Jim Sinclair, Jan 20, 2008: This is it

[lynnie]

 
 
  Posted On: Sunday, January 20, 2008, 2:59:00 PM EST

Could This Be "The Mother of All Wakeup Calls"?

     Author: Jim Sinclair

 
Dear Friends:

This is it and even the prestigious "Economist" knows the truth.
 
The Default Swap and Default Derivative (herein called bond default insurance companies) meltdown that will follow the cut of the bond rating on Ambac, a bond insurer, is referred to as a DOMINO EFFECT.
 
What this means is that the side of the derivative special performance contract that is required to perform cannot perform and may in fact not even be there.
 
In my exchange with Monty yesterday, I named his concept the “Resurrection Trust,” as in Lazarus. However, in this case Lazarus does not rise because in all probability he will not even be there at rising time.
 
Pop Goes the Weasle of derivative madness in the form of 2.1 trillion dollars. I see this entire matter as the crime of all time, not simply the Great Train Robbery.
 
Once again these geeks have killed us all to some degree. For those who refuse to protect themselves, you are certainly going to be a victim.
 
When will people realize that these companies could never perform on the products they sold even when they were flush with money?
 
Default swaps and derivatives were always a scam if you consider their inability to do what they had contracted to do. No one ever imagined that multiple credit problems could occur simultaneously. That means no one ever did or considered the “What If” in this whole fiasco. All that existed was world class unbridled GREED.
 
How thick can people be that they can't see that the entire financial world is now threatened with a problem for which there is no practical solution?
 
Tax cuts, lower interest rates, and putting $800 in every consumer’s hands is not going to put a dent in this juggernaut of unwinding derivatives that are hell bent on producing a Financial Apocalypse.
 
The potential now is akin to the Weimar Republic case study. Yet many sleep comfortable in their imaginary world, seemingly immune to what's about to happen.

 http://www.jsmineset.com/
 
 

[Toadstool]

Over here in the UK, today has been classed as the "worst day since 9/11" for finances. Worse yet, I'm completely unprepared for a major recession as is everyone else I know 

[Flagg707]

Jim does good work, but just be aware - we could see a serious sell-off in gold before it skyrockets on hyperinflation fears. This is not investment advice, just a heads-up that in a deflationary panic, even on that is short-lived, you could actually see the US dollar shoot up in a dead-cat bounce and gold drop as investors meet margin calls on their equity accounts. 

The US still has immense taxing power and US debt instruments are still very safe instruments to preserve some amount of capital, even though the US government is heading towards insolvency thanks to Medicare and Social Security.  I think Jim's fear of hyperinflation is valid and will eventually occur - but I just don't think it happens immediately.

[jock]

Over here in the UK, today has been classed as the "worst day since 9/11" for finances. Worse yet, I'm completely unprepared for a major recession as is everyone else I know 

Your local Tesco superstore stocks beans, split peas, rice and broth mix/lentils at between 49p and £1 per kilo bag.

I suggest you get down there soon.

Btw welcome to latoc

[CreoleGenius]

Flagg 707;

Exactly what you described is going on RIGHT NOW!  Dollar up as EURO downs on equity fears.
Equity fears spawn margin calls paid with GOLD.  Gold and silver down until the shorts in paper
blow their wads.  DOW futures omen is making many big-shots go without sleep THIS VERY NIGHT!

[mtlouie]

You know the thing I've always misunderstood about people's relationship to gold these days?  They act like it's for some "investment" purpose.  Like if they bought at $200 and it goes to $1500, they're rich.  I've always considered it to be the monetary exchange when (not if) the U.S. goes bankrupt and/or the dollar is finished.  Even if it's worth $100 an ounce it's still gold and still fungible; whereas the dollar may be used as woodstove kindling, toilet paper, insulation, etc.

[knucklewalker]

You know the thing I've always misunderstood about people's relationship to gold these days?  They act like it's for some "investment" purpose.  Like if they bought at $200 and it goes to $1500, they're rich.  I've always considered it to be the monetary exchange when (not if) the U.S. goes bankrupt and/or the dollar is finished.  Even if it's worth $100 an ounce it's still gold and still fungible; whereas the dollar may be used as woodstove kindling, toilet paper, insulation, etc.

Either case is valid depending upon whether we see inflation vs deflationary forces come into play?

[Jay Dee]

You know the thing I've always misunderstood about people's relationship to gold these days?  They act like it's for some "investment" purpose.  Like if they bought at $200 and it goes to $1500, they're rich.  I've always considered it to be the monetary exchange when (not if) the U.S. goes bankrupt and/or the dollar is finished.  Even if it's worth $100 an ounce it's still gold and still fungible; whereas the dollar may be used as woodstove kindling, toilet paper, insulation, etc.

Either case is valid depending upon whether we see inflation vs deflationary forces come into play?

The dollar currently serves as a medium of exchange as well as a store of value - although its value ahs dropped like a stone the last few years it is not in new territory historically. However, if the value of the dollar as a store of value/strength continues to wither then the value of gold will continue to increase as a store/hedge for value. We can still use the dollar as a medium for exchange it just gets like the lira - 10,000 dollars may only buy ten dollars worth of value(goods and services) by current standards or as compared to gold. Thats the way I understand it.