Pimco’s El-Erian: Ireland Risks Major Run on Banks
Ireland risks a “major bank run” unless European officials act quickly to calm the financial turmoil in the nation, Pacific Investment Management Co. Co-Chief Investment Officer Mohamed A. El-Erian said.

 

Embry expects a mania in precious metal mining shares

 

Is A Twenty Year Low On The Real (Not Nominal) S&P Approaching?

CLSA's Chris Wood Chimes In On The Endless European Banker Bailouts

Jim Sinclair’s Commentary

This is a total Western world currency problem whose basis is still not fully discussed. The essence of the problem is as much overspending and debt, but media forgets, facilitated by the national OTC derivative camouflage.
QE will go to infinity and the race to the bottom is going to get UGLY. Although Nigel Farage is correct, he has no concept of what doing the right thing will result in immediately.
There is no practical way out of this. I have told you that for 8 years and nothing has changed.
Gold is the only currency that is going to survive this, defined as the preserving of buying power, as it always did throughout monetary history.



Jim Sinclair’s Commentary

Step back a few months. Does this remind you of a period called the Greek Crisis? It is so similar that the articles might even be the same words with only the names changed.
Would it not be fair to say US Banks are ""Nearly Bust" If the US dollar Collapses, Yahooti Says."
How about Yahooti says the FASB’s selling out of their auditing souls covers up a bankrupt financial industry?

European Banks ‘Nearly Bust’ If Euro Collapses, Evolution Says By Charles Penty – Nov 25, 2010 3:31 AM MT
The European banking system would be “nearly bust” if the euro were to be abandoned which means the 16-member currency “cannot and should not go,” Evolution Securities Ltd. said.
“If the euro is abandoned, and we go back to the peseta, lira, escudo, drachma etc., devaluations would follow immediately,” said Arturo de Frias, head of bank research at Evolution in a note to investors today, adding the industry is a “great buying opportunity.” Devaluations mean write-offs “of a size that would render the whole European banking system completely insolvent.”
Contagion from Europe’s sovereign debt crisis is spreading to Spain, sparking concern that the European rescue fund set up in May isn’t large enough. French, German and U.K. banks could lose 360 billion euros ($479 billion) if the euro collapsed, assuming a 30 percent devaluation in the wake of the restoration of national currencies, said de Frias.
The damage caused by the abandonment of the euro would be such that such an outcome is impossible and the “only way forward” for Europe is fiscal union, he said.
“It is simply too late,” he wrote. “There are too many cross-border investments in Europe to go back to national currencies.”
More…




Jim Sinclair’s Commentary

This should be very disturbing in light of the public musing about retirement tax accounts.

Hungary Follows Argentina in `Nightmare’ Pension-Fund Ultimatum By Zoltan Simon – Nov 25, 2010 4:37 AM MT
Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.
Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.
“This is effectively a nationalization of private pension funds,” David Nemeth, an economist at ING Groep NV in Budapest, said in a phone interview. “It’s the nightmare scenario.”
Hungary is rolling back pension changes implemented more than a decade ago as countries from Poland to Lithuania find themselves squeezed by policies designed to limit long-term liabilities by shifting workers into private funds. Now the cost is swelling debt and deficit levels at a time when the European Union is demanding greater fiscal discipline.
More…




Jim Sinclair’s Commentary

Add this to the Russian and Chinese announcement yesterday of abandonment of the dollar that will be replaced by using each other’s currency in trade settlement.
No amount of media flag waving is making this trend go away.

Russia buys Canadian dollars, may add Australian dollar
Moscow expands its foreign-exchange holdings Nov. 25, 2010, 1:45 a.m. EST
HONG KONG (MarketWatch) — Russia has reportedly added the Canadian dollar to the basket of currencies that comprise its international foreign-exchange reserves and indicated the Australian dollar will likely be the next addition.
A “small” amount of Canadian dollars has been purchased by Russia’s central bank, according to a Bloomberg News report citing comments Wednesday by Alexei Ulyukayev, the central bank’s first deputy chairman.
Ulyukayev reportedly said Russia plans to increase the size of its Canadian dollar holdings in coming months as part of changes to its reserve holdings, also made up of the U.S. dollars, euros, British pounds, and Japanese yen.
Ulyukayev also said the Russia central bank is still considering whether it should add the Australia dollar to its reserves’ holding, reaffirming statements earlier this year that it may add the commodity-backed currency as it diversifies away from the U.S. dollar.
More…




Jim Sinclair’s Commentary

Is there anyone still doubting Monty or me concerning QE to infinity in the entire Western World?

Weber Says EU Rescue Fund Can Be Increased If Needed By Christian Vits and Mark Deen – Nov 25, 2010 9:06 AM PT
Nov. 25 (Bloomberg) — European Central Bank council member Axel Weber said governments can increase the size of the European Union-led bailout fund if necessary to restore confidence in the euro.
“Seven hundred and fifty billion should be enough to assure the markets,” Weber said at the German embassy in Paris late yesterday. “If not, it will have to be increased.”
Contagion from Europe’s sovereign debt crisis is spreading to Spain, sparking concern that the bailout fund set up in May isn’t large enough to rescue the euro region’s fourth-largest economy. The premium on Spanish debt over German bunds rose to a euro-era record yesterday and Portugal’s bonds fell on concern they will follow Ireland and Greece in asking for external aid.
“It is far from certain whether the fund can be increased as easily as that,” given governments may face domestic resistance to a top up request, Commerzbank AG analysts wrote in a research note today. “So there is a danger that markets are going to consider this statement to be premature, thus increasing market skepticism regarding the ability to act among those responsible.”
Spain’s economy is almost twice the size of Portugal, Greece and Ireland combined. Deputy Finance Minister Jose Manuel Campa said in an interview yesterday the country’s funding position for the rest of the year is “comfortable.”
More…

NY Times' Floyd Norris: Pondering the causes of gold fever

Buy Gold: It’s the Only Way to Combat Government Spending
By: Richard Daughty, The Mogambo Guru


Totally Standard Hyper-Inflation
By: Adrian Ash, BullionVault


Gold – "Buy on Dips" Advised as Irish Crisis Tips "Ugly Contest" from Dollar to Euro
By: Adrian Ash, BullionVault




Preparing for The Big One, Coming Soon


.

Nigel Farage To European Parliament: "The Euro Game Is Up... Just Who The Hell Do You Think You Are? You Are Very Dangerous People"

 

Breakup of the Euro Zone? Thinking the Unthinkable



Investors Keep Up the Pressure on Portugal, Spain

 

Europe Begins Push To Ban HFT: Calls "Quote Stuffing" Market Abuse, Dark Pools "Tragic Error", And "Explicitly Rules Out" Flash Orders

 

UK Watchdog Charges 5 With Insider Dealing

 

Despite A Crumbling Europe, Goldman Sticks With Its 12 Month $1.55 EURUSD Forecast

 

A hypothecation of a politically palatable German policy regarding the euro



The Horrible Truth Starts To Dawn On Europe's Leaders   



How Bad Could Ireland Get? Iceland Offers Some Clues  

Happy Thanksgiving...

In Response To Concerns That EFSF Funds Are Insufficient, Axel Weber States Simply That Europe Will Just Print As Much As Needed

 

The Collapse of the Yen: The Party Has Started

Die Welt: EU Commission Is Considering Doubling Size Of European Financial Stab [sic] Fund

 

Rosenberg: "I Think The Dramatic Fiscal Tightening We Are Seeing In Ireland And Others Is Insane"

 

LCH Hikes Irish Repo Margins From 30% To 45%

 

Guest Post: R.I.P, Homo Economicus: On the End of Ubiquitous Poverty and the Beginning of Universal Abundance

 

Wouldn't China love to trade U.S. Treasuries for U.S. gold?

 

Reg Howe: Three years of contraction and concentration in gold derivatives

 

 

 

The Day the Dollar Died

 

It's Official: There Is Not Enough Money To Bail Out Spain

QE2 & The Great Misdiagnosis

Jim Willie CB

 Dazed and Confused: The Fed’s Clouded Vision Of The Future

FX Concepts On "The Day The Currencies Died", Sees EURUSD At 1.26 By Mid-December

 

A Look At The Remainder Of The European Week Through The Eyes Of Chiswick's Favorite Uberbull

 

29 Consecutive Equity Mutual Fund Outflows

 

In The News Today

Posted: Nov 24 2010     By: Jim Sinclair      Post Edited: November 24, 2010 at 5:12 pm
Filed under: In The News

Thought For The Evening

One thing and one thing only happened today. It is a landmark development where the US dollar is concerned.
MOPE may well keep it from the attention of the Sheeplez  for some time.
Those that matter know exactly what a milestone event this is. As a dollar reality now it will factor into price very soon.
The move of Russia and China away from the dollar represent two huge economies that have made their decision to downgrade use of the US currency. All else today is noise and Management of Perspective Economics.



Jim Sinclair’s Commentary
You must give serious consideration to subscribing to John’s service.
I would not be without it.
The recently labelled good economic reports are constructs of statistical "adjustments."
- GDP at 2.5% But "Equivalent" GDI at 1.6%
- Weaker Durable Goods Orders Reflect Stressed Consumer
- Home Sales Weakness Intensified by Systemic-Solvency Issues
"No. 335: GDP Revision, October Durable Goods Orders and Home Sales"
www.shadowstats.com




Jim Sinclair’s Commentary
This comes from a reliable publication in China. It is strange it was not reported this way in the US or Europe yesterday.
It was considered a trivial step for bringing the Yuan into greater use and maybe make it more, as the Western media articles said, market related.
The Chinese did it therefore the Chinese ought to know what they did, and why they did it.

China, Russia quit dollar By Su Qiang and Li Xiaokun (China Daily)
Updated: 2010-11-24 08:02
St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.
More…

Morgan Stanley: Imminent European Contagion

All The Roads Lead To Default, But Which Will We Take?

Weimar hyperinflation "When Money Dies" PDF file

Primary Global's Telecom "Expert" Don Chu First Arrest In Insider Trading Probe

Guest Post: The Federal Reserve's VISA Card Statement 

Weak $29 Billion 7 Year Auction Prices At 2.25%, Bid To Cover Drops

To Celebrate The End Of The Recession Small Businesses Are Cancelling Christmas Parties More Than Ever

Pimco’s El-Erian: Ireland Risks Major Run on Banks

Corporations Double Down On Loans to Avoid Defaults

In The News Today

Posted: Nov 24 2010     By: Jim Sinclair      Post Edited: November 24, 2010 at 1:03 pm
Filed under: In The News

Dear CIGAs,
This comes from a reliable publication in China. It is strange it was not reported this way in the US or Europe yesterday.
It was considered a trivial step for bringing the Yuan into greater use and maybe make it more, as the Western media articles said, market related.
The Chinese did it therefore the Chinese ought to know what they did, and why they did it.

China, Russia quit dollar By Su Qiang and Li Xiaokun (China Daily)
Updated: 2010-11-24 08:02
St. Petersburg, Russia – China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
Putin made his remarks after a meeting with Wen. They also officiated at a signing ceremony for 12 documents, including energy cooperation.
The documents covered cooperation on aviation, railroad construction, customs, protecting intellectual property, culture and a joint communiqu. Details of the documents have yet to be released.
More…

Jim’s Mailbox

Posted: Nov 24 2010     By: Jim Sinclair      Post Edited: November 24, 2010 at 12:47 pm
Filed under: Jim's Mailbox

Coincidentally, Personal Income and Spend Surge Before the Holidays CIGA Eric

Personal Consumption As A % of Personal Income:
Investors that use personal income and spending numbers for historical comparisons today prefer government statisticians doing the thinking about the economic world for them. In the commentary, If you don’t like the message conveyed by economic time series, revise it!, I revealed how many of economic time series have been adjusted to maintain the economic illusion. In many cases, there have been multiple adjustments since 2000.
The alteration of personal income and outlays should serve as all illustration of the growing disconnect between actual and statistical economic reality. The size of the distortion will only worsen as the sovereign debt crisis intensifies.
Headline: Personal income, spending higher
With the holiday shopping season just around the corner, both personal income and spending are on the rise, the government said Wednesday.
Personal income rose 0.5% in October, after a revised unchanged rate in September, while spending by individuals ticked up to 0.4% from a revised 0.3% the prior month, according to data released by the Commerce Department.
Source: money.cnn.com
More…


.

Ireland Gets €85 Billion, As ECB-Germany Schism Becomes Acute

 

Goldman Gets Roped Into Diamondback Insider Trading Probe, Gasparino Reports

 

Citadel Receives Subpoena

 

Merkel Points to `Serious’ Bailout Risk as Spanish Bonds Drop, Reggie Middleton says “Ya Damn Skippy” – Here’s How We Called It

 

HuMONGouS SHaDoW BaNKiNG CHaRT: DeSiGNed By NY FeD

In The News Today

Posted: Nov 23 2010     By: Jim Sinclair      Post Edited: November 23, 2010 at 5:04 pm
Filed under: In The News

Thought For The Evening
Gold continues to act out of sync with its normal motivators.
Reports indicate that South Korea shot first. International tensions have not had a major impact on gold in the past year, yet gold held the majority of its upside today.
This is the third trading day that gold has managed the shake off normal market detractions. I find that interesting.

Market Commentary From Monty Guild

Posted: Nov 23 2010     By: Monty Guild      Post Edited: November 23, 2010 at 5:05 pm
Filed under: Guild Investment

Dear CIGAs,
Just a few points before this holiday week.

QE in Europe— the European sovereign debt situation
It is not surprising that Europe’s short embrace of austerity has been unsuccessful.  There is never a choice for austerity until all other alternatives have been exhausted.  History is replete with examples.  Why don’t some of these stock market commentators read some global economic history?  It is obvious now and has always been obvious that Europe will go for QE.  It does not matter what they say about austerity.  We have been advising investors to watch what they do.  They are bailing out Ireland; Portugal is right behind and will be followed by Spain, Italy, and even France in the future.  There is no solution that politicians will embrace other than QE [money printing] because a program of austerity means the end of their political careers.  They will put their careers above the national interest.
It is absurd to believe that the U.S. dollar will be a safe haven over the intermediate term
An even more absurd belief is the one that puts U.S. dollar and U.S. debt as a safe haven.  There is not any convincing economic evidence that the U.S. dollar is well managed, and there is no reason to believe that the dollar will rise in value.  In fact, it is the U.S. governments’ intention to devalue the dollar and to print money to avoid a deflation in the U.S.  Why do some global commentators see the dollar as a safe haven?  In our opinion, the only safe haven is precious metals, energy, food and other assets which will hedge against the inevitable inflation that the above policies create.
We wish everyone an enjoyable holiday.
Sincerely,
Guild Investment Management
www.GuildInvestment.com

FOMC Minutes: Fed Is Now Openly Targetting A (Much) Lower Dollar

 

First Wellington, Now Janus

 

SAC Discloses Government Subpoena (Top 100 Holdings Presented)

Goodnight Sweet Prince

Fed QE Policy To Be Subject Of US House Hearing On Nov. 30, Says Kucinich

Guest Post: Please, Santa, Let This Be the Last Christmas in America (That's Supposed To "Save" The U.S. Economy)

 

Channel Checker Confirms On TV That All Wall Street Does Is Traffic In Borderline (And Often Blatant) Inside Information

 

Jim Sinclair’s Commentary
The ability of banks to determine the value of an item without any reference to what that item could be sold for is simply wrong.
Fight Over Fair Value in Global Finance Making Volcker Rue FASB Dissonance By Yalman Onaran – Nov 21, 2010 7:00 PM ET
A dispute between U.S. and international accounting groups about how to value financial instruments is threatening to derail efforts to converge global standards, affecting how trillions of dollars of assets are marked on bank balance sheets.
The debate pits the U.S. Financial Accounting Standards Board, which wants to expand the use of fair-value accounting to all financial assets, including loans and deposits, against the London-based International Accounting Standards Board, which opposes such a wide usage. The outcome also will determine how much capital banks have to hold to meet new rules.
FASB’s proposal, announced in May, could cause 26 of the largest U.S. banks to write down the value of about $4 trillion of loans on their books by as much as $138 billion, estimated Jason Goldberg, an analyst at Barclays Plc. Lenders, regulators and some investors have taken IASB’s side, leaving the U.S. standard-setter isolated in its battle.
“Treatment of financial instruments has been the sticking point, and there’s a lot of political pressure on all sides on that,” said Paul A. Volcker, a former chairman of the Federal Reserve who first introduced the idea of accounting convergence as head of the group that oversees IASB. “When you have global corporations operating around the world, and analysts looking at them from around the world, you want one accounting standard.”
More…

Show Me The Money

Posted: Nov 23 2010     By: Jim Sinclair      Post Edited: November 23, 2010 at 2:25 pm
Filed under: Martin Armstrong

My Dear Friends,
If you wish to eliminate the noise that we have been going through in the Irish euro manipulation, I suggest you print out Armstrong’s October 15th article titled "Show me the Money."
His discussion of each important currency is done with a long term chart and technical discussion. Take each currency and staple the two pages together.
Each week review the currencies in terms of the technical discussions and implications.
Regards,
Jim

Click image to open the article in PDF format

$598 Billion Wellington Management Busted

 

Weak 5 Year Auction Prices At 1.41% High Yield, Lowest Bid To Cover In 6 Months As Foreign Investors Flee

 

Is The Risk Rally Over? John Taylor Puts Out New EURCHF Target Of 1.20 By May

 
China Is In a Self-Imposed Bubble That Has Nowhere To Go But Bust! You Don’t Get Something (Growth Through Stimulus) For Nothing (No Economic Consequences)

In The News Today

Posted: Nov 23 2010     By: Jim Sinclair      Post Edited: November 23, 2010 at 12:19 pm
Filed under: In The News

Thought For The Morning
Merkle of Germany has been quiet on this Irish bailout until today. That seemed strange.
Today she is jumping up and down again. That was good for a few hundred point on the downside of the euro.
Could this be a currency war and covering by the usual suspects?



What’s Behind The Gold and Silver ETFs? CIGA Eric
ETF products hold nine years of global, not US as suggested below, mine supply. How much 1285.08 tonnes current holdings represent physical gold? The legal wording of the GLD prospectus should present signficant clues for investors.
There are no assurances that the gold bar exist until added to the account of HSBC custodian or subcustodians. Then the prospectus clearly states that if the subcustodian(s) do not have the gold, Trustee cannot be assured that they will be able to recover any damages from them.
Under the Allocated Bullion Account Agreement, except for an obligation on the part of the Custodian to use commercially reasonable efforts to obtain delivery of the Trust’s gold bars from any subcustodians appointed by the Custodian, the Custodian is not liable for the acts or omissions of its subcustodians unless the selection of such subcustodians was made negligently or in bad faith.
Basically, shareholders cannot be assured that the Trustee will be able to recover damages from subcustodians or any losses relating to the safekeeping of gold by such subcustodian.
Then the legal speak takes it a step further by suggesting that neither Trustee or Custodian really knows the activities or holdings of the subcustodians.
Because neither the Trustee nor the Custodian oversees or monitors the activities of subcustodians who may temporarily hold the Trust’s gold bars until transported to the Custodian’s London vault, failure by the subcustodians to exercise due care in the safekeeping of the Trust’s gold bars could result in a loss to the Trust.
When the objective of the fund is to track the price of gold, does it really have to own any gold to do it? No.
Meanwhile, the theoretical gold supply held by the gold ETF(s) continue to soar as money seeking an easy way to track the price of gold finds an easy solution. This game of musical chair will play until holders of baskets (100,000 shares or more) demand payment in gold. The music could very well stop when this happens.
Exchange-traded products own 2,088 metric tons, equal to nine years of U.S. mine supply, data compiled by Bloomberg show.
Source: financialpost.com
Source: spdrgoldshares.com
More…



the awesome collection of charts at the National Inflation Association site have been updated.

Ireland Denies "Surrendering Sovereignty" Over Bail-out

Economic Implosion Sets the Blame Game in Motion

Knight Research' Stunning Call:  The Game Is Over

The Fear Factor In The Muni Bond Markets

Eric Cantona Appeals For Peaceful Revolution Against Banks:  Pull Your Money Out 

North Korea Attacks South Korea Yellow Sea Island, South Korea On Highest Non-Wartime Alert In Response, USDJPY Goes Parabolic

 

Korean Update, In Which We Learn That The North Threatens With Many Additional Attacks

 

• Goodbye reserve currency: Yuan begins trading against the rouble (China Daily) this is big news
• US has no good options over North Korean clash (FT)
• South Korea Prepared to Implement Market-Stability Measures After Shelling (Bloomberg)
• Focus Shifts to China as North Korea Tensions Escalate (Reuters)
• China Inflation `Volcano' May Prove Too Hot for Controls After Cash Surge (Bloomberg)
• Growth in Thailand, Malaysia Slows, Heralding Caution in Asian Rate Moves (Bloomberg)
• Irish PM Defiant as Coalition Cracks (FT)
• IMF urges cuts in Irish minimum wage and dole payments (Irish Times)

 

On That Accelerating Irish Bank Run...

 

Flight To Golden Safety

 

European Bloodbath Intensifies As Spanish Bond Yield Hits All Time Highs, EURUSD On Verge Of Going Bidless

 

De Minimis POMO Ends As Sack Buys $1.6 Billion In TIPS; PDs Found Lacking In Cash As $210 Million Of November TIPS Auction Put Back

 

The End Of The Dollar Carry Trade? Presenting The Dollar Short Panic In A Burning Theater

 

Inflating The Debt Away
By: Steven Saville, Speculative Investor



Does the Fed Create Money?
By: Michael Pento

Countrywide’s Mortgage Document Errors May Doom Bank of America

In The News Today

Posted: Nov 22 2010     By: Jim Sinclair      Post Edited: November 22, 2010 at 10:17 pm
Filed under: In The News

All the perplexities, confusion and distresses in America arise not from defects in the constitution or confederation, nor from want of honor or virtue, as much from downright ignorance of the nature of coin, credit, and circulation.
–John Adams




Dear CIGAs,
How many times have we discussed the fact that securitized mortgages are not that at all? The collateral supposedly behind these OTC derivatives simply does not exist in the legal sense.
This problem is bigger than anything we have seen so far. The ramifications are far reaching. Think pension funds on this one.
Now people are waking up to this major financial problem which we knew about years ago. This was reported here on JSMineset in 2008 when we discussed the emergency meeting called by the New York Fed supposedly because of back office problems on securitized mortgage debt.
This is not only the Bank of America, but every manufacturer of toxic OTC derivatives called securitized debt instruments.
QE to infinity is the only politician’s tool to kick the can down the road at the cost of hyperinflation. The can will get kicked.
Gold will trade at $1650 and better.

Countrywide’s Mortgage Document Errors May Doom Bank of America By ABIGAIL FIELD
Posted 1:30 PM 11/22/10
Testimony in a New Jersey foreclosure case decided last week may spell big trouble for Bank of America (BAC). If what one bank employee said on the stand proves to be accurate, paperwork problems it acquired when it purchased the failing mortgage provider Countrywide in 2008 could leave BofA on the hook for billions of dollars.
Linda DiMartini, a supervisor and operational team leader for the Litigation Management Department of BAC Home Loans Servicing, testified in the foreclosure case of John T. Kemp that it was "customary for Countrywide to maintain possession of the original note and related documents."
If that’s true, then Bank of America may discover that it has millions of loans on its books that it thought it had transferred to trusts that issued mortgage backed securities, because 96% of Countrywide loans were ostensibly securitized. As the Congressional Oversight Panel explained, that outcome alone could cause massive damage to a bank’s balance sheet. And as bad as that would be, it isn’t the only problem that could result from Countrywide hanging on to the notes.
If the mortgage-backed securities aren’t in fact "mortgage-backed," investors who bought them could be able to force BofA to buy the securities back. A significant number of buybacks could on its own destroy BofA’s balance sheet. Nor could BofA stave off either outcome retroactively by delivering those notes today. First, the contracts that created the trusts would typically forbid transferring the loans into the trusts now. Second, even if somehow that could happen, such a transfer would destroy the special tax status the mortgage backed securities enjoy and give the investors a different reason to put back the securities or sue over them.
More…



Jim Sinclair’s Commentary

I am bullish on gold, but let’s hope this price objective is a tad rich.

Lear Capital: Could An Ounce Of Gold Be Worth Trillions One Day?
Posted 11/22/2010 4:13 PM by Lear Capital
In a really bizarre moment in history, a single American dollar was actually worth 4.2 trillion German marks.
It really happened. To fund its mega-expensive World War I effort, Germany severed the tie between its mark and gold — something that’s always happened, sooner or later, with government-generated currency.
Today there are no gold-backed currencies in the world.
After 1914 in Germany, the mark became just another fancy piece of worthless paper. No longer tied to gold, there were no longer any limitations on how many marks could be printed. But no worries, either — the patriotic German populace somehow believed everything would work out fine as long as Germany won the war.  Because the winners of wars, everybody knew, always dictated the terms of surrender, including — and especially — the economic terms.
The trouble was:
GERMANY LOST THE WAR
By the end of the war in 1918, Germany was a real mess. The Treaty of Versailles imposed steep war reparations, and that did nothing to strengthen a German Reichmark no longer backed by gold or anything else for that matter.
Confidence in the mark continued to nosedive, especially under a deluge of post-war government spending in many new social programs (sound familiar?). But Germany couldn’t spend its way back to normal — no country can pull that off — and confidence in the post-war currency continued to plummet.
By 1922, just four years after the war, Germany’s inflation pest had turned into a gigantic hyperinflation monster.
More…




Weimar hyperinflation "When Money Dies" PDF file

The Beginning Of The Ponzi End: As Of Today, The Biggest Holder Of US Debt Is Ben Bernanke

 

Is A Dropping VIX Masking Rising "Fear" In Most Other Asset Classes... And Does Hedge Fund SPY Pair-Hedging Explain The Market Melt Up?

 

What Will Happen To Ireland (And Various MNCs) When Ireland Is Finally Forced To Hike Tax Rates?

 

Graham Summers’ Weekly Market Forecast (Risk Back On? Edition)