CRISIS COVERAGE REPORT
BAILOUTS, MERGERS, CORRUPTION
EXTENDED BREAKDOWN ANALYSIS

* Critical Tidbits
* Big Brother At the Doorstep
* Green Revolution Outsourced
* Broad US Vulnerability in Bonds
* Challenge to Narco Military
* Financial Syndicate Exposed
* The Great Finance Money Grab
* State & City Pension Crisis


HAT TRICK LETTER
Issue #73
Jim Willie CB, 
“the Golden Jackass”
18 April 2010

"The way to crush the bourgeois is to grind them between the millstones of taxation and inflation." -- Vladimir I. Lenin (bourgeois = middle class)

"The more corrupt the state, the more it legislates." -- Gaius Cornelius Tacitus (Roman Senator and Historian, AD100)

"From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship." -- Alexander Fraser Tytler (18th century historian & jurist)

CRITICAL TIDBITS

◄$$$ THREATS HAVE COME TO CONGRESSIONAL MEMBERS AFTER THE WIDELY UNWANTED AND UNPOPULAR HEALTH CARE BILL PASSAGE. $$$

Since the Health Care reform passed the USCongress two weeks ago, a series of angry and sometimes criminal reactions have been reported. GOP House Minority Leader John Boehner addressed the recent spate of aggressive threats at a press conference. He said, "I know many Americans are angry over this Health Care bill, and that Washington Democrats just are not listening. But, as I have said, violence and threats are unacceptable. That is not the American way. We need to take that anger and channel it into positive change. Call your Congressman, go out and register people to vote, go volunteer on a political campaign, make your voice heard, but let's do it the right way." See the Huffington Post article (CLICK HERE).

Boehner seems unaware of the basis of the entire angst and ire springing up from the US populace, the same irate strident sentiment that fuels the Tea Party movement in a legitimate manner. The people of the United States have undergone a perception change. The American way (that escapes bonehead Boehner) is for government corruption, bribery, and cooperation with syndicate strongholds like with the USDept Treasury and Wall Street. The American way is also for endless war and control by the Pentagon of the USGovt foreign policy. The American way is to conceal 911 for what it was, a bloody hidden military coup of the USGovt. The American way is to install communism within a complex fascist structure and to shred the Constitution on phony claims of terrorism. The citizens are growing frustrated.

◄$$$ DOZENS OF POLISH LEADERS WERE KILLED IN A PLANE CRASH IN RUSSIA. THE CORPS CONTINGENCY WAS CONCENTRATED AND LOYAL TO US-UK INTERESTS.

The story reads like a spy novel. Actually, it might remind people of the Yugoslavian jet crash late in the Clinton Admin, where Secy Commerce Ron Brown and a score of corporate executives were killed. Perhaps the Polish crash in Smolensk in Russia on its western border. was only an accident. Maybe it was an arranged high level hit. It could have served a purpose in the global chess match at which Russian leader Putin is an expert. The Bush players eagerly move their missile checkers on the chessboard. The incident might affect regime change in Poland. It was certainly very unwise for the Poles to place so many high level people on one plane. Bechtel Corp learned this lesson 35 years ago. The Polish President Lech Kaczynski, their central bank governor, and 96 other officials were killed. See the UK Guardian story (CLICK HERE) or the Seattle Times article (CLICK HERE). Details so far are scarce, but the crash essentially wiped out their entire Polish governing body. Given the hostility between Russia and the United States over missile systems put in place in Eastern Europe by the Bush II Admin, in violation of NATO treaties, with several other points of deep friction like Ukraine and Lithuania, foul play toward regime change is highly likely in my view. Other Eastern Europe national leaders clearly witnessed the event and took note of the risk of US alliances. The Western world might have begun a second chapter with extreme danger to heads of state, following the first chapter that featured violations of NATO treaties by the Bush II Admin. Numerous sites for missile sites put in place in the 2000 decade were called defensive, actually directed at Russia, despite fierce objections by Russia. This could be a powerful example of blowback. See Ukraine also.

A contact with European and Russian ties offered his perspective on this highly suspicicous and shadowy event. He wrote, "This actually quite ironic. The Poles where on their way to a reciprocal Katyn Forest massacre memorial service in Smolensk Russia. The Russians just had their own ceremony in Poland, finally admitting to Stalin's murder of over 20 thousand Polish officers. They had been booked on the German's account until unification when Gorbachev provided Germany with the documents that the Russians murdered those Poles, that a Russian attack of Germany was imminent, and that the German move against the Russians via Poland was a pre-emptive strike [during World War II]. This is all well documented but kept out of the public domain. All the historical accounts are as big a fraud as the banksters with their Credit Default Swap contracts and the precious metal market gaming. Eventually all will be dragged into the open and some people will have not only egg on their face but people are going to lose their lives.When I asked a Moscow contact what I was missing this morning, upon hearing the death of the Poles, I got a very brief reply. He said 'People who do not listen always will have to live with the consequences, shortly before they are being canceled.' The entire group of puppets working with the USGovt was wiped out in one strike." Interpret the Russian contact as indirectly confirming a Polish Govt execution, after refusal to conform in some manner. We live in dangerous times!

◄$$$ CHINA IS ON A TREADMILL TO HELL. IT IS BOUND TO PLAY THE INFLATION GAME WITH ALL ITS RISKS, AFTER HITCHING ITS FATE TO THE USDOLLAR PAPER CURRENCY GAME AND USGOVT DEBT BURDEN. THE US$ CANCER IS LACED THROUGHOUT THEIR SYSTEM. THE IMMEDIATE RISK IS THE CHINESE PROPERTY MARKET. $$$

Hedge fund manager James Chanos claims that China is on the 'Treadmill to Hell' due to the massive bubble it has constructed. Few point to the current bull risk condition being an extension to their adoption of a US$-Yuan peg whose continuation is hardly being phased out. The Chinese property market is a bubble that may burst by as early as this year, according to Chanos. He is the founder of Kynikos Associates Ltd. The world's third largest economy must maintain the pace of property investment because up to 60% of its Gross Domestic Product depends upon construction, Chanos claims. The bubble should begin to run its course with effects felt and realized in late 2010 or 2011, in his estimation. He calls China a manifestation of Dubai times a thousand. He said, "They cannot afford to get off this heroin of property development. It is the only thing keeping the economic growth numbers growing." Export trade has slowed.

Property prices in China continue to rise at the fastest pace in almost two years, evident in February data. Property prices in 70 Chinese cities jumped by a record 11.7% in March from a year earlier, highlighting the risk of asset bubbles. This comes even after officials re-imposed a tax in 2010 on homes sold within five years of their purchase to curb speculation. Officials also ordered banks to set aside more funds as reserves so as to cool lending. Chinese policy makers are hard pressed to stop the bubble expansion. The steroid driven boom in Chinese real estate has fueled concern that China could face a collapse like what was seen in Dubai. Since his January prediction, Chanos has been joined by Harvard University professor Kenneth Rogoff in warning of a potential crash in the Chinese property market. Chanos identifies Chinese state and local governments as the most leveraged to property related debt. He anticipates the nation will ultimately be compelled to nationalize much of the impaired loans sure to arise from the expected bust, whatever proportion that might be. My point all along has been that the massive foreign reserves and sovereign wealth fund assets will be essential to fund the cleanup of the banking system, a point stressed by Chanos. The country has accumulated a record $2.4 trillion of FOREX reserves, and $889 billion of USGovt debt. See the Bloomberg article (CLICK HERE).

BIG BROTHER AT THE DOORSTEP

◄$$$ MICRO-CHIP IMPLANTS ARE PART OF THE USGOVT  HEALTH CARE BILL, HIDDEN WITHIN ITS MANY PROVISIONS.  BIG BROTHER WILL BE ADVANCED IN A GIANT STEP. MY CONTENTION ALL ALONG WAS THAT THE BILL WAS FOR NATIONAL I.D. CARDS AND TRACKING. THE IMPLANT WILL AID TRACKING OF PEOPLE. A BLOSSOMING OF NEW FEDERAL AGENCIES WILL BE SPAWNED, A GRAND EXPANSION OF THE USGOVT. $$$

The merger of fascist and communist USGovt pathways will next require US citizens to submit to RFID implanted chips, in the estabalishment of a USGovt National Medical Device Registry. Provisions in HR 3200 (HealthCare Bill) stipulate devices already in usage, new class III devices, or a class II device that is implantable, life supporting, or life sustaining. The life sustaining aspect hints of terminating a life if decided. The HC Bill also shares usage of medical claims data, patient survey data, standardized analytic files, electronic health records, and any other data deemed appropriate by the Secretary. Approved by the Food & Drug Admin, a class II implantable device is an "implantable radio frequency transponder system for patient identification and health information." See it for yourself in the FDA database (CLICK HERE). When implemented, this new law provides the framework for making the United States the first nation in the world to require each and every one of its citizens to have implanted in them a radio frequency identification (RFID) microchip for the purpose of controlling medical care in their country. See the details in the HR 3200 bill itself from the House Ways & Means (CLICK HERE). Specifically check pages 1001-1008 for the National Medical Device Registry for mention "to be enated within 36 months upon passage" and page 503 for the phrase "medical device surveillance" mentioned. The definition of surveillance is the monitoring of the behavior, activities, or other pertinent information for people and often in a secret manner. The implied debated intention is to streamline health care and to eliminate fraud. But the potential for tracking is clear. Also, the implants smack of realized prophesies in the Bible, that later could incorporate the mark of the Beast, with bowing in allegiance before him. See the Gold Future article (CLICK HERE) or the Global Research article (CLICK HERE) or the YouTube video (CLICK HERE).

Here is a portion of the HR 3200 Health Care Bill, taken from page 1001. The date by which this registry is to begin is mandated on page 1006, which is 36 months after the Health Bill becomes law. Therefore the process begins for micro-chip implants and registrations before September 2011. Everyone micro-chipped pursuant to this bill must be registered with the Secretary, whose position is formally the Secy of Health & Human Services. It reads as follows from the Subtitle C:  National Medical Device Registry.

"The Secretary shall establish a national medical device registry (in this subsection referred to as the Registry) to facilitate analysis of postmarket safety and outcomes data on each device that & is or has been used in or on a patient.

EFFECTIVE DATE.  The Secretary of Health & Human Services shall establish and begin implementation of the registry under section 519(g) of the Federal Food, Drug, & Cosmetic Act, as added by paragraph (1) by not later than the date that is 36 months after the date of the enactment of this Act, without regard to whether of not final regulations to establish and operate the registry have been promulgated by such date."

◄$$$ THE NATIONAL SECURITY AGENCY EAVESDROPPING PROGRAM HAS BEEN DECLARED ILLEGAL BY THE THIRD FEDERAL JUDGE. A PRINCIPAL SACRAFICE IN FASCIST STATES IS THE LAW ITSELF. NO EFFECTIVE CHECKS ARE IN PLACE TO HALT FEDERAL ABUSE OF POWER. $$$

Federal District Judge Vaughn Walker has become the third federal judge to find that Bush's eavesdropping program without formal warrants was illegal. In fact, all three out of three who have considered the question have found the USGovt behavior illegal. The other two are District Judge Anna Diggs Taylor and 6th Circuit Appellate Judge Ronald Gilman. The court emphatically rejected the continuation of the tactics used in the Bush II Admin repeatedly to cover up USGovt crimes. This is the change to believe in! Time Magazine wrote, "The judge's opinion is pointed and fiercely critical of the Obama Administration's Justice Department lawyers. The judge claims that the Obama Administration is attempting to place itself above the law." The 9th Circuit Court of Appeals also previously condemned the Bush/Obama position citing specifically state secrets as abusive and lawless. In December 2005, The New York Times revealed that the Bush Admin had been doing for years exactly that which the law unambiguously said was a felony, namely eavesdropping on the electronic communications of Americans in telephone calls and emails without warrants. Three federal judges have to date concluded that the practice was illegal. No initiative has come to restrict the activity, so the court ruling means nothing in a fascist state. Nothing is being done. The people stand by as the Obama Admin calls this criminal program a vital state secret, desperately trying to protect it and to shield the lawbreakers from legal prosecution. In the United States, leaders and political officials are completely free to commit crimes while in power and to do so with total impunity, as part of the syndicate that has seized USGovt power. See the Salon article (CLICK HERE).

◄$$$ A VERY SERIOUS THREAT TO THE INTERNET HAS COME TO THE UNITED KINGDOM, WHICH PASSED A CENSORSHIP CONTROL LAW. IT WILL RESTRICT AND FILTER WEBSITE CONTENT. THE FULL BRUNT OF THE LAW IS UNCLEAR FOR ACTUAL IMPLEMENTATION, BUT THE DOOR IS WIDE FOR ARBITRARY ACTION AND ENFORCEMENT, COMPLETE WITH ABUSE. THE BRITISH LAW HAS PARALLELS WITH AMERICAN INITIATIVES TO CONTROL THE INTERNET AND THE FLOW OF INFORMATION. CAN YOU SAY BIG BROTHER? $$$

Some are already calling it the death of the internet in England. An unprecedented censorship bill passed in the UK, deemed a draconian piece of legislation. Press coverage noted a small gathering of Parliament Members in attendance for the debate and vote. The law passed the House of Commons and is set for final approval in the House of Lords, a formality since the bill originated there. The desire is to limit the internet content undesirable for public consumption. The Digital Economy Bill was rushed through Parliament in a late night session with sparse attendance. Leading to the general election on May 6th, the UKGovt took advantage of what is known as the 'Wash-up Process' that allows the legislative process to be speeded up between an election soon called and Parliament being dissolved. This is reminiscent of the conditions whereby the US Federal Reserve Act was passed in the United States in 1913, again with sparse attendance in a lame duck session. Only a pitiful handful of Members of Parliament (pictured below) were present to debate the bill, fully supported by the opposition Conservative party, which passed by a wide majority of 189 votes to 47 against. The majority of its original clauses were kept intact. Democracy that sleeps is cast aside. In this case, and in the US, it is replaced by fascism.

Blockage of any website is permitted by government decree. The provisions allow the unelected secretary of state for business, currently Lord Mandelson, to order the blocking of "a location on the internet which the court is satisfied has been, is being, or is likely to be used for or in connection with an activity that infringes copyright." Opposing MPs argued that the clause was too broad and open ended, arguing that the phrase "likely to be used" could be used to block websites without them ever having been used for "activity that infringes copyright." Other MPs argued that under the bill, whistleblower websites, such as Wikileaks, could be targeted. The legislation will also allow the Home Secretary to place "a technical obligation on internet service providers" to block whichever sites it wishes. Much arbitrary enforcement invites widespread official abuse.

Under clause #11 of the proposed legislation Technical Obligation is defined as follows: "A technical obligation, in relation to an internet service provider, is an obligation for the provider to take a technical measure against particular subscribers to its service. A technical measure is a measure that (a) limits the speed or other capacity of the service provided to a subscriber; (b) prevents a subscriber from using the service to gain access to particular material, or limits such use; (c) suspends the service provided to a subscriber; or (d) limits the service provided to a subscriber in another way." Therefore clearly, the UKGovt will have the power to force Internet Service Providers (ISP) to downgrade and even block your internet access to certain websites if it wishes. Due legal process is non-existent. The legislation is a key element in a comprehensive initiative to seize more power over the internet and those who use it. This is Fascism with a bold face in England. For months, unelected Lord Mandelson has overseen UKGovt efforts to challenge the independence of the of the nation's internet infrastructure.

Some details are downright ugly. The Digital Economy Bill can have user broadband access cut off indefinitely, in addition to a fine of up to £50 thousand without evidence or trial, if they download copyrighted music and films. The legality of this provision is challenged by experts. The legislation would impose a duty on ISPs to effectively spy on all their customers by keeping records of the websites they have visited and the material they have downloaded. Failure to cooperate by ISPs could result in £250 thousand fines. Anticipated are user IDs to be used for storing each person's activity such as emails, websites visited, and files transmitted. Government agencies such as the police and security services will have access to the data upon request as part of criminal or terrorist investigations, or even harrassment pursuits. A group of over 300 ISProviders and telecommunications firms has attempted to resist the radical plans, whose proposals they describe as an unwarranted invasion of personal privacy.

The open nature of the clauses, cited above, grant the Secretary of State the power to conjure up as many new penalties and enforcement systems as he desires, without Parliamentary oversight or debate, according by copyright law experts. For instance, such extensions could contain authority to enable the formation of private militias, who will have the power to kick people off the internet, spy on usage of the network, and demand the removal of files in addition to the blocking of websites. The penalties could go beyond fines to actual prison time. The Digital Economy Bill is a true misnomer, since the legislation contains nothing that will actually stimulate the economy, a pure deception of the people. Rather, it is largely a license to shift control over the internet into government hands. In the process, information can more easily be hidden from the public as desired. Over 20 thousand citizens wrote to their MPs in the final week before passage in a lobby against the bill, to no avail. The newly devised networks of data gathering are sure to become integrated with existing intelligence agencies. See the secret mass internet surveillance project known as Mastering the Internet, which The London Times published leaked details about in recent weeks. Assurance of personal databases is clear, since denied specifically. See the Prison Planet article (CLICK HERE). My claim is firm, that the Axis of Fascism is clearly the US, UK, and Israel.

The USCongress is attempting to pass a similar internet censorship bill, as part of the Cyber-Security Act. The legislation was introduced by Senators Jay Rockefeller of West Virginia and Olympia Snowe of Maine in April 2009. It gives the president the ability to "declare a cyber-security emergency" and shut down or limit Internet traffic in any "critical information" network in the interest of national security. The bill does not define a critical information network or a cyber-security emergency, a task left to the president. The Obama security staff has also enlisted private contractor services to archive data such as tag lines, email, audio, and video from any place online where the White House maintains a presence for a period of up to eight years. The Obama Admin has also proposed scaling back a long-standing ban on tracking how people use government Internet sites with cookies and other devices. Recent disclosures under the Freedom Of Information Act also reveal that the USGovt has several contracts with social media outlets such as YouTube (Google), Facebook, Myspace, and Flickr (Yahoo) that waive rules on monitoring users and permit companies to track visitors to government websites for advertising purposes. The USMilitary also has over $30 billion invested in its own mastering the internet projects.

The initiative to lay waste to the current internet structure and move toward a greatly restricted Internet 2 system is making progress, regrettably. The pathogenesis to broad deep and pervasive Fascism is coming. This Hat Trick Letter someday will be either eliminated or discontinued. Big government does not wish to tolerate any opposition. In my view, big government has merged with crime syndicates, so that opposition is actually much more than critical voices. It is competition, even victims in resistance. It is debunking lies and deception.

GREEN REVOLUTION OUTSOURCED

◄$$$ CHINA WILL WIN MUCH OF THE GREEN REVOLUTION BUSINESS DEMAND FROM U.S. FIRMS. SILICON VALLEY IN CALIFORNIA IS ESTABLISHING ITS CHINESE CONNECTION NOW. $$$

Chief Technology Officers (CTO) are especially important at technology companies and often share important posts and prominent offices with the more visible CEOs and CFOs. The Chief Tech Officers are usually the visionaries of the company, responsible for exploiting technology so as to implement the business strategy for products and operations. Take one leading high tech US firm. Applied Materials (symbol: AMAT) is the largest supplier of semiconductor manufacturing equipment in the world, one of the largest suppliers of materials for solar panels, and a top cutting edge technology company. Applied Materials CTO Mark Pinto is moving to China, the first CTO to actually relocate to China, a watershed event that exposes the changing landscape of technology attitudes and strategies. Tony Sagami, a newsletter and sage researcher, believes this to be a monumental move for the high tech industry because it signals a major shift of power. The Applied Materials management team understands the threat and the opportunity in China, as well as risks for not joining. The Chinese produce more engineering graduates and have recently made significant technological breakthroughs. Additionally, their market for 1.3 billion people is so huge. The US produces a lot of lawyers, finance engineers, marketing professionals, and MBAs, quite the contrast.

The world's largest private solar energy research facility was recently constructed in Xian China. Applied Materials recently completed the construction of its own newest and largest research laboratory, also in Xian. It is the largest non-governmental solar energy research facility in the world, soon an important employer in the city of Xian. Not overlooked, Applied Materials held its 2010 shareholders meeting in Xian on March 9th. The high tech firm as well as lots of other technology companies are planting some serious roots in China. See the Uncommon Wisdom website in general (CLICK HERE).

◄$$$ CHINA WILL OFFER CALIFORNIA A HIGH-SPEED RAILWAY. THE UNITED STATES LACKS SUCH TECHNOLOGY, FOCUSED MORE ON LAST GENERATION TRUCKS, ADVANCED SPACE SHUTTLE TRAVEL, MERGED EFFECTIVELY WITH A GENERATION OF MILITARY WEAPON INSTALLATIONS. TO BRING THE USECONOMY UP TO WORLD STANDARDS WILL REQUIRE FOREIGN CONTRACTS. $$$

China offers high-speed rail to California. The irony is thick. Nearly 150 years after construction of railroads in the American West brought in thousands of Chinese laborers to build rail lines at cheap cost, China is poised once again to play a role in American rail construction. This time the roles are reversed, as China will supply the technology, equipment, and engineers to build high-speed rail lines. The Chinese Govt has signed cooperation agreements with the State of California and General Electric. China strives to become a major exporter and licensor of bullet trains traveling 215 miles per hour (345 km/hr). This green technology is one where China has raced past the United States in recent years. Governor Schwarzenegger of California has closely followed progress in the discussions with China and plans to travel to Beijing for talks with rail ministry officials. Their role is two-fold. China is offering not only to build a railroad in California but also to finance its construction, an extension of good will during a trade war. Chinese officials have already been shuttling between Beijing and Sacramento to make presentations, according to the state transportation official. The California Rail Authority plans to spend $43 billion to build a 465-mile route from San Francisco to Los Angeles and Anaheim, with planned inauguration in 2020. The authority was awarded $2.25 billion in January from USGovt economic stimulus money to work on the project. Japan, Germany, South Korea, Spain, France, and Italy have also approached the California High Speed Rail Authority. The final decision on whose technology to choose has not yet been made.

The railways ministry has concluded a framework agreement to license its technology to General Electric, with details. Curiously, GE is a world leader in diesel locomotives but has little experience with the electric locomotives needed for high speeds. Sensitive to criticism of stimulus to produce US-based jobs and orders, the agreement calls for at least 80% of the components of any locomotives and system control gear to come from American suppliers, and labor intensive final assembly to be done in the United States for the American market. China would license its technology and supply engineers as well as up to 20% of the components. However, all of the technology would be Chinese. China has already begun building high-speed rail routes in Turkey, Venezuela, and Saudi Arabia. It seeks opportunities in seven other countries, including a route desired by the Brazilian Govt between Sao Paulo and Rio de Janeiro. See the New York Times article (CLICK HERE).

BROAD US VULNERABILITY IN BONDS

◄$$$ U.S. DEBT ROLLOVER DEMANDS ARE ENORMOUS. TO COMPOUND THE PROBLEMS, THE USGOVT DEBT MATURITY IS VERY SHORT-TERM. THE UNITED STATES NEEDS THE ENTIRE WORLD SAVINGS TO SATISFY ITS APPETITE AND URGENT NEED, SUPPORTED BY SYNDICATE DEMANDS. A BLACK HOLE IS AT WORK. $$$

The table below lists the various types of debt required for refinance rollover in the next five years. It is limited to the United States. At issue, the growing question, is whether there is sufficient global savings to accommodate this amount of US refinancing demand. Notwithstanding are the additional demands for the rest of the world. The climax in demand appears in year 2012, at which time the credit markets are certain to be weary of US needs. The image of criminality, insolvency, government corruption, ineffective stewardship, war machine emphasis, and more have weighed on the US image. The transfer effect to its debt finance requirements have already been felt with near vanished foreign creditors. Amounts for USGovt debt are not included in the table for the current year and next year. Notice the $2.5 to $3.5 trillion annual US aggregate needs, and the total $9.6 trillion over the five years. The world will just say NO, and the United States will simply be forced to print money for the financing operations. That is the current trend. Hyper-inflation is here right now on the monetary side. The prospect for reducing its effect is not clear or evident.

Ever since the Clinton Admin, the USGovt has reduced its maturity reach on debt finance. Whatever saves money this year or next is seen as desirable, even if the practice puts the nation at high risk of debt default later. That is the Rubin Doctrine in wrecked debt finance. In order to keep fiscal deficits down, the USGovt has been steadily reducing the maturity of its USTreasury portfolio to make borrowing costs lower. The practice has received surprisingly received little media attention. The challenge to fund the USTreasury in its ever expanding rollover pools suggests a Maturity Wall must be overcome dead ahead. It will be encountered no later than 2012. Beware of the next financial default sequence for a trigger of a crisis on US soil due to extreme debt needs. The USGovt has a lower maturity timeframe for its debt than almost every other nation, thus the more dangerous Maturity Wall.

The USGovt will provide vigorous opposition for any Exit Strategy whatsoever from the ongoing near 0% interest rates stuck as policy. A backfire of monumental magnitude would result with even a 1% increase in average USGovt debt borrowing costs. The primary beneficiaries for the near 0% available rate are the speculators on Wall Street and the heavy borrowers at the USGovt itself. These points are rarely ever discussed in the financial media & press networks. They constantly relay the false message of movement toward an Exit Strategy, one not even remotely available.

◄$$$ USGOVT DEBT IS SOON TO DROP OFF THE SAFE LIST MAINTAINED BY C.M.A. DATAVISION. SUCH AN INSULT IS WITHOUT PRECEDENT. THE FIRST STEP IS RECOGNITION OF LOST SAFE HAVEN. THE NEXT IS REMOVAL FROM AN EXCLUSIVE LIST. THE LAST IS IMPLICIT DOWNGRADE OF THE USGOVT DEBT, WHETHER FORMAL OR NOT. $$$

The United States Govt is soon to drop off the list of safest credit rating nations. According to CMA Datavision, the USGovt ranks below nine other countries in terms of the safety of its sovereign debt. Norway is #1 deservedly, due to steady surpluses from its North Sea oil operations. Note that the Netherlands, Australia, Sweden, and Hong Kong are listed ahead of the United States as well. CMA's latest report covers Sweden and Hong Kong as new entrants into the top ten list, displacing France and Belgium in removals. The United States could be next to drop off the list, given its position of dead last. See the Business Insider article (CLICK HERE).

◄$$$ THE MUNICIPAL BOND MARKET IS THE LIKELY SITE OF THE NEXT US-BASED CREDIT CRISIS, DUE TO EXTREME INSOLVENCY AND LACK OF ATTENTION FROM THE SYNDICATE PRINTING PRESS OPERATORS LOYAL TO WALL STREET. THE DISTRESS IS ACUTE HERE & NOW. THE SOLUTIONS ARE NOWHERE IN EVIDENCE. A BUST IS ASSURED. $$$

A senior SEC employee warns of a potential municipal bond market collapse. Rick Bookstaber is a a senior policy advisor to Mary Schapiro, the SEC director. He maintains his own private non-SEC affiliated weblog. He has past experience in risk management at Salomon Brothers, Moore Capital Mgmt, and Morgan Stanley. He is the author of three books and a number of articles on finance topics ranging from option theory to risk management, and has received various awards for his research. He holds a PhD in Economics from the Massachusetts Institute of Technology (MIT). So his credentials are solid. He wrote, "We will NOT see a big crisis emerging for some time in banks, hedge funds, or derivatives, mostly because, like with a knockout punch, the risks that matter do not come from where you are looking." He implies the USDept Treasury and USFed are fast at work in maintenance functions. He is not so sanguine about the municipal bond market. He continues with a risk summary.

"So, where to look next. To see other potential sources of crisis, let's first recount the lessons learned from this crisis:

1)      Problems occur when things get leveraged and complex, and thus opaque.

2)      If the problems occur in a very big market, especially in a very big market like housing that is tied to the credit markets, things can go systemic.

3)      The notion that you can diversify by holding a geographically broad-based portfolio works fine, until it does not.

4)      A portfolio that is apparently hedged can blow apart. So we have to look at the gross value of positions, even if they are thought to be hedged.

5)      Do not bet on ratings, because rating agencies are conflicted and might not be all too dependable at their job.

6)      Defaults are never easy to manage, but it gets worse when there are a lot of them happening at the same time. It is harder to manage the mess, and there is less of a stigma in defaulting. And it is all the worse when, as is the case in the housing markets, those defaulting are not businessmen. As an added complication, with housing the revenue that we thought was there really was not. Income that was supposed to be there to finance the mortgages, even when that income was fairly stated, became committed to other areas like second mortgages.

Well, guess where we have a market that is (1) leveraged and opaque, that is (2) very big and tied to the credit markets, and is (3) viewed by investors as being diversifiable by holding a geographically broad-based portfolio, with (4) huge portfolios where assets and liabilities are apparently matched, and with (5) questionable analysis by rating agencies, and where (6) there are many entities, entities that may not approach default with business-like dispatch, and that have already mortgaged sources of revenue that are thought to support their liabilities?

Answer: THE MUNICIPAL MARKET."

Bookstaber goes on to cite specifics of the municipal bond market that ensures it as the site of the next bond market crisis. Homeowners mismanaged their assets and revenue streams on a broad national level. They are locked up via secondary loans. Similarly, much of the tax base for municipalities is already committed and mortgaged, through the sale of tax related revenues streams like tolls for highways, bridges,and tunnels, as well as fees for parking facilities. He makes the point that although general obligation bonds are considered the highest quality, they could easily be regarded as the residual claim after all elements with reliable fee streams has been sold off. Once a few municipalities default, a risk of a widespread cascade in defaults exists because of ripple effects facilitated by psychological hurdles having been overcome. The situation could hurtle out of control if the defaults are spurred along by a taxpayer revolt, an exercise of civil disobedience, or actual violence. Here are specifics that highlight the MUNI risk in particular. See the Rick Bookstaber weblog (CLICK HERE).

Leverage and Opacity: Leverage in the municipal market comes from making future obligations to employees in order to pay them less now. The opaqueness comes from the methods of reporting. For example, municipalities are not held to the same standards as corporations in their disclosure.

Size and potential systemic effects: This is a big market in the credit arena, which employs millions of people.

Diversification: Geographic diversification is a direct consequence of the housing market decline. Common strategies have been applied in municipalities across the nation. The impact from lost property tax revenue is direct and enormous.

Gross versus net exposure: The leverage for municipals is not easy to see. Some risk might be lower since rating agencies do look at the unfunded portion of these liabilities. However, they ignore that the promised payments within models are covered using risky portfolios. Also, unrealistic actuarial assumptions of asset growth are built in that make no sense.

Rating agencies: The rating agencies have spotty records for on-site examinations of the municipalities they are rating. They focus too much on the potential mismatch between assets and liabilities, the net effect from the under funded portion of the portfolio. They overlook the asset strategies and the changing liabilities.

Defaults: Municipalities are numerous, burdened by similar stresses as homeowners. Their risks are extensions of the irrational local taxpayers that must be dealt with.

CHALLENGE TO NARCO MILITARY

◄$$$ AFGHANISTAN IS BREAKING DOWN POLITICALLY AT THE ROTTEN TOP. HARMAN KARZAI HAS THREATENED TO JOIN THE TALIBAN IF WESTERN INTERFERENCE AND CRITICISM DOES NOT STOP. THE WAR HAS BEEN EXPOSED AS A VERTICALLY INTEGRATED NARCOTICS INDUSTRY EXPANSION, BUT WITH AN UNSTABLE PUPPET AT THE TOP. PERHAPS NEXT IS A SPINOFF OF THE GOVERNMENT FUNCTION FROM THE SYNDICATE NARCOTICS SUBSIDIARY. IT IS A TRAVESTY WRAPPED IN A COMEDY. $$$

Afghan President Hamid Karzai is a former oil industry consultant with ties back to Condaleeza Rice at Unocal. Karzai has issued a startling threat to join the Taliban if foreigners do not halt in meddling inside Afghanistan. He has elevated his criticism of the West, leading to worsened relations with the USGovt at a time when the USMilitary seeks closer cooperation. The White House spokesman described the reports as troubling. Karzai has openly threatened to abandon the political process and join the Taliban insurgency if the West keeps carping at him to reform his government. See the English People article (CLICK HERE). Perhaps a bomb will soon suddenly end Karzai's life.

The USGovt primarily wishes to maintain its syndicate subsidiary that manages and operates the vast sprawling narcotics operation on Afghan soil. It generates between $350 and $380 billion in profits per year. Its costs are heavily subsidized by USMilitary budgets. Meanwhile, the Russian Govt has demanded the United States cease and desist from all narcotics activities in Afghanistan, and destroy all the poppy fields that have sprung up since USMilitary aegis blanketed the nation in 2003. Afghan heroin has been exported at an amplified rate to Russia for years since 2003. The response in rejection came from N.A.T.O. itself. One should be well aware that if the US-based financial & military crime syndicate loses up to $400 billion of revenues from their Afghan drug dealings, the US financial nucleus would be ruined in three months. See the Boiling Frog article (CLICK HERE) and the Monsters & Critics article (CLICK HERE).

◄$$$ A POWERFUL DEPICTION OF THE US-CIA NARCOTICS HISTORY AND GLOBAL CHANNELS IS PUT FORTH BY THE LEW ROCKWELL INSTITUTE. THE THEME IS FAST APPROACHING THE MAINSTREAM. AN EXPERT IN THE FIELD PRODUCES A PRIMA FACIE CASE OF SIGNIFICANCE. $$$

In a moving article entitled "Opium & the CIA: Can the US Triumph in the Drug Addicted War in Afghanistan?" by Peter Dale Scott, a brief but comprehensive summary is provided. It is as powerful and salacious as it is disturbing and critical. It includes a map of poppy cultivated in Afghanistan by province. It describes the historic CIA responsibility for global drug trafficking, in particular the trade routes through Turkey. Be sure that Iran receives its fair share of heroin, enough to damage their society for national security reasons. It claims the Karzai Govt, with direct ties to the USMilitary and not the Taliban, dominate the Afghan Narco Economy.

The United States provides broad protection for drug trafficking in America. Scott wrote, "Thus it is not surprising that the US Government, following the lead of the CIA, has over the years become a protector of drug traffickers against criminal prosecution in this country. For example both the FBI and CIA intervened in 1981 to block the indictment (on stolen car charges) of the drug trafficking Mexican intelligence czar Miguel Nazar Haro, claiming that Nazar was 'an essential repeat essential contact for CIA station in Mexico City [on matters of] terrorism, intelligence, and counter-intelligence.' When Associate Attorney General Lowell Jensen refused to proceed with Nazar's indictment, the San Diego US Attorney, William Kennedy, publicly exposed his intervention. For this he was promptly fired." Another example of direct involvement is described, a recent spectacular example of CIA drug involvement, in the case of the CIA's Venezuelan asset General Ramon Guillen Davila. The Wall Street Journal claimed that the general was responsible for the smuggling of over 22 tonnes of narcotics through Miami and other points.

The article offers a rough sketch of the role of US banks and drug money laundering. Even the UN Office on Drugs & Crime arrived at a conclusion that the US & UK relied heavily upon the drug trafficking money flow during the autumn 2008 credit crisis that crippled Western banks. A Hat Trick Letter report from two years ago made reference to the United Nations report. In many instances, the money from narcotics was the only liquid investment capital for the major banks. Scott bravely concludes that "The biggest source of the global drug problem is not in Kabul, but in Washington." See the Lew Rockwell Institute article by Peter Dale Scott (CLICK HERE).

In another moving article entitled "America and the Dictators" by Tom Engelhardt and Alfred McCoy, a brief but comprehensive summary is provided of American support of dictators, which includes parallels between Afghanistan and Vietnam. Our nation does not learn from past mistakes. It expands them in the next decades, in perfect stride with the expanded narcotics monopoly pursued so vigorously and surreptitiously. Ngo Dinh Diem was the leader in Vietnam who was murdered in 1961 on film by the CIA, a step that launched a disastrous war, unless you were involved in USMilitary contractor firms at the time, or were placed on the US Senate appropriations committee. The parallels between Diem and Harman Karzai are eerie, but never dwelled upon. Karzai should fear for his life, or plan for his exile. Engelhardt and McCoy paint a horrendous picture. Their words serve better than any synopsis.

They wrote, "Karzai's authority, which came directly and almost solely from the Bush Administration, remained unchecked. For his first months in office, the president had so little trust in his nominal Afghan allies that he was guarded by American security. In the years that followed, the Karzai regime slid into an ever-deepening state of corruption and incompetence, while NATO allies rushed to fill the void with their manpower and material, a defacto endorsement of the president's low road to power. As billions in international development aid poured into Kabul, a mere trickle escaped the capital's bottomless bureaucracy to reach impoverished villages in the countryside. In 2009, Transparency International ranked Afghanistan as the world's second most corrupt nation, just a notch below Somalia. As opium production soared from 185 tons in 2001 to 8200 tons just six years later, a remarkable 53% of the country's entire economy, drug corruption metastasized, reaching provincial governors, the police, cabinet ministers, and the president's own brother, also his close adviser. Indeed, as a senior US anti-narcotics official assigned to Afghanistan described the situation in 2006, 'Narco corruption went to the very top of the Afghan government.' Earlier this year, the United Nations estimated that ordinary Afghans spend $2.5 billion annually, a quarter of the country's gross domestic product, simply to bribe the police and government officials." This is the great East Asian ally of the USGovt. This is the war being fought with American soldier lives at risk. This is the cause (smokescreen) that covers the narcotics industry established within the Afghan nation. This is the war with a sacred budget never to be challenged. This is where USMilitary integrates its warlord support, hires murders of rival Taliban tribal leaders, and creates a criminal underworld above ground. It is enough to make a US citizen vomit!! See the Lew Rockwell Institute article by Engelhardt and McCoy (CLICK HERE). A bug has certainly found its way into Lew Rockwell's editorial staff recently.

◄$$$ KYRGYZSTAN IS THE SITE OF PROTESTS. AMONG OTHER OBJECTIVES, THE LOCAL OPPOSITION PURSUES THE SHUTDOWN OF THE USMILITARY BASE. A FIRM TEST OF THE EXTENDED ANGLO EMPIRE IS UNDERWAY. CONTRAST TO THE WRIGHT PATTERSON AIRBASE IN OHIO (UNITED STATES), WHERE SUICIDE PREVENTION IS A MAJOR THEME, ESPECIALLY AFTER A SUICIDE LAST WEEK. $$$

The retreat of any overstretched empire is always a very difficult and daunting challenge. The Afghan War has another motive, to put the final piece in the global monopoly to control the narcotics production and distribution, even with vertical integration like any efficient business. It is the crown jewel, much to the ignorance of the American public. Various airbases have been important in the distribution channels, among them the important airbase in Kyrgyzstan. The Kyrgyzstan situation forms a stern test for the USMilitary Empire. The local natives are attempting to shut down the Manas Air Force Base, run by the USMilitary. In the past, simple payoffs of leaders has succeeded in extending airbase leases. So far only 40 people have lost lives, clearly minimal collateral damage so far, mere business costs. See the Huffington Post article (CLICK HERE) or the Press TV article (CLICK HERE).

The Kyrgyzstan story reads like a nightmare mixed with a Mafia made man ceremony. Kurmanbek Bakiyev, the nation's autocrat annointed by the USMilitary, has fled the presidential palace after it was stormed by angry citizens. Riot police killed over 80 people, firing live ammunition into the crowds. They failed to stop opposition protesters from taking control of the capital city Bishkek. Although the Bakiyev rule was brutal and corrupt, last year the Obama Admin courted Bakiyev successfully to preserve USMilitary usage of the old Soviet air base at Manas critical for supply flights into Afghanistan. Those flights sent war material to Afghanistan and narcotics on return flights. Even as police brutalized the opposition and their supporters to prepare for Bakiyev's landslide victory in last July's elections, President Obama sent him a personal letter praising his support for the Afghan war. Just another case of USGovt support for a repressive regime marred by murder and corruption, when the only apparent priority is support for a narco-war.

Contrast back home in the US of A. The suicide rate among men between the ages of 18 and 29 years who have left the USMilitary has risen significantly, a sordid topic covered in past Hat Trick Letter reports. The suicide rate for those veterans rose 26% from 2005 to 2007, according to the USDept of Veterans Affairs. The USArmy suffered a record number of suicides in 2009. Last May, Wright Patterson Air Force Base in Dayton Ohio focused on suicide recognition and prevention after four apparent suicides involving base personnel within six months. The list of factors is long, starting with the purchase one's own body armor upon enlistment. Then come repeated tours of duty, return to duty when still wounded, short time between tours, post traumatic stress syndrome, inadequate VA Hospital care, frequent refusal of prosthetic limbs after lost arms and legs, and more. On the home front, problems extend to divorce, lost child custody, debt burden, home foreclosure, and bankruptcy. The topic of soldier suicide is back on the front page, after a suicide on the front steps of a veteran facility in Dayton Ohio. Last Friday, Jesse Charles Huff put two bullets from his service rifle in his head after some particular refusal of treatment for pain from his Iraq War wounds and recent depression. He was injured by a ground blast while serving in Iraq and received ongoing treatment for a back injury and depression. Not anymore. The cost of his medical care will be reduced. See the Dayton Daily News article (CLICK HERE).

◄$$$ AN IMPORTANT USMILITARY CIVILIAN MURDER VIDEO HAS SPANNED THE GLOBE. IT EXPOSED MURDER OF NEWS REPORTERS AND OTHER CIVILIANS IN WHAT APPEARS TO BE A WANTON CALLOUS CASE OF MURDER. THE COVER-UP OF THE ATROCITY IS WELL UNDERWAY, NOT DENIALS, ONLY REMOVAL OF INTERNET VIDEO CLIPS. TARGETING JOURNALISTS IN IRAQ IS STANDARD BUT UNSTATED USMILITARY POLICY. DYLAN RATIGAN IS A CNBC OUTCAST. HE QUESTIONS THE RULES OF ENGAGEMENT AS A CONTEST IN BRAVADO TO RACK UP KILLS FOR BOASTING PURPOSES. $$$

WikiLeaks has release a video of what appear to be intentional murder of civilians, including journalists from an airstrike. Reuters has been attempting to obtain the video through the Freedom of Information Act, without success since the time of the attack. The video, shot from an Apache helicopter in Iraq, clearly shows the unprovoked slaying of a wounded Reuters employee and his rescuers. Routine targeting of journalists in the midst of the Iraq War have been common. See the YouTube video (CLICK HERE). Soon the video might be pulled by USGovt or USMilitary coercion. The USMilitary did not reveal how the Reuters staff were killed, and stated that they did not know how the children at the scene were injured. These are pure flat bold lies. After demands by Reuters, the incident was investigated, whereby the USMilitary actually concluded that the actions of the soldiers were in accordance with the law of armed conflict and its own Rules of Engagement. Clearly such rules have recently sponsored journalist targeting and killings. See the Zero Hedge article (CLICK HERE).

Details have been made available. Wikileaks has obtained and decrypted this previously unreleased video footage from a US Apache helicopter in 2007. One must assume that the video has been made available from internal Pentagon sources who object to the atrocity. It shows Reuters journalist Namir Noor-Eldeen, driver Saeed Chmagh, and several others as the Apache shoots and kills them in a public square in Eastern Baghdad. In the course of the event, they are assumed to be insurgents. After the initial shooting, an unarmed group of adults and children in a minivan arrives on the scene and attempts to transport the wounded. They are fired upon as well. The official statement was a naked whitewash. Wikileaks released this video with transcripts and a package of supporting documents on April 5th 2010. See the video also from the Collateral Murder website (CLICK HERE), at least as long as it appears. Another YouTube video is available (CLICK HERE). The many sources are necessary, since censorship is likely. Expect zero follow-up.

Targeting journalists in Iraq is standard Pentagon policy, evident from practice and not from statement. This tape is being called "The Baghdad Snuff Video" released by WikiLeaks, but it has yet to receive much corporate media coverage like the Abu Graib prison incidents. To their credit, maverick MSNBC covered the video. In a discussion of the video, Brett McGurk of the Council on Foreign Relations and an National Security Council member for the Bush and Obama Admins, defended the mass murder episode. McGurk said the soldiers fired on journalists because they thought they saw an RPG launcher. The trained soldiers mistook camera equipment for an rocket propelled launcher. Perhaps the soldier was hyped on amphetamines. The emerging ugly truth is that the mission of the USMilitary in Iraq is to target journalists. This was the charge made by Eason Jordan in 2005, who at the time was the head of the CNN news division. During a panel discussion in Davos Switzerland, Jordan said "I knew of about 12 journalists who had not only been killed by American troops, but had been targeted as a matter of policy." Prior the remarks made by Jordan, a Pentagon publicist Victoria Clarke said that journalists who are not vetted and approved by the Pentagon were putting themselves at risk. In other words, they would be targeted. See the Prison Planet article (CLICK HERE). The last thing the Pentagon wants is countless throngs of journalists taping and recording civilian killings, so they eliminate the journalists. This is syndicated war criminality reminiscent of Nazi Germany, without the publicity and fanfare. This is the war where USMilitary service contractors are wildly enriched. This is the war where experimental weapons are tested on the Iraqi citizens, almost two million of whom are dead since 2003. This is the war whose Iraq Reconstruction Fund has $50 billion missing, with no question or investigation. This is the war with a sacred budget never to be challenged. It is enough to make a US citizen vomit!!

Dylan Ratigan was outcast by CNBC for his highly critical detailed coverage of the Wall Street bond fraud. He is joined by Julian Assange, co-founder of Wikileaks, Lt Colonel Anthony Shaffer (from the Center for Advance Defense Studies), Glen Greenwald (from Salon.com), and Brett McGurk (from the Council on Foreign Relations), in a discussion of the highly controversial video that has made global exposure of the atrocity seem hardly isolated. Assange states that the purpose of releasing these videos is to show how "modern aerial warfare is being done... and to show the debasement and moral corruption of soldiers as a result of war." He openly questions why if indeed the the victim was believed to be an insurgent, the wounded man should be interrogated and asked about what he was doing. Assange charges that the USArmy has an entrenched desire merely "to kill as many people as possible, to get as high a score as possible, and then brag about it to the rest of the troops." Shaffer does a detailed analysis on the Rules of Engagement, citing the routine Minimum Force, Capture, and Interrogate being primary. Greenwald discusses the responsibility of the media to cover these kinds of events. He said, "Wikileaks is absolutely heroic, because this kind of footage is seen all the time in the Muslim world, about what we are doing over there, and what the effect of our missions are, but it is seen very rarely over here [in the United States]... This is far from uncommon... What do you think the people who this video and the family members who are surviving, are going to think about the US over the next two or three decades." Take notice that reality is not far from the popular video game Call of Duty, the game controlled by the joystick wielding players.

FINANCIAL SYNDICATE EXPOSED

◄$$$ DYLAN RATIGAN EXPLAINS THE CURRENT FINANCIAL BREAKDOWN FROM A PATHOGENESIS, IF NOT CRIMINAL PERSPECTIVE. HIS RAZOR SHARP EXPLANATION AND DESCRIPTION ADEQUATELY REVEAL WHY HE HAS BEEN BANNED FROM C.N.B.C. AND OTHER FINANCIAL PRESS SHOWS CONTROLLED BY THE SYNDICATE. $$$

Dylan Ratigan in another venue was joined by the irrepressible Congressional maverick Alan Grayson and financial analyst Bill Fleckenstein. Ratigan does one of the best comprehensive summations of the current financial situation, its pathways to the present, and the continuation of the misdeeds. He anticipates a climax event in USGovt debt default. He accuses the US Federal Reserve of enabling the entire pathogenesis of events. The game has become more widely understood, but the mechanisms to halt further damage, further loss, and further exploit is unclear. The observers seem powerless. The nation allows a handful of corrupt politicians and a few key USFed members unaccountable to anyone, coupled with a small group of Wall Street CEO, to determine the fate of this nation. In the process, democracy is being trampled by those very people who supposedly represent the people. They are in fact defending the banker interests. See the powerful Zero Hedge article (CLICK HERE).

◄$$$ CENTRAL BANKERS HAVE A MONOPOLY. THEY ARE THE CREATURES FROM JEKYLL ISLAND. WHEN THE SUN SHINES, THEY PROFIT. WHEN IT RAINS, THEIR BENEFACTORS GET WET. $$$

Refer to the groundbreaking historical book entitled "The Creature from Jekyll Island" by G Edward Griffin that revealed central banker motivation and coordinated plans. It will continue to have global impact as a book for a century. The author explains how the USFed was created, by whom, and for what purpose. In a nutshell, the USFed is a banking cartel (banking monopoly) designed to keep out competitors, to maximize profits, and to exploit insider information. It has in recent decades taken on money laundering duties from the narcotics syndicate operating within the US Security Establishment. It was created by six men who controlled about 25% of the world's net wealth at the time in 1913, namely Rockefeller, Rothschild, and JPMorgan. The way it works is the banking cartel lends money created out of thin air. It collects interest perpetually and charges fees to move funds behind the curtains. When the loans go sour, it then transfers the losses to the domestic governments via bailouts. The populace is eager to help, since it has a vested interest in job security. The USFed makes more money if more is borrowed. Furthermore, the USFed feeds the engine of war, whose destruction leads to wrecked economies, more economic rebuilding, and thus more loans. The main point is the systemic breakdown occurs according to plan. The credit cycle always ends in a bust. But this time the system is in cycle, deep in the throes of a bust. The USFed makes huge money until the bust comes. When the bust finally comes, they then extend their hand like a beggar in the business district streets, and are granted the inevitable bailout. They exert huge influence on the legislative and executive authorities, even the regulatory bodies. That is the game, their game. It was designed to work that way. The Federal Reserve Act was written by the very same men who benefit from this no-risk racket.

◄$$$ THE DERIVATIVES INDUSTRY IS A SMALL WELL-OILED CABAL. THEY HAVE SUCCEEDED IN BLOCKING COMPETITION, OVERSIGHT, AND REFORM. ALMOST NOTHING HAS CHANGED, DESPITE MUCH TALK. WHILE CLEARING HOUSE ACTIVITY HAS BEEN SET UP TO A SMALL DEGREE, REGULATION IS NON-EXISTENT, AS THEY WISH IT TO BE. $$$

Harold Bradley is a finance industry participant with a keen eye to observe events. He oversees almost $2 billion in assets as chief investment officer at the Kauffman Foundation. He told the Reuters Global Exchanges and Trading Summit in New York that a cabal is preventing swap derivatives from being forced onto clearing exchanges. He stated, "There is no incentive from the moneyed interests in either Washington or New York to change it. I believe we are in a cabal. There are five or six players only who are engaged and dominant in this marketplace, and apparently they own the regulatory apparatus. Everybody is afraid to regulate them. Instead of blowing up or burning over-the-counter Credit Default Swaps, as Nobel economist Myron Scholes urged, or making any other real changes which would help the economy and the consumer, the rule changes are mainly a public relations effort by the derivatives industry itself. Much like the stress tests were a stunt by the banking industry. The changes will do virtually everything the derivatives industry asked for, including guaranteeing the big banker profits in selling CDSwaps by keeping out smaller competitors. Regulation of over-the-counter CDS has already failed." See the Naked Capitalism article (CLICK HERE). The credit derivatives are a clever perverse concoction. They enabled the Wall Street firms to exploit and profit from the destruction they created, planned, and executed. Imagine an arsonist profiting from big insurance contracts after big deadly fires he sets after carefully planning.

◄$$$ MATT TAIBBI POINTS OUT A CASE OF JPMORGAN USING LEVERAGE IN REVERSE TO CRIPPLE AN ALABAMA CITY. THEY AMPLIFIED THE COST OF A ROUTINE MUNICIPAL PROJECT TEN-FOLD. SOME PROSECUTION IS SET. TAIBBI CALLS THE EVENT AN ATROCITY. $$$

Another exposé has come from the indefatigable and ferocious Goldman Sachs critic Matt Taibbi. Taibbi chronicles the details in which JPMorgan managed to stick Jefferson County in Alabama with more than $5 billion debt for a sewage system originally supposed to cost $250 million. That is 20:1 leverage. The municipal area contains the city of Birmingham, and has brought it to the brink of bankruptcy. Taibbi mentions that Goldman Sachs was not involved because JPMorgan paid them $3 million to stay out of the project. He claims over 20 local convictions for corruption in the case, plus an SEC fine for JPMorgan, like a wrist slap. The so-called Alabama atrocity points out that any municipality doing deals with Wall Street is in effect putting themselves in the hands of a syndicate worse than the Mafia. The USEconomy suffers the effects at the national level from what can be seen in microcosm by this sort of predatory financial parasite. A similar series of predatory deals have brought down Greece. See the Rolling Stone magazine article entitled "Looting Main Street" (CLICK HERE).

◄$$$ WALL STREET FIRMS ARE GRADUALLY BEING EXPOSED AS A CRIMINAL SYNDICATE. RECENT CHARGES LODGED OVER ACTIVITY IN THE MUNICIPAL BOND MARKET ARE POWERFUL. THEY ARE NO DIFFERENT FROM DAILY USTREASURY BOND AND MORTGAGE BOND ACTIVITY, EXCEPT THE CITIES AND STATES ARE DIRECTLY AFFECTED. $$$

Every market that Wall Street touches, it corrupts with its illicit behavior. Often they engage in criminal activity. Lately, the charges against Wall Street firms are broad and loud, coming from the municipal bond market in outright price riggings. The big US banks increasingly resemble criminal enterprises, more than a managed financial system, hardly the envy of the world. If anything, they are envied for their ability to earn money via fraud without prosecution. That is changing, as JPMorgan, Lehman, and Union Bank of Switzerland are named as conspirators in muni bid-rigging. Typically no mention of their illicit activity can be found in the mainstream media. Public demands for serious reform against the cheating and looting mean nothing when the USCongress is compromised by donations and controlled by Goldman Sachs from its power perch in the USDept Treasury. The unspoken effect of malinvestment will continue, a national capital formation engine producing little in economic development or job creation or avoidance of bubbled air pockets. Eventually, the currency and bonds might collapse like some Third World kleptocracy. The world's largest economy in the United States is grinding lower, crushed by inefficiency and corruption. The impact on the rest of the world is obvious and far reaching, because the USDollar's position as the world reserve currency. All talk of recovery is total nonsense and ignorant gibberish. The banks must be restrained after liquidated, the financial system reformed after cleared from Wall Street control, and the USEconomy returned to balance from outsized insolvency, before any realistic notion of sustained recovery can remotely occur. See the Cafe Americain article (CLICK HERE).

A conspiracy case has been brought forth by the USDept Justice, in a criminal anti-trust case. JPMorgan Chase, Lehman Brothers Holdings, and UBS were among more than a dozen Wall Street firms charged in a conspiracy to pay below market interest rates to US state and local governments on investments, according to documents filed in a USDept Justice. A list of previously unidentified co-conspirators contains over 20 bankers at firms, including Bank of America, Bear Stearns, Societe Generale, two General Electric financial subsidiaries, and Salomon Smith Barney (the former unit of Citigroup). The documents were filed in US District Court in Manhattan on March 24th. The complaint was filed by attorneys for a former employee of CDR Financial Products, an advisory firm indicted in October. None of the firms or individuals named on the list has been charged with any specific crime. The court records mark the first time these companies have been identified as co-conspirators. The charges provide the broadest look to date at alleged collusion in the $2.8 trillion municipal securities market. Profits were delivered to Wall Street at taxpayer expense, the usual practice of predators operating like a cancer.

The case centers on investments known as guaranteed investment contracts that cities, states, and school districts purchase with the funds they receive through municipal bond sales. Some $400 billion of municipal bonds are issued each year, and the bodies use the contracts to earn a return on sale proceeds that are left idle until needed for certain projects. Actually the Internal Revenue Service requires that the contracts be awarded by competitive bidding to ensure that governments receive a fair return. The USGovt charges that CDR ran sham auctions that resulted in the banks paying low interest rates below the credit market to local governments. CDR is a Los Angeles based local government counseling firm, indicted in October along with three current or former executives. The company and three men deny all accusations of malfeasance. Since March, three former CDR employees not charged in the initial indictment have pleaded guilty and agreed to cooperate with the USDept Justice. More than a dozen financial firms also face civil suits filed by municipalities in the same case. The prosecution is spreading, like with a lawsuit brought by the state of Mississippi. The queer twist laced throughout extends from the USGovt bailout funds many of the involved firms have received. Cooperation with the prosecutors is the high road to take, rather than guilty pleas. Formal opposition and court battles would become a total disaster. Many ongoing antitrust investigations continue against companies involved that were never indicted. Pressure to cooperate is tremendous. Political pressure to indict and convict individuals is tremendous. When a corporation pays $200 million in penalties and fines, it is simply a balance sheet issue. Jail time is what captures corporate attention in the United States.

The October indictments did not identify by name any of the sellers of the investment contracts involved in the alleged conspiracy. They are charged with paying kickbacks to CDR after winning investment deals brokered by the firm, according to the indictments. The firms accomplished this by paying sham fees tied to financial transactions entered with other companies, prosecutors claim. Kickbacks were paid from 2001 to 2005, ranging from $4500 to $475 thousand per contract each, according to the USDept Justice. The investment contracts involved were created by units of General Electric and divisions of Financial Security Assurance Holdings, a bond insurer formerly part of lender Dexia based in Brussels Belgium. The kickbacks were paid out of fees generated by transactions between two financial institutions, up to March unnamed, but now identified as UBS and Royal Bank of Canada. See the Bloomberg articles (CLICK HERE or HERE).

◄$$$ WACHOVIA IS NAILED FOR DRUG MONEY LAUNDERING. THE NEWS WAS NOT REPORTED AS A CONFIRMATION THAT U.S. BANKS ARE AT THE CENTER OF THE NARCOTICS TRADE. JUST A TIP OF THE ICEBERG EXPOSED FOR ALL TO IGNORE. THE SEIZED COCAINE WILL GO DIRECTLY INTO THE SYNDICATE INVENTORY, NEVER TO BE DESTROYED. THE DRUG ENFORCEMENT AGENCY IS AN AGENT FOR THE SYNDICATE, THEIR PRIVATE POLICE AND PROCUREMENT GROUP. IN MY VIEW, WACHOVIA WAS POSITIONED AS A COMPETITOR TO THE USGOVT NARCOTICS RING AND WAS REMOVED. $$$

Wachovia has settled a Mexican narcotics money laundering case for $160 million with the USGovt. Wachovia will make the settlement to end a federal investigation into laundering of illegal drug profits through Mexican exchange houses. It constitutes the largest case of its kind ever brought against a US bank, an historic case never seen before. The probe began in 2005 when a Drug Enforcement Admin narcotics dog in Florida detected cocaine traces in an airplane, and ultimately uncovered at least $110 million in drug profits laundered from Mexico through Wachovia. The total settlement includes forfeiture in that amount plus a $50 million fine. If truth be known, perhaps between 500 and 1000 such shipments take place every single year. Nonsense distraction claims came from the DEA Miami chief, who said "The DEA will follow drug money wherever it leads us," Hardly! Not when it is a major Wall Street bank doing business for the US Security Establishment. The DEA will instead expand inventory.

The plea bargaining agreement means Wachovia and its executives will avoid criminal prosecution in return for the $160 million payment and significant improvements in its anti-money laundering program. No jail time for the executives means a sweet deal. They can even earn the benefit of other charges being dropped, if certain conditions are met within one year. The $160 million fine and forfeiture represents the biggest penalty ever imposed under the Bank Secrecy Act, which requires financial institutions to keep close records on suspicious transactions that could indicate money is being laundered from criminal enterprises. According to prosecutors, the Wachovia program was woefully inadequate and bank executives were aware of the inadequacy, meaning that numerous red flags were overlooked during a three year period.

Ultimately at least $13 million from the Mexican exchanges went through Wachovia for the purchase of aircraft. Four planes were seized by investigators, along with more than 22 tons of cocaine. From there, investigators from the DEA, the IRS, and other agencies tracked billion$ in wire transfers, bulk cash shipments, and other transactions from the Mexican exchanges through Wachovia. Many were considered suspicious, since they bore such markings as multiple round number wire transfers on the same day for a single account, deposits of travelers checks with sequential numbers that contain unusual markings, and bulk cash transfers up to 50% greater than a customer had led Wachovia to expect. See the Oregon Live article (CLICK HERE). The case enables the USGovt to look strong and vigilant, while the bigger portions of the financial sector and security apparatus conducted well over $500 billion in annual narcotics trafficking. The seized drugs undoubtedly went directly into syndicate inventory for sale. Somebody with Wachovia or the Mexican partners were on the wrong side of the CIA. The details will never be known.

THE GREAT SYNDICATE MONEY GRAB

◄$$$ PERMIT THE JACKASS TO DESCRIBE A POSSIBLE CLIMAX SCENARIO. MINE IS PURE SPECULATION, BASED UPON NUMEROUS CONVERSATIONS WITH INFORMED PEOPLE WHO HAVE BEEN RELIABLE AND ACCURATE IN THE PAST, MIXED WITH MY GUT FEELING AND EXPERIENCE WATCHING EVENTS. $$$

My imagination will be unrestrained. This is not a forecast, just a possible scenario. Citigroup fails suddenly, is liquidated, but the aftermath is called a restructure. Other Wall Street banks like Bank of America go bust. The JPMorgan credit derivatives blow up, with $15 to $20 trillion in rumored losses, but the firm continues to stand. Goldman Sachs succumbs to fifty lawsuits in twelve countries, and goes into receivership, but its assets were removed to a foreign location to join the Madoff funds. The USGovt leaders, together with USFed and USDept Treasury officials, will declare that all is clear after the climax, but they will lay blame elsewhere, not on their policies or the broken US$ framework. Next will come the widespread closure of US & UK banks and brokerage firms. Reports will spread like wildfire of $1 to $2 trillion in missing accounts, but the major networks will not cover it, only the internet which focuses attention on the DTCC as villain. A bank holiday will be announced for three days, but it will last thirty days. Entire supply chains will be disrupted, as supply lines for food, gasoline, ATM cash machines, and basic materials are interrupted. Pensions and civil workers nationwide will not be paid. The internet will not function properly, even cell phones will not operate properly. Some phony terrorist attack and infiltration will be announced, which will be blamed for many missing accounts.

A flash of events will occur. The gold exchanges will shut down altogether, as officials blame speculators and foreign account holders for removing the majority of gold & silver bullion. Numerous complaints of fraud and price fixing will arrive to flood the exchanges. Most gold claim funds like the GLD and SLV will be shut down, with these fraud-ridden Exchange Traded Fund officials announcing that account holders given cash redemptions at low prices. The USDollar will suddenly suffer a 25% devaluation, as the USTreasury yield will rise quickly from 4% to 6%, but come down and remain under 5% on the 10-year yield miraculously. Rumors of trillion$ monetization will come forth, to explain, as the news renders repeated rounds of damage to the USDollar. Foreign central banks assist in the USDollar stabilization initiative, as a global monetary crisis is the rage. The crude oil price zooms up to $150 per barrel and stays there, as some liquidations of tankers finally occurs, with extreme profits realized, sending the oil price down to $120. The gold price hits $1600 per ounce, and the silver price hits $35 per ounce, but only the major mining stocks benefit. No physical bullion will be available worldwide. Many mining firms will be acquired suddenly, again at low prices, in order to grab valuable property and staff. The people will remain dazed and confused. If they riot, then the swine flu will make a comeback. If disorder is widespread, then FEMA camps might begin to take in prisoners. Just speculating.

◄$$$ THE D.T.C.C. CLEARING HOUSE IS THE OBJECT OF NEW FOCUS, THE POSSIBLE SITE OF GLOBAL BANK SKIMMING OR A GRAND HEIST. THE SECRETIVE CLEARING HOUSE OPERATES AS AN ALL INCLUSIVE BLANKET WITH GRANDIOSE POTENTIAL FOR ABUSE. ALMOST THE ENTIRE U.S. FINANCIAL SYSTEM OF STOCKS AND BONDS IS VULNERABLE TO SEIZURE BY THE BANKING ELITE. THEY HAVE SHOWN THEIR COLORS WITH THE WALL STREET BUST, THE T.A.R.P. FUND CONFISCATION, THE FAILURE OF DISCLOSURE, THE EXECUTIVE BONUSES, RAIDS AGAINST RIVAL HEDGE FUNDS, AND VAST INSIDER TRADING. $$$

Some believe the DTCC is the US Federal Reserve's next big money grab, following a pattern of hidden authority and position placed by it. The existence of the Depository Trust & Clearing Corporation is probably the best guarded secret in United States, easily surpassing the real truth about the Fort Knox. No gold exists in Fort Knox, the ugly secret. The DTCC and its six subsidiaries were established in 1973 as a clearing house for every financial transaction is the US, Euroland, and over 100 foreign countries. The EURO CCP, one of the six DTCC subsidiaries, did not exist at the time of inception. To obtain a proper perspective on the magnitude of its scope and potential, in the year 2009 the DTCC managed over $2 quadrillion USDollars of transactions. That is a billion billion dollars, a mindboggling sum. A grandiose setup has taken place for future abuse. Until January 2009, a person could hold a physical paper stock certificate or bond in possession as proof of ownership within the financial realm. After the 1st of January in 2009, only electronic transactions and entries were permitted, investors thrust into cyberspace. Worse, without permission the entry was switched from the investor name to the broker name from the firm involved. The names of investors have been once removed. Then without permission it was switched to a company called Cede & Co, which happens to be a subsidiary of the DTCC. Investor funds are parked in the DTCC money pool. Now the name of investors have been twice removed. The DTCC and its six subsidiaries are wholly owned by the US Federal Reserve System, a private group of bankers, brokers, insiders, and global elite. They are the subject of frequent challenges for disclosure of balance sheets and for illegal activity such as TARP Fund confiscation. The people must realize that at any time the elite choose to engineer the ultimate money grab in the name of national security or war or any other phony excuse, they can seize your money or freeze it indefinitely, with no power lying in the hands of investors. The USFed officially and legally has access to all contents in the DTCC money pool.

The financial crime syndicate that is the US banking system has further plans. Back in February 2010, Zero Hedge posted an article entitled "Enter Cede & Co II: The Fed is Now Backstopping $25 Trillion in DTCC Cleared Credit Default Swaps" (CLICK HERE). The USFed is actually in the process of insuring that their banking partners will be thoroughly healed when they make their next giant Credit Default Swap (CDS) maneuvers. Tyler Durden wrote, "The Federal Reserve Board had approved its application to establish a DTCC subsidiary that is a member of the Federal Reserve System to operate the Trade Information Warehouse for over-the-counter (OTC) derivatives." In other words, the USFed through its DTCC Warehouse has become the guarantor for all the CDS transactions that clear via the DTCC, a gigantic hairball of $25.5 trillion size. If and when the next meltdown occurs, like with AIG or Lehman Brothers or Bear Stearns or Fannie Mae, these criminal bankers in total control of the USGovt finance ministry and US banking system are prepared. They are in a position to offset that staggering Credit Default Swap contract losses by pilfering money residing in the DTCC money pool. Whether they do so remains to be seen. The grand bank holiday event, in my opinion set to enable the grand financial system heist of private investor funds, has been prepared under full system construction. The people are totally unaware, only suspicious and angry. The banker elite have at their disposal the full $25 trillion. If and when they confiscate the funds, they will surely call it a failure of the system, which should be interpreted as the climax of slavery.


STATE & CITY PENSION CRISIS

◄$$$ THE SHORTFALL IN STATE PENSIONS ZOOMS PAST $3 TRILLION. ABSURD ASSUMPTIONS CONCEAL THE DEPTH OF GAPS. MANY STATES ARE RESORTING TO DESPERATE MEASURES, SOME OF WHICH MIGHT ENTAIL LEGAL VIOLATIONS. $$$

The 50 US States have $5.17 trillion in pension obligations. The suffer from a massive Gap of $3.23 trillion, over half of the overall obligation. The federal USGovt has largely ignored the states, and acted in true syndicate fashion, taking care of their own toxic bond redemptions, criminal coverups, and executive compensation needs, with an eye only on Wall Street requirements. States are finding it increasingly difficult to ignore their fiscal woes and pension deficits. State debt woes have grown far too grand to camouflage. Parallels are ugly, as California, New York, and other states like Illinois are showing many of the same signs of debt overload that recently took Greece to the brink. They suffer budgets that will not balance, use accounting that masks debt, and depend upon derivatives to plug holes. Legions of retired public workers are counting on benefits that are proving more elusive to pay.

The California state debt, whose visible surface is its outstanding bonds, looks manageable at just 8% in size versus its total economy. But The Golden State has huge unstated debts in addition that escape mention or appear in calculations. If the fair value of the shortfall in the California pension fund is counted, its debt burden expands almost five-fold to 37% of its economic output. Unstated debts pose a bigger problem to states with smaller economies. If Rhode Island were a nation, its fair value on pension debt would push it outside the maximum permitted by the EuroZone, which imposes a limit on government debt to 60% of gross domestic product, according to Andrew Biggs. He is an economist with the American Enterprise Institute who has conducted analyses of state debt. Alaska would not qualify either. In Illinois, the state comptroller recently claimed the state was nearly $9 billion behind on its bills to vendors, which he called an ongoing fiscal disaster in his words. Earlier in April, the ratings agency Fitch downgraded several categories of Illinois debt, directly citing the state's accounts payable backlog.

Professor Rogoff at Harvard Univ and Carmen Reinhart at the Univ of Maryland collaborated to produce a book entitled "This Time Is Different" about the string of global debt crises spanning more than a century. They wrote, "When an accident is waiting to happen, it eventually does. But the exact timing can be very difficult to guess, and a crisis that seems imminent can sometimes take years to ignite." Many economists anticipate the last straw for states and cities will be debt hidden in their pension obligations, since it is immediately felt when funds are unavailable. Joshua Rauh is an economist at Northwestern Univ, and Robert Novy-Marx is from the Univ of Chicago. They recently calculated the value of the pension obligations at 50 states the way the bond markets value debt. They put the number at $5.17 trillion. After the $1.94 trillion set aside in state pension funds was subtracted, a state pension gap of $3.23 trillion shows. The sum is more than three times the amount the states owe their bondholders! The network news focus too much on Wall Street and USGovt matters.

States have resorted to creative ways to hide their debt. The grabs are gray area actions, sometimes illegal. At best they are heavy handed and use creativity. At worst they are basic legal violations. The court system has been placed in an awkward position to force compliance, when default is the last resort option. States are cornered. Responses have been innovative, often seeming like a comic tragedy.

  • New Hampshire took $110 million from a medical malpractice insurance pool to balance its budget. The State Supreme Court ordered them to return the funds.
  • Colorado tried to grab a $500 million surplus from Pinnacol Assurance, a state worker compensation insurer that was privatized in 2002.
  • Hawaii went to a four-day school week.
  • Connecticut tried to issue its own accounting rules.
  • California is forcing companies pay 70% of their 2010 taxes by June 15th.
  • New Jersey and other states make their budgets look balanced by pushing debts into the future.

While Greece used a disguised type of foreign exchange trade to conceal debt as currency swaps, the derivative contracts popular with states and cities have been Interest Rate Swaps. They are contracts to hedge against changing rates. The more common practice is outright deception on pension fund management. Fictitious accounting allows states to pretend their pension plans are in better shape than reality dictates. Hawaii, Montana, New Jersey, Illinois, Mississippi, Ohio, New Mexico, Rhode Island, and Alaska all have unfunded liabilities of 50% or greater. Overall, 20 states have unfunded pension liabilities of 40% or greater. Most states have pension plan assumptions that build in an absurd assumption of at least a 7% rate of return. Such returns are ridiculously unrealistic. Another downturn would cripple states. Their fund portfolios would take losses that cannot be afforded. The $5.17 trillion in pension obligations is a tremendous sum of money for the states. They cannot pay. Two thirds of it, $3.23 trillion must come from thin air. It will NOT come from the USGovt, which is devoted to the Ruling Elite and their powerful expansive crime syndicate. The amount in need for states just for pension shortfalls is more than twice the USGovt deficit. Those who fail to detect the crime syndicate are sleepy, distracted, incapable, blind, politically dedicated, involved personally, too buy waving their flags, or plain morons.

◄$$$ LOS ANGELES DEBT WAS DOWNGRADED, ALMOST TO JUNK. THE CITY CAREENS TOWARD BANKRUPTCY. IT IS RUNNING OUT OF CASH. SERVICES ARE AFFECTED. $$$

The ratings agency Moodys downgraded Los Angeles from Aa2 to Aa3, one level above junk. The downgrade reflects the continued breakdown of the city's historically willingness and ability to quickly rebalance its budget mid-year. It has over the decades been much more responsive. The downgrade reflects the likelihood that their general fund reserves at the end of the current fiscal year could be much lower than previously expected. At direct issue is the reduction in an expected transfer from the Dept of Water & Power, a strong signal of breakdown. The revamp of its budgetary reserves over the next few years would be rendered more difficult, given its start from a weaker position. Moodys maintains a rating outlook for the city's general obligation and general fund ratings remains as negative. They do not expect repair for the city's near-term general fund liquidity challenges in a timely fashion. Any transfer of funds from the city's general fund budget reserve will not remedy the situation, currently estimated at $199 million. See the Zero Hedge article (CLICK HERE).

The city of Los Angeles will run out of cash on May 5th, claims city Controller Wendy Greuel. The city has formally requested a $90 million transfer of reserve funds to pay bills. Greuel stated publicly that the city might not be able to meet payroll obligations. She asked Mayor Antonio Villaraigosa and the City Council to release reserve funds to meet what she described as an urgent cash need. The Controller office financial reporting division estimated that the city would need $90 million to ensure solvency through the fiscal year that ends June 30. The crisis came to a climax recently when the Los Angeles Dept of Water & Power admitted the utility would not send an anticipated $73 million payment to the city's general fund. A battle has been waged for some time, with current fallout finally. The DWP usually makes an 8% contribution to the city in lieu of taxes but does not have the expected $73 million, a consequence of the city council blockage of a proposed electricity rate hike. Mayor Villaraigosa blames the city council. Instead, many believe the city is broke because the mayor led the city down a path of reckless and irresponsible spending. Los Angeles cannot pay pension obligations, after overly generous union contracts and pension benefits. Some believe Villaraigosa should admit LA is broke and next tackle wage and pension issues in the bankruptcy court. The mayor has grandstanded before with public statements that "Bankruptcy is Not an Option" but that usually means it is imminent.

Los Angeles is bankrupt, whether the city realizes it or not. The mayor seems not to fully grasp the gravity of the situation. Villaraigosa appears unaware of legal implications in the bankruptcy process for the city. An attorney close to the situation gave a solid assessment of the legal forces at work that have put the mayor in the corner with few options. He wrote, "If Los Angeles unpaid creditors start attaching assets, the mayor has no choice. Literally. He would have to immediately terminate all LA employees before they accrued federal tax trust amounts. If he allows those amounts to accrue without funds to pay them, he has committed a federal felony. Here is how it works. Basically, you can stiff creditors generally or 'stretch' them as is the bankruptcy parlance. So although somebody is on 30-day terms, you effectively fall behind and pay them effectively on 90-day terms. And for one-time creditors whom you do not need in the future, you just stiff them. So long as you have enough cash to pay the employees for the tax trust fund accounts they are accruing, and generally for their compensation, you can keep skating. So if LA or Illinois ever get that low on cash, a filing will happen. Also if lots of those little (and not so little) creditors get restless and file lawsuits, you start having problems. They can move for pre-judgment attachments of cash, freezing cash, and preventing it from being used for other purposes, like paying employees or putting money away for trust funds. Or they can choose simple expedited collection procedures that lead to prompt judgments and attach cash post-judgment. Same effect, you have to file [for bankruptcy]. But LA and Illinois, I am sure, have excellent lawyers who know this. Saying bankruptcy is not an option is total bulls*** and he knows it." See the Global Economic Analysis article (CLICK HERE).