"The sub-prime problems in the USA, Europe and elsewhere stem from excessive liquidity creation; leading to demand for investment vehicles exceeding supply; leading to creation of new, esoteric products and fraudulent acquisition of business. Losses from the sub-prime area started a chain reaction."
"The world is dealing with a Sub-Prime crisis, an Evaporation of Credit crisis, a Banking Solvency crisis, a US Dollar crisis and an International Monetary crisis. These roll into one to produce the "Mother of All Crises", the "Perfect Storm" crisis."
"This crisis will not go away. It is destined to escalate. Investors and businessmen need to have a clear understanding of the constituent causes of this crisis and ensure that they develop strategies for the financial survival of their investments and businesses."
"Government Sponsored Enterprises (GSEs) such as Fannie Mae and Freddie Mac face potential bankruptcy as they carry over $4 Trillion of Credit Default derivatives on their books with a capital base of only 1.5% of the liability. The GSE capital base is being eroded by mortgage losses that are escalating daily."
"Governments and central bankers will not stand by idly while the financial markets burn. Interest rates will be rapidly reduced and any major institution that threatens to collapse the financial system will be bailed out. It is unthinkable that Fannie Mae and Freddie Mac will be allowed to go under. Nor will any major bank be allowed to go belly-up."
"Governments have the ability to create as much new liquidity as is required to avoid a systemic melt-down and they will use this ability to attempt to avert, or at best, delay or ameliorate the major systemic crisis that the world is facing. The outlook is for a flood of new world wide money creation as far as the eye can see."
"The disease stems from a malfunctioning and dysfunctional international monetary system in which governments can create new local money at will without restriction. This has been the case since 1971 when the Bretton Woods system collapsed and all currencies floated against one another. August 1971 was when President Nixon decreed that the USA would cease exchanging gold at $35 per ounce for gold tendered by foreign central banks."
"Since 1971 the world has embarked upon a binge of undisciplined credit and debt creation. It is the first time that this has happened on a world-wide scale..."
"The magic of the Fractional Reserve Banking System and the fertile imagination of hedge funds, investment bankers and other speculators in creating new derivative investment products with levels of leverage unimaginable even a decade ago, have created a most unstable world-wide financial and economic structure that is in the process of collapse."
"The disease can be diagnosed as unsound money, plus an unsound international monetary system, combined with undisciplined politicians and central bankers who have spawned a system that is awash with vast quantities of newly created liquidity and lax morals."
"Once such a consensus is reached and it is finally accepted that monetary discipline must return, then an international gathering of experts might have a chance of thrashing out a new monetary system based on the principles of sound money. What seems likely is that a new world-wide currency will have to be created, a currency that all nations will use. It must be a currency that cannot be created at will by anyone. It will have to be managed and policed by a totally independent and international body. It will also have to be based on something of real value and be freely exchangeable."
"It is futile for over 150 countries to each have their own local currency. Globalisation suggests that a single currency used world-wide is now possible. The template is the Euro which replaced a whole raft of different European currencies. Be prepared for the eventual arrival of the "GLOBAL".
If you wish to understand how to profit (or simply survive) when the "international gathering of experts" provide the cure, it helps to understand: who they are, why they gave us the disease to begin with, how they managed our illness, and how they plan to profit.
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