Excerpt from the latest Sprott Asset Management‘s “Markets at a Glance” installment:

Clearly, derivatives failed to avoid the monumental crisis in the financial system today – quite the contrary. They’ve increased the likelihood that if one financial institution goes down, they all go down, just like the house of cards it was all built on. As we wrote last year: “We believe if banks were allowed to go bankrupt, and their assets liquidated, then the true extent of the ruse would be revealed.”
Indeed, as predicted, there came a day when the ruse was revealed. This has resulted in an unprecedented intervention on the part of the Treasury and the Federal Reserve, taking the role of buyers of last resort for just about any and all paper assets in an effort to ‘save’ the financial system. Lest market-based adjustments prove too onerous for the economy to endure, government is now taking over the functioning of the free markets to a disturbingly great extent.
Unfortunately, this only exposes the other half of the ruse; namely, the erroneous belief that central banks can ‘solve’ financial crises with the same ‘solution’ that caused the crisis in the first place: throwing money at the problem. Alas, contrary to what Wall Street would have us believe, the road to riches does not lie through central bank actions of this sort.

Please click HERE for the whole three page analysis document in Adobe Acrobat .pdf