Grasping Reality on TypePad, by Brad DeLong

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Monday Morning Staff Reports: Buffett's $55 Billion Gamble is a Bet on U.S. Collapse, Warns CIA Economist:

Did Warren Buffett just make a $55 billion bet on an imminent market crash?

A single financial document has emerged that may hold the answer.

According to a new SEC filing, Buffett is sitting on $55 billion in cash through his company Berkshire Hathaway. This is highly unusual behavior from a man often called "the world's greatest investor."

It's the biggest cash hoard the company has ever amassed, in the 40 years he's been in charge.

At a cost of $29 million every single day he keeps his money out of the markets, from all outward appearances, this is a risky and costly gamble. Unless Buffett is sure a Wall Street crash is at our doorstep.

Shocking: See the chart that may have caused Buffett to bet on a U.S. collapse.

But he's not the only famous investor who fears a dangerous correction is coming.

Jim Rogers recently admitted to Yahoo! that he is staying far away from U.S. stocks.

New filings also revealed billionaire George Soros' massive short position on the S&P 500.

Previously, Soros allocated 3% of his portfolio to shorting the S&P. It's a common practice major investors use to insure their positions against unforeseen pullbacks.

But he just increased his short position on the S&P 500 over 5X fold, taking it to 16% of his entire portfolio.

That is an alarming sign that Soros is betting on a market collapse. And given his track record of predicting these events, it's one we should not ignore.

So the question remains: Why are some of the "greatest investors alive" betting against Wall Street?

According to Jim Rickards, the CIA's Financial Threat and Asymmetric Warfare Advisor, they are taking emergency measures now before a historic economic meltdown strikes - one he, and many of his colleagues at the U.S. Intelligence Community, fear is unavoidable.

In an exclusive interview with Money Morning, Rickards warned, "The signals we've been tracking are quite clear, a 70% stock market crash is imminent."

"Think of the market down 70%. If Buffett has that $55 billion in stocks, he loses $38 billion," he explained.

Rickards, a three-decade veteran of Wall Street's biggest hedge funds and investment banks, knows billionaires like Buffett are well-connected to both the financial markets and U.S. government.

So it's logical they'd have the luxury of receiving an advanced warning of a coming catastrophe similar to what his work with the CIA is forecasting.

"Every business in the world whose back is to the wall, they're distressed, they go to Warren Buffett" asking for a bailout, Rickards explained. "Think of the information he has. He sees everything."

"I think Buffett is seeing the same things my colleagues and I are."

Rickards stepped forward to take part in this exclusive interview so average Americans could receive this early warning as well.

During the discussion, Rickards shared a series of dangerous economic patterns that have recently appeared that he and those in the highest ranks of the intelligence community have been tracking.

What they reveal is an economy that has reached what he refers to as a "super critical state."

"Everybody knows we have a dangerous level of debt. That's no secret," he said. "But all signs are now flashing bright red that our chickens are about to come home to roost."

Frightening: Single chart reveals which banks could collapse (and how soon). If your life savings is in a major bank, please look at this now. Rickards focused on five "flashpoints" the Intelligence Community is closely monitoring that they believe will soon ignite this collapse.

"This nearly instantaneous 70% stock market crash is just Phase 1. From the outside, nobody will see it coming," Rickards explained.

"Once it becomes clear that it's not a flash crash – it's a systemic meltdown in the economy itself, that's when the gravity of the situation will sink in. And there will be no digging out from it.”

He went on to explain how a $100 trillion meltdown would quickly unfold in the aftermath. Then he used five words to describe what this was all leading to.

“A 25-year Great Depression,” Rickards warned.

Editor's Note: Money Morning has released their exclusive interview with Jim Rickards to the public. And it's a must-see for every American who is concerned about our country and their financial security. Click here to view it.

Rickards warnings are a part of a growing wave that have begun to appear from areas of our government who are not historically known for making their findings public.

Recently, a sensitive report containing the consensus view of all 16 branches of the U.S. Intelligence Committee surfaced.

These agencies, which include Rickards' CIA, as well as the FBI, Army, and Navy, have already begun to jointly estimate the impact of, as the report stated, "the fall of the dollar as the global reserve currency."

The nightmarish endgame presented in this report involved "a worldwide economic breakdown and an extended period of global anarchy."

"Look at it this way," Rickards stated near the end of the interview. "Americans are standing at the bottom of a very tall mountain - Mt. Everest, Mt. Kilimanjaro... they look up and see an avalanche barreling down.

"Determining the one snowflake that started this chaos shouldn't be our focus. Recognizing the severity of the situation and moving to safety should be."

Buffett, Soros, and Rogers may be prepared for anything, but few individual investors are.

That's why Rickards is now urging Americans to ask themselves a simple question.

"What if we're right?"

Editor's Note: For a limited time, you can view Rickards' interview and claim a free copy of his New York Times best selling book, The Death of Money. Click here to continue...