Economic Collapse

- Jim Sinclair, March 7th 2010:

What is the difference between the State of California and the State of Greece? The State of California is a bigger bankruptcy… The financial industry is at war with Greece. The CDS-attack (Credit Default Swaps, an off-the-counter derivative) is a nuclear financial attack on Greece.

Very interesting two-part interview with the legendary Jim Sinclair of JSMineSet.com by King World News. Listen to this amazing interview: part 1 and part 2.

In part 2, Jim Sinclair talks about Quantitative Easing, hyperinflation and the coming One World Currency of the IMF and a de facto financial One World Government.

The interview ends with Jim Sinclair concluding:

“Be prepared! This is a great civilization change. The most positive thing you can do is to recognize what is out there. The greatest contribution you can make to your family is to be prepared. So when all of this happens, you already have things in place: plans as of what you can do.
…We are not trying to scare anybody or trying to sell anything. We are simply saying, this is the hand writing on the wall. This is what’s most likely going to happen. In order to prepare you have to look at your financial and physical situation. You have to se weather or not this is a really great and significant shift in world history.
…The entire purpose of all this is preparation, because the truth will set us free.”

That last statement is at the core of why I have this blog. The world is changing. If you want to protect the purchasing power of your savings from the devaluation of the printing press - buy gold. If you want to stimulate your mind and stay a head of the game, keep reading, listening and watching. Stay tuned…

The next big thing in the economic meltdown are the Commercial Real Estate Mortgages as many economists, like Gerald Celente of The Trends Research Institute, have been saying now for a long time, and as I wrote earlier:

First to default were the now (in)famous “sub-primes”. Defaulting now are the “primes” and the “alt-A’s”. Next up: “Commercial Real Estate Mortgages”.

Today, the biggest US Commercial Real Estate lender, Capmark filed for bankruptcy.

The US has been building commercial properties since the early 90s somewhere along the lines of 5 times the rate of population growth and up until today Capmark has been lending out money to about 2/3 of all building projects in the US. As you understand, this is a huge event.

The next big thing after this is of course all the derivates based on these loans like “Mortgage Backed Securities” etc. The derivatives bubble is currently about 20-30 times the global GDB depending on who you ask. Yes, in the Quadrillions. It’s such a huge number its almost impossible to grasp. This is one of the many reasons this blog is called “Economic Collapse”. We will need an Economic Paradigm Shift to get out of this one. The system we have now based on dept, fiat currency and Fractional Reserve Banking is proving not to work. Likely we will see an interesting line of events shaping from today and for the rest of the year. By early november the main stream news will probably start talking like they did one year ago when Lehman Brothers went bust. Hold on to your hats, folks, there is a storm coming. Interesting time to be alive…

If the Obama Administration decides that Capmark is too big to fail and bails this institution out, the Quantitative Easing program of the Federal Reserve has to gain momentum. This will further the downfall of the US Dollar, which will mean gold goes further up.

First to default were the now (in)famous “sub-primes”. Defaulting now are the “primes” and the “alt-A’s”. Next up: “Commercial Real Estate Mortgages”. On top of those: “Mortgage Backed Securities” and other derivatives of all kinds. So many different names for paper debt. Here are some stats from Bloomberg for the third quarter of 2009:

• 937,840 homes received a default or auction notice or were repossessed by banks, a 23% increase from a year earlier
• 1 of every 136 U.S. households received a filing, the highest quarterly rate on record
• A “shadow inventory” of 7 million properties are in the foreclosure process or likely to be seized, up from 1.27 million in 2005
• The pace of prime and so-called alt-A loan defaults is accelerating
• The delinquency rate (failure to pay) for prime loans rose to 6.41% in the second quarter from 6.06 percent
• The share of prime loans in foreclosure increased to 3% from 2.49%

Prime loans are those made to borrowers with the best credit records while alt-A loans are considered riskier because they were often granted without documenting the borrower’s income. “The best” borrowers are now incersingly defaulting as (official) unemployment in the US goes above 10%. Shadowstats.com puts that number at about 21%.

I got a question from a friend today via e-mail, and I though I’d share our little conversation:

Q: The question is why would the comex run out of gold? When someone takes delivery, they have to pay for the gold, and why can’t more gold be purchased by the Comex to replace what went out?

A: The short answer is that more gold is traded on the Comex than there is gold. It is all derivatives. Paper. They can’t buy more because there isn’t that much for sale and then the gold price would sky-rocket and Main Street, not Wall Street, would set the price. This is where we are heading and at that point the price of gold is theoretical… If there is no gold to buy, what is the price? Gold will buy you land, silver will buy you bread.

Derivatives now 29 times the GDP of the world… What happens to bubbles?

Federal Reserve Will Fail With Quantitative Easing

Quantitative easing; everybody is doing it like the Bank of England, Japan and even Switzerland. Quantitative easing is a tool of monetary policy. The effect is an increase in the quantity of currency without regard to maintaining its quality.

http://www.runtogold.com/2009/03/federal-reserve-will-fail-with-quantitative-easing/