In The News Today

Posted at 3:25 PM (CST) by & filed under In The News.

Dear CIGAs,

Here is someone that understands when paper currency fails, the nationality of that currency increases their transactions in a flight to defend themselves. This can be seen recently in the runs on grocery stores in Iceland. That explodes the velocity of money upwards and delivers hyperinflation right in the middle of a recession and/or depression. It is happening right now, just look far North.

See the closing statement in my Formula that was first presented in its entirety in 2006. It addresses this predictable piece of nonsense that you cannot have hyperinflation in a full-fledged depression. This is total balderdash!

GEAB N28 is available! Global systemic crisis Alert – Summer 2009: The US government defaults on its debt
– Public announcement GEAB N28 (October 16, 2008) –

In this 28th edition of the GEAB, LEAP/E2020 has decided to launch a new global systemic crisis alert. Indeed our researchers anticipate that, before next summer 2009, the US government will default and be prevented to pay back its creditors (holders of US Treasury Bonds, of Fanny May and Freddy Mac shares, etc.). Of course such a bankruptcy will provoke some very negative outcome for all USD-denominated asset holders. According to our team, the period that will then begin should be conducive to the setting up of a « new Dollar » to remedy the problem of default and of induced massive capital drain from the US. The process will result from the following five factors studied in detail further in this GEAB:

  • The recent upward trend of the US Dollar is a direct and temporary consequence of the collapse of stock markets
  • Thanks to its recent « political baptism », the Euro becomes a credible « safe haven » value and therefore provides a « crisis » alternative to the US dollar
  • The US public debt is now swelling uncontrollably
  • The ongoing collapse of US real economy prevents from finding an alternative solution to the country’s defaulting
  • « Strong inflation or hyper-inflation in the US in 2009? », that is the only question.

Studying the case of Iceland can give an idea of the upcoming stages of the crisis. That is what our team has been doing ever since the beginning of 2006. This country indeed provides a good illustration of what the US and the UK should be expecting. It can be considered – and that is what most Icelandic people do today – that the collapse of Iceland’s financial system came from the fact that it was disproportionate to the size of the country’s economy.

Financially speaking, Iceland thought of itself as UK (1), in the same way as, financially speaking, UK thought of itself as the US and the US thought of themselves as the entire world. It is therefore quite useful to study the case of Iceland (2) in order to understand the course of events that London and Washington will follow in the next 12 months (3).

What we see today is a double historical phenomenon:

. on the one hand, since September 2008 (as anticipated in the February 2008 edition of the GEAB – N°22), the whole planet has become aware that a global systemic crisis is unfolding, characterised by the collapse of the US financial system and its contagion to the rest of the world.


Jim Sinclair’s Commentary

Today it was the Federal Reserve providing funds to the US Treasury which in turn provided the funds to the Exchange Stabilization Fund. The ESF then used the funds to buy key Dow stocks when the US Equity Index open was limit down at minus 550 points. The Exchange Stabilization Fund is legally able to do that.

The article would better titled the “US Treasury Invests in Everything.” That is money into the system, just like buying bonds. The difference is the money goes to the many, not the few.

Treasury Investing in Regional Banks
By Zachary A. Goldfarb, David Cho and Binyamin Appelbaum
Washington Post Staff Writer
Friday, October 24, 2008; 1:15 PM

The Treasury Department plans to announce as early as this afternoon that as many as 22 regional banks — including Capital One of McLean and PNC bank of Pittsburgh — have accepted billions in capital injections from the government that are designed to spur lending and to drive consolidation in the banking industry, according to industry sources.

Separately, Treasury is working on ways to get some of the $700 billion in rescue money granted to it by Congress to insurance companies that are a critical backstop to a wide range of deals, bond issues and leasing arrangements, an industry source said. Treasury officials said that many insurance companies are eligible for government investment because they are regulated as thrift holding companies by the Office of Thrift Supervision.

Concerns about insurers grew this week when Metro and other transit agencies faced demands to pay billions of dollars to their banks as years-old financing deals unraveled. The deals were guaranteed by insurer American International Group, which was taken over by the government last month after it nearly collapsed, and now officials are concerned that other insurers, which report financial results next week, are facing similar problems.

Other banks receiving government money include Regions Bancorp, KeyBank of Cleveland and possibly BB&T, which has a major presence in the Washington area, sources said, speaking on condition of anonymity because the announcement has not been made public. PNC already announced this morning that it would use the Treasury funds to help it buy struggling Midwest bank National City.