Archive for July 28th, 2008
The Catalyst For Financial Disaster
The Catalyst For Financial Disaster
Author: Jim Sinclair
Dear Friends,
A serious event occurred today. This event was the very public international recognition of more off balance sheet so called “assets” revealed as having little, if any, value.
This event is arguably the most serious financial upset ever. If you have not protected yourself, it is getting very late – maybe too late.
Your best hope is that this event is so complex that the herd of self anointed experts has no clue what that vehicle is, how large it is and therefore the profound meaning it has.
Gold, serious junior gold shares (the only seriously underpriced and therefore real value in equities) and non-dollar short term federal currency instruments are your sanctuary. You better get there, and get there FAST!
Click here for the criteria you should consider when selecting junior gold share situations.
The meaning of this is not only are Freddie and Fannie’s troubles much costlier than realized, but now there is an entirely new definition of market-less financial entities with off balance sheet assets that undermine primarily the US and now international banking systems. Conduit mortgage OTC derivatives will have to be marked down now that the sun is shining on them.
The U.S. mortgage industry transformed itself in a way that has opened dangerous SIV sub prime real estate conduits to global capital markets.
A conduit loan is priced by swaps and swap spreads, thereby becoming a package of various OTC derivatives generally derived from a formula that would make Einstein look like a kindergarten mathematician.
By turning mortgages into securities, lenders created vast distances between homeowners and their mortgage holders, who can be anywhere in the world such as Australia.
US banks have written down $450 billion in bad housing loans. The revelation from NAB means that they will now certainly need to take provisions to $1,000 billion. Write-downs of $1,300 billion and perhaps even more are in the cards.
That guarantees the USDX at .6200 and more likely at .5200.
That guarantees gold to reach at least $1650 much sooner than I anticipated.
This strongly suggests that my estimate of $1650 is significantly below the price of gold coming soon.
This opens the probability that a modernized and revitalized Federal Reserve Gold certificate ratio tied to the M3 will evolve into the monetary system.
The greatest economic crime ever committed is OTC derivatives. Those that proffered these will have killed more people than most wars.
This is it and it is NOW!
Respectfully yours,
Jim Sinclair
Greater Depression in US… Ad Vitam Eternam…
Greater Depression in US… Ad Vitam Eternam…
The Greater Depression is coming in the US as surely as an out-of-control freight train and it’s unstoppable. But, that’s not the bad part…
Whether Bush declares Martial Law and becomes a Dictator, as a result of another contrived ‘terrorist attack’ or the presidential elections actually take place putting Obama at the helm, it’s way too late to do anything about it…
The Greater Depression is coming to the US as surely as an out-of-control freight train and it’s unstoppable. But, that’s not the bad part…
What’s coming is the end of the era of the US Dollar dominating the world and all the abuses that resulted, allowing the US to live well above its means at the expense of all the other countries obliged to use the US Dollar for their commodities transactions…
What’s coming is the destruction of the ‘American Way of Life’ and the return to harsh reality, where consumption will be forcibly cut down by at least 30 to 35%, in line with what the US can actually afford…
What’s coming is the complete loss of Faith in FIAT currencies, starting with the US Dollar, but extending eventually to all paper currencies as well and heralding the return of precious metals as the TRUE store of VALUE: my initial target for Gold is $2,750.00, but $5000.00 is also a real possibility…
What’s coming is the destruction of a ’smoke & mirrors’ economy, where all the statistics are fraudulently manipulated: CPI/Inflation is 13% – NOT 3%; GDP Growth is -2.5%, NOT +1.5%; unemployment is 14%, NOT 5%, and M3 runs at 18%, etc…
http://www.shadowstats.com/alternate_data
What’s coming is the end of the current style of capitalism with all its excesses and the concentration of money and power in the hands of a few, while most of the citizens are kept in virtual financial slavery where their income in REAL terms has been stagnant for the last 15 to 20 years…
What’s coming, in a nutshell, is the collapse of the Dollar and the US economy, heralding a Greater Depression that will last far longer than that which began in 1929, as the US no longer has the means it had back then to pull itself out of the hole…
- In the 30’s, the US had oil aplenty to use and export: now it imports 70% of its needs at huge cost, as oil production peaked in the 70’s…
- In the 30’s, the US had a strong manufacturing base and its people were lean and driven: now, most of the manufacturing base has gone to Asia and 70% of Americans are overweight or obese, lack drive or have become apathetic, while their Asian counterparts are lean, mean and driven…
- In the 30’s, the US population was one of the better educated: now it’s lagging most modern countries and the high technology sector has to rely on foreigners for over 50% of its employees…
- In the 30’s, the US was competitive in terms of labor costs: now, Asia is at least 10 times cheaper and making huge stride in productivity because it started from a much lower level…
- In the 30’s, the US was not anywhere as indebted as it now is: as the largest world debtor, the US now need to borrow $3 BILLION a day just to keep afloat on which it cannot even pay the interests and its debt and future liabilities – as per GAAP accounting – now exceed $65 TRILLION, or some $510,000 for every household…
Here is the bad part:
In short, the US will soon enter the Mother of all Depression, BUT no longer has the means it once had to pull itself out of it: in the last Depression it took 10 years and the advent of WWII, but I fail to see what assets the US now has that will drive it out of the hole, except for its army. However it no longer is in the best of shape or all dominant with the advent of the Russian supersonic anti-ship missiles and there are many other nuclear powers that are MAD (mutual assured destruction) capable, so this is another option that has become obsolete…
Pakistan has right to retaliate if allied forces attacked: President
Pakistan has right to retaliate if allied forces attacked: President
President Pervez Musharraf Saturday said he is concerned over the Nato forces attack in Pakistani tribal areas and warned a U-S think-tank that no such attacks will be tolerated in future, and Pakistan reserves the right to retaliate.
Talking to a senior advisor of the US think-tank Dr Hormon Olmen in Rawalpindi, President Musharaf asserted that the Afghan-based Nato forces are not being attacked from the Pakistani soil nor is any cross-border activity taking place from here.
According to sources, the President reiterated that a stable Afghanistan in the interest of Pakistan and said baseless allegations against Pakistan could affect the war on terror.
Dr. Olmen told the President that the Pak-Afghan border security is a joint responsibility of both the countries and a cooperation between them is the need of the hour.
