Dear CIGAs,

CIGA Eric makes an excellent point. Think about the process and understand there has never been a more powerful tool to manipulate markets than the invention of the OTC credit default swap.

Fiat currencies will always be with us, but gold stands heads above paper money in the coming generations.

"Germany pulls out, and it’s over for fiat."
–CIGA Eric, May 16th 2010

Jim Sinclair’s Commentary

This illustration says it all. Add every other country in the Western world, because one by one they will all be chewed up in the process.

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Jim Sinclair’s Commentary

The article has only one major soft point. "America has time," yes, but not much time.

The dollar dies the day the euro fails as a union currency.

US faces one of biggest budget crunches in world – IMF
By Edmund Conway Business Last updated: May 14th, 2010

Earlier this week, the Bank of England Governor, Mervyn King, irked US authorities by pointing out that even the world’s economic superpower has a major fiscal problem -“even the United States, the world’s largest economy, has a very large fiscal deficit” were his words. They were rather vague, but by happy coincidence the International Monetary Fund has chosen to flesh out the issue today. Unfortunately this is a rather long post with a few chunky tables, but it is worth spending a bit of time with – the IMF analysis is fascinating.

Its cross-country Fiscal Monitor is not easy reading and is a VERY big pdf (17mb), so I’ve collected a few of the key points. The idea behind the document is to set out how much different countries around the world need to cut their deficits by in the next few years, and the bottom line is it’s going to be big and hard (ie 8.7pc of GDP in deficit cuts around the world, which works out at, gulp, about $4 trillion).

But the really interesting stuff is the detail, and what leaps out again and again is how much of a hill the US has to climb. Exhibit a is the fact that under the Obama administration’s current fiscal plans, the national debt in the US (on a gross basis) will climb to above 100pc of GDP by 2015 – a far steeper increase than almost any other country.

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More… ^[3]

Jim Sinclair’s Commentary

One way or another, Greece is far from the only entity hiding its debt.

Labour hid ‘scorched earth’ debts worth billions
Marie Woolf and Jonathan Oliver
May 16, 2010

THE government last night accused Labour of pursuing a “scorched earth policy” before the general election, leaving behind billions of pounds of previously hidden spending commitments.

The newly discovered Whitehall “black holes” could force even more severe public spending cuts, or higher tax rises, ministers fear.

Vince Cable, the business secretary, said: “I fear that a lot of bad news about the public finances has been hidden and stored up for the new government. The skeletons are starting to fall out of the cupboard.”

The new cabinet has been discovering previously unknown contracts and uncosted spending commitments left by their spendthrift predecessors.

“There are some worrying early signs that numbers left by the outgoing government may not add up,” said Francis Maude, the Cabinet Office minister.

David Willetts, the universities minister, claimed that Labour had left behind “not so much an in-tray as a minefield”.

More… ^[4]