italy, all trapped in EMU at overvalued exchange rates.
"A fall in the value of the currency plays a key role in softening the impact. The result is consistent with standard Mundell-Fleming theory that fiscal multipliers are larger in economies with fixed exchange rate regimes." Exactly.
More…
Jim Sinclair’s Commentary
The fizz is out of the bottle for fiscal and monetary stimulus.
Cheap Debt for Corporations Fails to Spur Economy By GRAHAM BOWLEY
Published: October 3, 2010
As many households and small businesses are being turned away by bank loan officers, large corporations are borrowing vast sums of money for next to nothing — simply because they can.
Companies like Microsoft are raising billions of dollars by issuing bonds at ultra-low interest rates, but few of them are actually spending the money on new factories, equipment or jobs. Instead, they are stockpiling the cash until the economy improves.
The development presents something of a chicken-and-egg situation: Corporations keep saving, waiting for the economy to perk up — but the economy is unlikely to perk up if corporations keep saving.
This situation underscores the limits of Washington policy makers’ power to stimulate the economy. The Federal Reserve has held official interest rates near zero for almost two years, which allows corporations to sell bonds with only slightly higher returns — even below 1 percent. But most companies are not doing what the easy monetary policy was intended to get them to do: invest and create jobs.
The Fed’s low rates have in fact hurt many Americans, especially retirees whose incomes from savings have fallen substantially. Big companies like Johnson & Johnson, PepsiCo and I.B.M. seem to have been among the major beneficiaries.
More…
Jim Sinclair’s Commentary
This is an interesting, but not necessarily a viable comparison, but the point he is making is correct
‘Black Swan’ Author Says Dubai More Robust Than U.S. October 04, 2010, 5:12 AM EDT
By Camilla Hall
(Updates with quote in second paragraph)
Oct. 4 (Bloomberg) — Nassim Nicholas Taleb, whose book “The Black Swan” described how unforeseen events can roil global markets, said Dubai’s economy is more robust than that of the U.S. as its debt problem can be “controlled.”
“Even if you take perhaps the worst of emerging markets, a place like Dubai, you realize Dubai is more robust than the United States,” Taleb said at a mutual funds conference in Manama, Bahrain today. “Dubai has been borrowing to put buildings on postcards. It can stop that, but America needs to borrow just to open the doors in the morning. That’s why I’m not comfortable with the United States.”
Prior to the collapse of Lehman Brothers Holdings Inc. in September 2008, Taleb warned that bankers were relying too much on probability models and were disregarding the potential for unexpected catastrophes. His book labeled these events black swans, referring to the widely held belief that only white swans existed until black ones were discovered in Australia in 1697, and said that they were becoming more severe.
“Dubai, they’re not depending on debt, it’s not a chronic debt, it’s not like the American person who has this dependency on debt and has been building it since the 80s,” Taleb, a former derivatives trader, said. “It’s not a great model but it’s more robust than the United States, simply because their debt situation can be controlled a lot better than the U.S.”
More…
Posted: Oct 04 2010 By: Jim Sinclair Post Edited: October 4, 2010 at 12:38 pm
Filed under: In The News
Jim Sinclair’s Commentary
This is an interesting, but not necessarily a viable comparison, but the point he is making is correct
‘Black Swan’ Author Says Dubai More Robust Than U.S. October 04, 2010, 5:12 AM EDT
By Camilla Hall
(Updates with quote in second paragraph)
Oct. 4 (Bloomberg) — Nassim Nicholas Taleb, whose book “The Black Swan” described how unforeseen events can roil global markets, said Dubai’s economy is more robust than that of the U.S. as its debt problem can be “controlled.”
“Even if you take perhaps the worst of emerging markets, a place like Dubai, you realize Dubai is more robust than the United States,” Taleb said at a mutual funds conference in Manama, Bahrain today. “Dubai has been borrowing to put buildings on postcards. It can stop that, but America needs to borrow just to open the doors in the morning. That’s why I’m not comfortable with the United States.”
Prior to the collapse of Lehman Brothers Holdings Inc. in September 2008, Taleb warned that bankers were relying too much on probability models and were disregarding the potential for unexpected catastrophes. His book labeled these events black swans, referring to the widely held belief that only white swans existed until black ones were discovered in Australia in 1697, and said that they were becoming more severe.
“Dubai, they’re not depending on debt, it’s not a chronic debt, it’s not like the American person who has this dependency on debt and has been building it since the 80s,” Taleb, a former derivatives trader, said. “It’s not a great model but it’s more robust than the United States, simply because their debt situation can be controlled a lot better than the U.S.”
More…
Jim Sinclair’s Commentary
Do you want to deposit your gold in the gold banks?
Not me. That is truly sleeping with the enemy.
J.P. Morgan reopens vault amid gold demand: report By Myra P. Saefong
Oct. 3, 2010, 9:34 p.m. EDT
TOKYO (MarketWatch) — J.P. Morgan Chase & Co. has reopened an underground gold vault in New York amid soaring demand and prices for gold bullion, according to a report in The Financial Times published Sunday. The vault had been closed since the 1990s. Deutsche Bank AG and Barclays PLC’s, Barclays Capital are also considering opening new vaults in London, the report said. J.P. Morgan opened its first vault in Asia for precious-metals storage in Singapore late last month. Meanwhile, prices for gold continue to climb, with gold for December delivery up $1.50 at $1,319.30 an ounce on Globex in Tokyo’s Monday morning trading. The contract closed at a record $1,317.80 in New York on Friday after tapping a high of $1,322.
More…
Posted: Oct 04 2010 By: Greg Hunter Post Edited: October 4, 2010 at 12:35 pm
Filed under: Greg Hunter, USAWatchdog.com
(Courtesy of Greg Hunter of www.USAWatchdog.com)
Dear CIGAs,
This weekend, Bank of America became the latest lender to delay all foreclosures in 23 states because of possible problems with the necessary documents needed to repossess a home. GMAC Mortgage and JP Morgan Chase have had similar problems recently with documents that prove the bank has the right to foreclose. ADINews.com posted a statement from B of A, “We have been assessing our existing processes. To be certain affidavits have followed the correct procedures, Bank of America will delay the process in order to amend all affidavits in foreclosure cases that have not yet gone to judgment in the 23 states where courts have jurisdiction over foreclosures,” BofA spokesman Dan Frahm said in a statement.” (Click here for the entire ADINews.com story.)
Florida Congressman Alan Grayson says the foreclosure document “problem” is really fraud on a massive scale. He calls what is happening now a “foreclosure fraud crisis” that could affect 60 million properties in the U.S. It is all because the banks have lost track of promissory notes signed by the homeowners. I was the first mainstream media reporter to do a story on this problem in 2008. (Click here for the 2008 “Produce the Note” story from CNN.) Back then, some big banks could not “produce the note” that proved it had the right to take back a home. The problem has gotten much bigger as more homeowners discover the banks do not have the original documents.
After physical paperwork was filled out and signed by the borrower, the banks electronically filed the paperwork into a computerized system called the “Mortgage Electronic Registry System” (MERS). According to Congressman Grayson, 60%, or 60 million, mortgages are in MERS. The banks lost track of the original paperwork, the note, signed by the borrower. That is what actually proves the bank owns the property. Grayson says, “It appears that on a widespread and probably pervasive basis they (the banks) did not take the steps necessary to own the note . . . which means that in 45 out of the 50 states they lack the legal right to foreclose. . . . So they have simply created a system where servicers hire foreclosure mill law firms whose business is to forge documents showing or purporting to show they have a legal right to foreclose.” (Click here for the entire Congressman Grayson video statement from 9/30/10.)
Please take a moment and grasp the enormity of this problem for the banks. There are 60 million homes which banks loaned money on, and now they might not be able to legally get the property back if the homeowner defaults! Another colossal problem for the banks is the trillions of dollars in mortgages bundled into securities. Remember, the banks were giving anyone who could fog a mirror a mortgage which allowed them to create and sell lucrative mortgage backed securities. So, there are trillions of dollars in mortgage backed securities that now could have NO backing! Would you like to be the pension fund manager who bought that security? Do you think this just might cause an accounting problem for the banks? Do you think this could push some of the big banks into bankruptcy? Will there be another financial meltdown and government rescue?
More…
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