Greek Tragedy Part of $37 T CDS

Sinclair - Greek Tragedy Part of $37 Trillion, Not $3.5 Billion

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Today legendary trader and investor Jim Sinclair told King World News the “credit event” in Greece totals much more than the $3.5 billion which is being reported by the mainstream media.  Sinclair also said if the CDS’s are in fact made to pay, this could require the rescuing of eight international banks, through Fed swaps that could total in the trillions of dollars.  Here is what Sinclair had to say about what is happening :  “The release made by the International Swaps & Derivatives Association (ISDA), for the average Mensa member or genius, is totally incomprehensible.  The press is using the word default, but the ISDA is using the word ‘auction.’  Clearly, the amount of CDS’s outstanding is infinitely more than the $3.5 billion that is being quoted.”

Jim Sinclair continues:

“The BIS confirms, in the area of CDS’s the total outstanding is approximately $37 trillion.  So I believe the reports being given about this just being a small and modest market event is false.  As a market observer and having more than 50 years in the business, the real number is at least 50% or more of the existing $37 trillion that is related to Greece.

The $3.5 billion figure being quoted in the press could easily be the reporting to the US Comptroller of the Currency.  For example, a foreign, non-consolidated subsidiary of a US bank, operating out of London, reports the size and kind of the over the counter derivatives to the BIS, not the Comptroller of the US.....


“KWN readers need to know that non-consolidated subsidiaries have in fact been the main issuers of over the counter derivatives.

These banks were grantors of the derivatives, some in Germany and some in Switzerland.  But it is not believable that German and Swiss institutions did virtually all CDS transactions and only a tiny fraction was done by US banks.  That’s absolute madness.

If in fact ISDA defines this event as a credit default and the CDS’s are brought into play, you are going to bring in significant Fed swaps which will go to the ECB.  These funds will then be redirected to the subsidiaries and to the foreign banks.  

Very simply, the number is not $3.5 billion.  It’s some part of $37 trillion.  The emergency swaps from the Fed could total in the trillions of dollars.  This is based on my strong belief that the figure of $3.5 billion is not accurate.

The implications of this, if it comes to pass, are a second rescue of approximately eight international banks.  Central planners would attempt to totally camouflage this and it would only be readable by tracking swaps from the Fed because the Fed is the lender of last resort.

This type of event would be the ‘meat’ by which Alf Fields would be proven right on his $4,500 projection for gold.  But strictly for traders, this does not apply to investors, but for the intelligent traders, they will flatten out their positions.

If my father were still living, I could hear him telling me, ‘Go flat!’  My father Bert Seligman and his business partner Jesse Livermore would flatten out their positions because of the ambiguity that exists here.  Again, this is for the traders, which is not to be confused with investors which hold positions in gold.

The bottom line is if these CDS’s are made to pay, we are looking at an inflationary hell.  This is also key, whether or not this is a default, this is a revelation of the outrageous weakness in all fiat currencies.”

Jim Sinclair was interviewed just prior to this news hitting the wire and he covered all of the key factors impacting global markets, currencies and gold.   The extraordinary KWN audio interview with Jim Sinclair is available nowand you can listen to it by CLICKING HERE.