The Terminal Beginning Of The Western Financial World

February 12, 2012, at 2:39 am
by Jim Sinclair

My Dear Extended Family,

The real terminal beginning of the Western Financial world was this week.
Kicking the can down the road is limited by the practical viability of the US dollar and US Treasury Securities market.
QE will go to infinity because there simply is no other tool that can create the amounts of liquidity required instantly by the destruction of the Western world financial system. This destruction was delivered to us via those that have securitized everything.
When you add to this that no default will be declared a default by the International Swaps and Derivative Association you have a guarantee that QE will go to infinity at the cost of the US currency market first and the US bond market second. I put this epic event in the year 2015. I give the US dollar no longer than June of 2012 before the cracks in its armor are visible to all.
The deal that set this in place happened in December when the Fed was confirmed as the lender of last resort to the entire Western financial world when it granted in excess of $500 billion in US dollar swaps to the European Central Bank. The ECB then in turn lent those funds to its member banks to buy European debt in order to paint the auctions of the European debt as viable.
At the same time the Chinese have agreed to be a port in the storm to the euro itself, explaining why it is trading above 1.30 when in truth it should be trading below 1.20 under present circumstances.
The IMF did its part in planning a large rescue package should Greek debt be haircut to 30% of its issued value. The IMF bailout fund will be dollar financed by the Federal Reserve and China. When push comes to shove the IMF bailout funds will benefit to a degree from Chinese dollars as an outsider lender that the IMF, which has already laid the ground, work for.
What will have to be rescued is the banking a system of Euroland and elsewhere holding the debt of Greece. However, what makes you think that other European nations will not demand some degree of equal treatment as the US credit rating agencies continue to downgrade European sovereign debt and the debt of their banking system.
Clearly the International Swaps and Derivatives association will see no default in the Greek credit event because it is voluntary. To declare this as such is the final can kick because it will be met by a demand for equal treatment and that will require infinite QE to hold up the world banking system. This begins a march towards 2015 when gold has a cyclical chance of being full-valued for the time being. A march has begun towards the virtual reserve currency that will have a connection to gold. This march will be toward an equilibrium price of gold and will not repeat the 1980 fall in price.
It is the funds necessary to cover the euro debt haircuts for the banks holding this debt internationally plus the ISAD Credit Event and Determination Committee non-declaration of default that guarantees QE to infinity.
The US dollar may have until June of 2012 before it replaces the euro as the currency of deep concern. Gold can continue for a period of time being played by the hedge funds but its next test is not at $1500 but rather at $2111.
The ISDA is the vehicle that will necessitate QE to infinity by its non-declaration of what is clearly default.
The clock is ticking and Alf’s numbers are in the crosshairs of the gold price. Let us hope that things do not get that bad and gold does its natural task and tries to balance the international balance sheet of the USA. That would speak very poorly for the quality of life the Banksters have planned for our grandchildren.
Gold is going to and maybe beyond Alf’s numbers. Gold shares with real growing extractable ounces will perform as they did in 1979 and 1980.
“Non carborundum est.” Don’t let the bashers get you down. They are so wrong at exactly the wrong time.

Respectfully,
Jim

Gold Wave & Money Flows Analysis Support Sinclair's Assessment

Eric De Groot at Eric De Groot - 2 hours ago

The US dollar may have until June of 2012 before it replaces the euro as the currency of deep concern. Gold can continue for a period of time being played by the hedge funds but its next test is not at $1500 but rather at $2111. I agree, Jim The 2011-2012 D-wave decline has a window of time with a mean of March and range of December (2011) to July. Its window of price has a mean of $1530 and... [[ This is a content summary only. Visit my website for full links, other content, and more! ]] more »

 

 

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Europe Needs To Stop Bailing Out Greece

Admin at Jim Rogers Blog - 4 hours ago

Europe needs to stop bailing out Greece. The real issue is are they going to change their ways in future? If they do that, the situation will improve. Just sorting out Greece is not enough, if they were to address the problems in other countries then that would be exciting. But I do not think they will. - *in Investment Week* *Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and C... more »

 

 

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Investor Sentiment: Heading Into the Final Stages

Live Streams From Athens And Greek Parliament

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For Greece, Bailout Two Is Just The Beginning

If one is wondering why Greece Finance Minister Venizelos is scrambling to pass the proposed bill which enacts Greek Bailout #2, without any debate or details, very much like the US Attorneys General passed the robosigning settlement without a robosigning settlement even having been inked, the following excerpt from Section E of the MoU between Greece and the Troika should explain it. Because heaven forbid someone actually ask for details as to just what '€[xxx]' of future funding needs over and above the €320 billion in committed funding means in practical terms, i.e., just how lower the minimum wage is going, how many million more jobs will be lost (in a population of just 11 million), and how soon until pension and retirement benefits go negative. Also, our German friends may be interested to know that funding 136% of Greek GDP in the form of endless "bailouts" (of which 81% goes to shore up bank balance sheets), is just the beginning. We are confident our German PM friend is more than aware of this exit clause which gives her the loophole to opt out of everything all over again.

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The prophetic words of Antal Fekete in his now infamous 'essay' on Gold are as relevant now (perhaps more so) as they were when he first wrote them 15 years ago - especially as the Euro-zone migrates from lossening fiat-money to quasi-money (greek pharma bonds for instance). While summarizing this must-read discussion of mainstream economic orthodoxy's mis-teachings is impractical, his initial introduction sets the stage for what is to come: "The year 1971 was a milestone in the history of money and credit. Previously, in the world's most developed countries, money (and hence credit) was tied to a positive value: the value of a well-defined quantity of a good of well-defined quality. In 1971 this tie was cut. Ever since, money has been tied not to positive but to negative values -- the value of debt instruments." After a brief, clarifying history of money, Fekete goes on to discuss the misnomers of currency depreciation, gold as wealth, the failings of kicking the can, quantitative easing, and finally in the misunderstanding of interest rates themselves - seeing them as nothing more than merely bribe-money, trying to persuade reluctant holders of irredeemable promises to hang on a while longer. Paradoxically, gold's importance is growing while its dispersal from official hoards and the mines continues apace. Dispersed gold represents latent power, far greater in scope than its nominal market value, as sound credit can be built only upon a gold base.

US Backs Al-Qaeda to Mutually Destroy Syria

The Arab League is mulling over what further action to take on the crisis in Syria, with reports of escalating violence. Meanwhile, the head of the group’s observer mission has resigned – just as a proposal is being considered to again send monitors from the League and the UN to the country. Political analyst Dr Adel Samara says the U.S. and Al-Qaeda have similar goals in Syria.

 

 

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Greece is the epicenter of a drama that threatens to unwind with all the intrigue and subterfuge of ancient Greek myths and tragedies. As with the legend of Icarus, big, and now bigger, transnational banks provoked the gods with their wax-and-feather financial fabrications to create the appearance of soaring wealth. Now that they have flown too close to the sun and their wings have melted, these banks are being brought to earth by the obligations and consequences imposed by their fabrications.
Rather than take responsibility, these banks seek to appease the gods by sacrificing taxpayers. In fact, if one looks closely, these banks aspire to be gods themselves. They clothe themselves in their indispensability and shield themselves from accountability with tales about how many innocent citizens will be hurt if they don’t get their next bailout. It is as if they say, “We are above the law… We are the law.” Mathematics, legal enforcement, restraint, humility all must fall under the sword of their hubris.
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Saturday Night With the ‘Doomsday Preppers’

[Ed. Note: Part 1, Part 3, Part 4.]
by SGT:
I just flipped on the TV this late Saturday evening and took a brief glance at the guide to see what’s on which led me to a episode of ‘Doomsday Preppers’ on National Geographic Channel. Although I’d heard about it, I’ve never seen it before. I’m posting Part 2 of the episode I am watching right now so you can see the portion I just watched – as I write this. Fast forward to the 9:00 minute mark to see where I started watching. The narrator in this show repeatedly mentions “total economic collapse and chaos” as one of the primary reasons these folks “prep”, which probably makes them ‘Extremists’ in the eyes of the U.S. government. Not sure if this is ‘predictive programming’ or ‘educational’ television, maybe it’s both. But one thing’s for sure, these folks are a helluva lot more prepared – for whatever comes – than most Americans.

Silver Update: 2/11/12 Socialism Fails

from BrotherJohnF:

Precious Metals: The Only Alternative

by Jeff Nielson, Bullion Bulls Canada:

One of the reasons why I stay very active in discussions with readers on our forum is that it is a wonderful way of keeping in touch with what the ordinary investor is thinking. More specifically, such interaction is frequently the inspiration for my commentaries, and that is once again the case with this topic.

The scenario is a familiar one for veteran investors in this sector. Gold and silver have again become temporarily imprisoned in a trading range. Meanwhile the anti-gold and silver propaganda machine is busy sowing doubt and creating uncertainty. Their goal is simple: play upon the fears of newer investors to the sector, or wear them out via ordinary impatience.

This piece is especially aimed at those newer investors, because it delivers a simple yet irrefutable message: you have no choice other than to protect yourselves with precious metals. To illustrate how the bankers and their servant politicians have forced us into focusing our investments in precious metals requires visiting and understanding three concepts.

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