"The Beijing Conference": See How China Quietly Took Over Africa
Back in 1885, to much fanfare, the General Act of the Berlin Conference launched
the Scramble for Africa which saw the partition of the continent,
formerly a loose aggregation of various tribes, into the countries that
currently make up the southern continent, by the dominant superpowers
(all of them European) of the day. Subsequently Africa was pillaged,
plundered, and in most places, left for dead. The fact that a credit
system reliant on petrodollars never managed to take hold only
precipitated the "developed world" disappointment with Africa, no matter
what various enlightened, humanitarian singer/writer/poet/visionaries
claim otherwise. And so the continent languished. Until what we have
dubbed as the "Beijing Conference" quietly took place,
and to which only Goldman Sachs, which too has been quietly but very
aggressively expanding in Africa, was invited. As the map below from
Stratfor shows, ever since 2010, when China pledged over $100 billion to
develop commercial projects in Africa, the continent has now become de
facto Chinese territory. Because where the infrastructure spending has
taken place, next follow strategic sovereign investments, and other
modernization pathways, until gradually Africa is nothing but an annexed
territory for Beijing, full to the brim with critical raw materials,
resources and supplies. So while the "developed world" was and continues
to deny the fact that it is broke, all the while having exactly zero money to invest in expansion, China is quietly taking over the world. Literally.
Since
the European Summit a mere six weeks ago, Crude oil prices have surged
over 20%. It seems, if one looks at stock prices, that between Monti's
'bluff', Rajoy's 'threats', and Draghi's 'promise' that everything has
been fixed in Europe and all-is-well in the world as Europe's stocks swing to a year-to-date gain of 5% (with Spain and Italy up 10-15% since the summit alone).
However, if one considers for one moment what exactly they are
supposed to have 'fixed' then it seems one of these markets is not like
the others... 10Y Spanish spreads are 10bps wider than pre-summit, Italian 10Y is only 10bps tighter, Portugal 10Y is unchanged and the Bund has outperformed Treasuries by 15bps. European corporate and financial credit has rallied but has dramatically underperformed
- especially post-Draghi - as it is clear that investor hope for more
unsterilized Fed/ECB 'aid' is more than priced into equity markets and
has had the aforementioned unintended consequence of spilling out into energy markets - with all the negative feedback implications that come with that.
The Federal Reserve: proudly creating checkpoint police jobs since 1913.
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With
86% of the S&P 500’s market cap reported, 2Q earnings growth has
been negative, with profits down 1.6% excluding Financials. This marks the first quarter of year-on-year profit declines since 2009.
Moreover, while EPS surprises have been positive, they have been the
weakest of the current recovery cycle, and revenue surprises have been
negative. Following 2Q announcements, companies have issued weak
guidance, resulting in increasingly rapid downward revisions
to analyst estimates. At present, consensus expectations are for
earnings to decline by 1.5% in 3Q. This implies further deterioration in
margins. While UBS believe margins will hold up better than expected,
their revised economic outlook suggests top-line expectations may be too high
- and along with the FX impact we noted last night, those miraculous
multiples will have to extend to magnificent levels to maintain this
haughty market valuation.
The
US stock market is up about 9% since June 1 despite weakening
fundamentals for US companies and weakening economies around the world,
including in Europe. Morgan Stanley's Adam Parker thinks the reason for the rally is investors’ dream that macro policy in the US and Europe will prove to be more effective this time
around than in the recent past. Underneath the market rally there has
been some abnormal micro structure, including the fact that mega-caps
have outperformed in an up tape, high beta has underperformed, and in
the last month energy was the best-performing sector while materials
was the worst, despite the 0.83 correlation between the two over the
past 40 years. His response to all this optimism is to remind investors
that analysts and investors tend to want to be optimistic and that the market runs on a buy-the-dream mentality. Everyone talks about being pessimistic, but what we hear from our conversations with investors is generally optimism: "I
am wary when people claim to be a contrarian bull today. They should
not pretend they are alone on an island in their bullishness."
You
may recall that one of the “tricks of the trade” was the use of people
in the audience. They stood up and claimed that they had taken the magic
potion and were cured of rheumatism, arthritis, cancer and that ninety
year old Uncle Elijah and been able to throw away his cane after
imbibing the stuff. This may remind you of what is going on in Europe
presently as politicians from each and every nation claim that the
newest European snake oil will cure the ailments of Europe for all time,
for forever and for always. Yes, well, the printing of money has a cost
besides the paper and brandishing yourself as the next new Savior of
Europe is the trick of Kings and countless empires on the Continent and
yet here we are after being saved so many times in the past. So I will
tell you this; you produce the Vampire and then I will buy the garlic
and we’ll leave it at that!
A
curious thing happened on the way to (ever deferred) recovery:
America's goods manufacturing sector has been resilient, and in line
what one would expect from a recovery. So far so good: the problem as
everyone knows, 70% of US GDP is based on "services." And it is here
that things get very ugly. As the charts of the day below show, while
"goods have been good", it is services that have stunk up the economy in
the post-depression era, and are what the Fed has been unable to do
anything to stimulate, and by implication have kept US GDP subdued at
stall speed levels.
Emotion, while an important element in man’s array of mental tools, can unfortunately triumph over reason in crucial matters.
In the context of simple economic reasoning, today’s intellectual
establishment often disregards common sense in favor of emotional-tinged
policy proposals that rely on feelings of jealously, envy, and blind
patriotism for validation rather than logical deduction. “Eat the rich”
schemes such as progressive taxation and income redistribution are
used by leftists who style themselves as champions of the poor. Plucking
on the emotional strings of envy makes it easier to arouse widespread
support for economic intervention via the state. Printed money is not the same as accumulated savings which would otherwise fund sustainable lines of investment. The truth is that capital is always scarce; there is never enough of it. Krugman
and Stiglitz believe, as most do, that Americans should be born with
the opportunity to succeed. What they fail to see (or refuse to
acknowledge) is that the free market provides the best opportunities
for someone to make a decent living by providing goods and services.
Jim Sinclair’s Commentary
Temporary Open Market Operations
Temporary Open Market Operations for August 07, 2012
Last Updated: August 07, 2012 9:56 AM
Number of Operations Today: 1
This operation is part of the operational readiness program announced in our August 2, 2012 statement.
Deal Date: Tuesday, August 07, 2012
Delivery Date: Tuesday, August 07, 2012
Maturity Date: Friday, August 10, 2012
Type of Operation1: Repo
Auction Method: Multiple Price
Settlement: Same Day
Term of Operation2: 3 Days
Operation Close Time: 09:55 AM
More…
Jim Sinclair’s Commentary
Euro to Beat Dollar? Draghi’s Genius Axel Merk, Merk Funds
August 7, 2012
Investors have not woken up to it, but last week may have been a game changer. European Central Bank (ECB) President Draghi took tail risks out of the Eurozone, while at the same time forcing closer fiscal integration. He did it all while keeping the ECB out of some political minefields. It’s pure genius. The initial market reaction suggested he might have lost a battle, not realizing that he is winning the war.
Dismayed by a dysfunctional process caused by a lack of leadership and the increasing risk of some of the worst case scenarios playing out, we have been staying away from the euro in our hard currency strategy. As of late last week, those dynamics changed: we are giving the euro another chance, not only because of substantial short covering potential, but also because Draghi’s “whatever it takes” approach might bring about seismic changes in how European integration, fiscal and monetary policy move forward.
In essence, Draghi told the world that the ECB will act like a central bank of a United States of Europe if the integration of European fiscal policy accelerates. The “integration” process hasn’t worked particularly well. In the early years of the Eurozone, peripheral Eurozone countries used cheap access to financing to live beyond their means. Now, the markets have serious doubts about the sustainability of the finances of weaker Eurozone countries. To regain the markets’ trust, governments have nibbled with austerity measures. While the respective governments will take offense to us using the term ‘nibble’ at their hard fought progress, governments have not been able to reduce their debt loads. Politicians blame the high cost of borrowing and speculators. Unfortunately, as long as debt is merely shuffled around, no matter how big any aid package may be, it is unlikely to bring long lasting relief. In an effort to regain the trust of the markets, governments must engage in credible structural reform. Ireland has successfully gone down this path, but politicians have so far been unable to do the same in Spain, Italy and Greece. In Spain, Prime Minister Rajoy enjoys an absolute parliamentary majority and has no excuse. Italy is run by a technocrat; as such, the market is rightfully suspicious. Greece, well, is in a category of her own.
To break the debt spiral of these weaker countries, the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) have been put in place. Accessing these facilities comes with a hefty price tag: giving up sovereign control over one’s budget. However, that’s exactly what a United States of Europe needs: tight fiscal integration. While access to the bailout facilities reduces the immediate cost of borrowing, it may also shut the door to selling bonds in the markets at palatable cost.
More…
Jim Sinclair’s Commentary
Jim,
Since millions would have been lost due to silver manipulation if it’s real, there’s an American tradition to address it in civil court through a class action lawsuit. If you, GATA and others have enough evidence to make the case, surely greedy lawyers who took the point against tobacco, asbestos, etc would find the concept worthy of their time. There would be myriad silver investors in the "class" and they could use any evidence sources available including subpoenas to the bank(s),as well as accessing CTFC acquired data and discussions.
All silver producers as well as Silver Wheaton would have suffered losses and could conceivably be part of the case, though such entities might be better advised to pursue civil actions independently.
If there really is a rule of law when USG agencies fall down on the job, it is the responsibility of citizens to protect their own interests. Since no one has taken up the lance on this, it appears silver investors are happy to be taken to the cleaners lying down.
I am not a silver investor but a keen observer of US society.
CIGA JF
Dear Jim,
After reading your numerous postings regarding the necessity for direct registration of stock, I set out to contact the two brokerage firms I use. The first one which I use for Canadian stocks for gold and oil stocks informed me that they could do it but it would be a minimum of $500 per transaction, but that depended on the company, and the amount could be higher.
Next, they informed me that if their brokerage firm went bankrupt that even with direct registration that my chances of recovery were not any better than street name registration. They indicated that it was much more difficult a transaction to trade street name registration versus direct registration. I am certainly no expert on securities, just what I have read on the U.S. Securities and Exchange Commission website.
The next firm was USAA Insurance Company that was originally set up for former or current military personnel and their families. I have 401K and SEP retirement money in these accounts, including approximately 20,000 shares of TRX. USAA informed me that they do not do direct registration and do not take part in the derivatives market. They have no other party outside of their brokerage who interacts with anyone’s account. These retirement accounts are not allowed to have a margin account.
So, two inquiries and push back on both. Just thought I would pass it along.
Best Regards,
CIGA William
Dear William,
Today’s Items:
Finally, please prepare now for the escalating economic and social unrest. Good Day!
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Back in 1885, to much fanfare, the General Act of the Berlin Conference launched
the Scramble for Africa which saw the partition of the continent,
formerly a loose aggregation of various tribes, into the countries that
currently make up the southern continent, by the dominant superpowers
(all of them European) of the day. Subsequently Africa was pillaged,
plundered, and in most places, left for dead. The fact that a credit
system reliant on petrodollars never managed to take hold only
precipitated the "developed world" disappointment with Africa, no matter
what various enlightened, humanitarian singer/writer/poet/visionaries
claim otherwise. And so the continent languished. Until what we have
dubbed as the "Beijing Conference" quietly took place,
and to which only Goldman Sachs, which too has been quietly but very
aggressively expanding in Africa, was invited. As the map below from
Stratfor shows, ever since 2010, when China pledged over $100 billion to
develop commercial projects in Africa, the continent has now become de
facto Chinese territory. Because where the infrastructure spending has
taken place, next follow strategic sovereign investments, and other
modernization pathways, until gradually Africa is nothing but an annexed
territory for Beijing, full to the brim with critical raw materials,
resources and supplies. So while the "developed world" was and continues
to deny the fact that it is broke, all the while having exactly zero money to invest in expansion, China is quietly taking over the world. Literally.Monti's Bluffing Unleashes Bull Market In Crude
Since
the European Summit a mere six weeks ago, Crude oil prices have surged
over 20%. It seems, if one looks at stock prices, that between Monti's
'bluff', Rajoy's 'threats', and Draghi's 'promise' that everything has
been fixed in Europe and all-is-well in the world as Europe's stocks swing to a year-to-date gain of 5% (with Spain and Italy up 10-15% since the summit alone).
However, if one considers for one moment what exactly they are
supposed to have 'fixed' then it seems one of these markets is not like
the others... 10Y Spanish spreads are 10bps wider than pre-summit, Italian 10Y is only 10bps tighter, Portugal 10Y is unchanged and the Bund has outperformed Treasuries by 15bps. European corporate and financial credit has rallied but has dramatically underperformed
- especially post-Draghi - as it is clear that investor hope for more
unsterilized Fed/ECB 'aid' is more than priced into equity markets and
has had the aforementioned unintended consequence of spilling out into energy markets - with all the negative feedback implications that come with that.Welcome To The Republic Of Federal Reserve. Please Present
The Federal Reserve: proudly creating checkpoint police jobs since 1913.Home Price Recovery Will Take Longer Than Spring of 2013
Eric De Groot at Eric De Groot - 19 minutes ago
It will take a little longer than spring of 2013 for home prices to
recover. Chart: U.S. Median Home Price (MHP) And MHP to Gold Ratio
Headline: Home prices won't really recover until spring Even though home
prices are rebounding in some parts of the country, the overall housing
market won't start turning the corner until next spring, according to the
latest forecast based on...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
History Repeats But Today's Cheers Will Eventually Turn into Tomorrow’s Tears
Eric De Groot at Eric De Groot - 2 hours ago
We've seen this game played throughout history and the end result is always
the same. Countries, States, or Cities Impose High Taxes on everyone
considered "rich". As a result, the rich flee and population declines
Countries, States, or Cities redefine who's rich to collect more taxes.
Aggressive taxation or enforcement curtails investment, economic growth,
employment, and...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Austerity At The Expense of Society
Eric De Groot at Eric De Groot - 4 hours ago
The world has become one big hedge fund that trades other peoples’ money
with great leverage, yet we squabble over old political phrases instead.
What a waste. Still, old-fashioned name calling and finger point provides
the perfect distraction for austerity designed to protect majority holders
of debt at the expense of society. The message would be different if the
majority...
[[ This is a content summary only. Visit my website for full links, other
content, and more! ]]
Fed and Treasury Irate at NY Bank Regulator's Vulgar Display of Public Diligence with Standard Chartered
Be Careful What QE You Wish For #2467: Gas Prices Surging Again
After
a drop of more than 20% from late April to mid June in wholesale
gasoline prices which was heralded as the great savior of a slowing
global economy - all those implicit tax cuts... the hopes and dreams of
the next great unsterilized money-printing has not only floated equity
asset valuations to near multi-year highs but energy prices across
Europe and the US are soaring once again. This 'transitory' 25% surge in wholesale gasoline prices in the US in the last two months - now back above $3/gallon implies (given the lag in transmission) that retail gas prices (which historically peak around July 4th) are set to rise notably above last year's summer peak
- back up near record highs and eating into that ever so happy to spend
consumer's pocketbook once again. Meanwhile, Europeans are seeing
near-record highs in retail gas prices once again and Brent
priced in EUR (which remember is what they 'care' about) is now back
above 2008 highs and within a few euros of all-time record highs - up
almost 30% since Mid-June. Deflationary? Recessionary?
From Chicago To New York And Back In 8.5 Milliseconds
Back in 2009 when the world wasn't filled with HFT 'experts', we deconstructed the
topic of High Frequency Trading on a daily basis, and predicted not
only the flash crash, not only debacles such as the Knight trading
fiasco, not only the death of capital markets as a fund raising vehicle
for companies who wish to go public (i.e. the FaceBook IPO fiasco), but
much more (all of which has yet to pass before the stock market, as it
was once known, is no more). The reason why little if anything can and
will be done to fix the persistent threat to capital markets that is
HFT is two fold: i) none of the current regulators understand anything
about modern market topology, and ii) HFT is so embedded in markets
that unrooting it would result in a complete reboot of "fair" stock
valuation: imagine what would happen to stock prices if Knight and its
"buy everything" algos were no longer present. Mass hysteria as the
realization that vacauum tubes are now TBTF. That said it is always
amusing to observe as more and more people get in on the scam that is
the "equity market", now completely dominated by robots which
do nothing but accelerate and perpetuate momentum moves - after all it
is all they can do in lieu of being able to read financials, or
anticipate events. Remember: it is always the market that makes the
news, never the other way around. So it was entertaining and informative
to read the latest recap of all events HFT-related as narrated by
Wired's Jerry Adler, whose write up "Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading"
does an admirable job of showing how not only nothing has changed
since those days in 2009 full of warning, but how in fact things are
moving ever faster to what will one day be a trading singularity,
limited strictly by the speed of light (and maybe even surpassing
that). Of all the things in the article, the one we found most curious
is that since 2009, the round trip from the biggest quant trading hub
in Chicago to the exchange hubs in NY and NJ, has been cut by over 50%,
or from over 13 milliseconds to just about 9 milliseconds, courtesy of
Microwaves.
Back in 2009 when the world wasn't filled with HFT 'experts', we deconstructed the
topic of High Frequency Trading on a daily basis, and predicted not
only the flash crash, not only debacles such as the Knight trading
fiasco, not only the death of capital markets as a fund raising vehicle
for companies who wish to go public (i.e. the FaceBook IPO fiasco), but
much more (all of which has yet to pass before the stock market, as it
was once known, is no more). The reason why little if anything can and
will be done to fix the persistent threat to capital markets that is
HFT is two fold: i) none of the current regulators understand anything
about modern market topology, and ii) HFT is so embedded in markets
that unrooting it would result in a complete reboot of "fair" stock
valuation: imagine what would happen to stock prices if Knight and its
"buy everything" algos were no longer present. Mass hysteria as the
realization that vacauum tubes are now TBTF. That said it is always
amusing to observe as more and more people get in on the scam that is
the "equity market", now completely dominated by robots which
do nothing but accelerate and perpetuate momentum moves - after all it
is all they can do in lieu of being able to read financials, or
anticipate events. Remember: it is always the market that makes the
news, never the other way around. So it was entertaining and informative
to read the latest recap of all events HFT-related as narrated by
Wired's Jerry Adler, whose write up "Raging Bulls: How Wall Street Got Addicted to Light-Speed Trading"
does an admirable job of showing how not only nothing has changed
since those days in 2009 full of warning, but how in fact things are
moving ever faster to what will one day be a trading singularity,
limited strictly by the speed of light (and maybe even surpassing
that). Of all the things in the article, the one we found most curious
is that since 2009, the round trip from the biggest quant trading hub
in Chicago to the exchange hubs in NY and NJ, has been cut by over 50%,
or from over 13 milliseconds to just about 9 milliseconds, courtesy of
Microwaves.
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Rosenberg's 'Four Horsemen' Of Downside Risk For US Growth
Gluskin Sheff's David Rosenberg details the four major downside risks for US growth over the next four quarters:
- More Adverse News Out Of Europe
- The Sharp Run-Up In Food Prices
- Negative Export Shock
- The Proverbial Fiscal Cliff
The Pace Of US Downward Revisions Is Picking Up
With
86% of the S&P 500’s market cap reported, 2Q earnings growth has
been negative, with profits down 1.6% excluding Financials. This marks the first quarter of year-on-year profit declines since 2009.
Moreover, while EPS surprises have been positive, they have been the
weakest of the current recovery cycle, and revenue surprises have been
negative. Following 2Q announcements, companies have issued weak
guidance, resulting in increasingly rapid downward revisions
to analyst estimates. At present, consensus expectations are for
earnings to decline by 1.5% in 3Q. This implies further deterioration in
margins. While UBS believe margins will hold up better than expected,
their revised economic outlook suggests top-line expectations may be too high
- and along with the FX impact we noted last night, those miraculous
multiples will have to extend to magnificent levels to maintain this
haughty market valuation.Silver Market Sees ‘Anomalies’ and ‘Devious Efforts’ - CFTC’s Chilton
The silver market was affected by “devious efforts” to move the price of the precious metal, according to Bart Chilton, a member of the U.S. Commodity Futures Trading Commission, as reported by Bloomberg. “I continue to believe, consistent with my previous statements and information from the public, that there have been devious efforts related to moving the price of silver,” Chilton said by e-mail today in response to questions from Bloomberg. “There have also been silver and gold market anomalies outside of the silver investigate window that have raised, and continue to raise, market concerns.” The enforcement division of the Washington-based agency, the main U.S. overseer of derivatives markets, began pursuing allegations of manipulation in the silver market in September 2008. Investigators have analyzed more than 100,000 documents and interviewed dozens of witnesses, the CFTC said in a November 2011 statement. Chilton said last month the investigation may be completed as early as September."The Market Runs On A Buy-The-Dream Mentality"
The
US stock market is up about 9% since June 1 despite weakening
fundamentals for US companies and weakening economies around the world,
including in Europe. Morgan Stanley's Adam Parker thinks the reason for the rally is investors’ dream that macro policy in the US and Europe will prove to be more effective this time
around than in the recent past. Underneath the market rally there has
been some abnormal micro structure, including the fact that mega-caps
have outperformed in an up tape, high beta has underperformed, and in
the last month energy was the best-performing sector while materials
was the worst, despite the 0.83 correlation between the two over the
past 40 years. His response to all this optimism is to remind investors
that analysts and investors tend to want to be optimistic and that the market runs on a buy-the-dream mentality. Everyone talks about being pessimistic, but what we hear from our conversations with investors is generally optimism: "I
am wary when people claim to be a contrarian bull today. They should
not pretend they are alone on an island in their bullishness."Waiting For The Vampires
You
may recall that one of the “tricks of the trade” was the use of people
in the audience. They stood up and claimed that they had taken the magic
potion and were cured of rheumatism, arthritis, cancer and that ninety
year old Uncle Elijah and been able to throw away his cane after
imbibing the stuff. This may remind you of what is going on in Europe
presently as politicians from each and every nation claim that the
newest European snake oil will cure the ailments of Europe for all time,
for forever and for always. Yes, well, the printing of money has a cost
besides the paper and brandishing yourself as the next new Savior of
Europe is the trick of Kings and countless empires on the Continent and
yet here we are after being saved so many times in the past. So I will
tell you this; you produce the Vampire and then I will buy the garlic
and we’ll leave it at that!Daily US Opening News And Market Re-Cap: August 8
The European start was quiet in terms of news-flow, with concentration still centered on the finances of the peripheral nations as Spain still refuses to accept they may need a bailout for the country as a whole. The Spanish short-end has seen a continuation of yesterday’s downside, with profit-taking noted following last weeks rally. Bund futures have seen a part-retracement of yesterday’s weakness, boosted by a well-bid 10yr German auction and as sentiment takes a turn towards safer havens. The headline event today came out of London with the Bank of England quarterly inflation report. Alongside expectation they cut growth forecasts for this year and next, although against forecasts the report and comments from Governor King were less dovish than anticipated causing strengthening of GBP, with moves to fresh highs in GBP/USD. Short sterling suffered downside following comments from King who said cutting interest rates would damage some financial institutions and would be partly counter-productive.Goods Are Good, Services Stink: Chart Of The Day
A
curious thing happened on the way to (ever deferred) recovery:
America's goods manufacturing sector has been resilient, and in line
what one would expect from a recovery. So far so good: the problem as
everyone knows, 70% of US GDP is based on "services." And it is here
that things get very ugly. As the charts of the day below show, while
"goods have been good", it is services that have stunk up the economy in
the post-depression era, and are what the Fed has been unable to do
anything to stimulate, and by implication have kept US GDP subdued at
stall speed levels.Frontrunning: August 8
- Regulators irate at NY action against Standard Chartered (Reuters)
- Recession Generation Opts To Rent Not Buy Houses To Cars (Bloomberg)
- Egypt launches air strikes on militants in Sinai (Reuters)
- Loan-Shark Lending Surge Feared In Japan (Bloomberg)
- US seeks $3bn for Sudan oil deal (FT)
- Home Prices Climb as Supply Dwindles (WSJ)... not really- just money laundering in the form of ultra luxury home purchases soars
- A lifeline is thrown to the periphery - Smaghi (FT)
- Standard and Who? Greece Credit-Rating Outlook Lowered by S&P as Economy Weakens (Bloomberg)
- BOE Cuts Growth Forecast, Sees Inflation Below Goal in Two Years (Bloomberg)
- S&P Takes CreditWatch Actions On Four Spanish Banks (Reuters)
- Japan Gets Reprieve as Drop in Oil Eases Trade Impact (Bloomberg)
Europe Back To Abnormal As Spanish Selling Resumes
A funny thing happened in European peripheral bond markets: they sold off - Spain is wider across the board, with the 2 Year back over 4%, and the 10 Year threatening to blow out above 7% for the first time since the market was re-re-fooled by Draghi. Same in Italy, where the 2s10s is once again in flattening mode. In other words after getting Draghi right for one day, then flipping and confusing what he said for the next week, the market is back to being right in itis initial kneejerk reaction to the ECB head's words. One reason (among many) - a Rabobank report by Richard McGuire and Lyn Graham-Taylor which states that Spain won’t ask for more aid if more conditions are attached add to likelihood "crisis must worsen before it improves." Hmm, where have we seen an identical turn of the phrase before. Oh yes, here. Rabobank also adds that the ECB will have to show willingness to buy across the curve (not just in tenors of less than one year) when it does intervene. Of course, for that to happen, things must get far, far worse. Just as we explained to the five-year olds in charge of the market this past weekend.Who's Afraid Of Income Inequality?
Emotion, while an important element in man’s array of mental tools, can unfortunately triumph over reason in crucial matters.
In the context of simple economic reasoning, today’s intellectual
establishment often disregards common sense in favor of emotional-tinged
policy proposals that rely on feelings of jealously, envy, and blind
patriotism for validation rather than logical deduction. “Eat the rich”
schemes such as progressive taxation and income redistribution are
used by leftists who style themselves as champions of the poor. Plucking
on the emotional strings of envy makes it easier to arouse widespread
support for economic intervention via the state. Printed money is not the same as accumulated savings which would otherwise fund sustainable lines of investment. The truth is that capital is always scarce; there is never enough of it. Krugman
and Stiglitz believe, as most do, that Americans should be born with
the opportunity to succeed. What they fail to see (or refuse to
acknowledge) is that the free market provides the best opportunities
for someone to make a decent living by providing goods and services.Jim Sinclair’s Commentary
Regardless of the denials, all that is required here and there in terms of liquidity will be supplied.
It has begun and will continue in many ways and definitions, but will end up as QE to infinity.
This will make the recent lows for gold the lows and bring us Alf’s price objectives.
Temporary Open Market Operations
Temporary Open Market Operations for August 07, 2012
Last Updated: August 07, 2012 9:56 AM
Number of Operations Today: 1
This operation is part of the operational readiness program announced in our August 2, 2012 statement.
Deal Date: Tuesday, August 07, 2012
Delivery Date: Tuesday, August 07, 2012
Maturity Date: Friday, August 10, 2012
Type of Operation1: Repo
Auction Method: Multiple Price
Settlement: Same Day
Term of Operation2: 3 Days
Operation Close Time: 09:55 AM
More…
Jim Sinclair’s Commentary
No one will give the euro any chance of survival. In my more than 50
years in this business there never has been a more touted and crowded
trade as short the euro. Few understand that the euro without one or
more weak nations would be more valuable than with the weak nations. I
think the short side will get squeezed in this universal transaction so
publicized by financial TV.
Euro to Beat Dollar? Draghi’s Genius Axel Merk, Merk Funds
August 7, 2012
Investors have not woken up to it, but last week may have been a game changer. European Central Bank (ECB) President Draghi took tail risks out of the Eurozone, while at the same time forcing closer fiscal integration. He did it all while keeping the ECB out of some political minefields. It’s pure genius. The initial market reaction suggested he might have lost a battle, not realizing that he is winning the war.
Dismayed by a dysfunctional process caused by a lack of leadership and the increasing risk of some of the worst case scenarios playing out, we have been staying away from the euro in our hard currency strategy. As of late last week, those dynamics changed: we are giving the euro another chance, not only because of substantial short covering potential, but also because Draghi’s “whatever it takes” approach might bring about seismic changes in how European integration, fiscal and monetary policy move forward.
In essence, Draghi told the world that the ECB will act like a central bank of a United States of Europe if the integration of European fiscal policy accelerates. The “integration” process hasn’t worked particularly well. In the early years of the Eurozone, peripheral Eurozone countries used cheap access to financing to live beyond their means. Now, the markets have serious doubts about the sustainability of the finances of weaker Eurozone countries. To regain the markets’ trust, governments have nibbled with austerity measures. While the respective governments will take offense to us using the term ‘nibble’ at their hard fought progress, governments have not been able to reduce their debt loads. Politicians blame the high cost of borrowing and speculators. Unfortunately, as long as debt is merely shuffled around, no matter how big any aid package may be, it is unlikely to bring long lasting relief. In an effort to regain the trust of the markets, governments must engage in credible structural reform. Ireland has successfully gone down this path, but politicians have so far been unable to do the same in Spain, Italy and Greece. In Spain, Prime Minister Rajoy enjoys an absolute parliamentary majority and has no excuse. Italy is run by a technocrat; as such, the market is rightfully suspicious. Greece, well, is in a category of her own.
To break the debt spiral of these weaker countries, the European Financial Stability Facility (EFSF) and European Stability Mechanism (ESM) have been put in place. Accessing these facilities comes with a hefty price tag: giving up sovereign control over one’s budget. However, that’s exactly what a United States of Europe needs: tight fiscal integration. While access to the bailout facilities reduces the immediate cost of borrowing, it may also shut the door to selling bonds in the markets at palatable cost.
More…
Jim Sinclair’s Commentary
CIGA JF is right on target. It is up the aggrieved company to pursue
the short that has used methods to profit which are clearly in violation
of common commercial code.
Forget regulators and securities/commodity law. There is no redress
there. I am yet to see one CEO willing to take on this challenge. I see
it as a must.
The CFTC says the investigation of manipulation in the silver market
is concluded. Commissioner Chilton disagrees. Only time will tell.
Jim,
Since millions would have been lost due to silver manipulation if it’s real, there’s an American tradition to address it in civil court through a class action lawsuit. If you, GATA and others have enough evidence to make the case, surely greedy lawyers who took the point against tobacco, asbestos, etc would find the concept worthy of their time. There would be myriad silver investors in the "class" and they could use any evidence sources available including subpoenas to the bank(s),as well as accessing CTFC acquired data and discussions.
All silver producers as well as Silver Wheaton would have suffered losses and could conceivably be part of the case, though such entities might be better advised to pursue civil actions independently.
If there really is a rule of law when USG agencies fall down on the job, it is the responsibility of citizens to protect their own interests. Since no one has taken up the lance on this, it appears silver investors are happy to be taken to the cleaners lying down.
I am not a silver investor but a keen observer of US society.
CIGA JF
Dear Jim,
After reading your numerous postings regarding the necessity for direct registration of stock, I set out to contact the two brokerage firms I use. The first one which I use for Canadian stocks for gold and oil stocks informed me that they could do it but it would be a minimum of $500 per transaction, but that depended on the company, and the amount could be higher.
Next, they informed me that if their brokerage firm went bankrupt that even with direct registration that my chances of recovery were not any better than street name registration. They indicated that it was much more difficult a transaction to trade street name registration versus direct registration. I am certainly no expert on securities, just what I have read on the U.S. Securities and Exchange Commission website.
The next firm was USAA Insurance Company that was originally set up for former or current military personnel and their families. I have 401K and SEP retirement money in these accounts, including approximately 20,000 shares of TRX. USAA informed me that they do not do direct registration and do not take part in the derivatives market. They have no other party outside of their brokerage who interacts with anyone’s account. These retirement accounts are not allowed to have a margin account.
So, two inquiries and push back on both. Just thought I would pass it along.
Best Regards,
CIGA William
Dear William,
You have been given a total load of crap. Direct registration totally
eliminates the broker or clearing agent. You name is on the books of
the transfer agent for the company. The cost does not exceed $50. Please
give your brokerage firm my letter which says they are charging ten
times their cost and lying to you about the advantage of direct
registration in bankruptcy.
I am shocked by how many people are being lied to. The broker wants
to control your shares to guarantee them the sell order. Your brokers
are lying to you and overcharging you to get rid of your request which
if done will totally protect you.
To get an honest answer to direct registration, contact your share
company directly to find out who their transfer agent is for their
shares. Contact the transfer agent directly and work your way back from
there. Transfer agents are generally much more knowledgeable in this
area.
Regards,
Jim
Jim
Today’s Items:
The people in Iran have seen inflation and
now, they are going to see their currency devaluated 5%. Economic
warfare against Iran is beginning to have an effect. The IMF admits
the sanctions are designed to break the country and force it to run up
an external deficit. Currency devaluation will undoubtedly feed
inflation and hurt the population of Iran. Nothing like aiming an
economic weapon at the innocent.
It looks as if the Spanish may be taking a
second look at any bailout schemes by the IMF or the Euro-zone. They
may actually be looking at Iceland and wondering… Perhaps we can get
on the bandwagon and start indicting the corrupt politicians and
bankers. Let’s hope so. The pain may be harsh; however, it will be
short-lived compared to economic slavery being put forth by
international bankers.
One week into August and the U.S. Mint has
sold 4000 ounces of gold and 765,000 ounces of silver. The U.S. mint
is selling 191.25 times as much physical silver as gold. This is a
rate that is completely unsustainable. At some point, the breaking
moment will be reached and silver demand will force silver prices to sky
rocket. With that in mind, after preparing, keep stacking physical.
Sugar Daddy Bernanke says taking on debt
to pay for college can be an important way of increasing one’s earning
potential. What!?! Yes, he goes on to say that it can become a
financial burden if it does not lead to a good job; however, one should
avoid a school loan that is more stringent than a mortgage. In short,
if in debt, get out of debt and if not in debt, avoid it.
The first round of QE was announced during
a Jackson Hole Summit in late 2008. The upcoming meeting at Jackson
Hole will be in August. In addition, if war begins to engulf on a
broader scope in the Middle-East, this will add to the upward pressure
in prices for commodities.
People are catching on to the criminal
enterprise that is the Federal Reserve System. They are beginning to
realize that it is designed to help a few people at the expense of
society. Now, the Officials at the Federal Reserve want to address
educators on how to best brainwash students into not questioning the
actions of the Federal Reserve. Will it work? Not likely at this rate.
Thanks to the internet, the proverbial genie has been released and more
and more people know the facts.
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