Thursday, October 18, 2012

Super-Power Showdown - US vs. China

These giants boast the world's largest economies and active militaries with their decisions influencing politics at a global level. Despite a massive trade agreement and many diplomatic meetings, the two nations struggle to maintain the semblance of a civil relationship. As pressure mounts from US leaders, China remains unfazed, coolly growing its military and economy. Master-of-Finance-Degrees provides the ultimate infographic of how these two titans of industry and power measure up when pitted head-to-head. Guess who wins?

Should Central Banks Cancel Government Debt?

Readers may recall that Ron Paul once surprised everyone with a seemingly very elegant proposal to bring the debt ceiling wrangle to a close. If you're all so worried about the federal deficit and the debt ceiling, so Paul asked, then why doesn't the treasury simply cancel the treasury bonds held by the Fed? After all, the Fed is a government organization as well, so it could well be argued that the government literally owes the money to itself. He even introduced a bill which if adopted, would have led to the cancellation of $1.6 trillion in federal debt held by the Fed. Of course the proposal was not really meant to be taken serious: rather, it was meant to highlight the absurdities of the modern-day monetary system. In a way, we would actually not necessarily be entirely inimical to the idea, for similar reasons Ron Paul had in mind:  it would no doubt speed up the inevitable demise of the fiat money system. Control can be lost, and it usually happens only after a considerable period of time during which their interventions appear to have no ill effects if looked at only superficially: “Thus we learn….to be ignorant of political economy is to allow ourselves to be dazzled by the immediate effect of a phenomenon."

Thoughts On Roman Circuses (And Ours)

From history, we can glean more than just the bare facts of the decline and fall of the Roman Empire. First, one has to understand that before Rome slowly toppled into dust, it was a very prosperous place. There was distinct upper, middle, lower and slave classes and, all in all, there was more than enough to eat and time to spare for numerous sports. Also, the Roman Legions were the largest and strongest, best trained and fed, best equipped with hardware aplenty of any nation-state-empire in the world at that time. Very similar, in fact to the U.S.A. (less a lot of technology). History will certainly repeat, but never the same way twice.  So here we stand, on the edge, citizens mostly well fed, clothed, housed and most of all, thoroughly entertained. What happens to all of us when the plug is pulled?

Spain's bad loans increase/raid on silver and gold

Good evening Ladies and Gentlemen: Gold closed down by $8.20  to finish the comex session at $1743.30  Silver fell by 38 cents to $32.84. The bankers needed another raid as the silver OI was still too high . The raid generally accomplishes nothing.  In other news, Greece greeted it's  EU guest with a 24 hour national strike.  Spain saw it's bad bank loans climb to 10.5 % of total bank loans.

Some Context On Spain's 'Big' Week

Much is being made of the compression in Spanish bond spreads this week - the largest 3-day drop since Draghi's 'dream' speech. Four critical things come to mind: 1) increasing amounts of Spanish sovereign debt is now held by domestic banks, making the market less liquid (and far less transparent as any indication of 'reality'); 2) the ban on naked CDS (and Draghi's put) has created a hedging vacuum with CDS spreads collapsing and exposure slumping (technically dragging bond risk down); 3) Lower spreads reflexively mean lower probability of Rajoy saying "Si" - which is what is helping spreads compress (leaving event-risk high - as indicated by the outperformance of our legal arb trade); and perhaps most importantly 4) Recency bias is incredible - we have seen 100-plus percent rises in Spanish risk followed by 35-plus percent retracements a number of times and the current level of Spain risk is still above LTRO-inspired crisis levels. So let's not get all excited quite yet eh?

Citi On The Election: "Ignore Pundits & Partisans; HuffPo Data Says Obama"

With less than 20 days to go to the election, the Presidential race has tightened following Romney's performances in the debates, as the Republican challenger has overtaken the president in the national averages for the first time this year (and RealClearPolitics has him with an edge in the electoral college also). But ever the fair-and-balance bank, Citi believes that Obama's advantages remain substantial, as an incumbent president in an improving economic environment. In this broad discussion, the Pandit-less bank addresses 'the data' driving their Obama call, what would have to happen for a Romney win, the Senate and House split, The Tea Party (and other unusual events), and the 'bungee jump'-causing headline risk of the pending Fiscal Cliff debate. Everything you need to know about the election-critical states, players, and events (and who would win in a fist-fight), but were afraid to ask Wolf Blitzer.

Spain Proposes Law Prohibiting Recording And Capturing Of Local Cops In Action

If a recently proposed law by the director general of Spanish police, Ignacio Cosidó, is actually enacted, it is likely that live (or replayed) webcasts, photos and any electronic recordings such as those seen recently from the Madrid anti-sovereignty riots may be a thing of the past. But not because they no longer exist: simply because very soon it may be illegal to actually record said events. El Pais reports that "authorities are studying the possibility that the next update to the Public Security Law could include an article prohibiting the recording, processing or circulation on the internet of police officers performing their duties, if doing so would endanger them or the operation in which they were engaged." These are the same riot cops who typically wear gas masks, and full riot attire and shields precisely to preserve their identity. But facts matter little when the liquidity tide is going out and all the Ponzi schemes are exposed to have been swimming naked. For now, Spain will be happy to little by little strip its citizens first of their rights to free expression, then all other rights, as it slowly but surely sells the country into Troika slavery.

Google Stock Plunges: Trading Halted After Earnings Report Shows 21% Decline Year-Over-Year

by Mac Slavo, SHTFPlan:

Following the trend of shipping company Fedex, the largest advertising venue in the world is showing signs of strain in a weakening global economy.
Google Inc., whose accounting firm mistakenly released their quarterly report prematurely, saw a 9% tumble in the share of their stock today after weaker than expected earnings.
It’s not clear why Google’s results were posted in a regulatory filing early, but the weaker-than-expected top- and bottom-line figures threatened to leave the stock with its steepest one-day decline since the 2008 financial crisis.
Read More @

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Made for T.V. Phony Terror Plot ~ 2012 

from crabbydogtrix:

JP Morgan Enron Chase

from Silver Vigilante:
JP Enron Chase Morgan has urged FERC not to force it out of the power market after FERC has slapped on the wrist multiple banks, such as Deutsche Bank, in the past year for electricity market manipulation. The order is separate from the FERC lawsuit that JP Morgan currently faces. As The Morgue would, it apologized to the US energy regulator on Thursday for misleading the agency on the electricity market. It claimed the misleading was done inadvertently. The biggest bank in the US, to be sure, has not apologized to California residents.
The bank remains standing tall above the regulator offices of the US. Either individuals are worried that a Mexico-style fatwa on opposition to the debt-dealers will foment or they merely are living a bit more comfortably with the hours they’ve picked up moonlighting for banks. Or maybe the regulators know the wrath that will befall the public if the bank’s become truly reigned in.
Read More @ Silver Vigilante

SOLA 3.11 Secret Societies

from TruthNeverTold :

So Far So Good On The Road To $50 Silver

by Addison Wiggin, Forbes:

Silver started the day at $32.84 and closed 0.73% higher at $33.20, but a mysterious group of traders billing themselves as “Wynter Benton” promised to move it big during the next six trading days, on the way to $50 before year-end.
“The Leader wishes to inform our followers that the group will be demonstrating our ability to move the price of silver between Oct. 16 to Oct. 23, 2012,” according to a post on a Yahoo! Finance message board. “We will be updating our moves in real-time during this period.”
“Wynter Benton” purports to be a group of former J.P. Morgan Chase commodities traders who say that JPM engineered the meltdown of MF Global a year ago because the traders were trying to take delivery on a huge amount of physical silver.
Read More @

New Obama slogan has long ties to Marxism, socialism

[Ed. Note: I saw an amusing video the other day in which the suggestion was made that Obama drop the 'D" from his campaign slogan, changing "FORWARD" to the far more accurate "FOR WAR". Food for thought.]
by Victor Mrton, Washington Times:
The Obama campaign apparently didn’t look backwards into history when selecting its new campaign slogan, “Forward” — a word with a long and rich association with European Marxism.
Many Communist and radical publications and entities throughout the 19th and 20th centuries had the name “Forward!” or its foreign cognates. Wikipedia has an entire section called “Forward (generic name of socialist publications).”
“The name Forward carries a special meaning in socialist political terminology. It has been frequently used as a name for socialist, communist and other left-wing newspapers and publications,” the online encyclopedia explains.
The slogan “Forward!” reflected the conviction of European Marxists and radicals that their movements reflected the march of history, which would move forward past capitalism and into socialism and communism.
Read More @

London Trader, Commercials & A Spike In Gold

from KingWorldNews:

Today John Embry told King World News, “What the London Trader was discussing with you was the fact that we were within $10 of a commercial signal failure, which is just astonishing.” Embry also stated, “These commercials are incredibly short … So if this market starts going against them, the price rise will be extraordinary.”
Here is what Embry, who is Chief Investment Strategist at Sprott Asset Management, had to say: “Im focused on two things in the short-term. I’m not too concerned with the fact that gold is being knocked around here. There are two factors at work. One, and the ‘London Trader’ spoke so eloquently of it in your interviews with that source, is this massive short position by the bullion banks.”
John Embry continues @

Seasonal Adjustments

by Andy Hoffman,
I am no statistician, but even a CFA and 20 years of financial analyst experience aren’t required to spot PURE BS.
No single data phenomenon on Earth embodies such LIES more than government published economic data; officially sanctioned to be fudged, massaged, and COOKED to perfection. And no phrase encompasses the breadth of government FRAUD better than “SEASONAL ADJUSTMENTS.”
“Seasonal adjustment” is a euphemism for fudge factor, in which the government arbitrarily adds “plugs” to official data to make it say what it wants; such as showing last month’s “unemployment rate” plunging to 7.8% – “coincidentally,” just below the 7.9% level when Obama took office…
Read more @

Your CRIMINAL Gov’t: Obama Pursuing Leakers – Sends Warning to Whistle-Blowers

by Phil Mattingly and Hans Nichols, Bloomberg:
Eric Holder, attorney general under President Barack Obama, has prosecuted more government officials for alleged leaks under the World War I-era Espionage Act than all his predecessors combined, including law-and-order Republicans John Mitchell, Edwin Meese and John Ashcroft.
The indictments of six individuals under that spy law have drawn criticism from those who say the president’s crackdown chills dissent, curtails a free press and betrays Obama’s initial promise to “usher in a new era of open government.” …
… The prosecutions, which Obama and the Justice Department have defended on national security grounds, mean that government officials who speak to the media can face financial and professional ruin as they spend years fighting for their reputations, and, in some cases, their freedom.
Read More @ Bloomberg

FBI Celebrates Foiling Its Own Terror Plot, Again

by Alex Newman, The New American:
Federal agents convinced a naïve, violence-inclined 21-year-old Bangladeshi that he was a member of “al-Qaeda,” giving the dupe fake bombs to blow up the Federal Reserve Bank of New York before swarming in and arresting him on October 17. As has become typical, government officials scrambled to put out press releases patting themselves on the back for their work protecting the “Homeland.”
In reality, however, there was no al-Qaeda, there was no threat, there were no bombs, and the only alleged “plot” the FBI “foiled” was the one it helped hatch with its dupe, Quazi Mohammad Rezwanul Ahsan Nafis. Like the vast majority of recent domestic “terror” schemes against the United States, the latest supposed “operation” was essentially run by authorities from start to finish.
“It is important to emphasize that the public was never at risk in this case, because two of the defendant’s ‘accomplices’ were actually an FBI source and an FBI undercover agent,” Acting Assistant FBI Director Mary Galligan admitted in a press release celebrating the arrest. “The FBI continues to place the highest priority on preventing acts of terrorism.”
Read More @

Nigel Farage on the Fall of Europe

by Eric J. Fry, Daily
Nigel Farage never elicits a neutral reaction…ever. His brutally honest remarks inspire either love or hate — kind of like country music, calvados or the Kardashians.
Even here, inside the Daily Reckoning brain trust, Farage produces a spilt reaction. One of your editors thinks Farage is the cat’s meow; the other editor thinks he’s the cat’s litter box. So one thing is clear; neutrality is not an option.
Farage, leader of the UK Independent Party, is a very outspoken advocate of small-to-no government, which makes him a very outspoken critic of the European Union. Farage is not an anarchist, but he would like to see the European Union wither up and blow away so that the nations of Europe could reclaim their political and economic sovereignty.
Late last week, Farage sat down with Lauren Lyster, the witty and engaging anchor of Russian TV’s Capital Account, to discuss his anti-eurozone perspective. (One of your editor’s loved it; the other, not so much).
Read More @

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In The News Today

It is the responsibility of the patriot to protect his country from its government. – Thomas Paine

Rumor control:

1. The former employee of Goldman Sachs who has written both a book and a op-ed in the Wall Street Journal is being painted today on the airwaves as a disgruntled employee who asked for a rise and was turned down.

2. If the rumor of an immense withdrawal of silver from the Comex Exchange vaults this Friday has any basis then be assured the Comex will change the rules just as they did when there was an unfounded rumor that the Hunts were going to take delivery. I would tend to think rumors like that are made to accomplish something.

3. The new transition of power in China in one month has talking heads condemning recent positive Chinese economic figures while totally silent about the USA economic figures doing the same thing at the same time. Sorry to say, we now have to question everything especially in the USA when states forget to send their data or the economic statistics are produced by a telephonic survey.


Jim Sinclair’s Commentary

She is definitely a team player.


Jim Sinclair’s Commentary

Not everything the Chinese do works!

An Entire 13-Story Building In China Lying On The Ground


Jim Sinclair’s Commentary

All this may turn out to be is the birth of a new business whereby legal counsel or accountants are required to make passport applications.
Regardless, getting a passport to maximum period now is wise.

Why You Need a Passport Now! Thursday, October 18, 2012
At a future point, it may be impossible to get one. reports on what the State Department is planning for future passport applicants:
The new U.S. passport application forms are back, worse than ever.
Ignoring massive public opposition, and despite having recently admitted that it is already using the “proposed” forms illegally without approval, the State Department is trying again to get approval for a pair of impossible-to-complete new passport application forms that would, in effect, allow the State Department to deny you a passport simply by choosing to send you either or both of the new “long forms”.
Early last year, the State Department proposed a new “Biographical Questionnaire” for passport applicants, which would have required anyone selected to receive the new long-form DS-5513 to answer bizarre and intrusive personal trivia questions about everything from whether you were circumcised (and if so, with what accompanying religious rituals) to the dates of all of your mother’s pre- and post-natal medical appointments, your parents’ addresses one year before you were born, every address at which you have ever resided, and your lifetime employment history including the names and phone numbers of each of your supervisors at every job you have ever held.
Most people would be unable to complete the proposed new form no matter how much time and money they invested in research. Requiring someone to complete Form DS-5513 would amount to de facto denial of their application for a passport — which, as we told the State Department, appeared to be the point of the form.

Jim Sinclair’s Commentary

We have a big readership in Switzerland.

NightWatch For the night of 16 October 2012
Switzerland: In September, Swiss authorities launched a military exercise to test its preparedness to deal with internal civil unrest as well as refugees from the Eurozone crisis, according to international media.
Comment: The Swiss are not prone to overreact to threats. They do not spend defense funds in order to be prepared for potential threats. They prepare for real threats.
The exercise is significant because it means the Swiss have determined that internal civil unrest coupled with refugees from Eurozone countries represent real threats for which their security forces must be prepared. The Swiss understand the meaning and significance of early warning and know about indicators.

Jim Sinclair’s Commentary

As will the US dollar, without any doubt. That means by "foreign exchange mirror effect" the euro will trade at $1.35 and higher.

U.S. to Get Downgraded Amid Fiscal ‘Theater,’ Pimco Says By Tracy Withers – Oct 17, 2012 7:05 PM MT
The sovereign credit rating of the U.S. will be cut as “fiscal theater” plays out in the world’s biggest economy, according to Pacific Investment Management Co., which runs the world’s largest bond fund.
“The U.S. will get downgraded, it’s a question of when,” Scaott Mather, Pimco’s head of global portfolio management, said today in Wellington. “It depends on what the end of the year looks like, but it could be fairly soon after that.”
The Congressional Budget Office has warned the U.S. economy will fall into recession if $600 billion of government spending cuts and tax increases take place at the start of 2013. Financial markets are complacent about whether the White House and Congress will reach agreement on deferring the so-called fiscal drag on the economy until later next year, Mather said.
In a “base case” of President Barack Obama being re- elected and Congress becoming more Republican, there is a high likelihood an agreement “doesn’t happen in a nice way, and we have disruption in the marketplace,” he said.
Policy makers probably will agree on cutbacks that would lower economic growth by about 1.5 percentage points next year, Mather said. They may roil markets by discussing scenarios that would lead to a 4.5 percentage-point fiscal drag, he said.

My Dear Friends,

With all the pre-election fabrication taking place understand that neither candidate has any room to maneuver financially. Also, keep in mind that in the situation of significant national bankruptcy in the Western world there is no other central bank tool other than QE that might have some force to oppose that total disaster.

Jim Sinclair’s Commentary

This is why you need to subscribe to John. As a gentleman, he always questions the statistics and qualifies them or notes them as "not credible."

- September Housing Starts Surge Was Marginally Significant
But Not Credible

"No. 477: September Housing Starts"


Jim Sinclair’s Commentary

People deciding who to vote for based on who is the best BS’er is sad.


Jim Sinclair’s Commentary

The priority is going to grow significantly.


Jim Sinclair’s Commentary

Some how I do not think this is Wall street journal material.

Armed posse patrols timber land in sheriff’s place By JEFF BARNARD | Associated Press – Wed, Oct 17, 2012
O’BRIEN, Ore. (AP) — There’s no room in the county jail for burglars and thieves. And the sheriff’s department in a vast, rural corner of southwest Oregon has been reduced by budget cuts to three deputies on patrol eight hours a day, five days a week.
But people in this traditionally self-reliant section of timber country aren’t about to raise taxes to put more officers on the road. Instead, some folks in Josephine County, larger than the state of Rhode Island, are taking matters into their own hands — mounting flashing lights on their trucks and strapping pistols to their hips to guard communities themselves. Others have put together a virtual neighborhood watch, using Facebook to share tips and information.
"I believe in standing up for myself rather than waiting for the government to do something for me," said Sam Nichols, a retired marina manager.
Nichols has organized a posse of about a dozen fed-up residents who have started patrolling the small community of O’Brien, which has about 750 residents.
"We call ourselves the CAC Patrol, Citizens Against Crime," he said.
Separately, a retired sheriff’s deputy in a community about 10 miles away has started a Facebook page called "To Catch a Thief," an open group that has nearly 1,200 members who post reports of crimes that aren’t priorities for the county sheriff’s office.


Notes From Underground: Hollande Gets Saucy With the Germans

Dear Yra,

You know how I think. When Euroland’s drama becomes old news the euro will in my opinion have traded at least at $1.35 with a possibility of $1.40 and the US dollar at USDX .7200 with a possibility of lower..
Whatever is going to be required will be provided, even $17 trillion euros.
Hollande, as controversial as he is, will be a major player in the final resolution. Gold will be a part of the process and final resolution.

Notes From Underground: Hollande Gets Saucy With the Germans Yra Harris
First, the equity markets continued this week’s rally as better data in the U.S. (housing) following upon the Monday retail sales report provided more fuel for the bulls and is causing great angst for portfolio managers that are underinvested and badly underperforming their benchmarks. These investment advisers must go to sleep and pray for the U.S. to bomb Iran so that they will have some type of opportunity to buy into the global equity rally. It’s tough to chase this one. As I wrote on Sunday, the IMF “volte face” on the impact of austerity budgets was a game changer as it will mean that austerity inspired programs, like the U.S. fiscal cliff, will force policymakers to be cautious in pushing for too much austerity in times of a balance sheet recession. The pushback from Spain, Italy and others is allowing the forces for unrestrained growth to gain ascendancy over the voices of austerity led by the Bundesbank.
Today, French President Hollande was feeling a new sense of vigor. In a U.K. Guardian interview, “Hollande Fires A Warning Shot at Merkel Over Austerity on Eve of EU Summit,” Hollande noted “Merkel is too preoccupied with domestic politics.” The president also noted, “We all have our own public opinion. Our common responsibility is to put Europe’s interests first.” This is an interesting view coming from France, a nation that is struggling itself. If the situation in Spain and Italy doesn’t get resolved in a pro-growth, less austerity format, France will continue to suffer economic malaise. Hollande also calls for a budgetary union and suggests that there should be a mutualization of debts through the issuance of euro bonds. The problem is that Germany wants a fiscal union first and then euro bonds while France desires the opposite. Yes, Chancellor Merkle is under political pressure at home not to proceed too quickly for the Germans need to measure the cost of a backdoor bailout  that would be the net result of EURO BONDS today  and fiscal union tomorrow.
The French want the Germans to supply the gold but they want the peripherals in coalition with the French to write the rules. President Hollande even admits “that whoever pays should control, who ever pays should sanction,” however first the money must be delivered and then the rules agreed to. It is very important to remember that for the last 50 years it has been the French who have been the most reticent about surrendering sovereignty to the EU. The Germans are “dragging their feet” but it the Bavarian Burghers that are paying the bill. When the French are pushing a speedy end it is time for the Germans to be cautious.
***Late in the day, there was a rumor that the EU Council’s chief legal adviser noted that the proposed European banking supervisor plan was illegal under present treaties. It was reported that the proposed ECB supervisory role “goes beyond the powers permitted under law to change governance rules at the ECB.” Again, this was rumored and although a quote offered–the sources remain unnamed–but it reflects the great battle taking place over the speed of a EU-wide banking authority and the influence that it would attain.
***In Spiegel Online, a German think tank advised “Euro exit by Southern Nations could cost 17 Trillion Euros.” This was a specious headline and upon further reading the research was shown to be measured to 2020. The article notes that the impact to global economic growth from any type of EURO dissolution would be severe. China, the U.S. and all the emerging market economies would be gravely affected and the resultant banking crisis from huge losses to bank sheets would create a deep global recession. This article reflects that not all Germans are enamored with austerity  and that voices of do whatever is needed to support the entire EU are also to be heard. The battle lines are being drawn and the voices of growth at any cost are rising with the IMF‘s new research providing the impetus to curtail those promoting AUSTERITY IS THE PASSAGE TO GROWTH.
***For a different view on the IMF research, this Financial Timesvideo piece by John Authers will question the IMF austerity data. The issue will be before us for quite a while and even though we are all suffering from EU FATIGUE, to not know the issues and be prepared will prove costly. Let us arm ourselves with the knowledge to be prepared for all the different misinformation that will move markets.


Jim’s Mailbox

Jim Rogers: Neither Obama nor Romney Are Worth My Vote CIGA Eric
The Presidential candidates talk a good game before the election, but the real world distinction between the two in terms of policies and spending designed to protect a decaying economic system are minimal. Expect both parties to continue spending and catering to the same institutions that issue their debt despite claims to the contrary.
Headline:  Jim Rogers: Neither Obama nor Romney Are Worth My Vote
The Presidential Election is a chance for a national rebirth. It’s a quadrennial right of passage giving Americans the chance, nay the obligation to exercise their right to vote for the candidate who best represents their interests. At least that’s the way the process is sold to the masses. Famed international investor Jim Rogers isn’t quite so sure.
"A pox on both their houses as far as I’m concerned," says Rogers, paraphrasing the Bard. "I will vote the protest vote. I nearly always vote the protest vote."
Rogers isn’t an America basher but a citizen who feels apart from the economic policies pursued by his country. He casts a ballot for none of the above because he doesn’t think President Obama or Mitt Romney can rebuild the nation’s flagging economy.

Seniors on Social Security squeezed by rising prices CIGA Eric
Both ‘Tax the Rich or ‘Austerity for the masses’ cause investment to decline, capital to flee, and an acceleration of the slow economic implosion underway.  The likely outcome is policy gridlock defined by economic stagnation, currency-induced inflation, infinite liquidity, and the masses dependent on social programs squeezed to the edge of existence until 2015.

Headline:  Seniors on Social Security squeezed by rising prices
NEW YORK (CNNMoney) — Janis Mason is 94 and has been receiving Social Security benefits for nearly 30 years. Because she has outlived her savings, the monthly checks are her only source of income.
"I always cross my fingers that the money can last the whole month," Mason said.
To keep pace with the rising cost of living, the Social Security Administration announced a 1.7% benefits increase for 2013. This will give a $19 boost to the average benefit of $1,130 a month.
For some of the 56.3 million people who get Social Security — either because they are retired or disabled — the increase may not be enough to keep up with rising expenses.

Why Apple will never bring manufacturing jobs back to the U.S. CIGA Eric
Production will continue moving overseas because the US burden uncompetitive tax rates and government largess remain competitive only in cutting edge technology and agriculture.  The US relinquished its "Made in the USA" for "Designed In The USA" label decades ago.  In the not too distant future "Designed In The USA" will be replaced by "Consumed in the USA".  At that point a large portion of the US population will be dependent on ever-expanding social programs to make ends meet.  America’s definition of prosperity will look radically different by the end of the decade.
Headline:  Why Apple will never bring manufacturing jobs back to the U.S.
NEW YORK (CNNMoney) — At the end of Tuesday night’s presidential debate, CNN’s Candy Crowley asked both candidates a question that has plagued Apple since the beginning of the year.
"IPad, the Macs, the iPhones, they are all manufactured in China, and one of the major reasons is labor is so much cheaper there," Crowley said. "How do you convince a great American company to bring that manufacturing back here?"
Mitt Romney said the solution is "very straightforward." The United States must pressure China to stop manipulating its currency, he said, and the federal government needs to "make America the most attractive place for entrepreneurs" by lowering taxes. He supports reducing the top corporate tax rate to 25%, down from its current 35%.

Hi Jim,
I was just running some numbers yesterday and although you have stated this many times before, it became clearly obvious to me from the numbers that Bernanke never intends to reduce the balance sheet of the Fed, nor could he if he wanted to.
I looked at IRS statistics about the number of tax payers by income (available on the website).  There are something like 14.5 MM individual tax payers who earn more than 200K.  Each one of those would have to pay 58,000 a year in *ADDITIONAL* taxes to cover just the $85BB a month of QE 3. Double that if you want to also cover the one trillion a year short fall in the budget (deficit). So if a guy making 200K (who
probably takes home 120-130K) could pay an extra 116K a year in taxes, we can keep our debt at 16 Trillion and keep spending the way we’re spending. Of course from the numbers you can see how preposterous that is.
I tried spreading the burden across more people, but kept coming to a number that was too much to bear, so I kept moving up the income ladder and the * "best"* balance was the 200K and above paying 58K a year, which is still ridiculous and impossible.
They never intended to "unwind" any of the QE’s and certainly not QE3. This is a blatant transfer of wealth from foreign holders of dollars to the US. Now what’s the catalyst that will give foreigners the strength to stand up to America’s financial bullying?
Thanks again for all you do for us.
CIGA Rangan

You are not only right, but please focus on the quality of much of the old and recently purchased debt. The answer is it is total junk for which the Fed is more than likely paying issue price. That stuff will be on the balance sheet of the Fed until it dies one way or another.
This economic crisis we are in is a total result of the actions of the manufacturers and distributors of over the counter derivatives.
Rather than fixing the OTC derivative problem, which could have been done before Lehman was flushed, the solution was to make the Fed a "Resolution Trust" but with no means whatsoever of making those worthless and worth-less assets silk purses out of Petunia’s ear.

Good morning Jim,
I hope this finds you well. Exciting times we are in, that is for sure.
I do have one more question for you if you don’t mind. I want to make sure I am understanding you clearly…
I am beginning the purchasing process on a home in Tennessee. Are you saying to NOT try to pay that home off , but rather to put a smaller amount down, maybe the minimum, and save the rest of the money? And then try to own outright in Scotland?
I have always thought it was the ‘goal’ to own your home. But perhaps it is wisdom to have the cash available for investment rather than have it  sit in real estate that is devaluing?
Thanks again. You advice is highly valued, and is a gift to me.

Dear S,
The home you own is Scotland in this scenario. You owe dollars on your US home which is the same as being short of dollars. As the dollar declines in international value so does the amount of your mortgage loan.
If the dollar dropped by half, your mortgage would drop by half in value to be paid off. Then you pay it off.
Does that make more sense? If not ask me.

Market Says Equity and Gold Bears Will Get Mauled Again CIGA Eric
The message of the market says that the equity and gold bears will get mauled again.  Yesterday’s new all-time high in the AD(E) illustrates a build up of trend energy on the NYSE (chart 1).  This build up comes as the NYSE composite lags behind.  This positive divergence says that the equity bears will be mauled again.
Chart 1:  NYSE Composite & Internals clip_image002
In addition, notice the "TRIN grenades" tossed on 9/26 and 10/12 (chart 2).  The combined force of these explosions supports higher equity prices.
Chart 2:  NYSE Composite & Internals 2 clip_image004
Gold and equities, both driven by infinite liquidity, move in the same direction.  The expectation of higher equity price equates to an expectation of higher gold prices.   The current paper operation in gold; therefore, has a limited half life.

Summers: ‘Hugely Irresponsible’ to Dive Off ‘Fiscal Cliff’ CIGA Eric
Austerity, either forced or involuntary, is not an option.
Headline:  Summers: ‘Hugely Irresponsible’ to Dive Off ‘Fiscal Cliff’
Former Treasury Secretary Larry Summers joined the chorus of voices calling on Washington to forge a solution to the massive tax hikes and spending cuts that loom early next year, saying it would be "an act of huge irresponsibility" for policymakers to sit on their hands.
Concerns are mounting that the political stalemate ahead of the presidential election next month will push the U.S. economy over the "fiscal cliff" after Jan. 1.
With both Democrats and Republicans focused on Election Day – less than three weeks away – Summers expressed worries that there appears to be no consensus in sight. (Read More: Alarm on Wall Street Grows as ‘Fiscal Cliff’ Nears.)
"We could take a situation, which is an economy that’s starting to turn, that’s got the prospects of a real recovery, and blow it if we go over that fiscal cliff," Summers said Wednesday on CNBC’s "Squawk Box."

Different Year, Same A-wave Setup CIGA Eric
The ‘body blocks’ during the NY session could very well be politically motivated.  Jamming the A-wave rally with high-octane paper supply, however, is a common delaying tactic used at critical resistance zones (chart).  Either way, the delay as Jim suggests will be limited.  The up trend will pick up speed once this supply quietly disappears after the election.
Chart:  Gold London P.M Fixed and the Commercial Less NonreportablesTraders COT Options Stochastic Weighted Average of Net Long As A % of Open Interest 


My Dear Friends,
Please accept my apology for a terse review today. I was in and out of the office for meetings.
The action of the gold market suggests to me a market made by edict, a new influence. It smells very political.
The body blocks of the gold price so far were at $1800 vs. the cash market, and more than 10 times at $1775. Now we have a new target price of $1750.
With all the markets that surround and influence gold not supportive to the decline in the gold price, I can only come to the conclusion that this is a political favor for the incumbent. When have we ever seen such prices picked in gold to make a stand?
The takedown this AM was so obvious, as was the recovery, as was the present price. Any person who takes the Presidency has extremely limited room to maneuver financially. There is no functional tool in any central toolbox other than QE to deal with national insolvencies.
Austerity is not one of them in the USA. Those with no margin have no problem.
This reaction is limited in a short time period.


Would you please explain how the paper price can remain so low yet I read that delivery on silver contracts for example can take two months?  How can this be and when will it end?  I can only think that it will end when some sovereign buyer files a lawsuit for default of contract for not delivering in a timely manner.

Then they will unilaterally change the contract like they did to the Hunts.
Buy silver for silver reasons and gold for gold reasons but buy neither for a failure of the exchange.

Dear Mr. James Sinclair,
Per my previous email and your kind reply as  shown below:
The down trend for the DXY is CONFIRMED by my humble market-model. I expect 72.70 to be tested.
I look forward to the joy of meeting you in person.
With highest admiration,
CIGA Darioush

Dear Darioush,
I agree with your selection of direction, but feel your price objective at .7270 will simply give a bounce but eventually give up the ghost of support.

Your support is needed...
Thank You

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