Dear Jim,

HALLELUJAH. As Jim Sinclair has repeatedly stated with extreme prescience and strong emphasis over many years, and as Volcker, Krugman and many other intelligent observers have seconded, we must control OTC derivatives or the same old problems will resurface. It will be a major mistake to allow the financial oligarchs once again destroy the economy.

Respectfully yours,

Monty Guild
www.GuildInvestment.com

Paul Krugman: Why are bankers getting money for nothing?
By Paul Krugman
5:16 PM Monday, April 27, 2009

On July 15, 2007, The New York Times published an article with the headline “The Richest of the Rich, Proud of a New Gilded Age.” The most prominently featured of the “new titans” was Sanford Weill, the former chairman of Citigroup, who insisted that he and his peers in the financial sector had earned their immense wealth through their contributions to society.

Soon after that article was printed, the financial edifice Weill took credit for helping to build collapsed, inflicting immense collateral damage in the process. Even if we manage to avoid a repeat of the Great Depression, the world economy will take years to recover from this crisis.

All of which explains why we should be disturbed by an article in Sunday’s Times, reporting that pay at investment banks, after dipping last year, is soaring again — right back up to 2007 levels.

More…

Dear Mr. Sinclair,

Below is a Pakistan map showing Taliban control. It is just like how you told us it would be months ago. Maybe the CIGAs selling their gold shares need to see this. As always, thank you for your teachings.

Respectfully,

CIGA Guinness,
Concord, California

Jim,

This case is a watershed that probably cannot be contained through any US action. The IR swap derivative market (basis BIS data last year) is 100X the size of the CDS boondoggle. These putrefactive organisms are now being recognized abroad for what they are. It’s like swine flu without the sneezing and body aches; but the IR derivatives are a pandemic much deadlier when you consider the basic social/public services (water and power transmission, e.g.) whose financing was "hedged" through these instruments. We need look no further than Jefferson County, Alabama to see the impact of this "good salesmanship/bad product" financial marketing. The State of Alabama will eventually receive the antiseptic through the Fed/Treasury. The outcome of this will be higher taxes both in Jeffco and state-wide. This will not fly in Italy. And Italy is a relatively peaceful (albeit very politically active – I have been there on May Day) place. What happens when these blow up in Brussels, Belo Horizonte and Buenos Aires?

CIGA Danny