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26 July 2008 at 7:35 a.m.
Posted On: Friday, July 25, 2008, 9:56:00 PM EST
The Catalyst For Financial Disaster
Author: Jim Sinclair
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!
copy and paste this URL 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
26 July 2008 at 7:53 a.m.
Thanks taxslave; you keep up better informed on this than the newspaper itself does.
26 July 2008 at 8:22 a.m.
Thanks for making the clarification of the two differently owned “national” banks.
26 July 2008 at 7:33 a.m.
We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.
It means the cost of bailing out housing exposures to the two mortgage insurers will be so great that it will leave no room to bail out anything else and there are several US banks that are now in big trouble. NAB says that the dislocation in the residential market is separate from the corporate market, but the flow on is inevitable.
While global banks have been writing down their balance sheet assets, few have tackled their conduit exposures which are off balance sheet but to which they are ultimately liable.
This morning at around 6am I wrote that we had been experiencing a 'dead cat bounce'. I had no idea that NAB would trigger the downturn and confirm what I had written. And of course Wall Street will receive a deep shock when it wakes up.
How did NAB get caught in $1.2 billion mess? They had a number of big clients who wanted to invest in these US housing loans. They were sucked in by the 'triple A rating' given to the securities by the rating agencies. They did not take into account that the monoline insurers who guaranteed some of the loans had no substance. To become a player NAB took out $1.2 billion in these triple A securities and 90 per cent of it has been lost.
Many Australian institutions are very angry. NAB is paying out far too much in dividends and should be conserving capital. The American bank it purchased, Great Western, was a good idea but it is now clear it overpaid for it. Fortunately it only has a small exposure to the bad loans. But what's happening to the NAB is not the main game.
The global banks have been marking to market the assets they held on their balance sheet, but the vast amounts held in so called 'conduit trust accounts' have not been written down because they were not marketable. NAB wrote them down when they saw the bad mortgages.
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. But write-downs of $1,300 billion and perhaps even more are on the cards.
Where will the equity come from to cover these bad loans? The world has never attempted a rescue effort of this size and it will make liquidity in the globe very tight. That's why corporates will be hit. All Australian companies that need equity should raise it now.
26 July 2008 at 7:56 a.m.
Governor Arnold Schwarzenegger just announced that he will sign an Executive Order on Monday slashing the wages of over 200,000 state employees to the bare minimum.
Not California's minimum wage of $8 per hour. The federal minimum wage of $6.55. Six dollars and fifty-five cents an hour.
Imagine trying to pay your bills on $6.55 an hour. Now imagine what will happen to thousands of vital service workers forced to live on poverty-level wages. A nauseating irony: many state employees may need to seek aid from the very state services that employ them.
26 July 2008 at 8:02 a.m.
Senate is in session today debating this bailout…..on cspan. Tune in, give 'em a call if you'd like. Oh brother….they don't even know.
OH, the bill is now over 700 pages, which like the Immigration bill, No One Has Read It and they are admitting it. They say it's being RUSHED through……again, tune in if you can stomach them.
26 July 2008 at 8:08 a.m.
Feds close First National Bank of ArizonaComments 2| Recommend 1Ed Taylor, TribuneBanking industry woes hit Arizona on Friday night as the federal Office of the Comptroller of the Currency closed the Scottsdale-based First National Bank of Arizona.
Banking officials said depositors' money is safe and that federal regulators negotiated an agreement for the Mutual of Omaha Bank to take over their deposits.
The 15 branches of the bank will reopen on Monday as branches of Mutual of Omaha Bank, according to the Federal Deposit Insurance Corp., which was named receiver. Also deposits up to $100,000 remain federally insured.
“Depositors will continue to be insured with Mutual of Omaha Bank, so there is no need for customers to change their banking relationship to retain their deposit insurance,” the FDIC said in a statement.
Over the weekend, customers can gain access to their money by writing checks or using automatic teller machines or debit cards, the agency said.
Checks drawn on the bank will be processed normally, and loan customers should continue to make loan payments as usual, the FDIC said.
The federal takeover applies also to the First National Bank of Nevada, the parent company of the Arizona bank. The two institutions merged on June 30.
First National Bank of Arizona is not related to the similarly named National Bank of Arizona, which is owned by Utah-based Zions Bancorp.
The failed Arizona bank suffered a $131.4 million loss in the first quarter as it was hurt by real estate loans that went bad as the state's economy slowed.
In a statement, the OCC said it acted after finding the bank “was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices.”
26 July 2008 at 10:06 a.m.
FDIC takes over two more failed banks28 branches scheduled to reopen Monday as Mutual of Omaha Bankthe Office of the Comptroller of the Currency said it closed First National Bank of Nevada and First Heritage Bank NA of California.
27 July 2008 at 1:45 p.m.
Private equity firm KKR to go public: reports
By Michael KitchenLast update: 1:03 p.m. EDT July 27, 2008Comments: 8new york (MarketWatch) — Private equity firm Kohlberg Kravis Roberts & Co. intends to become a public company, reports said Sunday. The company, noted for its role in high-profile buyouts, will go public in a complicated transaction in which it will merge with KKR Private Equity Investors (KPEQF:kkr private equity invtr lp units.Delayed quote dataAdd to portfolio
KPEQF 10.74, -0.01, -0.1%) , the investment fund it listed on Euronext Amsterdam two years ago, the Financial Times reported. The plan is expected to be announced on Monday morning before European markets open, it said. The Wall Street Journal also reported the plan on its Web site, citing “people familiar with the situation.” Established in 1976, the company has an aggregate enterprise value of over $410 billion, according to KKR's Web site
Another failed hedger being passed on to the sheep.
28 July 2008 at 5:39 a.m.
TBR News July 25, 2008
The Voice of the White House
Washington , D.C., July 23, 2008 : “What America is now facing is the title of O'Neill's play, 'A Long Day's Journey Into Night.' Congress has rushed through a Band-Aid bill to : 'help' home owners but it is far too little and far too late to do any good. Major banks like Wachovia, Chase and Bank of America are tottering and no one is lending money to anyone anymore. Credit is drying up, evictions rise, along with gas and food prices and unemployment is just behind all of them but rising. Some of this collapse is the result of overextension, some the result of greed and much more the ineptness of the Bush administration but the fact is, we are teetering on the edge of the quarry cliff and what is coming is slow disintegration. None of this could have come at a worse time. Bush has no reputation and no power, a major election is coming and no Congressman knows what to do. All of these statements are obvious but aside from bits and pieces here and there, our worthless press says little. Russia has told Estonia that if she allows a U.s. 'Miss le Shield' to be installed in that country, Russia will respond at once with military action. Serious stuff. Did you see this on CBS? On Fox? No, you did not. You didn't see it anywhere that I can find. Either our media is useless or they do as they are told. When the whole country is in a shambles and we are taking wheelbarrows of million dollar bills to the store to buy a bottle of skim milk full of dead ants, then we can look back on the last few years with joy.”
6 September 2008 at 7:08 a.m.
6 September 2008 at 7:10 a.m.
7 September 2008 at 6 a.m.
Have you looked up lately? Chemtrails cover most of Moffat County daily…
U.S. government scientists bombarding skies with acid-rain causing pollutant in name of fighting global warmingPaul Joseph WatsonPrison PlanetFriday, September 5, 2008
U.S. government scientists are bombarding the skies with the acid-rain causing pollutant sulphur dioxide in an attempt to fight global warming by “geo-engineering” the planet, despite the fact that injecting aerosols into the upper atmosphere carries with it a host of both known and unknown dangers.
The proposal to disperse sulphur dioxide in an attempt to reflect sunlight was again raised in a London Guardian article this week entitled, Geoengineering: The radical ideas to combat global warming, in which Ken Caldeira, a leading climate scientist based at the Carnegie Institution in Stanford, California, promotes the idea of injecting the atmosphere with aerosols.
“One approach is to insert “scatterers” into the stratosphere,” states the article. “Caldeira cites an idea to deploy jumbo jets into the upper atmosphere and deposit clouds of tiny particles there, such as sulphur dioxide. Dispersing around 1m tonnes of sulphur dioxide per year across 10m square kilometres of the atmosphere would be enough to reflect away sufficient amounts of sunlight.”
(article continues below)
Wake up from your slumber….tell your neighbor. They've been spraying all year….causes headaches, nausea, etc. Food truck drivers mention it all the time, they're always traveling back and forth to Denver.
7 September 2008 at 6:27 a.m.
More on chemical trails…..
7 September 2008 at 2:36 p.m.
Fannie & Freddie bailout..
20 September 2008 at 7:48 a.m.
2 October 2008 at 6:54 a.m.
2 October 2008 at 7:58 a.m.
Right To Work updates and details….
3 October 2008 at 7:12 a.m.
Carbon tax in Bailout Bill
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