Thursday, February 11, 2010

Jim Sinclair: This Is The End

Then it comes to be that the soothing light at the end of your tunnel
Was just a freight train coming your way -- Metallica - No Leaf Clover

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Dear Comrades In Golden Arms,

I sent an email to you awhile ago saying "This Is It," when it wasn't apparent.

Now, I am sorry to say, THIS IS THE END because it is becoming apparent.

Everything stands on the foundation of CONFIDENCE which is cracking rapidly.


Jim Sinclair

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Just How Ugly Is The Sovereign Default Truth? How Self Delusions Prevent Recognition Of Reality

By Tyler Durden, Zero Hedge

Today SocGen's Dylan Grice shares his perspectives on popular delusions, and why these may soon be coming to an abrupt end. Dylan begins:

Behavioural psychology applies to central bankers, regulators and politicians [American Thinker commentary] as much as it does to investors. In promising to 'fiscally retrench tomorrow', finance ministers are exhibiting the behavioural phenomenon of overconfidence in their future self-control. The bitter fiscal medicine required to stabilie debt levels won't become more palatable today relative to tomorrow until the bond market makes it so. It can only do this through higher yields. Thus, Ireland and perhaps now Greece lead the way. For the Japanese it's too late.

Why should behavioural psychology be seen as something applying only to investors? "Behavioural" finance is a well defined sub-discipline in its own right. But where is ?behavioural? politics, ?behavioural? central banking, or "behavioural" regulation? Remember the Fed policy statements around the end of the 1990s? The ones that kept referring to the "technology-enhanced" rate of GDP growth? Wasn't this herding around a bad idea the very same herding then fueling the NASDAQ bubble?

Nowhere is self delusion more prevalent that in the workings of the Federal Reserve duo of Greenspan and Bernanke. The issue is that any weakness, or any affirmation of faulty policy by the head money printer, will immediately be seen as weakness that could destabilize the reserve currency format. For a monetary system based on flawed assumptions that would be the beginning of the end.

Apparently heroin addicts can become so drug dependent their bodies cannot withstand the shock of withdrawal, and failure to continue taking the drug triggers multiple organ failures. I just wonder how apt that analogy is to our governments? debt dependency today. As long as governments think that taking these difficult decisions to end the addiction will be easier in the future than it is today, they will never take the decision "today." At the very least, there will have to be a sufficiently large bond market "event" to force the issue.

Today we finally saw a crack in the 30 Year Auction [Karl Denninger commentary.] And as the crack belongs to an ever more brittle wall holding back trillions in debt just begging to be revalued to fair value, and to an unmanipulated supply and demand curve, more and more fissures in the smooth and fake facade of sovereign debt will soon appear, only this time not somewhere out of sight and out of mind like Greece, but in our own back yard. At that point the financial oligarchy will very much wish the Methadone had been administered sooner (roughly about March 2009, when we first suggested it). It will however be far too late, and the decades of self delusion will finally end.

Read the rest of Tyler Durden's commentary at Zero Hedge and Dylan Grice's entire article here:

To read click "Fullscreen" (top center) then "Zoom +" (lower left).

SocGen Popular Delusions Feb 11 2010

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