2011 - What's Coming



The Fed's Monetary Policy is About to Run Into a BRIC Wall

Guest Post: Retirement Account Fantasy And Middle Class Erosion – 1 Out Of 3 Americans Has Zero Dollars In A Retirement Account

Weak 5 Year Auction Spooks Bonds, Big Tail To When Issued

 

Next European Leg Down? First Failed ECB Monetization Sterilization, As Central Bank Has E13 Billion Shortfall In Bond Bids

 

Consumer Confidence Misses Big, Prints 52.5, Below Consensus Of 56.3 And November's 54.3

 

Case Shiller Misses Consensus As Home Price Decline Continues For 4th Month

 

Gold Surges To Two Weak High As $1,400 Level Exposes Many To Pin Risk

 

Frontrunning: December 28

Submitted by Tyler Durden on 12/28/2010 08:25 -0500

• Backlash over use of Fed crisis cash (FT)
• Non-US banks gain from Fed crisis fund (FT)
• U.S. gas price tops $3 a gallon, highest since Oct '08 (Reuters)
• Japan November Consumer Prices Fall for 21st Month as Deflation Persists (Bloomberg), signaling recovery is stalling
• Japan Production Rises, Signaling Recovery Is Intact (Bloomberg)
• Retailers Hurt by East Coast Blizzard as Post-Christmas Shoppers Stay Home (Bloomberg)
• Japanese Stocks Retreat on Commodity Prices, Strong Yen; Inpex Declines (Bloomberg)
• After a six month delay, the US budget will be delayed again (WSJ) good news is: 2011 may actually have a budget... eventually

Shanghai Drops To Two Month Low, As Chinese Stocks Are S&P Performance Mirror Image YTD

 

 

Class action against Morgan, HSBC specifies silver manipulation mechanism

 

Strong foreign banks splurged on, profited from Fed's emergency credit

 

Greed And Fear's Chris Wood On The Timing Of The Euro Endgame

 

This Time Is Different

 

With 15 Minutes Of Fame Rapidly Approaching Their End, Assange Nets $1.5 Million Book Deal

 

Abysmal Volume Means Lowest Participation Trading Holiday Week In Years

 

Senator Coburn: Control Government Spending or Face 'Apocalyptic Pain'


Quantitative Easing 2 as Projected and Announced


Ted Butler:  A Show Stopper


"Commodity Super Cycle" Ripples Into China   

 
Naked Emperor and the Conspiracy of Silence


Why Fed Money Creation Hurts the Poor Population



The Case For Gold Today



The Year of Living Quantitatively



Inflation Update

Bailed-out banks slip toward failure

 

+74% later, Wall St. Journal notices silver only to try to talk it down

 

Reader Threatens To Sue Fed After Losses Incurred By Going Long Inverse Leveraged ETFs

 

In The News Today

Posted: Dec 27 2010     By: Jim Sinclair      Post Edited: December 27, 2010 at 2:41 pm
Filed under: In The News


Jim Sinclair’s Commentary
If A&P was taken over by Stop and Shop what would the new entity’s name be?

1,000 In N.J. Could Lose Jobs After A&P Bankruptcy December 24, 2010 9:47 AM
WOODBRIDGE, N.J. (AP) — More than 1,000 workers at a grocery distributor in New Jersey could lose their jobs in February in the wake of a bankruptcy filing by supermarket giant A&P.
Officials with Woodbridge Logistics say they filed notice earlier this month with state regulators warning that it may have to shut down six warehouses and lay off 1,114 employees in February.
The company distributed items for A&P and Pathmark stores across New Jersey. But the operator of those chains, Great Atlantic & Pacific Tea Co., filed for Chapter 11 bankruptcy protection earlier this month.
A Woodbridge Logistics spokesman says the Montvale-based operator’s bankruptcy is one of “myriad pressures” facing the distributor.
Woodbridge Logistics operates warehouses in New Brunswick, North Brunswick, Dayton and three locations in Woodbridge.
More…




Jim Sinclair’s Commentary
If misleading accounting blessed by the FASB was not the industry practice, practically all would be broke. In fact they are.

Bailed-Out Banks Slip Toward Failure
Number of Shaky Lenders Rises to 98 as Bad Loans Pile Up; Smaller Institutions Hit Hardest BY MICHAEL RAPOPORT
Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing.
The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program.
When TARP was created in the heat of the financial crisis, government officials said it would help only healthy banks. The …
More…

Jim’s Mailbox

Posted: Dec 27 2010     By: Jim Sinclair      Post Edited: December 27, 2010 at 2:38 pm
Filed under: Jim's Mailbox

Hi Jim and Dan,
I hope you both had a great Christmas.
I keep mentioning to my readers that we may be in the early stages of a significant drought in the plains area. The first impact will be the winter wheat crop, followed by beans and corn if the pattern continues into the spring.
Cost-push inflation is going to be horrible as is. Imagine the impact of crop failure too. Yikes!
Have a great week!
CIGA Craig

Hi Craig,
Thanks for the map. I have also been following that situation very closely. Not only are we dealing with some potential here in the US for dryness issues, but Argentina is running very hot and dry right now as corn enters its critical pollination phase. Soybeans also are at a stage where they too are affected in terms of both size and pod filling.
It looks like the grain and bean situation has the potential to put more pressure to the upside on food prices. As you say, a combination of monetary issues and fundamentals could get ugly very quickly.
Happy New Year,
Trader Dan


Jim,
China is a heavy investor in Brazil, mostly in strategic sectors like oil or land. Lately they have bought stakes in Brazilian electricity distribution businesses for close to $1 billion.
Why would China do this except for diversifying from its dollar holdings?
Best regards,
CIGA Christopher

China Spends Close to US$ 1 Billion Buying Power Plants in Brazil Monday, 27 December 2010 03:27
Electric power in Brazil Beijing-based State Grid Corp. of China completed the purchase of seven electricity distribution businesses in Brazil for US$ 989 million, announced the Chinese government this past week.
Beijing-based State Grid will run electricity transmission services in the southeast of Brazil and supply power to Brazilian capital Brasília, São Paulo and Rio de Janeiro, according to a statement at the website of the Chinese government’s state-owned Assets Supervision and Administration Commission.
China’s biggest electricity network operator agreed in May to buy controlling stakes in seven power transmission units in Brazil from Elecnor SA, Abengoa SA, Isolux Ingenieria SA and Cobra Instalações e Serviços SA.
Latin America’s biggest economy is attracting local and overseas investors to develop its energy infrastructure to meet power demand as its GDP expands more than 7%.
State Grid has obtained a 30-year right to transmit power to the southeastern region of Brazil, the statement said. The electricity distribution businesses will generate annual profit of about US$ 110 million, according to the statement.
More…

Real Estate Spin Continues by Mainstream Media

Posted: Dec 27 2010     By: Greg Hunter      Post Edited: December 27, 2010 at 1:27 pm
Filed under: USAWatchdog.com

Courtesy of Greg Hunter’s USAWatchdog.com

Dear CIGAs,
The mainstream media was at it again last week–putting a positive spin on the awful real estate market.  The USA Today headline on top of the “Money” section last Thursday read “Optimism for home sales adds up.”   The story said, “The trend is starting to move in the right direction,” says Diane Swonk, chief economist at financial services firm Mesirow Financial.  A string of new housing data is building optimism. Existing home sales in November rose 5.6% from October to a seasonally adjusted annual rate of 4.68 million, the National Association of Realtors reported Wednesday. Demand has steadily improved since bottoming in July following the end of the buyers’ tax credit.” (Click here for the complete USA Today story.)
The headline and the beginning of the story would lead you to believe everything is turning around and the worst of the housing meltdown is behind us.  The article failed to include the true context of that whopping 5.6% rise in sales.  Here’s how Marketwatch.com reported the exact same story, “Sales of existing homes rose 5.6% to a seasonally-adjusted annualized rate of 4.68 million, the National Association of Realtors said Wednesday . . . Even so, sales were still 27.9% below prior-year levels and below the 5.26 million in June when a homebuyer tax credit existed.” (Click here to read the complete Marketwatch.com story.) Yes, the spin from USA Today left out the fact home sales were still nearly 28% below last year’s levels.
This is despite the homebuyer tax credit program that doled out up to $8,000 for buying a home.  USA Today buried the real headline and that was this little morsel, “Home prices, down almost 30% from their 2006 peak, will fall 5% to 7% more before potentially rebounding later in the year, says Patrick Newport, IHS Global Insight economist. Banks will repossess 1 million U.S. homes next year, on top of 1 million this year, says market researcher RealtyTrac.”  How are back to back years with millions of “home repossessions” and declining prices of another “5% to 7%” not the lead in a story?  What does “Optimism for home sales adds up,” mean?  Optimism adds up to another million foreclosures and another price decline?  This is just another attempt to put lipstick on a pig of a housing market.
More…

John Mauldin Summarizes His Market Outlook

 

ECB Peripheral Bond Purchases In Sleepy Christmas Week Double To E1.1 Billion

 

Dallas Fed's Texas Manufacturing Index Misses Expectations Of 17, Comes At 12.8, Inventories Surge

 

Updated Complete Rates Technicals Package

 

Frontrunning: December 27

Submitted by Tyler Durden on 12/27/2010 07:28 -0500


Wen Is Confident China Can Contain Inflation (WSJ)

• Job Offers Rising as Economy Warms Up (WSJ), too bad only temp workers actually get hired
• Euro Pain Turns to 23% Gain for Europeans Through S&P Rally (Bloomberg)
• A neutered teleprompter speaks: Obama Wants Tax Cuts for Wealthiest Americans Ended in 2012 (Bloomberg)
• Krugman waxes philosophic on runaway commodity inflation (NYT)
• China's 2011 money supply back to normal level (Xinhua)
• The Economic Year in Review - Say goodbye to 2010 (Weekly Standard)
• Bankers: Don't fret. Harvard Biz School still loves you (Fortune)

John Embry: "Gold, Silver Could Go Ballistic By Year End"

 

'Apocalyptic' Warning: Fix Economy or Middle Class Is Toast

 

Jeff Gundlach: The US Economy Is A Complete Horror [Slides]



Top Economists Debate The Crisis:  "Clinging to the Euro Will Only Prolong The Agony"

 

The Eye of the Recession's Storm



Treasuries' Worst Drop In 2010 Driven By Central Bank Sales  

Guest Post: Positively Wrong: Positivism, That Is

 

Simon Black Explains How To Diversify Sovereign Risk

 

Investor Sentiment: Extremes Persist



News from England: Cost of the Weekly Shop Set to Rocket Next Year



Bolivia hikes gasoline prices 73 pct; protests hit.



Big Freeze Thieves Target Heating Oil As Prices Soar And Families Wait For New Supply   



China's Wen seeks to assure public about inflation

Unemployed Get Another Jobless Benefit--Yoga 
(It makes it easier... when they bend you over...)

16 U.S. cities that could face bankruptcy in 2011

Alabama Town’s Failed Pension Is a Warning




Americans Made Less in 2009; Minimum Wage Set to Rise in 2011   



In Tough Economy, Santas Are Also Suffering   

  


In Tough Economic Times, Bodyguard Business Is Booming

 

Charting 2010, Part 2: Currency - Printing Money, FX Manipulation And Pricing Unleaded In Bits Of Bacon

 

Rocket Carrying Largest Indian Communications Satellite Explodes 47 Seconds After Launch

 

King World News Weekly Metals Wrap

Posted: Dec 26 2010     By: Dan Norcini      Post Edited: December 26, 2010 at 10:57 am
Filed under: Trader Dan Norcini

Dear CIGAs,
Click the link below to listen to this week’s metals wrap up from King World News, once again featuring our very own Trader Dan Norcini.
Click here to listen to the interview…



Jim Sinclair’s Commentary
China does what is good for China but meaningless towards currency induced cost push inflation.

China’s central bank to raise one-year interests rate by 0.25% points English.news.cn   2010-12-25 18:30:48
BEIJING, Dec. 25 (Xinhua) — China’s central bank will raise the one-year lending and deposit interest rate by 25 basis points beginning Dec. 26, according to a statement posted on the website of the People’s Bank of China (PBOC), the central bank, on Saturday.
This is the second time the central bank has increased interest rates in 2010, which raised the one-year lending rate to 5.81 percent and one-year deposit rate to 2.75 percent.
The PBOC increased the benchmark lending and deposit rates by 25 basis points on Oct. 20, which was the first time in almost three years.
The rate hike came after the central bank vice governor, Hu Xiaolian, said Friday that China would bring its overall money supply to a normal level with a range of policy tools, as the government shifts monetary policy from "moderately loose" to "prudent" to rein in rising inflationary pressure and curb asset bubbles.
The country’s consumer price index(CPI), a main gauge of inflation, accelerated to a 28-month high in November of 5.1 percent, while new loans reached 7.45 trillion yuan in the first 11 months of this year, compared to the government’s full-year target of 7.5 trillion yuan.
More…


Jim Sinclair’s Commentary
Of this you can be sure. China never tells you exactly where they are looking for.

Gold miners to go global Updated: 2010-12-01 09:07
TIANJIN – China’s major gold mining companies are planning to ramp up efforts to expand overseas as gold demand rises in China and domestic reserves fall precipitously.
China National Gold Group Corp, the nation’s largest gold producer, said it will increase its annual capacity to 50 tons in five years, 30 to 40 percent of which will be produced overseas.
"We are looking for gold resources in Congo, Brazil, Russia, Venezuela and Mongolia, and most of them are in the early stages of geological exploration," said Du Haiqing, vice-president of the company.
More…

Jim’s Mailbox

Posted: Dec 26 2010     By: Jim Sinclair      Post Edited: December 26, 2010 at 6:02 am
Filed under: Jim's Mailbox

Jim,
China has been fully hedged against the humpty dumpty dollar for quite some time as the spending sprees continue.
CIGA BJS

Dear BJS
Yes, they have no dollar risk whatsoever but the average imbecile on financial TV has no clue.
Regards,
Jim

Venezuela signs US$40-bln worth pacts with Chinese oil giants Updated: 2010-12-07 10:25
Venezuela’s Ministry of Energy and Petroleum has signed six contracts with China National Petroleum Corp, China Petrochemical Corp or Sinopec Group and China National Offshore Oil Corp for a combined contract value of US$40 billion, bringing the three Chinese petrochemical giants a significant presence in the South American country.
CNPC, the parent firm of PetroChina Co Ltd, inked one of the six deals to explore Junin 4 oilfield with a designed crude oil output capacity of 400,000 barrels per day. The Chinese company has a 40% stake in the project that will cost US$16 billion.
Chinese oil giant, Sinopec Group, which controlls Sinopec, will jointly develop Junin 1 and Junin 8 blocks with Petroleos de Venezuela. Each of the two oil blocks will daily yield 200,000 barrels of crude oil. A refinery will also be built by the two partners.
CNOOC Ltd’s parent China National Offshore Oil Corp will develop a 1.2 million-cubic feet natural gas project in Venezuela, sources reported.
More…

 

China problems/European problems/Canada problems/

 

 

Normalcy bias

From Wikipedia, the free encyclopedia

Jump to: navigation, search

The normalcy bias refers to an extreme mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of the government to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred that it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.^[1]

Possible causes

The normalcy bias may be caused in part by the way the brain processes new data. Research suggests that even when the brain is calm, it takes 8–10 seconds to process new information. Stress slows the process, and when the brain cannot find an acceptable response to a situation, it fixates on a single solution that may or may not be correct. An evolutionary reason for this response could be that paralysis gives an animal a better chance of surviving an attack; predators are less likely to eat prey that isn't struggling.^[2]

Effects

The normalcy bias often results in unnecessary deaths in disaster situations. The lack of preparation for disasters often leads to inadequate shelter, supplies, and evacuation plans. Even when all these things are in place, individuals with a normalcy bias often refuse to leave their homes. Studies have shown that more than 70% of people check with others before deciding to evacuate.^[2]
The normalcy bias also causes people to drastically underestimate the effects of the disaster. Therefore, they think that everything will be all right, while information from the radio, television, or neighbors gives them reason to believe there is a risk. This creates a cognitive dissonance that they then must work to eliminate. Some manage to eliminate it by refusing to believe new warnings coming in and refusing to evacuate (maintaining the normalcy bias), while others eliminate the dissonance by escaping the danger. The possibility that some may refuse to evacuate causes significant problems in disaster planning.^[3]

Charting 2010, Part 0: The Biggest Winners And Losers From The "New Normal", And The 6 Main Strange Attractors

Charting 2010, Part 1: The Key Jobs Chart(s) Of 2010

 

DJ Art Cashin's Remix Of A Christmas Carol

 

China's Christmas Present To The World: Another Interest Rate Hike

 

In The News Today

Posted: Dec 24 2010     By: Jim Sinclair      Post Edited: December 24, 2010 at 2:37 pm
Filed under: In The News


Jim Sinclair’s Commentary
This fellow is going to go to jail for life based on a warrant for primary school truancy 40 years ago.

Norwegian Paper Obtains WikiLeaks Cable Haul By NAT WORDEN
DECEMBER 23, 2010, 6:29 P.M. ET
NEW YORK (Dow Jones)–A Norwegian newspaper in possession of WikiLeaks’ entire trove of 250,000 diplomatic cables is scouring the documents for new revelations, one of the reporters assigned to the story said Thursday.
"There are many stories that haven’t been told yet, and we’re looking forward to telling them," said Kristoffer Rønneberg, one of the 20 reporters that Aftenposten, Norway’s largest daily newspaper, has poring over the cables and crafting news stories from that material.
"Our main concern is to bring news to our audience and to the public, and as far as what we choose to report, we will take the same factors under consideration with these cables as we would with any other information we obtain through our reporting," said Mr. Rønneberg, a 32-year-old reporter on Aftenposten’s foreign news desk
He said the cables include large amounts of background on Osama Bin Laden’s activities before the 9/11 attacks, including his dealings with the Taliban in Afghanistan and Sudan.
Mr. Rønneberg said Aftenposten gained access to a smaller number of Norway-related Wikileaks cables two and a half weeks ago through a collaboration with a Swedish newspaper that had some of the cables. About 10 days ago, Aftenposten gained access to the entire trove of cables through other means. He declined to comment further on how the cables were obtained, except to say that the newspaper didn’t pay for them and it has no restrictions imposed on it on how it can use the material.
More…


For Recession Victims, Gold Mining Pans Out


60 Minutes segment: "State Budgets: Day of Reckoning"


Citigroup Fears Fresh Wave of Sovereign Defaults and Bank Failures in Eurozone


More People Fell Out of Obama Mortgage-Aid Program

The JP Morgue Whitsleblowers Are Back: The Cuddly Bears Continue To Expose The Silver Manipulation Story

Submitted by Tyler Durden on 12/24/2010 11:32 -0500

Promptly after those two cuddly bears explained how the JP Morgue is manipulating the silver market, and the xtranormal video promptly went viral, forcing the FT to release an indemnification that "according to sources" JPM had covered a major portion of its silver short (only to subsequently end up with 90% control of other metals markets), here they are back, explaining in Part 2 of the series just what the next steps in the unwind of the biggest metal manipulation scheme will look like. The kicker: a JPM insider has told one of the bears that there is no commercial silver left, "it's all smoke and mirrors, and the CFTC can do nothing about it other than pray." Other topical items explained: silver backwardation, that there are two commissioners at the CFTC on the JP Morgue's payroll, the BIS' fractional gold system and the usage of side pockets for sovereign gold, and pretty much everything that ties the loose odds and ends in the PM manipulation story. 

GAO Gives Up on Auditing Government, Cites 'Uncertainties' 

Silver shortage feeds on itself, Rick Rule tells King World News

 

Lawrence Williams: China's discreet gold-buying, dollar-dumping strategy

 

Shanghai Stocks Drop Following Failed 3 Month Bill Auction

 

An Irrevocable Right to Benefits?

Gold, Silver to Spike Next Week

By Greg McCoach | Friday, December 24th, 2010

Gold and silver prices have remained volatile in both directions since October.

But indications from the COMEX show suggest we may see a spike in these precious metals prices next week...

As prices moved higher over the past two weeks, strong bouts of profit taking have hit the gold and silver markets in each instance, stalling the next attempt to hit another new high.

World Gold and Silver Demand

World investment demand for gold has increased 250% in the past ten years. Investment demand for silver has skyrocketed 522% since 2007. Sales of official gold coins (like the American Gold Eagle) have increased 618% since 2007. World governments are hoarding silver; official sales have plummeted 83% in the past three years. Gold demand for ETFs has increased 20,470% since 2002. Above-ground silver supplies dropped 86% last year. Industrial demand for silver has increased over the past decade, despite a 236% increase in prices.

On the downside action over the past two weeks, strong buying support has come in as precious metals prices looked like they were going to sell off — thus our current holding pattern in gold and silver prices.

This will change to the upside within the next two weeks as major buying of physical metal will need to take place in order to meet contractual obligations on the COMEX before December 31, 2010.

Contracts for gold and silver December futures that demand physical metal must be met by then.

But there appears to be a significant shortfall in the actual physical metal required to meet these demands — especially in silver...

If these contractual obligations are not met by the 12/31/10 deadline, then we could see a default scenario, which would drive the metals prices even higher and cause great instability for other markets as well.

This potential default is due to the fact that JP Morgan Chase, the largest fractional stock holder of the Federal Reserve, has been wildly shorting silver and is now caught between a rock and a hard place.

Word on the street is that JP Morgan Chase has opted to go massively long copper in an attempt to hedge their losses in silver, which could be enormous.

This is setting us up for major fireworks in the metals markets as we come down to the wire at year-end.

---

And gold and silver prices could rocket higher as word hits the markets.

In other news, it appears we are coming to an inflection point in Europe, where the sovereign debt problems are becoming systemic.

It is now widely anticipated that we are going to see further fallout in Europe regarding countries that can no longer remain solvent...

As I've said before, Portugal, Spain, Italy, and others have been on the cusp and are soon expected to announce they can no longer cover their debt situations.

The European spending orgy has come to end and the consequences are going to be severe.

And world markets are going to be affected and precious metals prices will push higher and higher as investors seek safe haven assets.

These are extremely troubling events — not to mention the U.S. government and a majority of the states within the United States are on the same road to ruin as Europe.

Add on top of all these events the next wave of derivative problems that are soon to hit the market, and we have the making of the perfect financial storm worldwide.

Owning the physical precious metals and quality junior mining stocks is the only insurance one can have against the financial insanity that's about to be unleashed on a worldwide basis.

Get your house in order and prepare while you still can.

The paper fraud that is related to fiat currencies and ETF’s is going to be exposed as these events transpire...

And when this happens the new golden rule will be in effect: He who owns the gold makes the rules.

Good Investing,

Greg McCoach
Editor, Wealth Daily
Investment Director, Mining Speculator and Insider Alert

Ted Butler's important paper/IMF concludes gold sales/silver continues with high open interest 

After Nearly Two Years Of Searching, TrimTabs Still Can't Find Who Is Doing All The Stock Buying

Interviewed on CNBC, CFTC's Chilton defends position limits

 

We Are Now Paying for the Destruction of the US Dollar and Economy… Literally

No End In Sight To Equity Outflows As Stock Boycott Persists Despite Largest Bond Outflow Since Lehman Failure

 

NYSE October Margin Debt Jumps To Highest Since Lehman Failure As Investor Net Worth Is At Lowest Since April Highs

 

Economics Is Simple ... The Fat Cats Just Want You to Think It's Complicated So That You Won't Demand Change

Bloomberg Sues The Bucket Shop Known As The ECB, Seeks Disclosure Of Secret Greek Swap Documents

 

John Taylor Says To Play The Coming End Of The Global Reliquification By Shorting Australia

 

Is Paulson Offloading BofA In Dark Pools?

 

Jim Sinclair’s Commentary
John Williams of ShadowStats.com as compared to the glee of many talking heads for 2011.

- Automobile Orders Sink for Fourth Month
- Annualized GDP Growth at 2.6%, GDI Growth at 1.1%
- Housing Crisis Appears to Be Intensifying
- Year-to-Year Decline in Home Sales Is Meaningful Even after Netting out Year-Ago Tax Credit Spikes www.shadowstats.com



Little Holiday Cheer in This Week’s Numbers The average consumer remains liquidity-impaired, and that means there is no hope for any significant economic rebound in the months ahead.  New orders for automobiles (in durable goods) have fallen for four straight months.  Housing starts have begun to turn down anew, and home sales are showing meaningful annual declines, even with last year’s tax-credit-driven sales boosts backed out.  The GDP should turn down again, shortly, as the double-dip recession takes clear hold.  Payrolls and industrial production — allowing for revisions coming early in 2011 — appear already to have peaked or turned down anew as of the August to October 2010 period.  Retail sales — also subject to significant revisions — should begin to show outright monthly declines, net of inflation, in the months ahead.  This will be detailed in next week’s Commentary, which will address the outlook for 2011, a year that should be one of the most treacherous and unstable ever seen for the U.S. economy, systemic solvency and financial markets.  The general outlook as discussed in Special Commentary No. 333, however, has not changed.




Jim Sinclair’s Commentary
No amount of cost cutting can keep up with revenue decline. The you know what is about to hit the municipal bonds fan harder.

16 US Cities Facing Bankruptcy If They Don’t Make Deep Cuts In 2011 Gus Lubin and Leah Goldman | Dec. 21, 2010, 1:32 PM
2011 will be the year of the municipal default. At least that’s what analysts like Meredith Whitney predict, as do bond investors that have been fleeing the muni market.
There are many reasons to be worried. First, the expiration of Build America Bonds will make it harder for cities to raise funds.
Second, city revenues are crashing and keep getting worse. Property taxes haven’t reflected the total damage from the housing crash. High joblessness is cutting into city revenues, while increasing costs for services.
The next default could be a major city like Detroit, or it could be one of hundreds of small cities that are on the brink. Did we leave off your ailing city? Let us know in the comments.
More…




Jim Sinclair’s Commentary
Those cups with handles can be very powerful.

Chile’s Collahuasi copper mine halts shipments
Force majeure declared at world’s third largest copper mine By Jim Jelter, MarketWatch
Dec. 21, 2010, 7:13 p.m. EST
SAN FRANCISCO (MarketWatch) — Chile’s giant Collahuasi copper mine, the world’s third largest, has halted shipments indefinitely following an accident at the mine’s ore shipping terminal.
News that the mine had declared force majeure Monday raced through the global metals market Tuesday, sending March copper futures to a record close of $4.28 a pound on the Comex division of the New York Mercantile Exchange, a 1.7% advance from Monday’s settlement. Read Metals Stocks.
Force majeure is invoked when a company cannot meet its contractual obligations due to circumstances beyond its control, in this case its ability to ship copper-ore concentrate.
Mine officials said the mishap had not affected Collahuasi’s actual mining operations, but that they are scrambling to find some other way to ship stockpiled copper concentrate from the facility after a shiploader at the Punta Patache port collapsed, reportedly killing three workers. They said they did not know how long shipments would be suspended. Separately, a port official told Reuters it could take at least a month to repair the damaged loading station.
More…




Jim Sinclair’s Commentary
Does anyone still pay attention to these tools of currency manipulation? Did China not downgrade Fitch?

Fitch downgrades Hungary as parlt votes on 2011 budget Thu Dec 23, 2010 7:37am EST
By Gergely Szakacs and Krisztina Than
BUDAPEST, Dec 23 (Reuters) – Fitch cut Hungary’s long term foreign currency credit rating by one notch to BBB- with a negative outlook on Thursday, warning that the lack of a coherent medium-term fiscal strategy undermined confidence in fiscal sustainability.
The downgrade came just as Hungarian lawmakers prepared to approve the 2011 budget that cuts the deficit with one-off revenues, leaving markets hoping more reforms due in February will finally put the country on a sustainable fiscal path.
The 2011 budget targets a deficit below 3 percent of gross domestic product for the first time since Hungary joined the European Union in 2004, making it a top performer in the 27-member bloc.
But to do so it will rake in temporary taxes, including heavy new levies on profitable foreign businesses, and tap up to $14 billion of private pension savings, putting it on a potential collision course with markets and voters.
"The new Fidesz government… has set out fiscal plans that go in the wrong direction for further fiscal consolidation. Conversely, these plans could worsen the underlying medium-term budget outlook by around 4pp of GDP over 2011-2012," Fitch said.
Fitch warned that a failure to implement credible medium-term fiscal consolidation measures that restore public finances to a sustainable course could lead to a downgrade.
More…




Jim Sinclair’s Commentary
Who would want to bomb the Swiss other than a US account holder?

Swiss Embassy in Rome Hit by Package Bomb, Hurting One By Jerrold Colten and Tommaso Ebhardt – Dec 23, 2010 5:41 AM MT
A package bomb exploded and injured an employee at the Swiss embassy in Rome today, Foreign Minister Franco Frattini said.
The bomb, which was hidden in a postal package, exploded at noon today, according to a statement from the embassy. The victim suffered hand injuries. No one has claimed responsibility for the attack, according to the embassy.
“This is a deplorable act of violence that deserves our complete condemnation,” Frattini said in an e-mailed statement.
The embassy employee was “seriously injured” and taken to a hospital, news agency Ansa reported.
Today’s explosion is the second bomb scare this week in Rome. A suspicious device discovered on a Rome subway train Dec. 21 wasn’t capable of exploding, Mayor Gianni Alemanno said at the time.
Rome and other Italian cities have been the site of violent student protests in the last week as Prime Minister Silvio Berlusconi’s government attempts to push through legislation that will overhaul the country’s university system.
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Jim Sinclair’s Commentary
Regardless of all the China self-elected experts saying China will not do this, keep in mind that China’s strategy has always been to looks for any kind of national emergency and enter where no other man will tread. The West has no plans for anything and only reacts, usually in a wrong manner, to every situation.

China extends help to tackle euro crisis By Jamil Anderlini in Beijing and Peter Spiegel in Brussels
China has promised to take further “concerted action” to support European financial stabilisation, including continuing to buy the bonds of countries at the centre of the sovereign debt crisis, according to senior European officials.
The officials, who declined to be named, said Wang Qishan, a Chinese vice-premier, had given assurances that China would step up support for European stabilisation efforts “if necessary”. Mr Wang made the pledge during the third annual China-EU High Level Economic and Trade Dialogue, held in Beijing on Tuesday.
In comments reported by state media, Mr Wang said China supported measures taken by the EU and the International Monetary Fund to stabilise the eurozone, but gave little detail of what form such backing would take.
Beijing has emerged as one of the more enthusiastic backers of distressed European sovereign debt in recent months.
During a trip to Portugal last month, Hu Jintao, China’s president, said Beijing would take “concrete measures” to help the country, which officials signalled would include bond purchases.
A month earlier, Wen Jiabao, China’s prime minister, said in Athens that Beijing would purchase Greek bonds and increase foreign investment in the country.
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Fresh humiliation for eurozone as China says it will bail out debt-ridden nations By Daily Mail Reporter
Last updated at 8:12 PM on 23rd December 2010
China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7trillion overseas investment fund.
In a fresh humiliation for Europe, Foreign Ministry spokesman Jiang Yu said it was one of the most important areas for China’s foreign exchange investments.
The country has already approached struggling European countries with financial aid, including offering to buy Greece’s debt in October and promising to buy $4billion of Portuguese government debt.
Today Portugal had its credit rating downgraded by the Fitch Ratings agency amid mounting concerns over the country’s ability to raise money in the markets to finance its hefty borrowings.
Fitch said it was reducing its rating on the country’s debt by one notch to A+ from AA- and warned that further downgrades may be in the offing by maintaining its negative outlook.
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Jim Sinclair’s Commentary
What foolish bureaucrat thinks the West can bully China into anything?

U.S. files WTO complaint against China. The Obama administration filed a complaint with the WTO over subsidies China provides its wind-energy manufacturers, acting on a petition brought by the United Steelworkers union. The U.S. claims that the Chinese government fund which awards grants to wind power manufacturers appears to require recipients to use Chinese-made parts, which violates WTO rules.



Jim Sinclair’s Commentary
A small step for a city but the beginning of something that will impact all mankind in the West.

Alabama Town’s Failed Pension Is a Warning Published: December 22, 2010
PRICHARD, Ala. — This struggling small city on the outskirts of Mobile was warned for years that if it did nothing, its pension fund would run out of money by 2009. Right on schedule, its fund ran dry.
Then Prichard did something that pension experts say they have never seen before: it stopped sending monthly pension checks to its 150 retired workers, breaking a state law requiring it to pay its promised retirement benefits in full.
Since then, Nettie Banks, 68, a retired Prichard police and fire dispatcher, has filed for bankruptcy. Alfred Arnold, a 66-year-old retired fire captain, has gone back to work as a shopping mall security guard to try to keep his house. Eddie Ragland, 59, a retired police captain, accepted help from colleagues, bake sales and collection jars after he was shot by a robber, leaving him badly wounded and unable to get to his new job as a police officer at the regional airport.
Far worse was the retired fire marshal who died in June. Like many of the others, he was too young to collect Social Security. “When they found him, he had no electricity and no running water in his house,” said David Anders, 58, a retired district fire chief. “He was a proud enough man that he wouldn’t accept help.”
The situation in Prichard is extremely unusual — the city has sought bankruptcy protection twice — but it proves that the unthinkable can, in fact, sometimes happen. And it stands as a warning to cities like Philadelphia and states like Illinois, whose pension funds are under great strain: if nothing changes, the money eventually does run out, and when that happens, misery and turmoil follow.
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