John Taylor Parallels Current Situation To World War 2, Predicts Global Debt Structure Could Collapse

 

Guest Post: Gold Will Soar as the U.S. Dollar Bubble Bursts

1 of the 2 Administrative Judges at the Commodity Futures Trading Commission Vowed NEVER to Let a Complainant Win. He's Kept His Promise for 20 Years

Fannie, Freddie To Pursue Putbacks, Subpoena JPMorgan, Among Others, In Seeking Loan Level Detail

Mortgage documentation fraud heralds another bank bailout, Rickards tells King World News

 

France Grinds To Literal Halt As Authorities Impose Fuel Consumption Restrictions

 

The Greek Dollar Swap Window
By: Jim Willie CB


Why Is the Gold Price Rising So Fast and So Far?
By: Julian D. W. Phillips, Gold/Silver Forecaster - Global Watch

In The News Today

Posted: Oct 20 2010     By: Jim Sinclair      Post Edited: October 20, 2010 at 10:06 pm
Filed under: In The News

Jim Sinclair’s Commentary
Assuming that Fannie Mae prevails, how many more fraudulent mortgage loans are they holding?
Fannie Mae sued insurance companies, including Great American Financial Resources Inc. and The Travelers Companies, claiming they are responsible for losses on the $131 million Fannie paid for fraudulent mortgage loans. The lawsuit was filed today in federal court in Washington.

In The News Today

Posted: Oct 21 2010     By: Jim Sinclair      Post Edited: October 21, 2010 at 12:10 pm
Filed under: In The News
Jim Sinclair’s Commentary
Don’t demand to see the note, just trust me, I own your house. Now give me your house!


Jim Sinclair’s Commentary
QE to infinity or the financial Black Hole of all time opens wide to swallow the Western world.
Get ready for a landslide of pension fund problems. This article says 10 years until they are broke. I think 10 months is more like it

Chicago faces crisis over pension funding, how to pay for it October 18, 2010 8:50 PM
Much has been made of retiring Mayor Richard Daley’s plan to draw down reserve funds to balance next year’s city budget and how it could burden his successor.
But the chairman of the Finance Committee, Ald. Ed Burke, today talked about a far larger problem. One in four pension funds for city workers will go broke in the next decade, if current funding levels continue and markets don’t improve, and all will be belly up by 2032 if nothing gives.
"It’s similar to watching the house burn down without turning on the fire hydrant," said Burke, 14th, during the first day of hearings on Daley’s proposed $6.15 billion budget. "At the present time, the city pension funds are actually selling assets to meet obligations."
Stabilizing employee pensions long-term would require greater employee contributions, higher taxes, major changes to the pension systems or a combination of those steps. Without relief, the city would have to about double its property taxes for the next 40 years to cover its pension obligations, said Gene Saffold, the city’s chief financial officer.
After his budget address last week, Daley told the Tribune editorial board that he will ask the General Assembly to apply pension reforms enacted this year for teachers and municipal workers to the city’s police officers and firefighters. The changes reduce benefits for new employees and require them to work longer to collect their retirement checks.
More…




Jim Sinclair’s Commentary
Nice to see someone stand up to the Banksters.
The points of their demonstrations are logical, however bloodsuckers want blood, not logic.

Foreclosure-Gate Related Disruptions at American Bankers Association Annual Meeting
The first signs that Foreclosure-Gate can lead to problem protests for bankers came earlier this week in Boston. Wednesday, October 20, 2010
Tuesday morning, three women dressed as bankers, from a group they identified as the "Alliance to Develop Power"– TC Eckstine, Jamie Sadiq, and Caroline Murray – took turns interrupting the plenary session of  American Bankers Association annual meeting.   Over 1,000 bankers were in attendance at the event which took place in the Hynes Convention Center in Boston.
The three demanded of  the ABA a somewhat contradictory set of items from the modification of current loans to demands that more loans be issued. Specifically, the three called on the ABA to:
Fix the foreclosure crisis and move millions of families into fair mortgage modifications with principal write-downs.
Invest responsibly and sustainably in community-led economic development projects to create jobs.
Stop bankrupting taxpayers and communities.
More…

Market Commentary From Monty Guild

Posted: Oct 21 2010     By: Monty Guild      Post Edited: October 21, 2010 at 12:04 pm
Filed under: Guild Investment
Dear CIGAs,
The U.S. hopes to lower the value of the dollar to improve exports
Here is how they do it:

Please notice the chart reflecting the trends in the holdings of U.S. treasury debt by Japan, China, and the U.S.  This chart tells the story of what is happening to the U.S. dollar and the U.S. economy.
You will notice that Japan is increasing their holdings of U.S. debt.  This means they are buying U.S. debt, selling yen to keep the value of the yen from rising too much.  It seems clear to us that the Japanese exporters are suffering greatly as the yen has risen to high after high and they are pressuring the Japanese government to do something to get the yen down.  Despite their efforts, the yen has continued to strengthen.  How long will this continue if it’s ineffectual?
The Chinese, on the other hand, have been decreasing their ownership of U.S. government securities for over a year.  They decreased their holdings from $983 billion in Sept 2009 to $846 billion in July 2010 (which is the latest data in the chart).  It is no secret that the Chinese have been diversifying their large reserves away from being so concentrated in U.S. dollars
Meanwhile, the U.S. Federal Reserve is now increasing their purchases of U.S. treasuries, and are planning to do a lot more of it in the near future.  This is quantitative easing—pumping money into the U.S. system—and it is a primary reason, the dollar is, and will continue to be, weak.
As you know, if the supply of an asset or commodity rises and the demand stays the same, the price will fall.  In this case, the asset or commodity is U.S. dollar denominated treasury bonds.  Large budget deficits are increasing the supply of these U.S. dollar denominated bonds each month.  For now, Japan is increasing their holding, but it looks like the appetite for these bonds from other countries is waning.  This is a key reason the price of the U.S. dollar is falling.
India to allow foreign retail investors to buy Indian stocks
India’s Fabian socialism is slowly giving way, and foreign retail investors may soon be welcomed into the Indian equity market.  Guild Investment Management is a registered Foreign Institutional Investor (FII) in India.  We went through the registration process twice, and remember the inefficiency, expense, and hassle of going through the permitting process to get registered.  The process was filled with delays, occasional surprise government taxes or fees, and bureaucratic hoop-jumping.  When we did it in 2007, the process was slow, but when we did it in the mid 1990’s, the process was laughable.  This makes us hopeful that they are moving in the direction of opening more to foreigners, and making it fairly easy for international investors to invest.  If they do this it would be a major improvement for Indian stocks; sending them much higher.
U.S. financial authorities are frightened that U.S. may fall, like Japan, into a prolonged deflation
Clearly, U.S. Federal Reserve officials are frightened that the U.S. may be falling into a Japan-like deflationary environment, and that it may last for many years.  The Japanese stagnation and deflation cycle has lasted for 21 years, and is not near ending.  Those visiting Japan today know what I am talking about.  The entire nation is suffering from a depression about the future prospects of the nation and its people.
As we mentioned two letters ago, we believe that Federal Reserve officials will try to create inflation in order to reverse the deflationary trend toward which the U.S. is moving.  Currently, core inflation is at a 29-year-low.  All of the following data points argue for more inflationary activity and targeting:  a deleveraging banking system; consumers who save and cut spending; a foreclosure crisis on home loans (which means lower home prices); and an increased popular movement towards greater public sector austerity.
The Fed’s actions are intended to get the consumer into an inflationary psychology, in which investing, spending, and expanding business are paramount, rather than the retrenching, deleveraging, saving, and cost-cutting psychology.
If they are successful in doing so, we can avoid going through what Japan is.  If not, we could see a long and devastating deflation in the U.S.  As we have been stating for years, politicians will never consciously opt for deflation, since deflation ruins political careers and destroys the hope and verve of a nation.
We expect more quantitative easing (QE), and inflation targeting at 2% or more (up from the current 1% target).  We believe the Fed wants to allow inflation to rise to 3%, before they need to reign in any inflationary tendencies.
Tuesday’s panic about the fact that China raised interest rates by .25% is absurd.
To say that the market’s reaction was overblown is an understatement, and it was evident Wednesday, when many markets turned higher again.  China will not stop growing because of this or even if rates were raised by an equal amount once a week for a month.
In China, interest rates are still below the inflation rate that most Chinese believe really exists.  As in the U.S., official Chinese inflation statistics are inadequate.  Chinese GDP growth will be strong in 2010 and for the next few years.  Any decline in the Asian markets over the next few days or weeks created by reaction to this raise of interest rates will create buying opportunities.
China’s New 5 Year Plan
Growth is still the priority and it will focus on westward development in its interior regions with emphasis on technology and on critical industries.  We believe this means an increased focus on mining resources and building their military.  About $600 billion has been set aside for these areas thus far.
China’s plan will boost the social welfare of migrants from inland to the big cities and shift more migrants into urban residential status.  This will also mean higher monetary compensation for farmers if their land is expropriated by urban development, and the opening of non-crucial sectors for more private investment.  Social well-being is also highlighted, including housing for the poor, infrastructure build out, more roads, dams, bridges, ports, airports, railroads, etc.
Rumors about bad debts in China are clarified
For months there have been rumors of large bad debts had been created by city and provincial governments connected with borrowing to finance real estate projects such as government buildings and high-rise office buildings.  China has done an audit and found up to $500 billion of potentially bad debts.  This is a much smaller amount than some of the rumors have proposed.
China has the reserves and the economic growth rate to manage some bad debt issues.  China’s total holdings of foreign bonds and currencies have risen to $2.6 trillion dollars.
This new high level of reserves reflects a small number of loans to the U.S. government and to its agencies.  The Chinese have been diversifying their holdings to include more euro bonds and more bonds of the numerous countries with whom they trade.  This is why the smaller countries in Southeast Asia and Australian currencies have been rising so rapidly: both the Chinese buying and the knowledge of this buying, which causes investors like us to buy the non-U.S. currencies.
Our Recommendations:
Investors should continue to hold gold for long-term investment.  It will move to $1500 and then higher.  Traders sell spikes and buy dips.  Gold-related news:  South Korea decided this week to increase the percentage of gold in their investment portfolio these purchases could be substantial.  China continues to buy gold.
Investors should continue to hold oil.  Oil-related news:  Positive U.S. onshore inventories are neutral and offshore inventories held in tankers have declined substantially.  A negative news event is that there will be an increasing supply from Iraq.
Currencies:  For long-term investment, we do not like the U.S. dollar, the Japanese yen, British pound or the Euro.  We do like Canadian, Australian, and Singapore dollars, the Thai baht, Malaysian ringgit, and Indonesian rupiah.  We would use the current pull-back in the favored currencies as an opportunity to establish long-term positions.
Investors should continue to hold shares in India, China, Singapore, Malaysia, Thailand, Indonesia, Colombia, Chile, and Peru.  We would use any pull-backs as an opportunity to add or initiate positions for long-term investors.
Investors should continue to hold food-related shares such as grains, wheat, corn, soybeans, and farm suppliers.
Continue to hold U.S. stocks for a further rally.  U.S. liquidity formation through QE will create demand for many assets, including U.S. stocks.
All of these recommendations have unrealized profits.  All of these positions are long-term recommendations; traders may want to sell rallies and buy dips.
A new recommendation is for investors to cover the short on Japanese yen.  The Japanese just do not have the resources nor the political willpower to fight against further price rises in the yen.  We have been wrong lately on our recommendation to sell short the yen after it has risen about 4% over the past 5 weeks since we said we were bearish on it.  We continue to see the yen as overvalued, but it can stay overvalued longer than we had anticipated.
Another new recommendation is that we are less bearish on U.S. long-term bonds.  We are removing our bearish view on long-term U.S. government bonds.  30-year U.S. treasuries have been volatile, but they not appreciated or depreciated from the point where we recommended that they be sold in August.
Why the change in recommendation?  We still believe that too many bonds are being issued, and that the U.S. Federal Reserve has begun to target a higher inflation rate than we have currently experienced in the U.S.  Both of these views are bearish on bonds longer term, however, we are also seeing positives that balance out some of the negatives.  The first is the view that more QE is likely to occur, and the second is the fact that many pessimists believe that the U.S. economy will sink into depression, both of which are creating a strong demand for bonds.  Thus, our current opinion is that we believe that it is too early to sell them short.  The day will come for that, but it is not yet here.
Thanks for listening.
Monty Guild and Tony Danaher
www.GuildInvestment.com