Willem Buiter: The US Must Prepare For Savage Austerity 

 

No Option But QE To Infinity

Posted: Oct 21 2010     By: Jim Sinclair      Post Edited: October 21, 2010 at 2:45 pm
Filed under: General Editorial
My Dear Friends,
The weakness that the shorts on the Comex have taken advantage of is the many comments, almost every day, by highly placed people around the world stating that the Fed is making a huge error by utilizing QE.
The dollar today has not rallied enough to account for the gold price decline. The 30 Year Treasury Bills indicate that economic news is not a factor.
What you need to focus on is the fact that the Federal Reserve has no other option but to go with QE to infinity.
QE never ended, it only became camouflaged through the methods it was utilized such as guaranteeing everything in sight.
What the market anticipates is more on the down low commentary by the Fed concerning QE. Remember that the Fed sees things within the US financial system that even other governments cannot such as the real risk of the rollover of securitized mortgage debt OTC derivative instruments.
You are witnessing the beginning of a period in the gold price that will be marked by totally outrageous volatility. I have told you many times I have no doubt whatsoever about gold trading at $1650.
Historically I have done well with price objectives on gold. I will do well this time around. If I had any concern it would be that I am much too conservative in my objectives.
Bert Seligman had a great lesson to teach when he said "The weak succumb, the strong survive."
From me personally to you, stand strong!
Regards,
Jim

Happy days are here again...oh wait...really...Damn....

Fannie and Freddie may need another $215 billion CIGA Eric
This is certainly dollar friendly, right? Don’t think so.
Fannie Mae (OTC BB:FNMA.OB – News) and Freddie Mac (OTC BB:FMCC.OB – News) may need as much as $215 billion in additional capital from the Treasury through 2013 to offset losses and maintain a positive net worth, their federal regulator said on Thursday.
Source: finance.yahoo.com
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Goldman Advises Clients To Front Run The Fed Via POMO

 

Jim Sinclair’s Commentary

The G20 says no before they even meet.

U.S. plan hits opposition at G20, FX accord remote By Abhijit Neogy and Toni Vorobyova
GYEONGJU, South Korea (Reuters) – G20 officials are unlikely to reach an accord rejecting currency devaluations and capping current account balances, an informed source said on Thursday, after U.S. proposals ran into stiff opposition.
The swift rebuff of a U.S. call for numerical targets for "sustainable" trade surpluses and deficits underscored difficulties facing Group of 20 finance ministers gathering in South Korea to try to defuse tensions over currencies and economic imbalances.
The G20 source, who has direct knowledge of deliberations at the meeting, said the proposals had not found favor with India, China and other emerging economies, or even the likes of Germany, which has a large current account surplus.
In an interview with the Wall Street Journal, U.S. Treasury Secretary Timothy Geithner called for an agreement on exchange rate policy "norms."
"Right now, there is no established sense of what’s fair," he told the paper. "We would like countries to move toward a set of norms on
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Jim Sinclair’s Commentary
QE to infinity has one more guarantee here.


Why California is About to Fall Off Into an Ocean of Unpayable Debt TUESDAY, OCTOBER 19, 2010
Perry Wong, Director of Regional Economics at the Milken Institute is co-author of a new report,  Addressing California’s Pension Shortfalls: The Role of Demographics in Designing Solutions. His conclusion:
We’re talking about a perfect storm: more state services needed for an aging population, a workforce that will spend more years in retirement than they did contributing to the funds, and a smaller ratio of working-age taxpayers and contributing state workers to pay for it all.
Some of the key findings in the report include:
• By around 2012 or 2013, the three major state pensions’ obligations will be more than five times as large as total state tax revenue.
• Not only will California’s growing senior population depend on Medi-Cal and other state services, but public school enrollment is likely to rise in the coming years. The state can ill afford to fund pensions by cutting back on these services.
• In 2009, the pension liability came out to $3,000 per working-age adult in the state. By 2014, it will triple to over $10,000 per working-age Californian.
• Raising employee contributions alone will be less effective over time as the ratio of actively contributing members to benefit recipients continues to decrease.
• Currently, the average state employee contributes to the system for 25 years, but will receive benefits for 26 years — and the number of benefit-receiving years is increasing as longevity improve
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Jim Sinclair’s Commentary
Here is a piece of evidence that shouts the mortgage debt mess is deep and permanent.
Fidelity National to Require Banks to Sign Foreclosure Warranty By Danielle Kucera – Oct 20, 2010 2:30 PM PT
Fidelity National Financial Inc., the largest U.S. title insurer by market share, will require lenders to sign a warranty assuring their paperwork is sound before backing sales of foreclosed homes.
An indemnity covering “incompetent or erroneous affidavit testimony or documentation” must be signed for all foreclosure sales closing on or after Nov. 1, the Jacksonville, Florida- based company said in a memorandum to employees today. The agreement was prepared in consultation with the American Land Title Association and mortgage finance companies Fannie Mae and Freddie Mac, Fidelity National said.
“It’s just the prudent thing to do,” Peter Sadowski, executive vice president and chief legal officer for Fidelity National, said in an interview. “It is important for the servicers and the lenders to represent to us and to the people we are going to be insuring that there are no problems.”
Bank of America Corp., the biggest U.S. lender, agreed to a similar contract with Fidelity National on Oct. 8, the same day it extended a freeze on foreclosures to all states amid concern by federal and state officials that lenders are seizing homes without properly reviewing documents. The bank plans to start resubmitting foreclosure affidavits next week. Attorneys general across the country have opened a joint investigation into foreclosures, saying they will seek an immediate halt to any improper practices at mortgage lenders and loan servicers.
Fidelity National, in separate announcements today, named a new chief executive officer and said that its earnings rose 13 percent in the third quarter.
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Jim Sinclair’s Commentary
When the public sees litigation starting against the Banksters that stuffed pension funds with fraudulent securitized mortgage debt OTC derivatives, more will start to act.
Pension fund managers have a fiduciary legal obligation, so they must litigate to prevent being litigated themselves.
Do not let the MOPE that this is not really a serious problem interfere with your better judgement.

Regulator for Fannie Set to Get Litigious By NICK TIMIRAOS
* OCTOBER 21, 2010
The federal regulator overseeing Fannie Mae and Freddie Mac hired a law firm specializing in litigation as the agency considers how to move forward with efforts to recoup billions of dollars on soured mortgage-backed securities purchased from banks and Wall Street firms.
The Federal Housing Finance Agency, which in July issued 64 subpoenas to issuers of mortgage securities, bank servicing companies and other entities, is working with Quinn Emanuel Urquhart & Sullivan LLP, a Los Angeles-based firm that specializes in business litigation, to coordinate its investigations.
In a statement, the FHFA said it is analyzing requested information and that "no decisions for future action have been made." Quinn Emanuel confirmed its hiring by FHFA but declined to comment further.
Since the financial crisis, 400-lawyer Quinn Emanuel has avoided building a banking clientele, making it a top suitor for plaintiffs pursuing banks. The firm has represented MBIA Insurance Corp. in several lawsuits against top U.S. mortgage banks alleging that the insurer was fraudulently induced to cover losses on mortgage-backed securities. Those cases are ongoing.
The FHFA hasn’t disclosed the targets of its subpoenas, though some banks have acknowledged receiving them, including J.P. Morgan Chase & Co. The probe is focused on so-called private-label securities that were originated by mortgage companies, packaged by Wall Street firms and then sold to investors.
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Jim Sinclair’s Commentary
The so highly touted Volt will be GM’s biggest historical bomb. Any gear head knows this.

Volt Fraud At Government Motors Posted 10/19/2010 06:55 PM ET
Green Technology: Government Motors’ all-electric car isn’t all-electric and doesn’t get near the touted hundreds of miles per gallon. Like "shovel-ready" jobs, maybe there’s no such thing as "plug-ready" cars either.
The Chevy Volt, hailed by the Obama administration as the electric savior of the auto industry and the planet, makes its debut in showrooms next month, but it’s already being rolled out for test drives by journalists. It appears we’re all being taken for a ride.
When President Obama visited a GM plant in Hamtramck near Detroit a few months ago to drive a Chevy Volt 10 feet off an assembly line, we called the car an "electric Edsel." Now that it’s about to hit the road, nothing revealed has changed our mind.
Advertised as an all-electric car that could drive 50 miles on its lithium battery, GM addressed concerns about where you plug the thing in en route to grandma’s house by adding a small gasoline engine to help maintain the charge on the battery as it starts to run down. It was still an electric car, we were told, and not a hybrid on steroids.
That’s not quite true. The gasoline engine has been found to be more than a range-extender for the battery. Volt engineers are now admitting that when the vehicle’s lithium-ion battery pack runs down and at speeds near or above 70 mph, the Volt’s gasoline engine will directly drive the front wheels along with the electric motors. That’s not charging the battery — that’s driving the car.
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Why Inflation is Always a Bad Thing
By: Richard Daughty, The Mogambo Guru