This Is It...
Jim Sinclair

Both the Fed and the Treasury are spinning in circles akin to a wheat fly in the Fall. The wheat fly puts on this show and in the end expires from sheer exhaustion.

Are people so thick that they do not understand the problem is so grave that desperate measures are being considered and might be implemented? Do you think that both the Treasury and Fed are doing business as usual? CAN'T YOU SEE THAT 'THIS IS IT"?

We have ruled out 'Bankruptcy Monetization" as even our illustrious financial leaders who got us here cannot be that dumb. So what we see being hoisted up the flag for reactions is a combination of:

A form of price control by holding interest rates on ARMs at the teaser low rate that was the bait in the trap set by the lenders of adjustable rate mortgages.

Selectivity of some sort by class, not on a case-to-case basis, to determine what homeowner will receive this treatment.

The increased interest rate not being paid to the lender by the homeowner is added to the cost of the home, increasing the principle which is now compounded as the nut is bigger.

An inducement to the lenders in some form of tax treatment of the deferred income.

So let us look at this potential under the microscope of logic and rational judgment. A panic to stop a panic always denies financial leadership.

The plan, as all financial fixes have been under the present 'Theatrical Economics" is to delay, deceive and spins the inevitable.

The situation is already dire, and cannot be blamed primarily on adjustable mortgages.
Holding rates at the teaser levels for the least worthy borrowers only delays the eventual failure at best by a few months because the foundation of economic conditions is deteriorating simultaneously.

The legality of who may make this decision is clouded by the fact that the securitized form of the problem raises the question of legally who does the money lent really belong to and furthermore who has the right to postpone, to wrap around and opine of what class of mortgagee will receive the questionable but meaningless reprieve.

The major beneficiary of this delay, defraud and spin scenario will be the legal community trying to sort out who has the right to do what to whom.

Already a case has been heard and decided wherein the owner of a securitized debt instrument was determined not to have the legal right to foreclose. It only follows that a group of the same do not have the right to make changes in the agreement between the primary borrower and the primary lender.

What a hell of a mess the derivative geniuses have made of the financial world. I do not think the father will forgive them, as they knew exactly what the outcome of their actions would be and did not give a damn.

The fix contains little that will make a lender more comfortable with the borrower. Whatever benefit, beyond THEATRICS, is hard to quantify.

At the same time the Fed is using every means unrecognizable to the general public to increase liquidity, such as extending the loan period normally made to the special international investment dealer with whom the Fed transacts treasury operation through. Now there is a tool that the ordinary talking head fool will never see.

There is a simple question. That question is can the same people who got you here, get you out of here. The answer is a glaring NO.

The reason the answer is NO is that every tactic so far discussed is either hyper inflationary or a delay and deceive action.

There simply is NO fix to the worlds largest F up created by the bubble man and his merry investment banker derivative dealer elves. All they can do is postpone and ultimately make worse as that is what postponing always does of a problem that has no solution.

Very simply the little guy is screwed and some big guys have and are going down with the crowd.

If you cannot see that this is the sum of all economic fears in terms of markets and the dollar then you are as thick headed as those who really believe theatrics will work for the next four hundred plus days. Yes, all that matter are passing the hot potatoes from one administration to another even if they are of the same party. That is the foundational problem the USA is stuck with.

Gold is going to $1050 and then on to $1650. Shares representing Honest Money, Gold, will appreciate by orders of magnitude as the general public begins to sense something is really wrong with dishonest money, paper with liabilities attached. The US dollar is going to and below .7200, probably way below.

So if the Lemmings get more airtime don't let it bother you. This show is far-far from over.

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