Securitized Mortgage Debt: The Shot That Will Kill Many Financial Entities

Posted: Oct 11 2010     By: Jim Sinclair      Post Edited: October 11, 2010 at 8:40 pm
Filed under: General Editorial

Dear CIGAs,
I am asking for your attention again because of the depth of the fraud and now the size of the securitized mortgage debt OTC derivative pile of garbage that is in the trillions. This entire mountain of weapons of mass financial and social destruction is now in question. I have been telling you this for more than 2 years since the manufacturers and distributors of this crap were called by the NY Fed due to the loss of control over the paperwork.
I had dinner with my former partner, then lead director of and CEO of Bear Stearns. I could not contain myself so I asked him why he did so much business in OTC derivatives which were certain to bankrupt them. The answer I got was it was more than 50% of their profit. The right answer should have been it was more than 80% of their earnings.
Securitized mortgage debt is going to be the final shot that kills all kinds of financial entities in the Western world. The biggest holder of this putrid junk is pension funds.
Please! If you have not listened to all of the following video, do.
Please forward this to your friends.
The fellow with the sign that says the world is going to end is WRONG. Financially, it ended with the flushing of Lehman
Father, before you forgive them, please consider that they knew exactly what they were doing.
This is the largest fraud in the history of capital markets with the facts outlined with humor.
Click here to watch the video…


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Hourly Action In Gold From Trader Dan

Posted: Oct 11 2010     By: Dan Norcini      Post Edited: October 11, 2010 at 2:00 pm
Filed under: Trader Dan Norcini
Dear CIGAs,
The push from the 77 level on the USDX looks suspicious to me as the Dollar was spanked rather rudely last evening after the end of the weekend summit which amounted to a gigantic waste of time. It is a given that no one is happy with what is taking place in the Forex markets.
Brazil was active this morning buying up Dollars in an attempt to keep its Real from continuing to levitate higher while the Europeans continue to complain about their Euro bearing the brunt of the currency wars, especially considering the fact that so many of the member countries of the EU are nowhere near being out of the woods on their own sovereign debt woes.
Price movements of the nature we are seeing in the currency markets, especially on the lack of market moving news, therefore are always to be viewed with a great deal of suspicion. It is a given that Central Banks around the globe are becoming more and more active in the foreign exchange arena.
It looks to me like gold might be waiting to see if the Dollar is going to crash through 77 and stay down there before it resumes moving higher and heading towards $1,380. While it is a given that the market is expecting another round of Federal Reserve QE, some are yakking about “potential surprise improvements” in coming data releases that would serve to put the Fed on hold for a while longer and thereby threaten the massive speculative short position in the US Dollar. While anything is possible, given the compounding of the woes involved with the mortgage backed securities fiasco, it is also extremely unlikely that any move higher in the Dollar would be anything more than a dead cat bounce.
By the way, since we have all become convinced that there are effectively or realistically no mortgages backing the so-called “mortgage backed securities” (if the glove does not fit – you must acquit; if the clear owner cannot be disclosed, you cannot foreclose) perhaps we are all finally realizing that what we are in effect witnessing and have been witnessing for 2 years now,  is the modern day equivalent of the ancient Alchemy movement. Back then it was the mystic belief that the baser, more common materials could be transmuted into gold thereby filling the coffers of those fortunate enough to unravel the great secret with untold wealth and power. Fast forward to modern times – the banks have attempted to transmute mountains of paper into mountains of wealth. They have “separated” and then “joined together” various scraps of paper debt and made billions pedaling this stuff around the globe. Financial Alchemy was born.
It does appear however that these modern day descendants of that practice are going the same way as their more ancient predecessors.
That brings us to gold – more fears about further currency wars and continued dilution of paper currencies is keeping gold well bid even as it hesitates to make a new all time high in Dollar terms (it did however set a new lifetime high at this afternoon’s London PM Fix). The pit session close above $1,350 keeps it on track for a break of its recent high and should allow it to push on towards $1,380. Today was the highest closing price of gold ever! Support on the downside remains unchanged first near $1,330 followed by $1,320 – $1,315.
Silver continues its impressive display of strength steadily pushing higher and further away from $23. It set another fresh 30 year high near $23.67 overnight and held a fair amount of those gains even in the New York session.
The HUI however is the weak link in the chain continuing to struggle with that region near 520. We need to see it push away from there to the upside and hold above that level for several more sessions to get a clear and sustained leg higher. Apparently those who have lived by the ratio trade are intent on dying by it. I suppose they will have to be carried off the playing field instead of walking off under their own power. In other words, if they were smart, they would get out while they can and eat the paper loss to prevent taking an even deeper loss later.
Incidentally, those of you interested in watching the moves in food prices should know that corn hit its expanded limit to the upside in overnight trade before setting back some. It reached $5.73 bushel and is not far from putting a handle of “6” on itself. Soybeans are nearing $12 with wheat above $7.00.
Once again cotton hit limit up as its price continues getting ridiculously high yet there appears to be no end in sight to the buyers. Analysts are blaming it on China which is buying up all the cotton it can get its hand on and which probably scarfed up the stuff India was making available for export. I guess we are all going to have to switch soon to polyester underwear. Yuk! Forget the cotton/ploy blends – maybe the tag on the back of the shirt will be cotton but that will probably be it! Maybe the alchemists have turned cotton into gold. At least it must seem like that for US growers of the fiber!
Crude oil gave up its gains as the Dollar came off its lows and worked a bit higher. It is continuing to struggle with the $83 level and until it clears it by a wide enough margin or holds above it for at least two-three consecutive sessions, it appears more range bound than anything. As is the case with gold, crude will probably require a Dollar move lower 77 to catapult it convincingly past $83.
Bonds are dead in the water going nowhere in today’s session. The thinking is that they have already factored in the QE move by the Fed so they need another catalyst to kick them higher. The downside appears well supported for now. Any change in the US data releases that might seem to contradict any need of further QE would result in a sell off.
Click chart to enlarge today’s hourly action in Gold in PDF format with commentary from Trader Dan Norcini