King world News asks Jim Sinclair about derivatives, “They do nothing but grow and fail to perform. Defaults work constantly if nobody asks them to perform. If the credit swaps are asked to perform, five major US banks will fail. When you have a ticking time bomb, it’s the rational for kicking everything down the road, hoping to God something improves.
"It is an insurance industry that doesn’t have the backing or the regulation of an insurance industry. They are selling insurance they can’t insure. It will keep rolling along as long as nobody uses the two ‘D’ words, depression or defaults.
"If you can camouflage, such as FASB allows auditors to do, the real value of the paper you are holding, your balance sheet looks sound and is accepted as sound. What people can’t see, they can’t focus on. If you are the average blue collar guy you are in terrible trouble.
"If you are working for a huge financial entity, you are shaking in your boots every Friday to see whether you are still employed. The (economic) statistics are modestly off the bottom, mostly statistical aberration, and again, blasted over the airwaves as recovery and the sheeple yell, ‘We’re saved!’”