jim sinclair and eric king.....................the truth hurts
“But the real size of derivatives outstanding is well over one quadrillion dollars, and something clearly has our central banks terrified right now. We already know that Bernanke has led the US to significant amounts of QE, and the same is true of euro land. Maybe they are now looking at what the real cost of the derivatives will be and saying to each other, ‘Nobody can create that much money.’
What we may be seeing now is the fact that the central banks can no longer make the depositors whole. They are hitting the wall. This means that money is absolutely going to look to leave the financial system if indeed the final decision in Cyprus is to take money from deposits. We will know the answer as to what has truly been decided in Cyprus at some point during the April 13 to April 15 time frame.”
Eric King: “Jim, what you are saying here is that we are entering another phase where we can expect a dramatic increase in chaos as the one quadrillion dollars in derivatives causes more financial destruction?”
Sinclair: “Absolutely. When people say that the Cypriot banks lost because of being in Greek debt, what was one of the Greeks’ greatest sins? They used over-the-counter derivatives in order to hide the real condition of their balance sheet.
Depositor money, brokerage money, and clearing house money have been tangled up in the mountain of derivatives as the banks have used this cash to speculate in an attempt to make huge bonuses for bank executives. Unfortunately, most have lost their #$%$. This means that in many cases depositor money has already been wiped out.
What do you think happens when Buffett reports that he made $10 billion in derivatives? Somebody else lost $10 billion and it was most likely one financial institution. There is no question that what we are seeing right now is not isolated to Cyprus. It has happened everywhere, but is has been camouflaged by making the depositors and the banks whole."