Posted October 27th, 2008 at 7:45 PM (CST) by Jim Sinclair & filed under In The News.
Dear CIGAs,
Keep your eye on the ball.
The Problem is not broken entities. That is a symptom. The basis of the problem is OTC derivatives. That is the foundation that is never addressed. If you treat symptoms without handling the cause the result is more symptoms. Because the aim of remedial actions is improper, there is little chance of a fix, only an ebb and flow in a downward spiral that lacks real intervention.
In competitive shooting it pays to aim, which is the same when attempting to right an economic crisis.
Even the Fed buying these failed special performance contracts mucks up the Fed's balance sheet without solving the problem. It simply shifts the problem to where more serious trouble could occur, and that is in the credit rating of US Treasuries.
You can say that unless the real target is aimed at, the problem will persist. The problem now however is it is too late. There is no way to net the derivatives as many are written totally naked such as the majority of older credit default derivatives. The ability to net all OTC derivatives died as dislocations began in the ability of the final asset to maintain its value. Credit default derivatives were created on an actuarial type analysis and of course that went boom.
Jim Sinclair's Commentary
There is no question that Pakistan tightened up its China connection to offset the US. In the final analysis this offsets nothing but complicates everything.
China reiterates support for Pakistan
* Beijing to give Islamabad soft loan, encourage investment by top business corporations
BEIJING: China will stand by Pakistan in all circumstances to safeguard the country's sovereignty and territorial integrity, while maintaining the existing bonds of their strategic partnership.
This assurance was conveyed to Prime Minister Yousuf Raza Gilani by Chinese leaders during Gilani's visit to Beijing that concluded on Saturday, Pakistan's Ambassador to China Masood Khan said.
Gilani, during his interaction with Chinese Prime Minister Wen Jiabao and Chinese People's Political Consultative Conference Chairman Jia Qingling, was assured that China would continue to help Pakistan meet new challenges in the wake of terrorism and a financial crisis.
China is supportive of Pakistan's stand on counterterrorism, normalisation of its relations with India and its role as a frontline state to wipe out terrorism, Khan said.
Loan: China assured Pakistan that it would help the country overcome its financial difficulties. Besides giving direct financial help in terms of a soft loan, Chinese leadership will encourage its top-level business corporations to investment more in Pakistan.
It will be critical how the new president, whoever he, is handles these situations. You can be sure that he will be tested severely by his adversaries in his first six months of office.
US special forces launch rare attack inside Syria
Oct 26 05:54 PM US/Eastern
By ALBERT AJI
DAMASCUS, Syria (AP) – U.S. military helicopters launched an extremely rare attack Sunday on Syrian territory close to the border with Iraq, killing eight people in a strike the government in Damascus condemned as "serious aggression."
A U.S. military official said the raid by special forces targeted the foreign fighter network that travels through Syria into Iraq. The Americans have been unable to shut the network down in the area because Syria was out of the military's reach.
"We are taking matters into our own hands," the official told The Associated Press on condition of anonymity because of the political sensitivity of cross-border raids.
The attack came just days after the commander of U.S. forces in western Iraq said American troops were redoubling efforts to secure the Syrian border, which he called an "uncontrolled" gateway for fighters entering Iraq.
A Syrian government statement said the helicopters attacked the Sukkariyeh Farm near the town of Abu Kamal, five miles inside the Syrian border. Four helicopters attacked a civilian building under construction shortly before sundown and fired on workers inside, the statement said.
Why shouldn't a fertilizer manufacturer buy into the US banking industry?
Bank in Southwest Florida being sold to distant buyers
Published: Monday, October 27, 2008 at 1:00 a.m.
Last Modified: Thursday, October 23, 2008 at 8:20 p.m.
Investors from Brazil plan to buy the struggling Riverside Bank of the Gulf Coast for $23 million.
Cape Coral-based Riverside, which has offices in Nokomis and Venice, needed a capital infusion, said Chairman Elmer Tabor. The buyers were looking to get into the U.S. banking business, he said.
It was cheaper for them to buy an existing bank than to spend at least $30 million to start and grow a new one, Taber said.
"From my point of view, it really is a match made in heaven," he said. "By infusing capital in the bank, it gets you in a position to get back on your growth plan."
Here is some good advice when your holdings are in Honest Money in a fake world. This picture was taken of Trader Dan during the rainy season in Houston.
File this relationship in your memory as it will be a topic in the future.
Pakistani PM leaves for Turkey on 5-day official visit
www.chinaview.cn
ISLAMABAD, Oct. 27 (Xinhua) — Pakistani Prime Minister Syed Yousaf Raza Gillani Monday left for Turkey on a five-day official visit, according to official Associated Press of Pakistan (APP).
Gillani is scheduled to hold bilateral talks with the Turkish leadership in a bid to woo investors and to lobby for the Friends of Pakistan initiative to help the country overcome its financial problems.
"Turkey is our good friend and our relations are not only between the governments, but reach out deep at the people to people level," he told reporters before boarding his special aircraft for Ankara at the Chaklala Air Base here.
Gillani said he looked forward to the Friends of Pakistan initiative to help the country steer out of the economic crisis it was currently facing.
"Pakistan is an important country and is at the forefront in fighting extremism and terrorism, while spreading the message of peace for the entire world, " he said.
Pakistan is more than a simple threat, it is a key element in determining our future. Now watch developments concerning Turkey. The difference is that Turkey will play the victim on the world stage in the upcoming unwind of the entire Middle East.
ANALYSIS-Afghan-Pakistan threat worse for next US president
Mon Oct 27, 2008 1:28pm EDT
By David Morgan
"More disturbing still, analysts say, Pakistan is now facing an existential threat from Islamist militants at a time when the nuclear-armed nation and its new civilian government are engulfed in extraordinarily difficult economic problems."
WASHINGTON, Oct 27 (Reuters) – The next U.S. president stands to inherit a potentially more dangerous challenge in Afghanistan and Pakistan than the situation that led to the Sept. 11 attacks in 2001.
The situation is so serious that analysts say the incoming administration will need to move quickly on a broad new initiative to address the Pashtun region, which both countries share, with a mix of military pressure and economic aid.
"It will be extremely important to have an effective new strategy right out of the box. They cannot wait for a lengthy transition," said J. Alexander Thier of the U.S. Institute of Peace, a congressionally funded Washington think tank.
The two U.S. presidential nominees, Democrat Barack Obama and Republican John McCain, have pledged to make Afghanistan a top priority if elected to the White House on Nov. 4.
This is just a drop in today's financial disaster bucket.
US to inject $125bln into major banks this week: Treasury
Monday, October 27 12:59 pm
Nine major US banks will receive 125 billion dollars in capital injections this week from the US government, a Treasury official said Monday.
Assistant Treasury Secretary David Nason told CNBC television that "We executed the agreements for the nine institutions late last night so the money will go out the door for these institutions early this week."
The nine will get half of the 250 billion dollars to be invested by the government in the banks as part of a massive rescue of the financial system.
The nine banks are Citigroup, JPMorgan Chase, Bank of America, Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of New York Mellon, State Street and Merrill Lynch, soon to be taken over by Bank of America.
The remaining 125 billion dollars will go to smaller banks and lenders which agree to the capital for equity program, which includes mandated limits on executive compensation.
Smaller US banks fear predators armed with bail-out money
Andrew Clark in New York
Monday October 27 2008 16.53 GMT
America's smaller banks are claiming they could be vulnerable to government-funded predatory takeovers as their larger rivals enjoy huge cash injections from a $250bn (£157bn) Treasury bail-out.
The list of US banks signing up for government capital swelled to at least 19 today as middle-ranking names including State Street, Capital One and SunTrust announced they were issuing shares to the Treasury in return for about $17bn.
But critics have questioned whether the funds will be put to good use. Lending remains sparse on the high street and there are fears that the recipients will simply hoard the money – or use it to buy smaller players.
Camden Fine, the chief executive of the Independent Community Bankers of America, said it was unfortunate that the US treasury had imposed few conditions on the way the money was used, other than a stipulation that dividend payouts to shareholders must not rise.
"When you have taxpayers' money used by larger banks to purchase otherwise healthy banks, that just promotes the kind of consolidation that got us into this mess in the first place," said Fine.
Look who pays for the bailout
Meet the Henrys (high earners, not rich yet). They make $250,000-plus and get taxed to high heaven. And they're about to get socked again.
By Shawn Tully with Joan Caplin
Last Updated: October 27, 2008: 12:37 PM ET
(Fortune magazine) — Bill Kwon is the embodiment of the American dream. His father – who was arrested by North Korean Communists in the early 1950s for championing democracy – brought the family from Seoul to Illinois when he was a baby. Bill worked himself ragged pursuing every opportunity America's heartland offered, never leaving Peoria.
Just out of college, he was earning a six-figure salary at a telecom company and sleeping in his parents' basement. Now he's a wealth advisor earning $375,000 at Morgan Stanley (MS, Fortune 500), with a five-bedroom brick home, a minivan, a son in private school, and three younger kids to follow. "My dad never made more than $25,000 a year," says the burly, outgoing Kwon, 39. "When I was a kid, this was the top neighborhood in Peoria. I never thought I could live here."
For all his blessings, Kwon gets really steamed when politicians and pundits claim that he and other Americans in his income group aren't shouldering their "fair share" in taxes and should pay more. Nor does he appreciate being branded as "rich" when it's far from certain he'll ever build the kind of lavish nest egg the truly wealthy enjoy, especially after the current market meltdown. "I'm not a trust-fund baby," says Kwon. "Raising taxes for people at my income level is like being punished for success, for working hard." Kwon's total tax bill is already more than $100,000, and the bite is taking an ever-rising share of his raises and bonuses, not to mention his wife's income as a photographer. Kwon fears that America risks killing the incentive for people like him by shrinking the rewards for logging extra hours or starting a business, diminishing the dream that brought his father from Korea.