We The Sheeplez- The Coming Economic Collapse.."A Nation Of Sheep Ruled By Wolves" Thomas Jefferson

Tuesday, November 1, 2011

US Plans To Issue $846 Billion In Treasurys In The Next 6 Months, 35% More Than Previous Year

Since obviously nobody in charge has learned anything at all, and all the old school games will continue until they no longer can, and demand for US paper, already plunging at the international level, disappears (aside from the Fed of course: the Fed will always be a happy last ditch monetizer of one-ply US paper), here is the Treasury's just released schedule for bond issuance for Fiscal Q1 (Oct-Dec 2011), and Q2 (Jan-March 2012), which amounts to $305 billion and $541 billion, respectively, or a total of $846 billion in 6 months, a $141 billion run rate per month. This compares to a total of $628 billion issued over the comparable period a year ago (although granted the Treasury did burn a whopping $225 billion in cash in Q1 of 2010). In other words, the US Treasury is planning on issuing 35% more in the first half of the fiscal year than a year previously, even though this time last year the Fed was monetizing all gross issuance, and even though the European EFSF was not about to ramp up issuance and soak up hundreds of billions of excess fixed income targeted capital. Now we only have some vague, ineffectively sterilized duration transfer operation which is doing nothing to lift belly demand, and merely takes care of the long end (while the Fed's promise to keep rates at zero until 2013 makes all bonds 2 years and less to be off zero effective duration). We doubt this schedule is even remotely sustainable without some imminent form of Large Scale Asset Purchase program being implement (with or without MBS monetization: for a definitive answer on this issue, please call

949-720-6226 end_of_the_skype_highlighting), and none of that Nominal GDP targeting mumbo jumbo. Unlike Europe, the Fed knows that money talks, and bullshit targeting walks.

The Incurable European Mess

November 1, 2011, at 12:59 pm
by Jim Sinclair

Dear Extended Family,

Gold is headed into the $2000s. The mess in Europe is incurable and can only be damage controlled by QE.
MF Global got busted because credit default swaps did not work. MF Global had their Greek and Euro bond position covered by credit default swaps that they thought would protect them. SURPRISE!
They did not work because the Greek situation of a 50% haircut was given another name than “default” by a select group of Banksters and related parties.
97% of all credit default swaps written are carried by the major US banks. That means 97% of all the credit default swaps are the US usual Bankster suspects that swore to be more conservative in their ways.
If the Greek referendum is determined to represent a Greek default, major US banks will return to public insolvency and be bailed out yet another time because of the fraudulent nature OTC derivatives.
You think that game was rigged? China is coming to the rescue of no one. China specializes in picking up the pieces from troubled areas, not being troubled by troubled areas.
After Europe comes the US as media has been successful in keeping the focus of the problems off the US dollar. The only problem with gold shares is the hedge fund wild men and women that will in the end fail to stop the super bull market that is sure to come.
What is good for gold (QE) is also good for general equities so be careful on those that see doom everywhere.
Playing any one currency today is hard. Better hold a spread and seek to maintain buying power only. Competitive forced devaluation is the tool of strong currencies making it hard for exports in that currency. This is another example of making the Western world economic problems worse by curing the strong currency using liquidity to weaken it.
What today’s economic managers don’t know is Titanic in nature. There is no practical solution to the economic problems of today making gold in all forms desirable long term.

Regards,
Jim

Turmoil at MF Global/Official states firm Co Mingled funds/gold and silver decoupled from the Dow

Harvey Organ at Harvey Organ's - The Daily Gold and Silver Report - 2 hours ago

Good evening Ladies and Gentlemen: Turmoil continues in the aftermath of the MF Global Bankruptcy. An official from the firm today confirmed that the company co mingled customer funds with their own. Many will be afraid to invest funds in the stock market for fear that the management at these financial giants will steal from them. We will discuss this in detail in the body of my commentary: (

The Inside Story Of What Brought Down MF Global

Now that the affdavit of MF Global COO Bradley Abelow has been filed, we finally get the inside scoop of just what the events were that brought the company to its knees, and what specifically were the precipitating catalysts that ultimately led to the Halloween massacre. The relevant part begins with section E, paragraph 33, on page 13. "As a global financial services firm, MF Global is materially affected by conditions in the global financial markets and worldwide economic conditions. On September 1, 2011, MF Holdings announced that FINRA informed it that its regulated U.S. operating subsidiary, MFGI, was required to modify its capital treatment of certain repurchase transactions to maturity collateralized with European sovereign debt and thus increase its required net capital pursuant to SEC Rule 15c3-1. MFGI increased its required net capital to comply with FINRA’s requirement...." Read on.

Remember Fukushima? It's Back

The problem with sweeping unresolved problems, especially of the unstable gamma decay variety, is that they tend to pop up at the most inopportune of times. Such as during global coordinated fiat ponzi bailouts. Kyodo reports that according to TEPCO a fresh fission reaction has restarted at Fukushima Daichi, and that boric acid is being injected to control a "possible nuclear reaction." Hardly the encouraging news that the world needs right about now.

Here's Who's Freaking Out Now That Greece Will Hard Default

Eric De Groot at Eric De Groot - 57 minutes ago

If Greece leaves the EU, the contagion will spread faster than policy makers can schedule emergency meetings. REMINDER: Here's Who's Freaking Out Now That Greece Will Hard Default A disorderly default in Greece just became a much bigger possibility, after PM George Papandreou announced a referendum on austerity yesterday. If the Greeks vote no, this could be the end of Greece's participation... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Morgan Stanley On What Happens Next In Greece, And Why It Is All Very Euro Negative

Friday’s confidence vote in the Greek parliament will be extremely important in our view and will likely set the pace of the anticipated EUR decline over the coming months. Greek Prime Minister Papandreou could now find it difficult to win a confidence vote (due Friday 10GMT) given the defections from the government leave only the slimmest of majorities (just 151 votes in the 300 parliament). If the Greek PM fails to win the confidence vote then the government will fall. There is the possibility for a new Government under a different PM or the formation of a unity government. But these outcomes seem unlikely given that the opposition is strongly in favour of new elections. While new elections will delay the vote on the new budget reform measures and potentially delay the next round of bailout funds from the EU, this is likely to be seen as one of the most positive (least bearish) outcomes for the EUR as it will avoid a referendum. There could even be an initial relief rebound for the EUR on any news that a referendum is being avoided, by the continued uncertainty and delays with regard the passing of the new budget measures and payment of EU bailout funds will likely keep the EUR under pressure over the medium term. Indeed, most of the options under discussion in the market are EUR negative in our view. A victory by Papandreou in the confidence vote on Friday is likely to be seen as the most bearish for the EUR, opening the door to a referendum and the potential rejection of the bailout package by the Greek population.

November 1 2011: The Collapse of the Tower of Financial Babel

Ilargi at The Automatic Earth - 2 hours ago

Gustave Doré The Confusion of Tongues 1865Ilargi: As the financial world follows its best month in the markets in a long time with a spectacular fall on fears that the people of Greece may actually get a say in their future through a referendum (the reactions from the Merkels and Sarkozy's are at the very least amusing, even if downright scary too), Ashvin looks at the words that have been and

"We are Confused" | Oakland Police Officer's Association Open Letter to the Citizens of Oakland

Posted by : 4closureFraud

Post date: 11/01/2011 - 15:32

Oakland is struggling – we need real leaders NOW who will step up and lead." ~ Oakland Police Officer’s Association

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How US Banks Are Lying About Their European Exposure; Or How Bilateral Netting Ends With A Bang, Not A Whimper

A little over a month ago, Zero Hedge started an avalanche in the financial sector, and an unprecedented defense thereof by the "independent" financial media and conflicted sell side, by being simply the messenger in pointing out that the gross exposure of one Morgan Stanley to the French banking sector is $39 billion. The firestorm of protests, which naturally focused on the messenger, and not the message, attempted to refute the claims that Morgan Stanley (and many others) are overexposed to Europe (both banks and countries) by stating that gross is not net, and that when one nets out "hedges" the real exposure is far, far lower. The logic is that bilateral netting, as the principle behind this argument is called, should always work - no matter the market, and that counterparty risk, especially when it comes to hedges, should always be ignored because banks will always honor their own derivative exposure. Obviously that this failed massively when AIG had to be bailed out, to preserve precisely the tortured and failed logic of bilateral netting was completely ignored, after all things will never get that bad again, right? Well, wrong. Because the argument here is precisely what the exposure is when the chain of netting breaks, when one or more counterparties go under (such as MF Global for example, which filed bankruptcy precisely due to its hedged (?) European exposure - luckily MF was not in the business of writing CDS on European banks or else all hell would be breaking loose right now). So little by little the story was forgotten: after all when everyone says gross is not net, contrary to what history shows us all too often, everyone must be right. Today it is time to refresh this story, as none other than Bloomberg pulls the scab right off and while confirming our observations, also goes further: yes, banks are not only massively exposed to Europe, but they are in essence misrepresenting this exposure to the public by a factor of well over ten!

Past Midnight Headlines From Greece Send zEURq.PK Tumbling

Nothing really new per se, just G-Pap reiterating, now that his meeting is finally over at about 2 am local, that the referendum will proceed as noted earlier, probably some time in January, and Europe will like it or leave it.

GREEKS TO VOTE ON EURO MEMBERSHIP IN REFERENDUM: PAPANDREOU - BBG
GREEK PM SAYS PARTNERS WILL RESPECT AND SUPPORT GREECE'S EFFORTS -RTRS

What? Or Else? And how does this mesh with the following headline from Bloomberg:

Netherlands Will Try to Get Greek Referendum Canceled, PM Says

At what point do the crazy pills run out already?

The Greco-Franco Bank Run Has Skipped the Pond, Landed in NY/Chicago and Nobody Noticed, Exactly As I Predicted!

Posted by: Reggie Middleton

Post date: 11/01/2011 - 16:39

We just experienced a bank run in the US that I have been warning of for months on end. A bank run that resulted in this country's 8th largest bankruptcy,,, ever - and nobody even noticed.

Guest Post: Fed Trapped By Inflation

There will be NO announcement of QE 3 tomorrow. Why? Because the Fed has trapped itself into a corner. The first two rounds of Quantitative Easing (QE1 and 2) were viable for the Fed as inflation was running at deflationary levels in 2009 and at the bottom of their target range of 1-3% in 2010. In both instances the implementation of asset purchase programs, which immediately juiced liquidity in the financial markets, had an immediate and pronounced effect on the level of inflation. Today, with inflation currently approaching 4% on a year-over-year basis the Fed is not only outside its inflation mandate of 1-3% but any further cost pressures on the consumer is going to drive the economy into a recession. As we showed recently in our post on 3rd quarter GDP with food and energy consumer more than 23% of wages and salaries there is very little wiggle room for the average American.

Instant view: Manufacturing sector growth eases in Oct: ISM

Eric De Groot at Eric De Groot - 1 hour ago

US Economic activity is a lot weaker than generally depicted in the headlines. The approaching Presidential election, and increasing calls for austerity with no further bailouts and stimulus as a viable economic solution could become a cocktail for economic policy inaction throughout most of 2012. ISM Prices Paid Index (PP) to National Purchasing Manager's Index (PMI) Ratio: Headline: Instant... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Wheels Come Off Euro Plan in Just Five Days

Eric De Groot at Eric De Groot - 3 hours ago

It's often best to focus on the message of the markets when emotions (and headlines) are running wild. Success or failure of any Euro plan will be anticipated by the Euro. Continued signs of distribution in the Euro anticipate (forecast) an unpleasant outcome. The fill and close below the 9/9 breakdown gap on shrinking suggests illustrates weakness (further distribution) within a pattern of... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Average U.S. Sales Tax Rate Hits Record High

Eric De Groot at Eric De Groot - 5 hours ago

The real cutting when the realization that many States (and Federal) cannot tax their way to a balanced budget. It won't stop them from trying, though, as Americans hooked on big government increases daily. Headline: Average U.S. Sales Tax Rate Hits Record High President Obama's proposed budget calls for tax increases mainly on the well-to-do and rich. But many states are already raising the... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Keeping Up With The Korzines In The Kooler: FBI To Investigate MF Global's Theft Of Client Money

It is now 100% safe to say that the 100 basis point "springing rate clause" in the 6.25% bond indenture (that never saw even one coupon payment before the company filed) should Corzine join the White House will never be triggered. As NBC reports, Federal prosecutors and the FBI are set to join the inquiry into what happened to hundreds of millions of dollars invested with a securities firm headed by former New Jersey Gov. Jon Corzine, officials familiar with the case told NBC New York. The Justice Department involvement comes as the Securities and Exchange Commission and the Commodities Future Trading Commission have said their own inquiry is underway into the collapse of the brokerage firm, MF Global Holdings Ltd. The head of the Chicago Mercantile exchange said Tuesday that the firm broke rules requiring it to keep clients' money and company funds in separate accounts. U.S. Attorney Preet Bharara declined to comment Tuesday as did DOJ spokesmen in New York and Washington. An FBI spokesman also declined to comment.

US Food Stamp Usage Hits New Record

As the European news flow overflow continues, it is useful to occasionally look at how America's own economy is doing. After all remember that the latest paradigm is that the US will decouple from everyone (as is always foolishly and erroneously assumed whenever the ROW turns lower) and carry the weight of the global economy on its own shoulders. So here is this month's refresh from the Supplemental Nutrition Assistance Program, which informs us that in August, a new all time record number of Americans, or 45.8 million, relied on food stamps for sustenance. So for those who are looking for those up and coming states where the population has decided that slowly but surely work of any kind is an anachronism we suggest you move to Alabama, Delaware, Utah, or Washington: all states that have seen at least a 3% sequential increase in food stamp usage. And, tangentially, confirming that this country's economy is headed straight to hell and won't pass go is the latest news from LPS according to which nearly 40% of loans in foreclosure have not made a payment in two years, and 72% have not made a payment in the past 12 month. Bullish for iPad purchases.

One Greek's Take On The Upcoming Referendum

After my initial despair at the announcement of the referendum -- a decision I consider frivolous, suspicious and dangerous -- I was overcome by a strange calm. I understood, as never before, that the Greeks do not feel alive if not flirting with death. I don't know if, in his simplistic political obsessions, George Papandreou felt this and therefore pushed the country into a game of Russian roulette. In any case, he put bullets in the revolver and handed it to the people.

Stocks Tumble As No Hail-Mary Rumor Materializes

With the S&P closing -2.5% led by another financials sell-off (-4.3%), the long-hoped for late-day-rumor failed to appear and save the knife-catchers. The major credit indices modestly outperformed equities today although the after-hours (Greek govt is not collapsing) rally-monkey dragged ES (up to VWAP) closer to credit's performance as stocks closed back to 10/21 levels while credit held more in the 10/24 region. Another huge day in the TSY complex saw the 30Y rally around 15bps (back under 3%), 10Y drop back under 2% and major flattening continue as 2s10s30s collapses further. FX markets were dominated by EUR's referendum-on / referendum-off volatility as the dollar maintained its strength which was ignored by Gold which managed to rally while commodities and silver generally lost ground today. Implied Vol and correlation spiked as macro protection was bid in equity markets but notably, secondary bonds and CDS saw major regions of net-selling as opposed to blanket protection demand - suggesting IG credit has reached its limit on second-guessing and is derisking at the individual level (as opposed to macro hedging) especially higher beta names.

Greek Referendum Is On

Contrary to rumors that the entire referendum will be called off, and be replaced with elections instead, it appears that it won't be, and instead, per the BBC, will progress based on G-Pap's fatal assumption that the public will actually vote for the bailout, the loss of sovereignty, and perpetual austerity. Via Bloomberg:

Papandreou Adviser Sees Greek Public Backing Bailout Plan: BBC

and it's official:

GREEK GOVERNMENT SPOKESMAN TOLKAS SAYS REFERENDUM TO GO AHEAD

Good luck.

Supremely Ironic Humor Du Jour Brought To You By Bankrupt MF Global

......Uhhhhh, WTF?

The Italian Bond Maginot Line Has Just Been Pushed Back By 100bps

We commented earlier on the precipice of LCH.Clearnet's margin rules for Italian debt and the 450bps spread Maginot Line. Well, as always, there is some wiggle room in here and instead of using what seems 'obvious' as a benchmark (Bunds), LCH uses a blended AAA sovereign benchmark (consisting of Germany, France, and Holland). This makes a significant difference, obviously, and with Bunds massively outperforming today (now 86bps tighter than this archaic benchmark), ITA 10Y bonds ended the day at a spread of 355bps (not 440bps). So as long they keep France or Holland 'weak' then ITA margin calls should be safe for now and their benchmark becomes less and less realistic as a AAA index.

The Mediterranean Winter?

If a leader in the Middle East finally gave into months of protest and decided to give the people a real say on an important issue, the Western leaders would be rejoicing. Obama would have a podium and be uttering his support for the Courage of the people who stood up and give the Arab spring his full blessing. But if a fellow Western leader dares let his people express their wishes more directly than via "their representatives" they are all shocked and outraged. It seems that more and more we are likely to "save" our system. I just wonder if that system is worth saving.

Jon Corzine - Meet Bubba

The admission is here:

MF Global Admits Using Client Money, AP Says
MF exec. made the admission in phone call with regulators Monday morning

It's time to get some expert on the ex-MF Global head's mental state and to blame temporary insanity, otherwise, someone is going to be bunking with Bubba very shortly.

Desperate Demand For Short-Term Crash Protection Pushes Implied Correlation Above 100%

In one of the more quirky results of the rush for short-term protection and macro overlays this morning, the price of index protection was bid so far above the 'fair-value' based on the volatility of the underlying S&P 500 index components that the implied correlation (a modeled measure of the relationship between index and single-name implied vol demand - often reflective of 'crash risk' sentiment) for Jan 2011 exploded above 100%. Yes, we know that is 'impossible', but the point being that last week's smash higher in equity (and credit), as we noted at the time, had the feel of hedgers capitulating which leaves today's growing tensions (European and domestic) enough to push nervous traders massively into liquid hedges (macro protection). The bottom-line is that demand for liquid 'crash hedges' moved from 'economically sensible' to 'at any price' this morning.

Is A Greek Military Overhaul An Attempt To Prevent A Coup?

While the calls for G-Pap's resignation grow louder and Merkozy's blood pressure rises, we couldn't help but notice a potentially significant action among the top military leaders in Greece. Athens News reports that the Minister of Defense is proposing a complete (and surprise!) replacement of the country's 'top brass'. What better way to consolidate power than to bring in 'your guys' as the country lurches closer to all out chaos?

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Bank Of America Drops $5 Debit Card Fee

As expected, following the complete failure of banks to institute an extortion cartel on debit account fees after two already defected, it was only a matter of time before Bank of America withdrew as well. Sure enough:

BofA Drops Plan for $5 Debit Fee, Spokesman Says

Now, while this is great news for whatever deposits BAC has left (substantially lower than what it had at September 30, that's for sure), it doesn't answer the question - just how will the bank make money?

ECB Buying As 450bps ITA Spread Becomes New Maginot Line

As we detailed 11 months ago, LCH.Clearnet now stands at the fulcrum of today's price action in Europe as the critical 450bps spread to Bunds on European sovereign debt - which will trigger considerable rises in margin requirements - is being aggressively defended thanks to the ECB's SMP. What is evident (and troublesome) is the confluence of the rally in Bunds (as Greece implodes) and unhedgeable risks in ITA bonds which means relatively aggressive buying in ITA bonds is doing little to improve spreads. With all eyes now on the spread (which stood at a measly +150bps when the LCH.Clearnet margin rules were set) as opposed to price, buying Bunds is perhaps the easiest and most liquid way to put pressure on the Italian bond market.

Are the Clients of MF Global Insured Against Fraud?

A question has been raised as to if the clients of MF Global are insured on their losses as a client of a bank or securities firm would be under FDIC or SIPC? The answer is maybe. While there is no regulatory insurance agency to cover the losses of MF Global clients, the CME itself has a guarantee fund for losses. This fund is financed by the other Primary Clearing members. So all FCMs bear some burden of MF Global’s indiscretions. We believe it amounts to a $4BB Clearing Member “error Account” The answer depends on legal questions and accounting details: For example, are the segregated funds of a Clearing member’s clients guaranteed if those funds were lost due to fraudulent actions by that clearing member? In other words, do the other Clearing Members at CME have to pony up the lost money if MF Global lost it fraudulently as opposed to though market events and poor in-house risk management. If MF Global is found to be in violation of some CME rules, fraud, delinquency or otherwise, we believe CME’s other Clearing Members will put their collective political collateral into finding a way to not pay the money lost.

Liquidity Scramble Begins In MF Commingling Aftermath

When sharing our perspective last night on why the alleged MF Global crime of commingling client capital with the firm's deficiency capital we asked, "What happens next? Why customers at all other brokerages, all other exchanges, afraid that their money will suffer the same fate as MF, even if they transact with perfect solvent clearers and agents, will proceed to pull their money, as they know they have nobody to trust but their own prudent and forward looking actions. Which in turn will start the kind of liquidity drain that killed not only Lehman, but froze money markets, and with that brought the complete capital markets to a standstill, only to be thawed after the Fed pledged multiples of the US GDP to rescue Wall Street in October of 2008." Sure enough, here it comes. "Reports of short falls of client money ... if true would be a disaster for all the smaller brokers and banks as nobody will trust them anymore," one London trader said. Reuters continues "MF Global filed for bankruptcy protection on Monday, putting a sudden end to Corzine's drive to transform the more than 200-year old MF Global into a mini Goldman by taking on more risky bets on euro zone sovereign debt. In Australia, trading in grain futures and options was suspended by bourse operator ASX Ltd , prompting concerns about the integrity of the country's agricultural futures market. "We're sitting out here with risk that we can't cover," said Jonathan Barratt, head of Sydney-based Commodity Broking Services. MF Global was one of the largest participants in the country's agricultural futures market. And it is all only going to get worse as the liquidity outflow avalanche is realized, following the market's most recent distraction with Europe.

Central Banks Can Postpone The End Game For 5 Or 10 Years

Admin at Marc Faber Blog - 1 hour ago

CNBC video interview, October 26th Video topics: Central Bank policy, inflation, debt, student loans; *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

The U.S. Banking System Is More Leveraged Now Than In 2008

Dave in Denver at The Golden Truth - 1 hour ago

Before I get into what the title is about, I wanted to comment on the MF Global situation. By now I'm sure most of you have read/heard that about $700 million in customer funds are missing from MF. Legally, a brokerage firm is required to segregate its customer funds from all other capital/balance sheet items. This is one of the golden rules in the securities industry. This is supposed to be accounted for on a daily basis and reported weekly to regulators. My best guess is that Jon Corzine used customer funds to shore up the capital accounts at MF in order to avoid having credi... more »

Risk-On or Risk-Off? Watch Copper

Eric De Groot at Eric De Groot - 1 hour ago

Wyckoff defined a trend into three distinct phases. (1) Accumulation or Distribution, (2) Mark Up or Down (3) Distribution or Accumulation Copper remains in a mark down phase, but that will change in 2012. The mark down phase will yield to accumulation in 2012. This accumulation will setup the next mark up phase. The media often circuitously defines copper’s mark up phase as the “risk-on”... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

The First Results Are In... And Hedge Funds Appear To Have Missed The October Rally

Just two for now, but something tells us this is quite representative of the overall industry:

Third Point Offshore Fund, Ltd.: October Net Return +0.8%
Absolute Return Capital (ARC) – Bain Capital, LLC : October Net Return +0.7%

More as soon as we get the Month End HSBC report.

Double Your Money In 6 Months: 1 Year Greek Yields Pass 200% For First Time Ever

Looks like that 50% haircut may be insufficient. Who was the guy on CNBC was was buying Greek bonds a few days back on the "bailout"? And now, back to your regularly scheduled fiat ponzi system collapse.

In The News Today

November 1, 2011, at 10:09 am
by Jim Sinclair in the category In The News |

Jim Sinclair’s Commentary

Then what? Ask for an unconditional surrender of the West for a bailout?

China to discuss financial crisis with Russia, Central Asian nations Tuesday, November 1, 2:57 AM
BEIJING — Premier Wen Jiabao will discuss the global economic crisis and his vision for the Shanghai Cooperation Organization when he meets next week with his counterparts from the regional grouping, seen by Beijing as a vehicle for extending Chinese influence in Central Asia.
Wen and the other prime ministers of the six member countries would issue a statement on the world financial problems at the SCO meeting Nov. 7 in St. Petersburg, Vice Foreign Minister Cheng Guoping told reporters.
He said the organization, which also includes Russia and the Central Asian countries of Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, would discuss greater economic integration and strengthening the SCO’s institutions.
The meeting should “inject vitality into regional development, stability and prosperity,” Cheng said.
The SCO took its present form in 2001 with the initial goals of addressing religious extremism and border security in Central Asia, but has grown into a bloc aimed at challenging U.S. influence in the region.
Its meetings also include the leaders of its dialogue partners and observer members, including Pakistan, Afghanistan, Iran, and Mongolia.
Cheng didn’t say what specific proposals Wen would make, although China has sought to promote the use of its currency in regional trade and has been a keen participant in SCO anti-terrorism exercises.
More…

Jim’s Mailbox

November 1, 2011, at 7:43 am
by Jim Sinclair in the category Jim's Mailbox |

Eric,

The degree to which to Europe has created then mishandled their financial problems is EPIC. It makes the Fed look good in comparison. It shows the European Union to be a Union in the imagination of Europe.

Of course the Greeks would vote down anything other than the total repeal of all taxes. The Greek referendum was simply too stupid to be stupid.

Regards,
Jim

Futures drop on Greek referendum, Asian growth
CIGA Eric

Social unrest throughout Europe (Greece, Spain, Italy, etc) will be the wild card not easily placated by financial bailouts.

Headline: Futures drop on Greek referendum, Asian growth
NEW YORK (Reuters) – Stock index futures tumbled on Tuesday as the deal to rescue Greece and prevent a wider sovereign debt crisis faced a new hurdle and as Asian economic data reignited fears of a slowdown in global growth.
Greek Premier George Papandreou said he will put Greece’s bailout deal through a referendum, throwing the long-awaited deal into disarray and sending European stocks down 3.5 percent. The region’s bank shares fell 6 percent.
U.S. bank shares were expected to follow European lenders lower. The Financial Select Sector SPDR fell 2.3 percent in light premarket trading.
"The market did not see this Greek referendum coming, which is potentially a killer and could knock the wheels off the bus of the whole (European rescue) plan," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
Source: finance.yahoo.com
More…

Jim’s Mailbox

October 31, 2011, at 10:01 pm
by Jim Sinclair in the category Jim's Mailbox |

Jim,

Here we go. Watch the Chinese control the finance world.

Regards,
CIGA Luis Ahlborn Sequeira

China advocates Europe borrow in renminbi By David Marsh, MarketWatch
BEIJING (MarketWatch) — In the wake of last week’s new deal on European debt, China is serving up a steely reminder to Europe: you may have to start borrowing in renminbi to gain a sympathetic hearing from the world’s largest creditor.
Already officially enshrined by U.S. Secretary of State Hillary Clinton as bankers to the world’s biggest debtor the Americans, the Chinese have no wish to become, too, a last-ditch lender to the Europeans. The idea of renminbi borrowing has been put forward by Beijing advisers and officials as a way of lowering Chinese foreign-exchange risks caused by further exposure to Europe — and also of using the Europeans’ latest discomfiture to advance China’s international monetary-policy agenda.
If this happened, it might pave the way for the U.S. Treasury eventually to issue renminbi-denominated paper — a momentous moment in world monetary history .
More…

Dear Eric,

If China and other areas do not buy the euro rescue paper to finance the operation then the paper has to be produced by QE.

Gold is going into the $2000s without any question.

Regards,
Jim

China wants Europe to solve its own problems
CIGA Eric

Oops. How quickly the confidence of change fades when reality remains unaltered. China smart enough to distance itself from a savior role that must come from within. A savior must demand one currency, one debt, and plenty of devaluation.

Headline: China wants Europe to solve its own problems
LONDON: China has stressed it will not be a ”saviour” to Europe as the Chinese President, Hu Jintao, embarks on an official visit to the continent that will take in Thursday’s crucial Group of 20 summit in Cannes.
The warning came as the European Commission President, Jose Manuel Barroso, and the European Council President, Herman Van Rompuy, urged G20 leaders to use the meeting to address Europe’s debt crisis, saying measures proposed last week were not enough by themselves.
The French President, Nicolas Sarkozy, has said Beijing has a ”major role to play” in proposals to expand the European Financial Stability Facility to €1 trillion ($1.32 trillion), possibly through a special investment vehicle that would attract sovereign wealth funds.
Advertisement: Story continues below However, Mr Sarkozy came under fire from opposition leaders for seeking China’s help.
Source: smh.com.au
More…

In The News Today

October 31, 2011, at 12:08 pm
by Jim Sinclair in the category In The News |

Jim Sinclair’s Commentary

If called on to perform they will fail. It is that simple. It is the essence of the OTC derivative. They work if no one calls on them to work.

It has always been so.

Credit-Default Swap Risk Bomb Is Wired to Explode: Mark Buchanan 2011-10-30 23:00:00.1 GMT
By Mark Buchanan
The European sovereign debt crisis stands as the latest in a long line of similar crises. Argentina in 2001. Russia in 1998. Mexico in 1994. The list goes back into history. Debt crises are about as natural as earthquakes, but this time there is something different — and possibly more dangerous.
The European nations are linked in a network of debts, as Bill Marsh recently illustrated in the New York Times with a beautiful piece of graphic art. Greece and Italy are prominent; Ireland, Portugal and Spain lurk ominously nearby. France and Germany seem exposed, too, as does the U.S.
The image is like a complex wiring diagram for a ticking debt bomb. Yet what it shows may be less important than what it leaves out: a largely invisible network of ties among institutions around the world, which could ultimately cause global financial chaos.
This hidden network has been created by institutions that buy and sell unregulated credit-default swaps. These are essentially insurance contracts on bonds; in the event of a default on the bond, the seller of the swap promises to pay the buyer the bond’s value.
Credit-default swaps are mostly arranged “over-the-counter,” not traded on any exchange or recorded by any central information repository. This explains why Marsh’s map couldn’t show the links they create.
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The 2.5% GDP Growth Spin Job

October 31, 2011, at 12:05 pm
by Greg Hunter in the category USAWatchdog.com |

By Greg Hunter’s USAWatchdog.com

Dear CIGAs,

Last week, the government announced the economy (gross domestic product, GDP) grew at a 2.5% rate. The mainstream media (MSM) hailed this as some significant turnaround. Businessweek.com reported, “Buoyed by a resurgent consumer and strong business investment, the economy expanded at an annual rate of 2.5 percent in the July-September quarter, the government said Thursday. The expansion, the strongest quarterly growth in a year, came as a relief after anemic growth in the first half of the year and weeks of wild stock market shifts.” (Click here for the complete Businessweek.com story.) Where did this so-called growth come from? My bet is most of it came via money printing by the Fed, credit card use and inflation that is mistakenly reported as growth.
Economist John Williams of Shadowstats.com says the 2.5% GDP growth rate story is a sham. In his latest report, he says the economy is not growing but “sinking anew.” Williams criticized the government numbers the day they came out last week by saying, “. . .the widely-followed gross domestic product (GDP) nonetheless remains the most-heavily-biased, the most-heavily-guessed-at, the most-heavily politicized and the most-worthless major indicator of domestic business activity. Today’s numbers out of the Bureau of Economic Analysis are outright nonsense. Consider that latest numbers showed that the level of inflation-adjusted third-quarter 2011 GDP broke above the pre-recession high of fourth-quarter 2007: a full recovery. That is absurd. No other major economic indicator, including payrolls, real (inflation-adjusted) retail sales, industrial production, trade deficit or housing starts is showing that.” (Click here to go to the Shadowstats.com home page.)
There are many other signs the economy is not getting better. The latest data from both Consumer Sentiment and Consumer Confidence surveys have recently plunged right along with home prices. Business week.com reported last week, “The New York-based Conference Board’s household sentiment index slumped to 39.8 in October, the lowest level since March 2009 and less than the most pessimistic forecast in a Bloomberg News survey, the group’s data showed today. Property values in 20 cities were little changed in August from the prior month and down 3.8 percent from 2010, according to S&P/Case-Shiller. “The outlook continues to deteriorate,” said Yelena Shulyatyeva, a U.S. economist at BNP Paribas in New York. “It’s not good for confidence when people see their main asset, their homes, decline in value. Our best-case scenario is we’ll muddle through.” (Click here to read the complete article.)
To top it off, a nationwide survey of bankers last month revealed that most expect home prices will not recover until the year 2020! CNBC covered the story and said, “The survey conducted by the Professional Risk Managers’ International Association for FICO, found that 49 percent of respondents do not expect housing prices to rise back to 2007 levels for another nine years. Only 21 percent of respondents said they would. The findings, which authors called “a decidedly pessimistic outlook,” are a sharp reversal from cautious optimism the survey respondents expressed late last year and in early 2011. In addition, 73 percent of surveyed bankers say they expect mortgage defaults to remain elevated for at least another five years. And 46 percent believe mortgage delinquencies will increase over the next six months.” (Click here for the complete CNBC story.) So, don’t hold your breath for the so-called recovery story becoming reality anytime soon.
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Former PBoC Monetary Policy Committee Member: "Beijing Will Not Ride To Eurozone’s Rescue"

Yu Yongding: "Europe’s courtship of Beijing is moving to a more intense level. Klaus Regling, the chief of the eurozone bail-out fund, is in Beijing discussing possible support. Just a few days ago French President Nicolas Sarkozy conferred with Hu Jintao, his Chinese counterpart, to win Beijing’s support. They should not hold out their hopes too high. The two will have had a courteous hearing: China is willing and able to help. Since the beginning of Europe’s sovereign debt crisis, Beijing has repeatedly expressed its wish to offer “a helping hand” to Europe. Eurozone countries, however, have to understand that they will have to save themselves. Expectations of a “red knight” riding to the rescue are sorely misplaced."

Europe On The Verge Of A Political Crisis

And the hits just keep on coming, with the Greek government now just one vote away from total collapse

ONE GREEK RULING SOCIALIST LAWMAKER QUITS PARLIAMENTARY GROUP - STATE TV MORE - RTRS
GREEK MP'S MOVE REDUCES PM PAPANDREOU'S MAJORITY TO 152 OUT OF 300 DEPUTIES - RTRS

As a reminder 151 votes are needed to pass a vote. But that's not all:

Senior member of Italian opposition says party has asked president Giorgio Napolitano to form new government before G20 summit in Cannes

Oh yes, Italy, the one place everyone was terrified about before Greece stormed back to center stage with a bang. Result:

ITALY 2-YR BOND YIELD SPREAD VS GERMANY HITS NEW EURO LIFETIME HIGH ABOVE 500 BPS

Greece Sends Global Markets Into Tailspin Again: European CDS Spreads Demand Another Bailout

The futures are tumbling with U.S. futures falling in sympathy with plunge in European stocks; Italy’s FTSEMIB index down 5.3%, DAX down 4.4%, CAC down 4.3%, Spain’s Ibex down 4.1%, FTSE down 2.9%. But here is the true reason why Europe already needs another bailout, or the promises thereof, courtesy of those so vile CDS which no matter how hard it tries, Europe just can't kill:

    * Italy CDS Rise 45.5 bps to 491; update +53 495/505
    * France CDSs rise 14 bps to 190; update + 17 191/196
    * Spain CDSs rise 33.5 bps to 374.5; update + 41 375/385
    * Portugal CDSs rise 57 bps to 1,028; update + 71 1015/1055

The reason? Why Greece of course: the same referendum decision that it took the market yesterday 45 minutes to process before the sell off began.

Guest Post: Increasing Volatility: Prelude To a Crash?

Market observers have long noted that increasing volatility presages market crashes. If you glance at a chart of September-October 1929, just before the crash that started the Great Depression, you will note the same sort of manic swings of euphoria and fear that have characterized the U.S. stock market over the past few months. Not only are the swings increasing in amplitude, the time between each move up or down is decreasing. Think of a series of wind storms that grow increasingly more violent even as the time between storms diminishes.

Inflation Accounts For Most Of The Supposed Growth In The U.S.

Admin at Marc Faber Blog - 1 hour ago

The inflation in the system is accounting for most of the supposed "growth" in the US economy. - *in Bloomberg* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Stay Calm In Times Of Turmoil

Admin at Jim Rogers Blog - 2 hours ago

“Learn to stay calm especially in times of pressure or turmoil. You will make much better decisions.” - *in a Gift To My Children* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.*

The Surging U.S. Federal Debt

Admin at Marc Faber Blog - 2 hours ago

It took the United States 200 years to get to a federal debt of 1 trillion dollars in 1980, another six years to get to 2 trillion dollars, and now it’s north of $15 trillion. - *in WSJ Blog* *Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.*

Futures drop on Greek referendum, Asian growth

Eric De Groot at Eric De Groot - 2 hours ago

Social unrest throughout Europe (Greece, Spain, Italy, etc) will be the wild card not easily placated by financial bailouts. Headline: Futures drop on Greek referendum, Asian growth NEW YORK (Reuters) - Stock index futures tumbled on Tuesday as the deal to rescue Greece and prevent a wider sovereign debt crisis faced a new hurdle and as Asian economic data reignited fears of a slowdown in... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]

Spiegel's Reaction To G-Pap's Referendum Announcement

Manufacturing ISM Follows Chicago PMI With A Miss; Declines To 50.8 On Expectations Of Rise

Yesterday, the Chicago PMI miss led us to suggest that the ISM is next. Sure enough, today this other metric that had consistently beaten the negative HF economic data in the late summer was the latest to hit an inflection point, and miss substantially, with expectations of an improvement in the September number of 51.6 to 52.0 trounced, following an index print of 50.8. And while there was no major moves in the bulk of the index components, the Prices subcomponent saw an epic collapse, tumbling from 56 to 41. What does this imply for the S&P? Nothing good. But remember: correlation is not causation, a fact the Fed loves to abuse without pause.

Independent Strategy On "Greece The Ungovernable" - "Go short the euro and PIIGS debt — and hold on to your seats!"

The decision by Greek PM Papandreou to call for a referendum on the latest Greek bailout deal shows that Greece is becoming ungovernable. The PASOK leader made this decision because riots in the streets, increasing refusal by civil servants to implement the austerity measures and the likely loss of his majority in parliament made the survival of the government unlikely within weeks or months. So Papandreou has gone for broke. He hopes that by winning a vote on the bailout plan he can shut up the opposition both in parliament and on the streets. But this high-risk strategy threatens to bring the whole house of Euro cards down.

There Goes The Greek Majority

Just out from Reuters:

ANOTHER GREEK RULING PARTY LAWMAKER CALLS FOR ELECTIONS, NATIONAL UNITY GOVT - GREEK MEDIA

And with that the PASOK majority is history.

Emergency Greek Cabinet Meeting At 4 pm Local - Early Elections, Referendum To Be Discussed

News is now coming fast and furious, with the latest locus of activity once again Greece, where we learn that there will be an emergency meeting in minutes, at 4 pm local. Dow Jones reports that early elections, and the referendum, will be discussed by the Greek cabinet, according to a government official. Supposedly G-Pap is trying to control the revolt in the socialist party. We fail to see how this is remotely good news, as early elections are merely another form of popular referendum which will simply delay the final outcome of the prevailing hatred toward the bailout, only with it it risks esclating the country closer to outright civil conflict.

Will Italy Re-Denominate Back Into Lire?

We have discussed this a few times over the last year and as Greece begins to show signs of defection, it is perhaps worth considering what a spoiled and chided sovereign might do in a temper tantrum. Peter Tchir, of TF Market Advisors, puts it best this morning: "Everything I have read over the past couple of weeks coming out of Italy, tells me that if there was one country prepared to "screw" the Euro and go it alone, it would be Italy. They don't like Merkozy treating them like children, and they have a big enough economy that a dirt cheap Lire would make exports possible".

European CDS Rerack: Mamma Mia

The horror...The horror

10Y Bund Yield Drops 5 Standard Deviations, Most Ever

As EFSF spreads widen and Greek CDS-Cash basis implodes, the flight to safety bid in Bunds is incredible. The largest single-day move in Bund yields ever, at over 5 standard deviations, is very noteworthy and the last hour or so has seen Bunds dislocated (lower in yield) from French debt also as OATs move to record 123bps (+15bps today). Bunds also outperforming TSYs by 9bps today (so far) and interestingly, given the Bund bid, German CDS is popping 13bps to 97.5bps (which seems like a cheap bet on Euro break-up now).

Mutiny On The Acropolis

Oh this is getting good.

Greek Health Minister Says Referendum Won’t Happen: Proto Thema

Next up: the army arrives in full party regalia to pay the capital a visit.

Goodbye 9 Handle: BTP Collapses To 89.5, Down 4.3% On The Day; Next: Bidless?

Did we miss the announcement from Italy where it said it is following Netflix into full business plan suicide? Because the 10 Year just imploded. It is now time to panic.

Russia Halted

Another Defection- Greek Ruling Party "Majority" Down To 151

Margin of error: zero

Greek Ruling Pasok Party Majority Falls to 151, Kerdos Reports - BBG

Intessa Sanpaolo celebrates by being halted down over 14%..... and Banco Popolare.

G-Pap's Referendum Bomb Was Secret Even From His Finance Minister

Things in Greece are becoming absolutely surreal after Reuters has disclosed that G-Pap did not even tell his FinMin Venizelos (who earlier was hospitalized with stomach pains... yes, we know) that he was about to announce a referendum. From Reuters: "Greek Prime Minister George Papandreou had not informed his Finance Minister, Evangelos Venizelos, he was going to announce a referendum on the latest EU aid deal, a Greek government official said on Tuesday. "Venizelos had no idea about the referendum. All he knew about was the vote of confidence," a government official told Reuters on condition of anonymity. "He told Papandreou he should inform foreign partners and a letter was drafted in the early morning hours." What can one say but "coordinated decision-making."

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