The Dire Collapse Taking Place

Posted: Dec 15 2010     By: Jim Sinclair      Post Edited: December 15, 2010 at 2:24 am
Filed under: General Editorial

My Dear Friends,

There is a dire collapse taking place below the radar screens of the public. The financial condition of the fellow states of a currency union is the most critical component of a common union currency’s value today. It is the challenged financial integrity of member states and their constituents, the cities, towns and villages that make up the state where risk is most prevalent.
The municipal bond market is today in a second freefall as such entities now are failing in paying their obligations to suppliers and services. In many instances the overdue payments are 6 to 9 months in arrears.
Simple common sense tells you that if suppliers and servicers cannot be paid, you cannot meet your interest due obligation to the bond funding upon which these constituents of the state depend.
Fancy financial manoeuvres have been utilized at year-end to camouflage this growing and now transparent risk of bankruptcy. There is no difference between the use of OTC derivatives to camouflage Greece’s financial weakness and the present procedures of fancy bookkeeping on behalf of the 40 now identified states of the United States.
Worst of all is that these municipalities are now in line at the gates of the Barbarians that actually caused all of this. They are seeking assistance from the very same international investment banks that are the OTC derivative manufactures and distributors of that singular cause of all the Western world monetary suffering. They are the chickens walking into the fox’s lair that can only means their bones will be cleaned of flesh.
The momentum decline of the euro in operation short of the euro, named "Shark Feed," is the best precursor of the " Shark Feed" being a terminal attack on the US dollar very soon.
Gold is the only insurance against this unprecedented Western world financial malaise. It will rise in price to $1650 and beyond.
Respectfully,
Jim in Africa

Everything is Under Control?

Posted: Dec 15 2010     By: Greg Hunter      Post Edited: December 15, 2010 at 12:28 pm
Filed under: USAWatchdog.com
Courtesy of Greg Hunter’s USAWatchdog.com
Dear CIGAs,
There are some big messages being put out by the government that appear to be for the sole purpose of reassuring the public that everything is under control.  Bernanke appeared on “60 Minutes” 10 days ago to tell the public that he is “100 percent” sure inflation is not going to be an issue, and that it’s a “myth” the Fed is “printing money.” I am not going to touch on the veracity of his statements.  I did that in a recent post called “CBS Allows Fed to Spread Disinformation Unchallenged.” I want to explore why the Fed Chief felt it necessary to go on nationwide television to, basically, tell America and the world that he’s on top of the economy?  He could have gone on Bloomberg, CNBC or held a press conference at the Fed and got coverage for his message.  Why didn’t Mr. Bernanke ask to be on “60 Minutes” when he announced an unprecedented second round of more than $600 billion of Quantitative Easing in early November?  That was a big announcement–what he did 10 days ago was not.
Fast forward to last Friday.  See Bill Clinton and Barack Obama on stage to announce a united front to push a new tax package that extends the Bush cuts to all.  Everyone in the mainstream media seems to describe this as “impromptu,” but I think it was staged to send the message that things are under control.  Bill Clinton enjoyed one of the best economies in U.S. history.  He is the face of prosperity and good times.  Long time ABC Correspondent  Ann Compton, during a radio interview this week, described the feeling in the room as “desperation.” The network coverage was just the opposite when it came to describing the “impromptu” press conference of Democratic Presidents.  Newsbusters.org highlighted the gushing network coverage Monday, “. . . Good Morning America’s Dan Harris raved, “That was an awesome bit of political theater. An amazing atmosphere in the room, I have to imagine.”  Reporter David Kerley saw Clinton’s Q&A as a return to the 1990s and “the form that he showed in that White House briefing room when he was President.” On NBC’s Today, Mark Halperin touted Clinton holding court with reporters for 20 minutes (after Obama exited) as “great political theater.” Finding lessons for the current president, he enthused, “Bill Clinton figured out how to compromise, but still show people he was true to his principles and fighting hard for the middle class.” (Click here to read the entire Newsbusters.org post.)
I have to admit, for a moment, I did get a warm fuzzy feeling that things were on the right track again.  Then, cold hard reality sank back in.  The Hill reported Monday, “The package could add $900 billion to the national debt, if it is made permanent, and this increases the chances the U.S. would one day default on its debt.  ”From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth. Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the US government’s Aaa rating during the next two years,” Moody’s analyst Steven Hess writes.” (Click here fro the complete Hill post.)
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In The News Today

Posted: Dec 15 2010     By: Jim Sinclair      Post Edited: December 15, 2010 at 2:24 am
Filed under: In The News

Jim Sinclair’s Commentary
China bashers are wrong one more time.

China looks at keeping bank lending high By Jamil Anderlini in Beijing
Published: December 14 2010 17:46 | Last updated: December 14 2010 17:46
Chinese policymakers are examining bank lending targets for next year that will equal or even exceed their 2010 quota, despite fears about overheating amid the highest inflation in the country in more than two years.
Most analysts had expected a significant reduction from Beijing’s 2010 target of Rmb7,500bn ($1,130bn) in total new loans, especially after inflation hit 5.1 per cent in November and the government promised to tighten monetary policy.
But on Tuesday, a leading Chinese official newspaper reported that the government’s lending quota was likely to be Rmb7,500bn again in 2011.
Officials close to the process stressed that the final quota decision has not been made and the Rmb7,500bn figure is just “one opinion”.
The various regulatory agencies responsible for economic policy are meeting “every day” to discuss how much credit the state-controlled banking sector will be allocated for 2010, officials said.
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Jim Sinclair’s Commentary
This is more of the standard operating process in the euro manipulation.
These fellows take no risk, they are not great traders. The entire show is a set up.

Euro slips as Moody’s warns on Spain downgrade By Jamie Chisholm in London and Song Jung-a in Seoul
Published: December 13 2010 04:03 | Last updated: December 15 2010 06:55
Early-rising European dealers have been rattled by the return of eurozone fiscal angst after Moody’s said it may downgrade Spain’s credit rating.
The euro’s legs were whipped away and forecasts for opening prices of the continent’s bourses have been pulled back as dealers once again have to cope with the chronic irritation of the currency bloc’s budgetary woes.
The FTSE All-World index is down 0.3 per cent and commodities are lower as the dollar rallies, partly in response to the recent sharp move higher in US sovereign debt yields. US stock futures are down 0.4 per cent.
The credit rating agency said it was putting Spain’s Aa1 rating on review for a possible downgrade, citing Madrid’s large debt and its funding requirements in 2011.
The reaction to the news shows that investors remain extremely skittish about the festering fiscal difficulties in Europe and the deleterious impact that accompanying austerity measures and financial system anxiety may have on growth.
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Jim Sinclair’s Commentary
The purchase of influence is perfectly legal, but totally amoral.
Money talks, but only the few walk.

Goldman Sachs Hires New York Fed’s Lubke, Pointman on Derivatives Reform By Matthew Leising and Shannon D. Harrington – Dec 15, 2010 12:01 AM ET
Theo Lubke, who headed the Federal Reserve Bank of New York’s efforts to reform the private derivatives market, joined Goldman Sachs Group Inc. to help Wall Street’s most profitable firm navigate the looming overhaul of financial regulations.
Lubke, 44, started this month as chief regulatory reform officer in Goldman Sachs’ securities division, according to a memo obtained by Bloomberg News. The newly-created role will allow Lubke to “work closely with divisional and firm-wide leadership to implement regulatory reform legislation,” the memo said.
Goldman Sachs is hiring Lubke five months after Congress mandated the regulation of the $583 trillion over-the-counter derivatives market, which complicated efforts to resolve the financial crisis. The reforms threaten to cut profits at dealers because they will make swaps prices known to the public. Lubke’s new firm employs a former New York Fed president and has an ex- Fed board chairman as a director. The current president of the New York Fed, William Dudley, also worked there.
“It’s a pattern,” said Charles Geisst, a finance professor at Manhattan College in Riverdale, New York, who has written about Wall Street’s history. “It’s troublesome stuff and there needs to be some regulation so people don’t do it and undermine public policy.”
Michael DuVally, a spokesman for Goldman Sachs who confirmed the contents of the memo, declined to comment.
Lubke Reassigned
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Jim Sinclair’s Commentary
Open mouth currency intervention is a speciality of Mrs. Merkel. Ever wonder where she is?
Apparently the manipulation of the euro has some time to go, but not price. In the final analysis Germany will fall in line. Right now they take prestige by being the strongest of the weakest. That seems a tad lame.

Germany Stiffens Opposition to Aid Boost in Face-Off With ECB By James G. Neuger – Dec 14, 2010 6:00 PM ET
Germany stiffened its opposition to expanding government-financed aid for debt-plagued euro nations, leaving the European Central Bank to shoulder the bulk of the burden of fighting the crisis.
With Chancellor Angela Merkel ruling out an increase in the euro area’s 750 billion-euro ($1 trillion) emergency fund, Germany yesterday put the spotlight on the ECB by endorsing a possible boost in its capital.
Discord between Merkel and ECB President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker on the eve of a European Union summit evokes the tensions during the first phase of the debt crisis, when Germany held out for more than two months before consenting to a loan package for Greece.
“The consequence is a stalemate that leaves us with a familiar sense of déjà vu,” Ken Wattret, chief euro-area economist at BNP Paribas SA in London, said in a note to investors. “Market tensions are likely to resurface, as governments remain very publicly divided on the appropriate way forward.”
European bond markets fell yesterday. Spain’s 10-year borrowing costs remained 248 basis points over Germany’s. Portugal’s spread, a measure of risk, rose 6 basis points to 339 basis points. Both spreads were the highest since Dec. 1.
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Jim Sinclair’s Commentary
I call your attention to the statement made by key Chinese personalities concerning the price of gold as China was accumulating by every means possible.
Maybe if China is paying present prices they will not be present for long, but rather go to $1650 and beyond.

China’s Golden Surprise: A Glittering Opportunity? December 13, 2010
Jim Trippon
This is the kind of thing that the Chinese usually keep a secret. No one knows why Beijing broke with tradition. But perhaps the news was too big to contain behind the usual wall of silence.
If you hadn’t already heard, China’s gold imports are up – way, way up. In the first ten months of the year, China’s gold imports jumped fivefold. With two months to go in the year, China had quintupled its intake of gold compared to the full year of 2009.
This is big! Remember, China is already the world’s largest producer. Yet its gold imports rose to 209 tonnes in the first ten months – up dramatically from just 45 tonnes the year before.
Clearly Chinese mines are hitting the limits of their ability to satisfy internal demand. And make no mistake, consumer demand is booming.
Not long ago, I mentioned that Beijing was actively encouraging consumers to buy gold as an investment through banks and retail outlets. The plan worked beyond anyone’s wildest dreams. Tiny gold ingots, stamped with the image of a rabbit, are suddenly flying off the shelves.
(2011 is the year of the rabbit in China, a year in which some say "
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Jim Sinclair’s Commentary
You must admit that Aldous Huxley was a visionary. His predictions of government by Big Brother have become reality to those that are not among the sheeplez.
Maybe Oman’s approach is more functional.

"Technology can be among the most powerful weapons in the dictator’s armory. Propaganda, the suppression of the truth, particularly in democratic societies, will bring upon an age of enslavement where instead of yokes and chains, people in celebrated “free” societies like America will be bound by the soft restraints of ignorance, incuriousness, distraction and irrationality." –Aldous Huxley

“Great is truth, but still greater, from a practical point of view, is silence about truth. By simply not mentioning certain subjects, by lowering what Mr. Churchill calls an ‘iron curtain’ between the masses and such facts or arguments as the local political bosses regard as undesirable, totalitarian propagandists have influenced opinion much more effectively than they could have done by the most eloquent denunciation, the most compelling of logical rebuttals.” –Aldous Huxley




Jim Sinclair’s Commentary
The problem already exists. There is no means of meeting the requirements.
QE to infinity is not a choice, it is the only choice.

Mounting Debts by States Stoke Fears of Crisis By MICHAEL COOPER and MARY WILLIAMS WALSH
Published: December 4, 2010
The State of Illinois is still paying off billions in bills that it got from schools and social service providers last year. Arizona recently stopped paying for certain organ transplants for people in its Medicaid program. States are releasing prisoners early, more to cut expenses than to reward good behavior. And in Newark, the city laid off 13 percent of its police officers last week.
While next year could be even worse, there are bigger, longer-term risks, financial analysts say. Their fear is that even when the economy recovers, the shortfalls will not disappear, because many state and local governments have so much debt — several trillion dollars’ worth, with much of it off the books and largely hidden from view — that it could overwhelm them in the next few years.
“It seems to me that crying wolf is probably a good thing to do at this point,” said Felix Rohatyn, the financier who helped save New York City from bankruptcy in the 1970s.
Some of the same people who warned of the looming subprime crisis two years ago are ringing alarm bells again. Their message: Not just small towns or dying Rust Belt cities, but also large states like Illinois and California are increasingly at risk.
Municipal bankruptcies or defaults have been extremely rare — no state has defaulted since the Great Depression, and only a handful of cities have declared bankruptcy or are considering doing so.
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Jim’s Mailbox

Posted: Dec 15 2010     By: Jim Sinclair      Post Edited: December 15, 2010 at 1:51 am
Filed under: Jim's Mailbox

Dear Jim,
I think this speaks for itself. It matters more what 2 billion Asians think than what 700 million in the USA and West.
As you have said before, the US and the West is screwed. When Lehman was flushed so was the Western world financial system.
The derivative market was dead because no longer would all the OTC derivatives cancel out. That left no practical solution to the impending and then present problems. The jig was up.
Best,
CIGA BT

WikiLeaks: Bank of England Sought Global Bank Bailout in 2008 Tuesday, 14 Dec 2010 08:27 AM
(Excerpts From Article)
According to the cable, King told the U.S. ambassador and former U.S. Treasury Deputy Secretary Robert Kimitt, who was visiting London, that the Group of Seven major economies was no longer relevant to deal with global financial issues.
"The G7 is almost dysfunctional on an economic level, said King. Key economies are not included, especially those that have large and growing pools of capital. King said that a new international group was needed to address the issue," Tuttle said in the cable.
King also said, according to the cable on the Guardian’s website, it was imperative to find a way for banks to sell off unwanted illiquid securities, including mortgage backed securities, without resorting to sales at distressed valuations.
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