Mr. Sinclair sounds the alarms....

MilesWaits · January 30, 2012 10:38AM

Got this in my email tonight:

Dear Friends,

I was interviewed today concerning the most powerful body in the financial world that now holds in its hands the near future of all markets, from currencies to commodities, based on a single edict to be given.

The interview is being processed and should be posted here later this evening.

This organization supersedes all governments and central banks today in terms of the financial power they edict. This organization can have a greater impact on your pocketbook than the FASB did when they killed "true value" accounting.

This body is made up of the key players of the five largest banks in the USA and other countries. This body by their actions this week will guarantee QE to infinity.

This is relevant to all your assets, yes all. If you have the time listen to it please. If you don't have the time listen to it please. If you don't listen to it do not blame me when all hell breaks loose six months from now.

Not one word about this body was on the airwaves today, yet this group by a simple decision rules the financial plant. They will be making this edict in just a few days. They have to do it again this year. It is then that you know what will hit the fan.

I feel this is it for jsmineset.com tonight. I do not want to write another word and detract from the revelations you will hear.

Your financial future, even if you have never heard of them, is in this organization's hands. Check in later for the interview. If you don't check in your finances might just check out.

Please remember you have been informed of this impending edict as a service to the community.

Respectfully,
Jim

Justacommeman · January 30, 2012 10:51AM

jmski52 · January 30, 2012 10:55AM

FASB had made the guidelines on how companies report their financial results, for many decades until 2008. All of the big accounting firms *used to* adhere to FASB standards in doing audits, determining financial performance and the basic functions of financial accounting used in producing financial statements for publically-traded companies. They've now trashed their whole reputation for the bankers by eliminating their old standards for reporting of assets.

This is alot like the Society of Structural Engineers making a decree that no concrete need be tested for strength, that steel may be used having impurities which may cause brittleness, and that no load calculations be required in construction of a 3 mile span of bridge.

If MF Global says, "hey we got $2 Billion in Greek Bonds - it's all good," then it's all certified as "financially sound". Good Luck with That.

Sinclair is the Man.

derryb · January 30, 2012 11:00AM

Gotta be the FED or the IMF.

In a nutshell, FASB (Federal Accounting Standards Board) sets the rules on acceptable accounting practices and was threatened by Congress to modify the way banks show bad debt (particularly housing loans) on their balance sheets. Congress dictated that financial institutions be be allowed to show a highly inflated value instead of the previously required "mark to market" or true value. This act alone hides the insolvency of many TBTF institutions and makes them appear to be above water.

When one says that the banks are insolvent, this is what they are normally referring to.

Kinda reminds me of the ratings agencies who are paid by the very people they rate and give an opinion on. In the good ole days a buyer, not the seller, of some sort of paper paid the ratings agency for an independent opinion.

57loaded · January 30, 2012 11:58AM

what is this "single edict?"

the suspense is killing me

Sinclair does it again!

MilesWaits · January 30, 2012 12:17PM

e·dict (dkt) n.
1. A decree or proclamation issued by an authority and having the force of law.
2. A formal pronouncement or command.

I am waiting.......baited breath....girded loin......golden patience......argghhhhhh.

MilesWaits · January 30, 2012 12:21PM

Ok...here it is from his website!

Justacommeman · January 30, 2012 12:46PM

ISDA

roadrunner · January 30, 2012 12:51PM

The ISDA will determine this week on whether Greece is officially a default, and therefore the 5 major US banks that have large positions in Greek debt.
Per Sinclair, the 5 banks wield power over the ISDA and outcome is predetermined (ie no default, no matter what % of Greek debt is declared no good).
A decision was made last time around that a 50% haircut was not a default. Sinclair suggests that this time around 30-35% repayment won't be declared
a default. It therefore will have repurcussions among those dealers who carry CDS protection (ie their CDS's don't perform since there is no official default).
The ability to declare what % of default is not "really a default" gives the IDSA more power than any other financial entity in the world. Changing definitions
doesn't fix the original problem.

derryb · January 30, 2012 2:36PM

By avoiding the term "default," the IDSA will be cancelling all of the insurance policies (CDSs, the majority underwritten by JPMorgan and Goldman Sachs) that creditors bought to protect themselves in the event of a default. There will be one of three outcomes: (1) provide bailouts to the CDS writers, (2) provide bailouts directly to the US creditors to cover their losses or (3) let the chips fall where they may, which should have done in lieu of earlier US bank bailouts. Had it been done earlier chances are the economy would have taken the hit, flushed out the bad bets and began its recovery. More importantly the gamblers would have learned to quit making bad bets. Taking the hit this time around will have much more serious consequences to an alreay fragile US economy.

If it appears at any point that the banks will have to take responsibility for the their poor performing Greek investments as well as their insurance policies (more countries to follow, with more IDSA proxy cancellation of insurance), all hell will break out in the US financial markets including major equity exchanges. At this point the value of real money (gold) will be known. On the other hand, bailouts and QE will dilute the dollar further (good for PMs). So, either way PMs will benefit.

I'm betting on "save the banks at any cost," because if they don't the banks will be facing the same scenario when Italy blows up, when Spain blows up, etc.

Published reports have US banks on the hook for only $41 billion in Greek debt. I believe when the truth comes out it will be much greater. Turns out the two largest CDS underwriters are JPMorgan and Goldman Sachs and probably very much more than $41 billion dollars when you add up non-US bank exposure to the debt. Surprise, surprise.

Oh, what a tangled web they have woven. Got gold?

Zubie · January 30, 2012 3:04PM

So...what he is saying that I need to transfer my 401k to cash holdings/money market and with any extra money buy PMs?

derryb · January 30, 2012 3:10PM

<< So...what he is saying that I need to transfer my 401k to cash holdings/money market and with any extra money buy PMs? >>

Wouldn't hurt, at least until the affect is known.

jmski52 · January 30, 2012 8:15PM

If it is an edict, how is it "undeclared"?

Down the rabbit hole we go.

bluelobster · January 30, 2012 8:28PM

<< 

<< So...what he is saying that I need to transfer my 401k to cash holdings/money market and with any extra money buy PMs? >>

Wouldn't hurt, at least until the affect is known. >>

Seriously? No one knows if it would hurt, and like any investment the market has already moved after the event is "known". Place your bets, diversify and monitor, but I don't think it wise, to time your investments based on newsletter drama, maybe it's me..

Speaking of CDS's I have always held if you don't have an insurable interest you shouldn't be allowed to hold them and while the banks that write these instruments will get a break if the default threshold is lowered, the main holders of CDS's are banks so in totality, the banks would be losers as well.

pf70collector · January 30, 2012 8:53PM

I've been in 100% cash in my 401K since last year. What is Greece's total debt? I find it hard to believe it will bring all five banks down. Can someone explain this. However, I do believe they will hide the default because of the dominio effect on Portugal, Spain and Italy. That is the real danger. The Fed will backstop the banks no matter what. He says to invest in general equities but he states for equities to advance you need liquidity in the market. Wouldn't this default cause a lack of liquidity even with QE 3 which is happening now anyway?

derryb · January 30, 2012 9:58PM

And to think, one regulator could have prevented so much misery had she not been made out to be a heritic by Greenspan and his banking buddies. Congress actually enacted legislation to prevent her office (ironicially the CTFC) from doing its job. This event marked the beginning of regulators realizing they are no longer going to be allowed to properly carry out their duties and a virtual end to proper oversight in the banking industry. Thanks Alan, you truely were the maestro.....of Wall St.

Brooksley Born warned that unchecked trading in the credit market could lead to disaster, but power brokers in Washington ignored her. Now we're all paying the price.

Highly recommended documentary:
A Must See, PBS's "The Warning"

jmski52 · January 30, 2012 10:10PM

I have two comments. First, Brooksley Born was hot in 1964. Secondly, if Greenspan is such a big fan of unfettered and unregulated markets, why doesn't he advocate letting the insolvent, incompetant, corrupt banks fail? The answer - because Greenspan wants what he wants - for him and his friends, and the rest of us be damned. It's pretty simple, imo.

DoubleEagle59 · January 30, 2012 10:31PM

<< And to think, one regulator could have prevented so much misery had she not been made out to be a heritic by Greenspan and his banking buddies. Congress actually enacted legislation to prevent her office (ironicially the CTFC) from doing its job. This event marked the beginning of regulators realizing they are no longer going to be allowed to properly carry out their duties and a virtual end to proper oversight in the banking industry. Thanks Alan, you truely were the maestro.....of Wall St.

Brooksley Born warned that unchecked trading in the credit market could lead to disaster, but power brokers in Washington ignored her. Now we're all paying the price.

>>

I must admit, I was totally ignorant of this above fact and used to think Greenspan was just plain wrong.

Now I'm beginning to think that Greenspan is the devil himself!!

derryb · January 30, 2012 10:57PM

watch the linked PBS documentary, well worth the time

cohodk · January 30, 2012 11:46PM

Is this the "great event" that was supposed to happen last year?

Someone here has been saying that these derivative could/would be "cancelled" for quite some time now.

jmski52 · January 31, 2012 12:13AM

s this the "great event" that was supposed to happen last year?

Prolly not the "great event" per se', but it may actually precipitate the "great event". For sure, nothing is getting fixed. Yet. If ever.

cohodk · January 31, 2012 12:32AM

<< s this the "great event" that was supposed to happen last year?

Prolly not the "great event" per se', but it may actually precipitate the "great event". For sure, nothing is getting fixed. Yet. If ever. >>

Actually I would contend that the cancellation of these derivatives is a "fix".

jmski52 · January 31, 2012 12:34AM

Actually I would contend that the cancellation of these derivatives is a "fix".

Not if the liability gets dumped on you and me. Which it is.

cohodk · January 31, 2012 12:50AM

<< Actually I would contend that the cancellation of these derivatives is a "fix".

Not if the liability gets dumped on you and me. Which it is. >>

There is no liability if the contracts are destroyed. Its like it never happened. The world is not ending.

BTW---If such an event occurs, PMs will suffer.

secondrepublic · January 31, 2012 12:53AM

how exactly do these contracts get "cancelled"? at a minimum, you would need a law passed by Congress. good luck getting that. and even if it happend, that would only cover the US. no regulatory body can "cancel" lawful financial contracts. if they tried, the result would be endless litigation.

derryb · January 31, 2012 12:56AM

<< how exactly do these contracts get "cancelled"? at a minimum, you would need a law passed by Congress. good luck getting that. and even if it happend, that would only cover the US. no regulatory body can "cancel" lawful financial contracts. if they tried, the result would be endless litigation. >>

IDSA is not cancelling anything. They are using their (influenced) power to say that no "default" occurred. Without a declaration of default, the CDSs are useless. IDSA gets to define "default" just like FASB was able to define book "value." It's like having a life insurance policy that pays upon death and then having whoever the contract allows to define "death" say that there is no death. Terms of contract have not triggered a payout based on the definition.

The foxes are guarding the hen house.

jmski52 · January 31, 2012 1:03AM

Well, from my limited knowledge of the CDS legalities, it appears to me that one or the other of the contracting parties is going to be on the losing side of the bet. It also appears to me that a cancellation of the losing side's position will damage the winning side's position, unless the winning side gets a bailout.

Assuming a bailout of the winning side's unpaid bets - or conversely, a bailout of the losing side's gambling losses - in addition to a dump on the taxpayers, this amounts to an undermining of contract law, similar to the government's undermining of bankruptcy law written into the GM and Chrysler bailout terms, which maintained union benefits at the expense of both the bondholders and the taxpayers.

In my opinion, this is only fixed if these types of instruments are stopped and/or if the losing side is forced to lose all their assets and to go out of business. I don't see that happening. Corzine needs to be held accountable for his firm's direct theft of clients' accounts, and that's not happening either.

derryb · January 31, 2012 1:11AM

CDSs will fix themselves once buyers realize they are useless. Without the assumed protection of a CDS, the gamblers will be less risky. Besides, why buy insurance when you know your boys on the inside will force the taxpayers to cover your bad bets. It all goes back to holding bad gamblers accountable for their bets and also removing their ability to gamble with highly leveraged money that doesn't even belong to them.

Re-instate the Glass Seagal Act and the problem will be solved. Reward regulators for doing their job instead of running them out of governement service when they try to do their job. The controlling banks have created an environment where most every federal regulator is afraid to do his job if he wants to keep it.

I'll say it again - anyone that does not believe private bankers are in full control of our economic policy does not have their eyes open.

cohodk · January 31, 2012 1:25AM

CDSs will fix themselves once buyers realize they are useless. Without the assumed protection of a CDS, the gamblers will be less risky

Exactly. And the deleveraging continues. All part of the fix.

derryb · January 31, 2012 1:26AM

<< CDSs will fix themselves once buyers realize they are useless. Without the assumed protection of a CDS, the gamblers will be less risky

Exactly. And the deleveraging continues. All part of the fix. >>

Unless, of course, the taxpayer keeps coming to the rescue.

streeter · January 31, 2012 3:03AM

There is a tug of war going on in my brain....what is happening vs. what may happen vs. what other people interpret what is happening vs. whether it even makes any sense to pay attention to what I think may happen.

I have a headache.

mariner67 · January 31, 2012 3:13AM

roadrunner · January 31, 2012 6:56AM

<< 

<< Actually I would contend that the cancellation of these derivatives is a "fix".

Not if the liability gets dumped on you and me. Which it is. >>

There is no liability if the contracts are destroyed. Its like it never happened. The world is not ending.

BTW---If such an event occurs, PMs will suffer. >>

As long as each counterparty gets to value these as they like (per model) then there is no liability since both are assuming they are in a profit position. Unfortunately, there
will always be an actual market value for these illiquid assets with a winner and a loser. Unfortunately, you have to try and sell them to find out the value since there is no other
way of determining it. Banks like JPM or Goldman won't let you net them out if they are sitting on potential profits. The FED and Treasury won't let you net the $275 TRILL in
interest rate contracts out because those are the heaviest weights on the see-saw keeping it pinned down. The govt can decree these contracts all null and void. But almost
immediately rates will spring higher and just keep going with all the usual "beneficial" effects of humungously high interest rates. The business cycle will suffer immensely which
is hard to fathom based on where it has already been. The US won't be able to service its debt at those higher rates. That certainly doesn't sound bullish for the dollar or bearish
for PMs. In any case, the opportunity of cancelling out these contracts pretty much went by the wayside when Lehman went down. The TBTF banks will take down the financial
system and stock market before they concede the rights to their derivatives. But at some point they'll be sitting pretty in enough hard/tangible assets when it's time to bring down
paper charade. They'll come out on top once again when the system is reset.

cohodk · January 31, 2012 7:45AM

But at some point they'll be sitting pretty in enough hard/tangible assets when it's time to bring down paper charade. They'll come out on top once again when the system is reset.

So how 'bout if all of us on the board pool our resources and start a bank. As they say, "If you cant beat then, join them".

Otherwise I agree with Streeter.

Spooly · January 31, 2012 7:48AM

(So how 'bout if all of us on the board pool our resources and start a bank. As they say, "If you cant beat then, join them".)

The best way to rob a bank is to own it!

derryb · January 31, 2012 7:49AM

<< But at some point they'll be sitting pretty in enough hard/tangible assets when it's time to bring down paper charade. They'll come out on top once again when the system is reset. >>

Their future is not secured by what they have, it is secured by having everyone in debt to them. Debt is the lifeblood of banking.

secondrepublic · January 31, 2012 10:24AM

<< Their future is not secured by what they have, it is secured by having everyone in debt to them. Debt is the lifeblood of banking. >>

Very true. I'm constantly amazed at how cavalier most Americans are to so-called "good debt" like mortgages. No such thing. You gotta pay it off. The debtor is servant to the lender.

guitarwes · January 31, 2012 10:03PM

<< 

<< Their future is not secured by what they have, it is secured by having everyone in debt to them. Debt is the lifeblood of banking. >>

Very true. I'm constantly amazed at how cavalier most Americans are to so-called "good debt" like mortgages. No such thing. You gotta pay it off. The debtor is servant to the lender. >>

The borrower is SLAVE to the lender. -Biblical teaching

Slave is a strong word because we know the implications of slavery. Stronger words hit home harder sometimes.

jmski52 · January 31, 2012 10:29PM

"Neither a lender nor a borrower be." -Benjamin Franklin

cohodk · January 31, 2012 10:33PM

<< 

<< Their future is not secured by what they have, it is secured by having everyone in debt to them. Debt is the lifeblood of banking. >>

Very true. I'm constantly amazed at how cavalier most Americans are to so-called "good debt" like mortgages. No such thing. You gotta pay it off. The debtor is servant to the lender. >>

No one ever got rich by not taking leverage. Paying 4% interest for an investment that yields 10% is like stealing money "from the banks". Debt is not evil. Just like everything, it is the excess that kills.

There was a forum member who hasnt posted here in years that mortgaged his house and put it all into silver 8 or 9 years ago. Seems like that was "good debt".

Baley · January 31, 2012 10:53PM

It's difficult to characterize any debt as good or bad without a context. In the case of real estate, very few can possibly save enough money up to buy a home outright, it must be financed. Similarly, few young companies can buy and staff plant and equipment, they both must borrow and pay interest on the loan.

If the family or company does well, they will get to utilize the expensive asset right away, as if they owned it outright, and pay down the loan over time. If the results of their operations ("income" in the case of a family or company) exceed the interest paid, then it was a good debt. Also, if the real estate asset appreciates in value, the borrower/buyer experiences a leveraged increase in the value of the initial investment and accumulated interest paid.

Of course, market gyrations and/or inopportune execution of activities , particularly if in the short-term the cash flows do now allow servicing of the debt (missed payments) or cause the need to borrow more, the activities intended to generate income may cause the outcome of the borrowing to be negative for the borrower.

simply put, borrowing to invest, in hindsight, will be viewed as brilliant if your ideas work, and stupid if they don't. The trick is making decisions that maximize your probabilities.
It helps if you aren't operating at the edge of failure, either from the outset, or due to events beyond your control.

As far as another "alarm bell"... thanks. good warning. will file it with the rest of the alarm bells constantly going off all around us

secondrepublic · January 31, 2012 11:09PM

<< Paying 4% interest for an investment that yields 10% is like stealing money "from the banks". >>

If only it were so easy. There's no investment which provides a guaranteed 10% return -- at the same level of risk -- as simply paying off your mortgage at 4%. If there was an investment opportunity that offered a 10% return at the same risk level, I'm pretty sure the banks wouldn't be dumb enough to loan out money at 4%. They would simply invest in it themselves. I am also pretty sure that the bankers are, in general, a lot better at figuring this out than the average Joe investor who think he's spotted a major arbitrage opportunity. I know, the stock market over certain time periods has historically returned 10%. That's right. My son, when he was younger, was also growing at a 10% rate, but I am not projecting he will keep growing until he hits 25 feet in height.

Hard to believe the markets can expand perpetually at 10% when the real economy grows at 2.5%. The growth you've seen in the past, in my view, was a function of ever-greater participation in the stock markets by the U.S. population over the past few decades. 75 or 100 years ago, only the wealth few owned stocks; today it's almost everyone with a j-o-b at a 401(k). That doesn't give much platform for further growth, at least not in this country.

secondrepublic · January 31, 2012 11:19PM

<< It's difficult to characterize any debt as good or bad without a context. >>

All debt is bad, to varying degrees. A mortgage for a house you need and can afford (not a McMansion) isn't so bad when you first take it out. You gotta live somewhere. But it becomes bad if you don't pay it down when you have the opportunity. Carrying debt just makes the bank rich. By the time year 25 or 30 rolls around, you've paid 2 or 3 times what the house initially cost. Spending on luxury vacations, big SUVs, Harleys, etc. is craziness when you have a big mortgage hanging over your head.

Baley · January 31, 2012 11:44PM

Spending on luxury vacations, big SUVs, Harleys, etc. is craziness when you have a big mortgage hanging over your head.

No argument there, fully agree that consuming assets and discretionary income versus paying down debts (of any kind) is the road to ruin.

Also agree that there are no guarantees when seeking market-beating yields. Everyone's risk tolerance is different.

If one's portfolio is structured to represent "the market" or "the economy", it may not perform as well as a 4% mortgage over short or even long terms.

However, with a little sector selection, and some asset allocation, and the willingness to assume a certain amount of risk with that money over the medium to longer term, then it may make sense for some folks to carry a mortgage, even though they may have enough money in other assets to pay of the mortgage if they sold the assets.

cohodk · February 1, 2012 12:43AM

Without debt a farmer cannot buy a larger tractor to produce more corn. Without debt a factory cannot expand to employ more people. All debt is not bad.

Those that take on debt can and do lose everything. Those that take on debt can do become wealthy beyond their dreams. All debt is not bad.

pf70collector · February 1, 2012 1:27AM

Having credit worthiness is what's important. Some debt is not all bad either.

InYHWHWeTrust · February 1, 2012 2:07AM

follow TJ's example.... party hard, run up as much as your creditors will let you, and then die, and not leave the onus upon one's descendents, if that even matters... simply depends upon your worldview. (TJ did inherit quite a bit of debt back in the day tho')

agreed all debt is not necessarily 'bad' and has been pointed out above, risks: rewards, risk tolerance, uncertainty of the future... and ultimately, one's worldview. (that nasty worldview thing again

) Even if one gets into surety (virtual slavery), it depends upon the circumstances how 'bad' that might be, ie who one's master is.

secondrepublic · February 1, 2012 2:31AM

As I said, and as others have correctly pointed, out there are circumstances where taking on debt is not "so bad." But that doesn't make debt "good." It's still bad to owe someone money and be required to pay them interest. The only "good" thing (and the goal) is to NOT owe anyone money. That goal is not necessarily achievable right away, for families or individuals, but that's gotta be the goal.

I totally agree with what someone else wrote on this point:

"Here’s the thing: The good debt/bad debt dichotomy is useful for thinking about what things are and aren’t worth going into debt for. But once you’ve made the purchase and accumulated the debt, it doesn’t matter anymore. It all just becomes debt, and what matters is the interest rate, the repayment terms, and most importantly, the often ignored question of the consequences of default." Link.

Here's another excellent article on the same issue: The Myth of Good Debt.

cohodk · February 6, 2012 11:09PM

Any further word on this, or was it just another pump and dump scheme?

jmski52 · February 7, 2012 12:23AM

I listened to one of his recent interviews yesterday, but if there was a revelation about some singularly-important international banking body - it blew right past me. Now, I gotta go back and find more of his recent interviews.

The info is included in the Feb 2 Ellis Martin interview. At hand is the definition of a sovereign default, who makes that determination, and the reasons why. He is positive on both gold and equities for the time being, but not in the same ways. Lots of discussion about liquidity measures and the impact thereof.

He did say to cut back on your lifestyle and to consolidate your finances. That was in the Feb 6, Ellis Martin interview.

Baley · February 7, 2012 11:22PM

He did say to cut back on your lifestyle and to consolidate your finances.

When in the history of the world has this not been good advice? Should we also start to eat right and get plenty of rest? Be kind to others?

Mr. Sinclair sounds the alarms....

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