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How serious is the concern of a financial crisis?

*JSMineSet, by Jim Sinclair, March 11, 2008

“Federal Reserve Action Announces New Loan System To Member Banks

Dear Friends,

The Federal Reserve action today formalizes what has been the policy of the Fed from almost day one of the visibility of the credit and default derivative meltdown and credit market lockup.

What is occurring is THE MONETIZATION OF BANKRUPTCY.

The predictable result of monetizing bankruptcy is a significant increase in inflation and a sharply lower dollar.

The result of a sharply lower dollar is sharply higher gold regardless of the dress up process being applied to the US dollar and gold today. The dress up is to prevent a stinging rebuff for the Federal Reserve paying a FARCE price for bankrupt derivative packages purely to keep the banks that are almost all on the edge solvent.

This action speaks negatively for 30 year US Treasury bonds.

What needs to be understood is that there are more than $20 trillion dollars worth of credit and default derivatives out there.

The next key point is that nominal value of this over $20 trillion of credit and default derivatives becomes full value when the derivative fails to perform.

This comes on a modest capital injection into a bond guarantee company that facilitates pinning a tin AAA debt rating heart on them; something that is a total fallacy.

The problem at the heart of the deteriorating credit lockup situation is OTC credit and default derivatives that have failed to perform.

The inviting conclusion then is that $200 billion is as pimple on the ass of an elephant.

Nobody in his or her right mind wishes to see what is coming in 2011. It approaches the ‘Day After’ and ‘Mad Max’ in a financial sense.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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