Dear CIGAs,

Bond guarantee insurance firms are looking for a bail out. This is fact. Credit default over the counter derivatives are melting as we speak. No announced revaluation of special performance obligations (over the counter derivatives) approaches the real number. The financial system is in serious trouble. Analysts suggest that if off balance sheet units are included, the loss should be 21 billion. I suggest even that number is low.

Despite this, the clear majority of you are whistling Dixie as Rome burns. How in the world can you be so complacent?

1. Take delivery of your share investments as paper certificates.
2. Exit all Internet financial entities. You can always go back.
3. Do not warehouse your bullion coins at unregulated coin dealers. Demand prompt delivery.
4. For peace of mind reduce, if not eliminate, all debt.
5. As far as possible reduce if not eliminate fiduciaries and/or agents between yourself and your assets.
6. Will the next shut down of redemptions be your annuities? Examine the portfolio that the annuity holds asking the question “do these positions fit the present financial conditions?” If they do not then redeem your annuity and place the Funds in Swiss and Cando short term Federal Treasury bills.
7. Be very careful of your local banks. Cash in CDs regardless of interest rate penalties. Go the Cando and Swiss T Bill route.
8. Who owes you money? Take less for immediate repayment.
9. Keep some cash at home.
10. 45% in gold insures the whole.

Do some of the above, please. I care even if you do not via no action!!

Citigroup Writedowns May Be as Much as $13.7 Billion (Update6)
By John Glover and Jody Shenn

Nov. 6 (Bloomberg) -- Citigroup Inc., the world's biggest bank, may have losses from asset-backed bonds of as much as $13.7 billion, roughly equal to the company's profit so far this year. The shares fell for a sixth straight day.

The bank may have to write down an additional $2.7 billion of subprime mortgage-backed and related securities, CreditSights Inc. said today. Citigroup said on Nov. 4 that securities it holds may have lost $11 billion of value, prompting rating companies to downgrade its credit and precipitating the ouster of Chief Executive Officer Charles O. ``Chuck'' Prince III.

Additional writedowns may balloon to $21.1 billion if off- balance-sheet units are included, according to analysts David Hendler, Richard Hoffman and Pri de Silva in New York. That compares with potential losses of $5.4 billion for Bank of America Corp. in Charlotte, North Carolina, the second-biggest U.S. bank, and $4.1 billion for New York-based JPMorgan Chase & Co., the third-biggest, CreditSights said.

``Citigroup causes us the most concern of the big banks,'' the analysts said in a report today. ``Citi's risk is further amplified by its relatively weak capital position,'' reducing its flexibility in responding to crises.

More…

Jim Sinclair's Commentary

I mused with you among the small amount of grantors of OTC default derivatives who were writing them on each other. There are various ways these special performance contracts can be triggered.

1. Default
2. Significant market value depreciation.
3. Bond rating decline.

These are all special performance contracts any way you want to write them. They lack standards and without standards there can be no viable market.

Between this and the bond guarantee companies seeking bail out, the whole system is pear shaped.

How on earth can you just sit there looking at all this as a prime time sitcom?

All you have to lose is everything you have, maybe more.

UPDATE 3-Citigroup, Merrill bonds imply lower ratings-Moody's
Fri Nov 2, 2007 4:01pm EDT
By Walden Siew

NEW YORK, Nov 2 (Reuters) - Credit investors are betting top-rated bonds of Citigroup Inc (C.N) and Merrill Lynch (MER.N) are overrated and may be vulnerable to ratings cuts, as Merrill credit is now trading as low as junk.

The spreads, or the yield premium over U.S. Treasuries investors demand to hold Citigroup and Merrill bonds, widened on Friday after Deutsche Bank said more than $10 billion in write-downs are expected from large U.S. banks in the fourth quarter, mostly from Citigroup and Merrill.

Merrill credit default swaps have a market implied rating of "Ba1," or six levels below the current Moody's rating at "A1," the fifth-highest rating, said David Munves, head of credit strategy for Moody's Investors Service in New York.

Citi's credit default swaps have a market implied rating of "Baa2," or seven notches below the bank's current "Aa1" rating.

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Jim Sinclair’s Commentary

No more blonde jokes, please.

Supermodel Bundchen Joins Hedge Funds Dumping Dollars (Update3)
By Bo Nielsen and Adriana Brasileiro

Nov. 5 (Bloomberg) -- Gisele Bundchen wants to remain the world's richest model and is insisting that she be paid in almost any currency but the U.S. dollar.

Like billionaire investors Warren Buffett and Bill Gross, the Brazilian supermodel, who Forbes magazine says earns more than anyone in her industry, is at the top of a growing list of rich people who have concluded that the currency can only depreciate because Americans led by President George W. Bush are living beyond their means.

Even after the dollar lost 34 percent since 2001, the biggest investors and most accurate forecasters say it will weaken further as home sales fall and the Federal Reserve cuts interest rates. The dollar plummeted to its lowest ever last week against the euro, Canadian dollar, Chinese yuan and the cheapest in 26 years against the British pound.

``We've told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a non- dollar currency,'' said Gross, the chief investment officer of Pacific Investment Management Co. in Newport Beach, California, and manager of the world's biggest bond fund. ``That should be on top of the list,'' said Gross, whose firm is a unit of Munich- based insurer Allianz SE.

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Dan Norcini’s Commentary

Just when you think it cannot get worse, it does…

This really is like watching a huge train wreck taking place in slow motion. I strongly suspect that our price projection for gold is by far way too low…

Jim Sinclair’s Commentary

Capital One just estimated bad debts on credit cards for write off of $5 billions. That is only a start.

The $915 Billion Bomb in Consumers' Wallets

This past summer's subprime meltdown involved about $900 billion in now-suspect securitized debt, reckless lending, and consumers who buckled under the weight of loans they couldn't afford. Now another link in the consumer debt chain - credit cards - is starting to show signs of strain. And the fear that the $915 billion in U.S. credit card debt (an uncannily similar figure) may blow up has major financial institutions like Citigroup, American Express, and Bank of America strapping on their Kevlar vests.

Last month, as banks reported their worst quarterly results since 2001, concerns about rising credit card delinquencies began to make their way onto earnings announcements alongside mentions of subprime woes.

First Citigroup, reporting a 57% decline in earnings, cited higher consumer credit costs and said it would put aside $2.24 billion in loan-loss reserves to cover future defaults.

In describing the situation to analysts, CFO Gary Crittenden said Citi's credit card holders were beginning to increase the balance on their cards or take cash advances on those cards for the first time - behavior that, in his experience (which includes seven years as CFO of American Express), can translate into future trouble. Citi said the change in loan losses was "inherent in the portfolio but not yet visible in delinquencies."

More…