Economic Armageddon and You...Prepare for the Worst...

Jim Sinclair’s Commentary

Here is the entire story. I would suggest spreading the truth to offset the lies. 




Fed's Massive Stimulus Program Had Little Impact on Economy: Former Chairman Greenspan Tells CNBC (Click for More)

Tim Geithner: Welcome To The Unemployment Line 

GEITHNER SAID TO CONSIDER LEAVING TREASURY AFTER BUDGET DEAL
Explains why the market just ripped.
In the meantime, a cubicle at 270 Park is being prepared.

Slick Willie Calls For Broad Principal Mortgage Writedowns 

Submitted by Tyler Durden on 06/30/2011 16:39 -0400

Bill Clinton, in what appears to be an attempt to succeed where the IEA failed so miserably to score some brownie points for the president, told Bloomberg's Al Hunt during an interview, that Bank of America Corp.’s accord with mortgage-bond investors may give more “underwater” homeowners a chance to cut the principal on their home loans. "You’d relieve the anxiety of countless Americans who would know they could hold onto their homes." That you would also bring moral hazard to the masses and demonstrate to the public that the alternative of prudent monetary management is not insolvency, but yet more bailouts, apparently was lost on the slick one. And confirming that he still has no clue how anything in the ponzi system works, he added: "You lift not only an economic, but a psychological burden off of the homeowners and the banks,” he said. “And we’re free to start lending again, we’re free to engage in normal economic activity." Apparently marking down one's assets, which would in turn lead to massive Tier 1 capital (as artificial as it may be) erosion, and a need to funnel hundreds of billions of new cash in on the balance sheet, while at the same time setting off a chain reaction whereby everyone else is forced to remark their assets (all currently at par thanks to FASB encouraged Mark to Unicorn), an act which QE 1, Lite and 2 have been doing all they can to avert, is stimulative to "lending". And this is the thought process of the person credit with generating the last American budget surplus...

The CDO At The Heart Of The Eurozone 

Submitted by Tyler Durden on 06/30/2011 15:22 -0400

A few days ago, we demonstrated that the latest Greek bailout package is nothing more than recycled MLEC special purpose vehicle designed to cover up toxic assets off balance sheet, like that one that was supposed to wrap up the subprime toxic mess. Luckily that did not happen as all it would do is make the credit crash even more acute when it finally did hit. In the meantime, the other Frankenstein contraption proposed by Wall Street to contain the fallout of the PIIGS bankruptcy, is the EFSF, which also got a facelift a few weeks back, and which is effectively a CDO: the same instrument which caused European banks to now be insolvent after buying up all tranches offered them by Goldman et al in the 2005-2007 period, once US banks realized just how toxic the less than AAA tranches were. It is poetically ironic that the instrument that led to Europe's insolvency is now what is supposed to prevent (temporarily) its plunge into outright default. For all who are wondering what the details of the new and improved CDO at the heart of the Eurozone are, here is Nomura's Nikan Firoozye. 

 

 

 

 

 

While Criminal US Bankers Receive Golden Parachutes, Barbarian Afghanistan Has Just Arrested Executives Of Failed Kabul Bank 

Submitted by Tyler Durden on 06/30/2011 14:35 -0400

Sometimes it is good to put things in perspective when comparing developed democracies like America and barbaric despotic dictatorships like Afghanistan. In one country, radioactively orange criminal heads of imploded mortgage lenders, who are responsible for billions in losses at rescued companies that will soon require more taxpayer bailouts, received multi million dollar golden parachute severance packages and slips on the write from the country's "regulators." In the other, former executives of a major failed bank have been arrested over huge fraud that led to its near collapse, while the head of its central bank flees to the first country on fears of prosecutions. Take a wild guess which country is which... 

 

 

 

 

Predictable Surprises

Posted by: Chris Pavese

Post date: 06/30/2011 - 14:29

The way we see it is quite simple. With every investor and every company in the world seeking exposure to China and betting on continued and unabated Chinese growth, what happens if they are wrong? Is it at least worth having some insurance in the portfolio to hedge against the risk of being wrong? If nothing else, we recognize that we are sometimes (often) wrong! GMO’s James Montier recently shared the following thoughts with investors...

 

 

 

 

Radiation Detected In Fukushima Children Urine Samples As Fort Calhoun Orders 10 Mile Evacuation Radius 

The Fed may have stopped printing money, but that does not prevent Fukushima from printing radiation, and a flooded Fort Calhoun to print notices of "all's well" even as a 10 mile evacuation zone has been established. Per Ex-SKF, quoting the Sankei Shinbun: "A citizens' group in Fukushima Prefecture "Fukushima Network to Protect Children from Radiation" tested the urine samples from 10 children in Fukushima City, age 6 to 16, and announced on June 30 that a small amount of radioactive materials was detected from all samples. The highest amount of cesium-134 was from an 8-year-old girl, at 1.13 becquerels per liter. The highest amount of cesium-137 was from a 7-year-old boy, at 1.30 becquerels per liter. The samples were taken in late May, and sent to the French laboratory ACRO (Association pour le Contrôle de la Radioactivité dans l’Ouest) to testing for radiation. ACRO has experience in surveying the radiation exposure in children after the Chernobyl accident. ACRO's president David Boilley said in the press conference, "There is a very high possibility that children in and around Fukushima City have been exposed to internal radiation. Prior to the [Fukushima] accident, these numbers would have been zero." Nothing to see here. Just as there is nothing see in Nebraska, where the NRUC said there is nothing to worry about... despite the imposition of a 10 mile evacuation radius. As a reminder Fukushima has a roughly 18 mile evacuation radius zone.

Risk Spread Compression Time 

It's that time of the day when Brian Sack is holding the ES flat or rising even as his increasingly depleted arsenal to push other risk assets higher causes the RISK basket to decline. The latest: the ES-RISK (commodities, FX carry and rates) spread has just blown out to a 7 ES point equivalent. In the past 2 months the divergence has not failed to close upon emergence within 48 hours. Those with discount window access and wishing to take on the Fed in this relatively low risk pair trade, now that the Fed is about to step out of overt market manipulation (and just be stuck the covert one... and with the fiber optic cable to 131 South Dearborn Street) are as usual advised to take a long, hard look at a compression trade at these levels. 

 

 

 

 

 

Guest Post: How Much Would It Cost To Buy Congress Back From Special Interests? 

Submitted by Tyler Durden on 06/30/2011 12:53 -0400

We all know special interests own the U.S. Congress and the Federal machinery of governance (i.e. regulatory capture). How much would it cost the American citizenry to buy back their Congress? The goal in buying our Congress back from the banking cartel et al. would not be to compete with the special interests for congressional favors--it would be to elect a Congress which would eradicate their power and influence altogether. A tall order, perhaps, but certainly not impossible, if we're willing to spend the money to not just match special interest contributions to campaigns but steamroll them. A seat in the U.S. Senate is a pricey little lever of power, so we better be ready to spend $50 million per seat. Seats in smaller states will be less, but seats in the big states will cost more, but this is a pretty good average. That's $5 billion to buy the Senate.

 

 

 

 

 

Muddy Waters' Carson Block "I Am Not A Ninja Assassin" 

But as far as the credibility of at least one $30+ billion (?) hedge fund, he sure as hell is.

Market Commentary From Monty Guild

June 30, 2011, at 1:34 pm
by Monty Guild in the category Guild Investment |  Print This Post |  Email This Post

Eye on Washington: Oil and Food Price Manipulation
Nothing stirs politicians into action more than a loss in public confidence…especially with an election coming.  Currently, food and fuel inflation is contributing to disenchantment. The fact that policies the politicians themselves have brought about are responsible for the inflation is lost on them. In response to sinking poll numbers they go into scramble mode, looking for political quick fix buttons they can press.  The problem is that quick fixes often work in the short run, but create problems in the long run; in this case, more inflation. It’s a shame, but the system operates by applying political quick fixes that serve self-interest but not the greater good.
In the 1970s, U.S. and European governments engaged in multiple sales of government-held gold.  They sold a great deal of gold between $200 and $300 dollars an ounce. Between 1999 and 2002 Gordon Brown, then the U.K. finance minister, liquidated about 60 percent of the British gold reserves for about $275 per ounce.
How smart do these sales look now?  And how smart will current manipulations look later?
Washington is now selling national strategic stockpiles of oil at $90 per barrel to bring down the price of gasoline. We expect oil to rise eventually to $150 per barrel as a result of the continuing battle over control of the massive reserves present in Middle East oil-producing countries.

Outside Hands Stirring the Middle East Cauldron
For many nations, whether they want to maintain their standard of living (the developed world) or feed their growth (China, India, among others), the Middle East reserves represent an irreplaceable source of sustenance.  Thus, it is no wonder why we see growing evidence of significant foreign machinations and manipulation of local political groups as a backdrop to political unrest and upheaval in the Middle East.
What’s to come of this?  For one thing, we expect expanded military action in Libya, namely the U.S. and Europe committing ground troops.  The purpose is to restore the flow of that North African country’s light, sweet, easy-to-refine crude oil and bring the price of oil down before the 2012 election. Our guess is that they will try to get Libyan dictator Qaddafi out by the end of this year and have the oil flowing again by September 2012 so that gasoline prices will be lower by election day in November.
Our wise friend Larry Jeddeloh of The Institutional Strategist foresees a war between Iran and Saudi Arabia for control of Saudi Arabia’s oil fields and with major countries backing one or the other parties. The west and NATO will surely support the Saudis while Russia will back the Iranians. It is too early to be sure where China will stand.

The Guild Basic Needs Index^TM —Why it exists
In a recent newsletter we introduced the Guild Basic Needs Index^TM as an important touchstone for Americans who wish to keep track of how the prices of goods they require for daily life are changing. As we stated, the power of the index is its simplicity and focus. Moreover, it is tamper-proof. That makes it unique and reliable compared to the often-cited U.S. Consumer Price Index, which, like other indices of consumer and wholesale prices, can be seasonally adjusted or altered by the inclusion or exclusion of index elements.
Such tampering is typical of governments, not just in the U.S., and it is inspired by strong incentives to understate cost-of-living increases.  Those incentives include the following:
●  To lull the masses and avoid criticism from constituents.
● To keep pension and public assistance payments down. In many countries payments to retirees and to those on public assistance are calibrated to inflation.  Payments rise with inflation. In order to keep government spending down, many countries manipulate the statistical basis of price indices to understate inflation. In many fields, conflict of interest requires disclosure. Not here, it seems.  Governments are masters in the art of spinning reality and masking conflict of interest.
Along these very lines, a recent Dow Jones article revealed that Congress is discussing changes to the CPI index that would understate inflation and save money by minimizing payout increases to those with income pegged to the CPI. Check out the link to the article for yourself and decide whether this is manipulative and reeks of conflict of interest.
Dow Jones Newswire
Our belief is that for individuals with a strong desire to maintain the buying power of their assets, reliable index like the Guild Basic Needs Index TM offers great value. Let the politicians do their customary manipulations.  Our readers will have the correct information, the Guild Basic Needs TM index shows a strong inflationary trend exists today in the basic needs of food, clothing, shelter, and energy.
The Rising Value of Chinese Exports
We have been saying for some time that the developing world (which has been a source of lower prices for manufactured goods) is now exporting higher-priced products abroad and contributing to inflation. A recent Wall Street article and video discusses just that: how higher wages and higher commodity costs are resulting in the end of low cost goods from China.  Please click image below:

Our Recommendations
We are making some changes to our recommendations.  We recommend that investors can repurchase Malaysian equities as their market looks poised to move higher after its recent pause.  U.S. equities also look like they are set for a rally that could last four to six weeks, so we recommend them for a trade.  We also remain committed to our bullish recommendations on Japan and India. 
Gold and Oil continue to act stunningly well in the face of higher margin requirements on commodities and other governmental attempts to get them to fall in price.  Investors should continue to be long gold, oil, and corn in the commodity arena.
We are taking profits in our Australian dollars as the Reserve Bank of Australia may be done raising interest rates for the time being.  However, we still recommend currencies with strong economic fundamentals like the Singapore dollar, Canadian dollar, Swiss franc, Brazilian Real, and the Chinese Yuan.  All of these are much better options than holding a lot of U.S. dollars, Euros, or yen.
Please see our recommendation table below, and stay tuned to our upcoming letters for new recommendations.

	Date	Date	Appreciation/Depreciation
Investment	Recommended	Closed	in U.S. Dollars
Commodity Market Recommendations
Corn	4/20/2011	Open	-6.0%
Gold	6/25/2002	Open	+365.1%
Oil	2/11/2009	Open	+164.5%
Corn	12/31/2008	3/3/2011	+81.0%
Soybeans	12/31/2008	3/3/2011	+44.1%
Wheat	12/31/2008	3/3/2011	+35.0%
Currency Recommendations
Short
Japanese Yen	4/6/2011	Open	-5.7%
Long
Brazilian Real	9/13/2010	Open	+9.2%
Long
Canadian Dollar	9/13/2010	Open	+6.0%
Long
Chinese Yuan	9/13/2010	Open	+4.4%
Long
Singapore Dollar	9/13/2010	Open	+8.4%
Long
Swiss Franc	9/13/2010	Open	+20.8%
Long
Australian Dollar	9/13/2010	6/29/2011	+14.1%
Long
Thai Baht	9/13/2010	6/22/2011	+6.5%
Short
Japanese Yen	9/14/2010	10/20/2010	-3.3%
Equity Market Recommendations
Malaysia (NEW)	6/29/2011	Open
U.S. (NEW)	6/29/2011	Open
India	4/6/2011	Open	-6.2%
Japan	2/15/2011	Open	-8.8%
Australia	2/15/2011	6/22/2011	-0.9%
Canada	3/24/2011	6/22/2011	-7.1%
Colombia	9/13/2010	6/22/2011	+2.6%
Malaysia	4/6/2011	6/22/2011	+0.8%
Canada	12/16/2010	3/11/2011	+7.9%
U.S.	9/9/2010	3/11/2011	+18.1%
South Korea	1/6/2011	3/3/2011	-2.9%
Colombia	9/13/2010	2/2/2011	+3.9%
China	9/13/2010	1/27/2011	+5.0%
India	9/13/2010	1/6/2011	+7.9%
Chile	9/13/2010	12/16/2010	+8.9%
Indonesia	9/13/2010	12/16/2010	+9.5%
Malaysia	9/13/2010	12/16/2010	+1.3%
Peru	9/13/2010	12/16/2010	+32.2%
Singapore	9/13/2010	12/16/2010	+4.8%
Thailand	9/13/2010	12/16/2010	+11.9%
Bond Market Recommendations
30 YR Long Term
U.S. Treasury Bond	8/27/2010	10/20/2010	0.0%