[Leaplist] The current money situation.

[Kyle Gonzales]

Don't we've had worse crisis.  Invest in utilities and mortgage
scavenger companies, put 10% of your portfolio in gold and silver
(like all planners tell you to do.)  No portfolio?  Then just use
firefox (open source software) on your Linux computer (hey, on
topic!), go to eBay (uses alot of Linux) and buy silver coins.  Almost
anyone can afford a couple of those a week, tho you should buy a roll
at a time.

On Dec 10, 2007 8:53 PM, Homer Whittaker <whittake at sbaflorida.com> wrote:
>
>
> Posted On: Sunday, December 09, 2007, 6:31:00 PM EST
>
> In The News Today
>
> Author: Jim Sinclair
>
>
>
> MORTGAGE MELTDOWN
> Interest rate 'freeze' - the real story is fraud
> Bankers pay lip service to families while scurrying to avert suits, prison
> Sean Olender
> Sunday, December 9, 2007
> New proposals to ease our great mortgage meltdown keep rolling in. First
> the Treasury Department urged the creation of a new fund that would buy
> risky mortgage bonds as a tactic to hide what those bonds were really
> worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac
> to buy the risky loans, even if it was clear that U.S. taxpayers would
> eventually be stuck with the bill. But that plan went south after Fannie
> suffered a new accounting scandal, and Freddie's existing loan losses
> shot up more than expected.
>
> Now, just unveiled Thursday, comes the "freeze," the brainchild of
> Treasury Secretary Henry Paulson. It sounds good: For five years,
> mortgage lenders will freeze interest rates on a limited number of
> "teaser" subprime loans. Other homeowners facing foreclosure will be
> offered assistance from the Federal Housing Administration.
>
> But unfortunately, the "freeze" is just another fraud - and like the
> other bailout proposals, it has nothing to do with U.S. house prices,
> with "working families," keeping people in their homes or any of that
> nonsense.
>
> The sole goal of the freeze is to prevent owners of mortgage-backed
> securities, many of them foreigners, from suing U.S. banks and forcing
> them to buy back worthless mortgage securities at face value - right now
> almost 10 times their market worth.
>
> The ticking time bomb in the U.S. banking system is not resetting
> subprime mortgage rates. The real problem is the contractual ability of
> investors in mortgage bonds to require banks to buy back the loans at
> face value if there was fraud in the origination process.
>
> And, to be sure, fraud is everywhere. It's in the loan application
> documents, and it's in the appraisals. There are e-mails and memos
> floating around showing that many people in banks, investment banks and
> appraisal companies - all the way up to senior management - knew about it.
>
> I can hear the hum of shredders working overtime, and maybe that is the
> new "hot" industry to invest in. There are lots of people who would like
> to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy
> time and make this all go away. Cuomo is just inches from getting what
> he needs to start putting a lot of people in prison. I bet some people
> are trying right now to make him an offer "he can't refuse."
>
> Despite Thursday's ballyhooed new deal with mortgage lenders, does
> anyone really think that it can ultimately stop fraud lawsuits by
> mortgage bond investors, many of them spread out across the globe?
>
> The catastrophic consequences of bond investors forcing originators to
> buy back loans at face value are beyond the current media discussion.
> The loans at issue dwarf the capital available at the largest U.S. banks
> combined, and investor lawsuits would raise stunning liability
> sufficient to cause even the largest U.S. banks to fail, resulting in
> massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.
>
> The problem isn't just subprime loans. It is the entire mortgage market.
> As home prices fall, defaults will rise sharply - period. And so will
> the patience of mortgage bondholders. Different classes of mortgage
> bonds from various risk pools are owned by different central banks,
> funds, pensions and investors all over the world. Even your pension or
> 401(k) might have some of these bonds in it.
>
> Perhaps some U.S. government department can make veiled threats to
> foreign countries to suggest they will suffer unpleasant consequences if
> their largest holders (central banks and investment funds) don't go
> along with the plan, but how could it be possible to strong-arm everyone?
>
> More…
>
>
> Jim Sinclair's Commentary
>
> Derivatives certainly do present some prickly problems that are only
> starting to come out of the woodwork. In time derivative traders and
> their backup geeks are going to be considered criminal. They should take
> their hundreds of millions and run to a non-extradition country Monday.
>
> Judge Dismisses Foreclosures because Banks couldn't Prove They Owned the
> Mortgage
>
> In the murky world of packaging and reselling mortgage loans, where is
> the paper trail?
>
> December 8, 2007 – Palm Coast, FL – Investors holding mortgage backed
> securities increasingly face losses due to foreclosures. Now they face a
> new problem. In November, an Ohio federal judge dismissed 14 foreclosure
> cases because the mortgage investors were unable to prove that they
> owned the mortgages underlying the foreclosed properties.
>
> Jim Sinclair's Commentary
>
> It is everywhere.
>
> Sub-prime fears hit the UAE
>
> With global liabilities from structured investments at more than $200
> billion, UAE banks may be on course for greater write-downs than
> predicted, HSBC research claims. However, Abu Dhabi Commercial Bank
> (ADCB) played down forecasts that it could face losses of up to Dh900
> million due to exposure to US sub-prime mortgage related instruments.
>
> An HSBC research report, obtained exclusively by Business 24|7, said:
> "Taking into account the size of ADCB' overall securities portfolio of
> Dh3.6bn (as of September 2007) and the decline in the ABX index during
> second quarter of 2007, ranging from 5 percent (for AAA-rated products)
> to 30 percent (for BBB-rated products), we estimate the overall position
> to be approximately Dh900m.." However, ADCB rejected the numbers saying
> its potential losses from structured products were much lower.
>
> "The HSBC numbers are over-exaggerated. It is not right," a senior
> official of ADCB told Business 24|7. "Besides, ADCB did not book a loss
> of Dh283m but only Dh70m. A total of Dh213m was taken to equity
> account," he said.
>
> The ADCB official also said the losses are not necessarily due to the
> sub-prime crisis but due to the fallout of sub-prime and lack of liquidity.
>
> "Sub-prime was the catalyst but losses are not necessarily due to
> sub-prime. It is because of lack of liquidity also."
>
> More…
>
>
> Jim Sinclair's Commentary
>
> The US dollar is dead now and for years to come.
>
> Gulf plans revaluation talks in days: Bahrain
> Sat Dec 8, 2007 4:45am EST .
> By Mohammed Abbas
>
> MANAMA (Reuters) - Gulf Arab oil producers are considering revaluing
> their dollar-pegged currencies together and will hold talks on a change
> in the exchange rates "in the next few days", Bahrain's foreign minister
> said on Saturday.
>
> Saudi Arabia and five neighbors preparing for monetary union as early as
> 2010 ruled out dropping pegs to the tumbling dollar after a summit last
> week and said any talks on revaluation would be kept secret.
>
> Since the summit the United Arab Emirates, which has been pushing for
> currency reform, said it would not change exchange rate policy for "the
> foreseeable future."
>
> Bahraini Foreign Minister Sheikh Khaled bin Ahmed al-Khalifa said the
> six states were working together to shift exchange rates, although they
> would keep their dollar pegs.
>
> More…
>
> Jim Sinclair's Commentary
>
> This is the Formula in action.
>
> CompUSA to close all of its 103 stores
> The consumer electronics store will run store-closing sales during the
> holidays to get rid of inventory.
> December 7 2007: 7:18 PM EST
>
> DALLAS (AP) -- Consumer electronics retailer CompUSA said Friday it will
> close its stores after the holidays following sale of the company to an
> affiliate of Gordon Brothers Group, a restructuring firm.
>
> CompUSA operates 103 stores, which plan to run store-closing sales
> during the holidays.
>
> Privately held CompUSA, controlled by Mexican financier Carlos Slim
> Helu's Grupo Carso SA, said discussions were under way to sell certain
> stores in key markets. Stores that can't be sold will be closed.
>
> Gordon Brothers will also try to sell the company's technical services
> business, CompUSA TechPro, and online business, CompUSA.com.
>
> Terms of the transaction were not disclosed.
>
> Dallas-based CompUSA has struggled for nearly a decade with falling
> prices on personal computers, its most important product, and
> competition from big-box retailers such as Best Buy
>
> More…
>
> Jim Sinclair's Commentary
>
> Here is the Formula in action. It does not matter why scaling back
> occurs. What is your guess on what is going to happen to Federal tax
> revenues? What is your guess on what is going to happen to Federal
> spending? With those two items, you can predict the dollar's action in
> 2008 better than GS.
>
> Americans scale back on big loans
> The Fed says borrowing for cars and other costly items fell in October
> for second month in a row.
>  From Reuters
> December 8, 2007
>
> WASHINGTON -- U.S. loans for big-ticket items like cars fell in October
> for a second consecutive month, according to a Federal Reserve report
> Friday that suggested tighter lending conditions in the wake of a global
> credit crunch.
>
> It was the first back-to-back decline for this type of loan since 1992.
>
> Nonrevolving credit, which includes closed-end loans for big-ticket
> items such as cars, boats, college educations and holidays, declined by
> $1.64 billion, or 1.26%, to $1.561 trillion, the Fed said.
>
> In addition, September's report of nonrevolving credit was revised to
> show a decline of $1.37 billion from a previously estimated $363-million
> increase.
>
> The data can be seen in different ways. One explanation might be that
> tougher lending standards mean fewer customers qualify for this type of
> borrowing, which is dominated by auto loans.
>
> More…
>
> Jim Sinclair's Commentary
>
> Who was saying the US is a resilient economy that could resist the
> downward spiral of the Formula?
>
> Auto loan delinquency rises, another sign of stretched consumer
> Posted Dec 6th 2007 10:15AM by Douglas McIntyre
>
> The housing crisis has been going on for over a year now. As the value
> of peoples' homes drops and loans reset to higher rates, foreclosures
> rise. But up until recently at least, car loans and credit card payments
> have been holding their own. This was a sign that consumers still had
> some money in their pockets.
>
> The Wall Street Journal reported that "about 4.5% of auto loans made in
> 2006 to top-rated borrowers were at least 30 days delinquent as of the
> end of September, up from 2.9% the previous month, according to a Lehman
> Brothers survey of companies servicing these loans."
>
> Investors in financial stocks have probably been hoping that home loan
> worries, which are a problem at financial firms, would be written off
> and most of the bad news would be in the past. But $575 billion in car
> loans are made each year, and that is a huge pool for potential defaults.
>
> Car loans are put into pools the same way home loans are. Those pools
> are bought and sold based on the overall value and default rate of the
> loans in the pool.
>
> More…
>
> Posted On: Sunday, December 09, 2007, 6:25:00 PM EST
>
> Jim's Mailbox
>
> Author: Jim Sinclair
>
> Dear Jim,
>
> "I will tell you when, but you and 97% of the CIGAs will not at that
> time believe me."
>
> Why not?
>
> I went from not having a clue about anything financial to having a
> current six figure portfolio in "real" assets.
>
> Forever grateful for you and your JS Mineset crew.
>
> CIGA David
>
> Dear David,
>
> Let me tell you a short story.
>
> On my trading desk at the Sinclair Group of 15 traders, 7 came from less
> than nothing to millionaires as a result of following my lead for their
> own account. I allowed them to trade for themselves, but not in front of
> any client, nor in the same marketplace.
>
> The day gold hit $887.50 I called a time out and told the kids the game
> was over. We spent that night selling physical everywhere it was traded,
> in each different form it was traded. We sold short 400 ounce bars to a
> Hong Kong teals against our futures positions. All my traders heard what
> I said and stayed that night, assisting us to bail out and in the
> process sold gold down over $100.
>
> I took all these kids from school into trading, holding evening classes
> to train them. Not one of them listened. They thought Daddy didn't want
> them to keep raking in the money. Every single one of them went belly up.
>
> I received death threats from the gold community when I said the gold
> bull was over, and over for many years to come. Old man Forbes quoted me
> as saying "If you missed gold, you missed it." That was a comment on
> gold going South for at least 15 years.
>
> You may believe me, but if you do David, you will be in the minority.
> These kids looked at me every day. They were the near and dear. They did
> not listen.
>
> Regards,
> Jim
>
>
>
>
>
> Jim,
>
> The GS Gold and Dollar report was a part of "Operation Overwhelm."
>
> This proves further that the GS report was totally "WAG THE DOG"
>
> CIGA Brian
>
> JPMorgan favors precious metals in 2008
> Saturday December 8, 1:38 AM
>
> NEW YORK, Dec 7 (Reuters) - Precious metals could rally in 2008 as the
> U.S. dollar falls and supply flattens, JPMorgan said on Friday, ranking
> the sector the strongest among all commodities for next year.
>
> JPMorgan said its favorite precious metals continued to be gold and
> platinum, with their respective prices expected to average $815 an ounce
> and $1,475 an ounce for 2008, with risks strongly skewed to the upside.
>
> The U.S. bank said that precious metals are unlikely to de-link from the
> dollar next year and it expected a large portion of the volatility in
> metals prices is likely to come from the currency markets.
>
> "Precious metals have the most scope to rally given their leverage to
> currency markets and supply constraints. Mining supply growth will
> likely be flat in gold for the next four years, while platinum and
> palladium will likely remain in deficit next year," JPMorgan told
> clients in a note.
>
> More…
>
>
>
>
>
> Jim Sinclair's Commentary
>
> CIGA Erik, in a note to Trader Dan, has a great analysis using this own
> proprietary methods. I fully agree.
>
> "Conditions are ripe for a trend acceleration as most long-term bulls
> sit on the sidelines in fear."
>
>
>
>
>
> Dear Jim,
>
> Part of the Formula in action?
>
> Sincerely,
> CIGA Alex
>
> Oil Min: Iran Has Halted Oil Transactions In Dollars -AFP
>
> TEHRAN (AFP)--Major crude producer Iran has completely stopped carrying
> out its oil transactions in dollars, Oil Minister Gholam Hossein Nozari
> said on Saturday, labeling the greenback an "unreliable" currency.
>
> "At the moment selling oil in dollars has been completely halted, in
> line with the policy of selling crude in non-dollar currencies," Nozari
> was quoted as saying by the ISNA news agency.
>
> "The dollar is an unreliable currency, considering its devaluation and
> the oil exporters' losses," he added.
>
> The world's fourth-largest oil exporter, Iran has massively reduced its
> dependence on the dollar over the past year in the face of U.S.
> pressures on its financial system.
>
> The U.S. has successfully encouraged major European and Asian banks to
> cut their dealings with Iran in a bid to make the Islamic republic give
> way on its controversial nuclear program.
>
> More…
>
> Dear Alex,
>
> No, that is not part of the Formula. That is politics plus the fact that
> as you sell oil for dollars your revenue declines in value because you
> discounted the oil. In time all oil producers not politically dependent
> on the USA will drop the dollar as the medium of exchange for oil.
>
> To cease accepting dollars for oil is a means of diversification away
> from dollars that oil rich central banks have already expressed an
> interest in.
>
> Regards,
> Jim
>
>
>
>
>
> Jim Sinclair's Commentary
>
> The TIC report will get some positive input from the continuing fire
> sale on all or part of financial institutions to non US entities.
>
> The deep discounting by retailers in the face of a slower Christmas
> selling season could cushion the statistics of the economic slow down.
>
> Whatever the numbers are be sure to factor in both these concepts.
>
> A housekeeping note:
>
> Please help me help you.
>
> If your question is complex or a tome please give me your phone number,
> and when you can be contacted.
>
>
>
>
>
> Dear Mr. Sinclair,
>
> I was reading up on Jesse Livermore and his trading style. What outdid
> him initially was the delay between market price and price quoted. Does
> that mean that his trading style is more effective today than it has
> ever been?
>
> Thank you
> Ron
>
> Ron,
>
> I think you got that backwards.
>
> Jesse busted about 6 Bucket Shops (they bet against their clients by
> taking the order, giving an execution at one price, but never executing
> anything) because he could get an execution all at one price which could
> not be done in the market place. In time the Bucket Shops banned him as
> they were in business to skin the public, not pay them.
>
> It was the execution at one price he could get from the Bucketeers that
> the exchanges and Curb could and would not do. That was the differential
> and it favored him, disfavoring the Bucketeers.
>
> He made a bunch but then was banned. He tried many ways to sneak in or
> use agents but the Bucketeers were ready and banned them too.
>
> Regards,
> _______________________________________________
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-- 
Kyle Gonzales
kyle.gonzales at gmail.com
GPG Pub Key: 9C3FBD51

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