GLOBAL MONEY WAR REPORT
DEBASED CURRENCY COMPETITION
SOVEREIGN BOND BREAKDOWN
CENTRAL BANK DISCREDIT

* Intro Monetary Fragments
* Ukraine Chaos Grows
* BRICS Road Widens Away From USDollar
* Eurasian Trade Zone Progress
* Derivative Risk Escalates
* Failed Central Bank Franchise System
* USTreasury Bond Busting at Seams
 


HAT TRICK LETTER
Issue #121

Jim Willie CB, 
“the Golden Jackass”

20 April 2014

Editor Note: This month marks the tenth anniversary of the Hat Trick Letter, an important milestone and true thrill. It has been an unusual, raucous, controversial, enlightening, wild, but disturbing and disconcerting ride, even with a deeply satisfying element filled with gratitude to colleagues as well as to clients. The objective has been to provide accurate information and to shed light on the financial markets and the economy, with strong reliable forecasts in anticipation. Furthermore, never to give up. A big thanks to the 9460 clients who have made orders over this timespan, and the 2550 current active subscribers. Many clients return after a time away, always a special inbox item treat. A intense sense of gratitude goes to my astute colleagues, in particular to The Voice, who together have served as an extremely valuable virtual staff of astute researchers and brain trust. The Jackass intends to take this newsletter through the climax of collapse, and to cover the Gold Standard Return, which will involve the death of the USDollar and great tumult. It is not unpatriotic to wish for a moribund toxic global reserve currency, reigning over insolvency, corruption, exploitation, and aggressive war, to be put to rest. Although the report is quite long, my apologies for overlooking several articles. It is impossible to be complete, but to be comprehensive is within reach.

Editor Dedication: The Gold Standard is a device for freedom from elite exploit, its installment a noble deed, its implementation the manifestation of an equitable system. Furthermore, a Gold Standard will be an efficient force to the global economy which enables strong capital formation, effective saving, and fair trade. It contains a feature currently inhibited on a profound basis. To declare its advocates enemies of the state defines the fascist state, where truth is its chief enemy. The fascist state must be isolated in order to have its flame turn down. The entire set of initiatives to set upon war against nations who strive to escape the USDollar impact and clutches will result in the complete isolation of the United States, the quarantine of the nation from the rest of the world seeking remedy, and ultimately its slide into the Third World, while shock sets into every part of American life. The currency effect will be the most disruptive, since inflation will finally be imported after 40 years of its export. The accelerated effect will cause over 200% in price inflation for products brought into the United States from overseas ports over the next few years. Great supply shortages will slam the nation, as foreign suppliers will be frozen for many reasons, including unstable currency issues. The set of conditions will serve as the defining blow for systemic failure and introduction to widespread violence amidst lost wealth.

QUOTES ON MONEY

"This entire Ukraine Kabuki theater is nothing but a staging area for much bigger issues to be resolved. The US & West have been trapped and will be sucked dry due the funding commitments the West must make to see their coup d'etat through. On a de-facto basis, it has already failed due to Ukraine being divided into five parts, once all is set and done. I wrote a white paper on that issue in the late 1990's. The really interesting development is that there is a domino effect unfolding. The Eastern countries in Europe are going to turn back to Russia, since they are being royally screwed by these EU/NATO machinations." ~ The Voice

"Russian Prime Minister Medvedev has been visiting Crimea and announced massive new expenditures in that part of the Russian homeland. Pension benefits are to be doubled, and gas prices to be slashed. Meanwhile, the United States has made its first gift to Ukraine's independence. [It is] 300,000 Meals Ready To Eat, known as MREs. US soldiers who have subsisted on them claim that MRE actually stands for Meals Rejected by Ethiopians." ~ Marvin Zonis

"If Washington cannot stop this [Russia-Iran] deal, it could serve as a signal to other countries that the United States will not risk major diplomatic disputes at the expense of the sanctions regime. Yet another epic geopolitical debacle resulting from what was originally intended to be a demonstration of strength, and instead is rapidly turning out into a terminal confirmation of weakness. One must wonder how these guys define democracy." ~ Mark Dubowitz (Defense of Democracies, a US think tank)

"The United States has truly lost the initiative, in the Middle East region and beyond it. The Neo-Con drunkenness with military power led to costly wars that have overwhelmed the empire beyond salvation. Now, US foreign policy makers are mere diplomatic firefighters, from Palestine to Syria to Ukraine. For the Americans, the last few years have been less a reality check, more the new reality itself." ~ Ramzy Baroud (doctoral student at Univ Exeter in England)

"The orderliness of secret power in Washington and chaos under heaven, the growth of a police state, and a planet run riot, turn out to be two sides of the same coin. If you want a news story that will glue eyes, then think of it this way. On September 12, 2001, the national security state entered the cockpit of (to modernize a phrase) the plane of state, hijacked it, and steered it directly for the Bermuda Triangle. Here was the strangest thing of all: no one even noticed." ~ Tom Engelhardt (an exaggeration, since at least half of 1% of Americans are well aware of the Gestapo hijacking with Nazi coup, and around 50% suspect something is very wrong with the official 911 Commission Report)

"The Trojan donkeys are already inside the system, slowly mutating into elephants. They will crush the evildoers from the inside by turning the tables on them. The ones who refuse to jump or hang themselves will be helped out the window or onto the rope. The cabal operators working in the background are well aware that executioners are coming for them. Some will stand and die, while others will try to run only to die tired. This cleansing process has happened many times before during humanity's long and twisted evolution. There will come justice. One only needs to live long enough to see justice being served." ~ The Voice

"It was possible, no doubt, to imagine a society in which wealth, in the sense of personal possessions and luxuries, should be evenly distributed, while power remained in the hands of a small privileged caste. But in practice such a society could not remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupified by poverty would become literate and would learn to think for themselves; and when once they had done this, they would sooner or later realise that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance." ~ George Orwell (the prophetic novel "1984")

"When injustice becomes law, resistance becomes duty." ~ Thomas Jefferson

## INTRO MONETARY FRAGMENTS

◄$$$ ROGERS HAS PREDICTED THE UNITED STATES WILL SOON ABANDON THE USDOLLAR FOR ANOTHER CURRENCY... THE US DOLLAR HAS LOST 38.5% OF ITS VALUE SINCE 2002... ALL FIAT PAPER CURRENCY IS IN DEADLY TROUBLE... ABOLISH THE USFED AS CENTRAL BANK, A FIRM SATURATED WITH DEBT CERTAIN TO GO BUST. $$$

Jim Rogers is a sage of our times. His past success is a legend. His wisdom is deep. He is not fooled easily. He is ahead of the crowd. He left the United States for Singapore long ago. His message has been steady. He should be heard. His latest commentary is on central bank failure and excesses. "There is no sound currency anymore. There is no paper money in 2014 and 2015 that is going to be worth much of anything. For the first time in recorded history, we have all major banks and central governments around the world printing huge amounts of money. This has never happened in world history. So the world is floating on an artificial ocean, of lots and lots of printed money. The debt is going higher and higher. The money printing is going higher and higher. We have had 50 or 60 years of success in America. You have got to pay the price someday whether you like it or not. The longer you delay the day of reckoning, the worse the day of reckoning is going to be. This is not going to be fun. Abolish the Federal Reserve. The world has gotten along quite famously and well without central banks for most of world history. America has had three central banks in our history, the first two disappeared. This one is going to disappear too because they keep taking on huge amounts of debt. They keep leveraging up the balance sheet. They keep making mistake after mistake. They are printing money. It is going to self-destruct before it is over. We would be better off with no central bank than this central bank."

Never overlook where the control lies, in foreign central banks that hold USGovt debt. They dictate terms of financial movements, monetary policy, big bank contractors, all in the shadows. The China FOREX reserves hit $3.95 trillion recently. They have truly enormous reserves plus a lot of Gold reserves that are not admitted, like over 15,000 tons. See the Xinhua Net article (CLICK HERE).

◄$$$ PARADIGM SHIFT HAS TOUCHED CAPITAL, AS POWER IS LOST... ERRANT PRIORITIES TO FAVOR CRIMINAL PILLAGE DURING CAPITAL DESTRUCTION AMIDST FASCIST BUSINESS MODEL CLIMAX HAS CAUSED ENORMOUS LOSSES AND DIVERTED MOTIVES... CABAL CONTROL HAS BEEN A HIGHER PRIORITY, RATHER THAN CONTINUED CAPITAL FORMATION AND LEGITIMATE INCOME DEVELOPMENT... CONTROL IS THE GOAL, NOT OPTIMIZATION... BUT WITH GREATER CONTROL COMES LOST STRUCTURAL INTEGRITY AND DIMINISHED CAPITAL. $$$

As over ten years of Fascist Business Model ruin has taken place, the climax is near. Control by the banker cabal has been the objective, in keeping with the nazi elementals. Money has escaped the system, vacated. The funds are on the sidelines, in the vaults, out of harm's way, set aside as gold and other bullion. US corporations have a huge amount of cash that refuses to come home, estimated between $1.3 and $1.8 trillion. Eastern raids have become extremely common, accelerating in number, with US$-based bonds converted to hard assets, to productive assets, whether from mortgages of government debt, whether to commodity type assets or to commercial property. America is for sale, under distressed sale to be more exact. These $3 to $5 trillion in funds (domestic and foreign) will return when the system is friendly to capital again.

The Jackass contention is that an enormous and staggering amount of money is being concentrated in Asian central banks (like Russia & China, even India & Japan & SKorea), along with the BRICS central bank. The Eastern Hemisphere money is coalescing and forming a capital core for the future paradigm, a future financial structure that will foster a new type of economic system. It is almost within touch, being so close to future realization. Almost nobody talks about it, since most analysts are dumb as hell, beholden to the system, and distracted by toxic toilet paper money flying in patterned formation. Their hearts and mindsets are directed by the preservation of their own power and financial firm survival. New cutouts will be constructed, like bosses in the field, like foremen at the site, like supervisors at the plant, and like barkers at the offices. New disposable cutouts will serve a master and serve a purpose. This time around, far more robot coulees will be seen in white skin and dull faces. Capital is in hiding, and will emerge from the newly capitalist East, not from the fascist West. The fascist impetus is best seen at the Ukraine margin.

Catherine Austin Fitts offered some thoughts on capitalism, the dying American art. She wrote the following. "The people who are in control, in my experience, are quite intelligent. Of course they understand that when you centralize control of capital in this way, you destroy a great deal of it. Small business is being targeted and destroyed. This is purposeful. It has been for years. Credit has been shut off on Main Street, done on purpose. So you start off with X utils of capital broadly dispersed, and to centralize control you shrink it, but end up with much tighter control. They know all of this, since done intentionally. Control is the goal, not optimization. They optimize, but only when and where it serves their strategic goals. For purposes of understanding what is happening, it helps to shelve frustration and anger, head into the invention room, and say, the system is working perfectly. It is optimized perfectly for the goals of those managing the system. Then work from there. I agree with Jim that capital is being stockpiled for a change in paradigm. When the change in paradigm comes, it will be presented as the kind of reform you describe. It will radically increase the power of the people who engineered the financial coup. A new crowd of puppets will be presented as the saviors and the old crowd of puppets will be blamed. And so life on planet earth goes on." Bear in mind the highest priority. The cabal seeks a totally wrecked system in order to seize control toward a global totalitarian state.

◄$$$ PUTIN HAS TIME ON HIS SIDE FOR DEALING WITH THE UKRAINE SITUATION... MANY ARE THE HIDDEN CHESS MOVES, AND TRAPS FOR THE WEST HAVE BEEN ENTERED BLINDLY... PUTIN WILL NOT PERMIT SLAUGHTER, BUT HE WILL ALLOW THE COLLAPSE... IT IS UNAVOIDABLE. $$$

Russian President Vladimir Putin has been steadily routinely systematically prodded goaded and lured into initiating a wider conflict that could emerge as a hot military war. Watch as Putin waits patiently, forces standoffs, and plays a passive hand. He will give time for the Kiev regime to undergo failure and suffer disintegration. He will give time for Western support of US & NATO initiatives to evaporate. He will give time for the Ukraine Economy to collapse on its own funding holes and weight of debt. He will give time for the scattered regions to demand separation. He will give time for local popular movements to halt environmental damage from fracking in the gas fields. He will give time for the several neighboring countries to see the rape and pillage of Ukraine, which is the carrying card of the Western neo-Nazis. Then afterwards comes the unification of the Eurasian Trade Zone where the Eastern European nations flock to the Kremlin door with lacking enthusiasm or smiles. The West has entered every trap set, and more will soon be revealed.

◄$$$ VLADIMIR PUTIN (VLAD THE HAMMER) IS SOMETIMES SUSPECTED AS BEING A WESTERN TOOL OF A DIFFERENT ORDER... SUCH THOUGHTS SHOULD BE PUT ASIDE AS SILLY AND BASELESS... PUTIN IS A SAVVY OPPONENT WITH BETTER RESOURCES AND MORE STRATEGIC SKILL... ONE SHOULD KNOW THE UNITED STATES WAS CAPTURED BY NAZIS LONG AGO. $$$

The key question is whether Russian President Putin is a Western puppet. The answer is with extremely high likelihood an emphatic NO. The Jackass sincerely doubts it, although there might be some elite influence by Western bankers inside Russia. Even though Putin has visited the Vatican, that does not mean the Roman Satanists with their infamous Black Nobility control him. One would expect that not much is left after Yeltsin and certain Russian oligarchs were swept out years ago. To be sure, realize that Putin is not perfect, but he seems an enemy of the fraudulent corrupted criminal Western gang that operate the King Dollar and its huge syndicate apparatus with a plethora of illicit connective tissue.

The Voice was asked his opinion on Putin and Russia. He wrote the following, with my minor edits. Russia will lead the clean-up job of the entire global economy. People have a totally distorted and false picture of Russia. Vlad the Hammer is a chess player, very smart, extremely learned, with a keen vision of what is right and what is wrong. Putin is a sober and focused professional who cares almost nothing about what the West thinks, since he knows the West is doomed from its own huge debt, phony money, and impaired financial structures, as well as from recent outsized dependence upon Chinese capital for the supply chain. Russia collapsed in 1989-1990 and then again in 1998. What Russia went through, the West will next experience. Russians have no entitlement mentality, as all they strive for is respect. The West has an entitlement mentality, and worse, the Americans have a conceited entitlement based upon some absurd sense of exceptionalism.

The Jackass calls the Americans exceptionally corrupt and exceptionally clever to conceal their 40 years of Nazi streak, led by Nixon, Kissinger, Brzezinski, Bush, Rubin, and others. In past conversations, The Voice has called the modern day New York, Washington, and London bankers and politicians the most corrupt in all of recorded human history. Eisenhower tried to warn the United States about the military industrial complex with its creeping powerful influence, but not a single word he uttered has been heeded. The US turned Nazi in the Jackass sopinion with the Kennedy killing, the Nixon promotion, the Bretton Woods abrogation, the Kissinger hiring, the pilferage of Fort Knox gold (most favorite nazi theme), the ongoing support of every South American fascist regime, and with final culmination in the 911 events and Gestapo Manifesto otherwise called the Patriot Act. As footnote, be sure to know that Neo-Con means Neo-Nazi. Check their principles, objectives, beliefs, speeches, deeds, and record. Dullard Americans vote for Neo-Cons, but would tend not to vote for Neo-Nazis, without comprehending the concealment.

◄$$$ PUTIN IS MILITARILY ENCIRCLING THE UNITED STATES IN RED DAWN STYLE... THE AMERICAN SYNDICATE LEADERS ARE DEEPLY COMMITTED AND DISTRACTED BY CRIMINAL ENTERPRISE... THE ECONOMIES ARE FALLING UNDER RUSSIAN & CHINESE CONTROL. $$$

Dave Hodges of The Common Sense Show offers details on how Russia has encircled the United States, which he calls a Red Dawn. It is not a fair label, since the US has turned to favor Marxism while the Eastern giants have converted to capitalism. The US national syndicate dons are far too pre-occupied by narcotics trafficking and gun running to be concerned with economic development. They seek control with loss accepted. The American Nazi priorities of the USGovt are being revealed and comprehended. Consider that all of Latin and Central America is now tied to Russia and China in many commercial respects. Russia is building a 3G cell phone network in Nicaragua, where China considers a new canal (never happen). Russia is deeply entrenched in Venezuela and their oil business. China has mining and commercial deals all through Latin America, with close ties in Brazil. The Petro-Dollar in South America is under severe assault, while the Chinese Yuan is under growing usage. A regional currency is being formulated for usage by Panama, Colombia, Ecuador, and other neighboring nations. It is likely to be backed by gold & copper reserves owned by Panama, and oil reserves commanded by Venezuela. The United States is militarily encircled while its military fiddles with Syria and Ukraine, far away. The dirty secret is that the Ukraine and Syrian fronts are the battleground for the Langley CIA military and its several mercenary crack troops. The Pentagon is not in support of the conflict in Ukraine at all, probably not in Syria either. They see the devious duplicitous deeds.

The important oil deals in Mexico between Russia and PEMEX, the tight broad relationship between China and Brazil, and the extreme wreckage of Argentina hasten the USDollar collapse in the entire South American region. The USGovt pursues pointless trade agreements that accomplish nothing and are badly misdirected. The pacts with Asia seek to isolate China (not possible), while the pacts with Europe appear to annex the continent (foolhardy). Even Japan has joined the gold parade, dumping USTreasury Bonds quietly, while securing Gold bullion in its stead. The American traders kill the gold price, control the market with absent inventory, and give away the physical metal to Eastern buyers. The United States under Wall Street folly in leadership is directed insanity. See the Common Senses Show essay (CLICK HERE) by Dave Hodges, which complements the Jackass perspective effectively.

◄$$$ STRANGE MARKET REACTION TO RUSSIAN STANDOFF CONFLICT, IN MILD US-STOCK DECLINE BUT A STRONG 10% RISE IN RUSSIA... THE MONEY IS BEING BET, AND IT IS GOING AGAINST THE UNITED STATES. $$$

◄$$$ PSYCHOLOGICAL FACTORS CREATE DEFENSE MECHANISMS IN THE FACE OF SYSTEMIC FAILURE AND NATIONAL CALAMITY... THE SUPPOSED EXPERTS ARE PART OF THE PROBLEM AND CAUSE OF WRECKAGE... HUMAN PSYCHOLOGICAL FRAMEWORK AND DEFENSES TEND TO ASSIMILATE AND ACCOMMODATE IN VAST RATIONALIZATION EXERCISES THAT BECOME MORE UNTENABLE BY THE MONTH... THE ILLOGIC IS EXPOSED. $$$

In the last three years, a few colleagues and the Jackass have investigated reasons why people do not investigate or show interest in the decayed financial structures and depleted economy. Many go farther and hold firm to odd indefensible beliefs, while mocking those who display curiosity and put forth theories for test. We examine why they choose to remain uninformed and in the dark, even to hold firm on slippery ground. This is a new intriguing aspect of human psychology, and as fascinating as disturbing. Here are some conclusions after a couple of years.

a)      We conclude that some people wish to believe the leaders, laws, and system protect them, another sacred belief. Like the USGovt is there to serve, the bankers to invest, the laws unswerving, the military to defend the people and nation rather than the elite and the corporate giants. To me, this is utter nonsense as evidence blows it away to the contrary.

b)     We conclude that some people have over-arching belief systems for their lives that are sacrosanct and not challenged. Like how good prevails over evil, how solutions are pursued, how the United States always prevails, how the system will correct itself. To me, this is utter nonsense as evidence blows it away to the contrary.

c)      We conclude that some people are so frightened by certain threats, that they wish to ignore them in order to avoid a deeply rooted sense of insecurity. They might choose to minimize the threats, since horrifying. They stick with illusions in a dream world. To me, this is sticking one's head in the sand while exposing one hind quarters to the full impact of the impact that has become utterly obvious.

d)     We conclude that some people are successful in their work, and deeply invested in the current system, that they do not wish to alter the system in which they succeed. However, doing so has already resulted in significant loss of business even for the successful and diligent. To me, this is sticking one's head in the sand while exposing one hind quarters to the full impact of the impact that has become utterly obvious.

e)      We conclude that people come from different eras within the national history, the older folks with more trust in the system to rebound like after the Great Depression and World War II, the military veterans replete with loyalty rooted in trust, the Vietnam Boomer generation absent trust entirely, the youth mostly disillusioned about the future and struggling for a path to a job. To me, the stratified divisions of society will always be present, and always exert hugely different conditioning factors. The Jackass passed through the Vietnam Era and saw the betrayals to my generation. To me, after a few years of holding firm from a conditioned response, the position of loyalty to the system seems untenable.

These justifications and phenomena are not comprehensive or exhaustive. They are a work in progress, which go together with the Stockholm Syndrome and the Warsaw Effect. These two forces address the emotional integration between victim and assailant, and the denial of threat while trapped within contained walls. Such defense mechanisms are not new to the human species, but they are finally more commonly discussed and studied. However, integrate the five described items and something more perverse emerges. What appears is defense mechanisms for a nation undergoing systemic failure, along with delusional defeated masses not coping too well during the collapse. Too many people have succumbed to the pressures, and remain hidden in their little anal caves.

Turn next to supposed economist experts and brief encounters. The Jackass holds a PhD in Statistics with considerable knowledge and training in mathematics, computation, and economics. Statistical analysts test hypotheses and accept nothing at face value. We build constructs one plank at a time from observable events and the most reliable data. My side fields of interest with some degree of expertise are physics, chemistry, astronomy, genetics, geology, and psychology. Some strange experiences have come from lengthy conversations with three Ivy League PhD Economists early in the 2000 decade. One was a brilliant fellow, fellow gold analyst and expert aware competent economist Richard Bensen from Harvard Univ, with whom the Jackass once had a nice collegial relationship. We have not spoken in a few years, due to neglect, not conflict. The other two Ivy League PhD Economists in my honest opinion were well spoken dunces and low ranking dogma priests. They seemed similarly errant in their Keynesian dogma, as they rigidly defended untenable beliefs despite the nasty trail of debt impact and overlooked capital wreckage. They each believed the USEconomy is more powerful since more flexible with debt and deficits. They turned a blind eye to the phony money argument, calling gold-backed money old-fashioned. My rebuttal was that banking system insolvency was just around the corner (discussions occurred in 2005 and 2007). They believed my urgent warnings of asset backed bond market distress was both unfounded and irresponsible, and my expectation of USGovt debt distress limits to be absurd. As it turned out, they foresaw no crises. The unorthodox Jackass forewarned of many parts to the crises.

The debates with the Economist Doctorates were really pathetic. They acted as if the recessions were alleviated by the debt/deficit cycle, whereas the Jackass argued that they were caused by the debt/deficit cycle. And worse, they grew worse each cycle, and guaranteed the next recession to be worse than the previous with a climax coming very soon since the United States lacked critical mass in its industrial base after the rise of China. They saw no merit in the progression argument. My point of methodical wreckage of capital structures until fuller debt saturation and resultant systemic failure was called absurd by both doctoral quacks. The two arrogant fools told me in loud but illogical arguments that mine was errant in the entire viewpoint. They probably both approve of the QE bond monetization, and even the distortions in Bernanke's PhD Economics thesis. Their erudite babble was more errant dogma and economic policy mumbo jumbo than arranged psychological blocks that deny failure. But these past conversations are worthy of mention in the context.

Human psychological framework and defenses are an interesting chapter for our species and its pathology, when dealing with failure, loss, wreckage, and ruin. The system goes into failure mode, while the citizens individually veer off course in their defensive structures and mechanisms. The following is from Bill V in Texas, a client and professional psychologist. "It is called the Assimilation Accomodation Model of information processing. Most people can assimilate novel information that fits their existing mental models, but they cannot accommodate (change) their existing models to assimilate (accept) the novel information. In addition, most people would rather be told what they want to hear, what makes them feel good, than be told the truth. Politicians understand this, so they lie to us routinely, and get rewarded for their psychopathic behavior. Humans are strange creatures." The Jackass loves the cartoon depiction of reassuring lies being very popular for maintaining the illusion of safety, security, even justice and harmony. The inconvenient truth tends not to be followed, accepted, surely not embraced or absorbed.

## UKRAINE CHAOS GROWS

◄$$$ ON WAR:

Poland has had a role in destabilizing Ukraine. The Polish military trained Neo-Nazi militants, and acted as a training ground for the crack troops deployed by the USGovt security agencies and NATO black ops forces. In the last few days, the USMilitary has deployed troops to Poland, ready for action in Ukraine. The embattled nation is on the brink of civil war, after giving separatists an ultimatum. Unidentified military fighter jets opened fire on the Kramatorsk airfield, with casualties reported. Recall that Russia lost 50,000 men in the final eastern offensive of WWII in the exact area of Ukraine being contested. They are willing to defend again. NATO is in violation of the 1997 treaty with Russia. The Germans definitely hold the trump card with respect to the clumsy Euro-American trade zone deal and Ukraine, both of which are meant to achieve similar cabal objectives. See the Global Research article (CLICK HERE) and the Zero Hedge articles (CLICK HERE and HERE and HERE) and the Russia Today article (CLICK HERE) and the Indian Rediff article (CLICK HERE) and the Spiegel article (CLICK HERE).

◄$$$ ON POLITICS:

The USGovt has stated the G-7 Nations are open to more Russian sanctions. Just like with QE bond monetization and austerity budget measures, if it does not work, apply more of the same ineffective pressure. Russia is leaving the USDollar based system entirely, making them immune to sanctions. Global cabal architect Brzezinski sees a Finlandization process coming to Ukraine as deal maker. Perhaps the black nobility prince will slither into a negotiator role of West surrender. Propaganda drivel from London is ripe, with claims that Putin is caught in a pincer. More like he is in the driver's seat to force a Global Paradigm Shift on the doubly vulnerable United States. It is over-exposed with the USTreasury Bond and over-stretched with the USMilitary. See the Al Jazeera article (CLICK HERE) and the Bloomberg article (CLICK HERE) and the UK Telegraph article (CLICK HERE).

◄$$$ ON STRATEGY:

Forcing Russia out of markets is seen as Ukraine leverage, but the strategy will backfire. The United States will be horribly isolated with the Eastern nations form a critical mass of non-USD participation in both trade and banking reserves. The Iranian lesson on sanctions was not learned well, as it almost caused the collapse of the SWIFT bank system. Monetary blockade of Russia has begun with JPMorgan blocks of Russian money transfer. NATO nations will suffer the backlash of USGovt violations of international banking rules. The Gazprom Neft CEO anticipated the Russian oil company could look eastward if sanctions hit. Their business will not be affected. Russia mulls conducting trade only in Rubles. See the Bloomberg article (CLICK HERE) and the Zero Hedge article (CLICK HERE) and the Fox Business article (CLICK HERE) and the Reuters article (CLICK HERE) and the TF Metals Report article (CLICK HERE). The Voice commented, "Russia has all the money they need. If Russia pulls the plug on European banks, we shall see Deutsche Bank, Commerz Bank, Credit Suisse, UBS, and a couple of others go bust in a blink of an eye. Watch China exploit the crisis in asset purchases for 10 cents on the Euro."

◄$$$ ON DISUNITY:

Israel has begun to side with Russia over the Ukraine battle, citing an endangered security. The Gazprom angle with Israel's prized Floating Tamar platform might have been used as a chess piece. Great irony is evident. The Massad is very active in Ukraine against nazis, but a Massad agent at the central bank opened the midnight door for the US Nazi bankers to steal the Ukraine gold bullion. A multitude of Jews live in Kiev and Odessa, and besides, a significant portion of Israeli immigrants are of Russian descent. Israel is not White House friendly, since it is loaded with Muslim Brotherhood. More north, Switzerland has snubbed the USGovt effort to sanction Russian billionaires, by obstructing or freezing their accounts. Too much money is involved. The official scorecard of US Friends List is becoming shorter by the week. Total isolation is directly ahead, except of course for the British handlers. See the Before Its News article (CLICK HERE) and the Yahoo News article (CLICK HERE).

◄$$$ ON FINANCES:

Delusion is ripe. Intl Monetary Fund chief sternly holds that the Ukraine bailout will not fail. Lagarde expects Ukraine to deliver on its commitments despite concerns about the fragile Kiev regime. Moodys downgraded Ukraine debt one notch, giving the nation negative outlook. The current downgrade drops from their extremely speculative rating to a status of default imminent with little prospect for recovery. It would be loud ugly ironic if Maidan of the Ukraine Govt were to demand his nation's gold back, just like Germany and Venezuela did, in order to address its debt structure. Also, the Ukraine debt via Russian bonds is subject to UK law, whereby Russia would be first in line from any funds to aid Ukraine. Putin has out-maneuvered the Western clowns. See the Voice of Asia article (CLICK HERE) and the Russia Today article (CLICK HERE).

◄$$$ ON ECONOMY:

Ukraine only has enough gasoline for a month, 28 or 29 days to be exact. Rapid economic collapse comes to their economy as reward for the coup d'etat and collusion with the West. Vacuum of leadership, capital, supplies, and tax revenue will be the billboard messages soon. Putin has been waiting patiently, allowing the collapse. The Crimean ports are vital for agricultural exports. Ukraine's next casualties could be its farmers, who are priced out of fertilizer and other supplies, even as fuel costs have risen. The economic implosion moves quickly. Ukrainian farmers control a bountiful land. The nation was the #3 world exporter of corn and #6 exporter of wheat in 2013. Suspect the Chinese will try to buy the Ukrainian land before the West can steal it. In view of China being stiffed on a $3 billion grain deal from Ukraine, a picture emerges. The Asian giant might work to control their farmland resource before it is subjugated and stripped by the West. More details on the natural gas and energy issues related to Ukraine will be addressed in the Gold & Currency Report.

China has filed lawsuit against Ukraine for breach of contract in a grain deal. Citing a Ukrainian parliament official, the ITAR-TASS news agency reported that the State Food & Grain Corporation of Ukraine has diverted part of the $3 billion Chinese loan to provide crops for other countries and parties, including Ethiopia, Iran, Kenya, and Syrian opposition groups. See the Zero Hedge article (CLICK HERE) and the Russia RBC article (CLICK HERE) and the Business Week article (CLICK HERE) and the South China Morning Post article (CLICK HERE). EuroRaj added a different perspective. "Ukraine is also a big fertilizer supplier and exporter to emerging markets like Brazil, India, and Turkey. Ukraine is a grand scheme to mess with the BRICS, a serious violation. Hence there are no takers of the Russia isolation within the G-20 nations."

## BRICS ROAD WIDENS AWAY FROM USDOLLAR

◄$$$ FURIOUS PUTIN ORDERED PROJECT DOUBLE EAGLE TO ESTABLISH A GOLD-BACKED RUBLE CURRENCY... THE RUSSIANS PLAN TO DEPLOY A RIVAL TO THE SWIFT BANK SYSTEM, USING THEIR GOLDEN RUBLE... THEIR CENTRAL BANK WILL BE AMPLY SUPPLIED THE GOLD BARS FROM THE NATALKA PROJECT IN EASTERN RUSSIA, WHICH CONTAINS 12,500 GOLD TONS IN RESERVES... THE USDOLLAR CANNOT SURVIVE SUCH COMPETITION BY A TRUE CURRENCY... AT RISK IS THE DESTRUCTION OF THE FINANCIAL SYSTEM AND ECONOMIES OF ANY NATION WHICH REFUSES TO DO THE SAME, AND TO MAKE A SIMILAR HONEST GESTURE. $$$

Gold-backed currency is honest, legitimate, and not subject to criminality except to falsify gold bars (an American specialty under Clinton-Rubin). Russian President Putin has ordered the immediate implementation of Project Double Eagle, which would eventually lead all Russian energy supplies to be purchased in gold as a requirement. The Russian adoption on non-USD payments for their energy products will become compulsory. The quick consequence would be an end to the USDollar's reign as the global reverse currency. In plan are five distinct Ruble gold coins that contain 0.1244 troy ounces of .900 pure gold, with a diameter of 18mm, emblazoned with a shielded and crowned double eagle. The goal is to establish an alternative to both the USDollar and Euro in purchasing energy supplies. Furthermore, Project Double Eagle includes the creation of a new national payment settlement system which will allow Russia to build a foundation for a global payment system. It would offer an alternative to the Society for Worldwide Interbank Financial Telecommunications (SWIFT) banking system. The gangways, gates, and planks are moving away from the USDollar and its terror, manifested by labeling any nation wishing to conduct trade outside the USD as a rogue terrorist state. The cause was attributed to Putin's furious reaction to the US action to block a remittance from the Russian embassy in Kazakhstan to Sogaz Insurance Group. He called the action illegal and absurd by JPMorgan in early April, whereby the SWIFT system was used.

Putin also ordered Sberbank, the largest bank in Russia and all of Eastern Europe, to halt the issuance of consumer loans in foreign currency. The Ruble will move more toward a consumer currency in the EU Economy. The Russian strategy is to remove the glue that holds together the global banking system. The newly designed Russian payment system based on gold would destroy the USDollar system in a fortnight, in their words. Certain to join Russia's new gold denominated global banking alternative to SWIFT will be other BRICS nations (Brazil, India, China, and South Africa) that have supported all initiatives to circumvent USD financial abuse. These four nations have each supported the Russian position on Crimea against both the United States and European Union. The entire set of BRICS nations plus their associate nations will combine to form a critical mass, hardly operating in isolation. The impact of the conflict has begun economically. The European Union is bound by Russian natgas imports, crude oil too. Watch one nation at a time splinter off from the US position. They will not wish to fall into a virtual Third World.

To sustain Project Gold Eagle against the inevitable US-EU backlash, the Ministry of Natural Resources (MNR) in Moscow has reported that the Natalka Project has already begun production. Its endless supply of gold will be pledged to the Russian central bank in order to assure the success of this new global currency. Russia as a nation is in possession of the second largest gold reserves in the world at 12,500 tons (=400 million oz). Located in the Magadan region of Pacific Russia, the Natalka site is considered one of the largest gold deposits in the world. It contains 32 million ounces of proven and probable reserves, along with a total resource of at least 60 million oz. The site began production in April. See the essay by Sorcha Faal on the What Does It Mean website (CLICK HERE) and the Russia Today article (CLICK HERE) and the Global Research article (CLICK HERE).

The golden Ruble symbol appears in front of the central bank of Russia. The new logo of a Golden Badge of the Russian national currency has been officially adopted by the Central Bank of Russia. It will symbolize a sign of stability and security of the Ruble gold reserves of the country, according to their statement. Shown above is the symbol in front of the office of a Russian financial firm involved as both bank and stock brokerage. See the Silver Doctors article (CLICK HERE) and the In Gold We Trust article (CLICK HERE).

◄$$$ CHINA & INDIA OPTED OUT OF A POTENTIALLY IMPORTANT OECD-BACKED MEETING, STAGED AT A CRITICAL MOMENT... THE ANGLO-AMERICAN BANKERS WILL GRADUALLY LOSE THEIR FINANCIAL CORE OF SUPPORT IN THE WEST, AS THEY WILL BE STUCK WITH THEIR BROKEN TOYS, IN THE USDOLLAR AND USTREASURY BOND... THE US & UK WILL NOT BE ABLE TO DISCARD THE USDOLLAR AND USTBOND, GRAND MILLSTONES... SEVERE ISOLATION IS IN THE WORKS. $$$

The conference jointly organized by OECD did not include China and India. The two nations decided to boycott the meeting organized by the Paris-based club of rich nations. This is an important economic organization with clout and integrity. They agree on policy, make rules, and set trends. The high-profile conference will lose its sheen and luster. Both China and India formally stated concerns framed in conflict. They had specific issues of concern on aspects relating to developing countries, the oft-mentioned Emerging Markets. The two-day meeting brought together over 1500 participants, including some heads of state, but the G-77 bloc did not participate in the meeting due to concerns with certain provisions of intra-regional cooperation by Southern nations. The G-77 block is a new forum of 133 smaller developing nations. Many were the objections, such as issues over the Mexico communique that called for bold and sustained action for shared development, improved gender equality, and the promotion and protection of human rights. They found no agreement on the binding input to United Nation processes, as all member states were not present at the meeting. China and India have maintained that poverty eradication should be the main pillar of global development, and not linked with issues like human rights protection. In doing so, they expose Western hypocrisy. See the BRICS Post article (CLICK HERE).

The new trend seen on the geopolitical stage is the increasing abandonment of Western-based organizations by BRICS nations. The many other smaller developing nations will follow the Yellow BRICS Road, where equitable expanding trade, favorable lending programs, and gold trade settlement will be the norms. Next on the boycott schedule will be the Intl Monetary Fund meetings, where the USGovt is the stick in the mud. The World Bank will be sidestepped. The OECD boycott is an important elevation of the friction between East and West.

The Jackass has stated for over three years: The United States and United Kingdom will not be able to discard or escape the clutches of the USDollar and USTreasury Bond. The USD/USTB will form the rope around their necks. It will be the chain to drag them into the Third World. It is an almost impossible take to get rid of a global reserve currency, since it contains too many tentacles and cables which formerly served up advantages. Going the way of the British Pound would be extremely optimistic as an outcome. In the face of an internationalized Chinese Yuan that will be fully convertible, trouble brews with powerful widespread storm clouds. The final blow, the coup de grace, will come later with introduction of the Gold-backed Yuan and Gold-backed Ruble, along with Gold Trade Notes as letters of credit. The USDollar faces at least a 50% to 60% devaluation, that is called the shitcan in FOREX parlance. It is coming to a nearby neighborhood in Third World color.

◄$$$ RUSSIA HAS ANNOUNCED DECOUPLING TRADE FROM THE USDOLLAR... CHINA WILL RE-OPEN THE OLD SILK ROAD AS A NEW TRADING ROUTE LINKING GERMANY, RUSSIA, AND CHINA... THE BRICS NATIONS (PLUS ASSOCIATE NATIONS) WILL WORK TOWARD A NEW CURRENCY FOR RESERVE AND TRADE PURPOSES... IF AND WHEN IT GAINS GROUND, THE BRICS(A) NATIONS WILL HAVE A SECURE PLATFORM TO PLACE THEIR AMPLE SAVINGS AND TO BUILD THEIR ECONOMIES FURTHER... THEY WISH TO BE FREE FROM THE ANGLO-AMERICAN CORRUPTION AND CONTROL. $$$

Peter Koenig is an economist and former World Bank staff member. That means he had a good view from a corrupt center. He is trying to walk away from the dodgy bank and offer some solid analysis. He issued a surprisingly solid attack of the banker cabal and BIS Basel fortress. He summarized the big threat to the USDollar system. He wrote, "Russia has just dropped another bombshell, announcing not only the de-coupling of its trade from the dollar, but also that its hydrocarbon trade will in the future be carried out in Rubles and local currencies of its trading partners, no longer in dollars. Russia's trade in hydrocarbons amounts to about $1 trillion per year. Other countries, especially the BRICS and BRICS-associates (BRICSA) may soon follow suit and join forces with Russia, abandoning the petro-dollar as trading unit for oil and gas. This could amount to tens of $trillions in loss for demand of petro-dollars per year (US GDP about $17 trillion as of December 2013). [That it is] leaving an important dent in the US economy would be an understatement."

Koenig went on to highlight developments by China to rebuild the Old Silk Road into modern day form, as a new trading route linking Germany, Russia, and China. The hidden benefit is economic development of the nations along the road, especially in Central Asia. They are eager. The unspoken fact about the Chinese Economy is that its western provinces remain poor and under-developed. The Beijing leaders have specifically cited the Lanzhou New Area in their northwestern Gansu Province. It languishes as one of China's poorest regions. Chinese President Xi Jinping made the Silk Road comments when visiting Duisburg, the world's largest German inland harbor, an historic transportation hub of Europe and of their Ruhr steel industry center. Witness blessings over the upcoming Eurasian Trade Zone. Interestingly, Koenig pointed out how the Western media has to date been oblivious to both events, the Russian non-USD energy trade with BRICS implications, and the Chinese Silk Road with Eurasian Trade Zone development implications. He wrote, "It seems like a desire to extending the falsehood of our Western illusion and arrogance, as long as the silence will bear. What looks like a future gain for Russia and China, also bringing about security and stability, would be a lethal loss for Washington."

The game is on to lure Germany into the Eurasian TZ, which Koenig identifies. The nation is situated on the western end of the new axis, and on the eastern end of the old axis. It is the main economic driver of Europe with the world's fourth largest economy (US$ 3.6 trillion GDP). The Jackass exp ects Germany to play both sides effectively and adroitly, but eventually giving capital emphasis and political weight to the East. It is a major swing nation which controls in effect the great prize of Europe.


Koenig anticipates the BRICS nations will launch a new currency, or more precisely formulate a new currency basket. It will be used for reserve banking purposes and for trade settlement purposes. Indications are for it to be the IMF super sovereign reformed currency basket, which includes the Russian Ruble, the Chinese Yuan, even Gold & Silver. He implied that the BRICS nations will include their own currencies, like the Indian Rupee and Brazilian Real and SAfrican Rand. Recall that BRICS nations are loaded with resources and mineral assets, in both production and ownership. India is rumored to own on the order of 20,000 tons or more of citizen gold. The constant refrain is that Gold never leaves India. The BRICS(A) nations want to put their savings in a safe place in a safe form, free from the ravaging grip of the Anglo-American banker elite corruption and control. They wish to put it to use. Along with the new BRICS(A) currency will come a new international payment settlement system, replacing the SWIFT and IBAN exchanges. Koenig offers the essay in strong prose. He mentions breaking the hegemony of the infamous privately owned Bank for International Settlements (BIS) in Basel Switzerland, openly accusing them as currency and gold manipulator. He is taking a shot as his old master, with descriptions of secret meetings, global control agenda, elite members.

Koenig offered a cross between an objective forecast and conclusion framed in desire. He wrote, "The BIS is known to hold at least half a dozen secret meetings per year, attended by the world's elite, deciding the fate of countries and entire populations. Their demise would be another welcome new development. As the new trading road and monetary system will take hold, other countries and nations, so far in the claws of US dependence, will flock to the new system, gradually isolating Washington's military industrial economy and its NATO killing machine. This Economic Sea Change may bring the empire to its knees, without spilling a drop of blood. An area of new hope for justice and more equality, a rebirth of sovereign states, may dawn and turn the spiral of darkness into a spiral of light." These are feisty fighting words directed against the World Bank, the IMF, and the BIS, the elite trio of bank fortresses. See the Koenig essay on Information Clearing House (CLICK HERE). As footnote, the NATO bases are used by the USGovt security agencies in narcotics distribution and logistics.

◄$$$ ANGERED BY CONFRONTATIONS, THE RUSSIAN PARLIAMENT HAS ORDERED COMPLETE USDOLLAR ABANDONMENT... ALTERING EXISTING CONTRACTS WOULD BE DIFFICULT, BUT MUTUAL CONVERSION TO GOLD BULLION WOULD BE PRACTICAL... RUSSIA HAS VIVID MEMORIES OF PAST WESTERN GAMING OF THE CRUDE OIL MARKET TO CRUSH THEIR NATION. $$$

Mikhail Degtyaryov, a member of the Russian Parliament from the conservative nationalist party spoke boisterously in an interview with Izvestia. A group of Lower House MPs are urging Russian oil & gas producers and traders to stop using the USDollar. They wish to remove Russia from a vulnerable position with the Western sanctions. He pointed out that Russia already had a bilateral agreement with China, allowing payment in national currencies. He is known for drafting an official bill banning usage of the USDollar in Russia, and also banning the Euro usage.

The combative comments by Degtyaryov rang clear. "The dollar is evil. It is a dirty green paper stained with blood of hundreds of thousands of civilian citizens of Japan, Serbia, Afghanistan, Iraq, Syria, Libya, Korea, and Vietnam. Our national industrial giants will not suffer any losses if they choose to make contracts in Rubles or other alternative currencies. Russia will benefit from that. We should act paradoxically when we deal with the West. We will sell Rubles to consumers of our oil & gas, and later we will exchange Rubles for Gold. If they do not like this, let them not do this and freeze to death. Before they adjust, and this will take them three of four years, we will collect tremendous quantities of Gold. Russian companies will at last become nationally oriented and stop crediting the economy of the United States that is openly hostile to Russia." The battle lines are drawn on the financial front. The United States is seen as deriving taxes from USDollar usage in trade.

Andrey Kostin, head of big bank VTB, urged Russia to start transitioning to Ruble payments with all its trading partners, including China and Western Europe. He urged the transition to begin as soon as possible, and that exporting companies should lead the way in adopting the change. A word of caution came from Yakov Mirkin at the Trade & Industry Chamber, the committee for financial markets. He reminded all that the international practice was to calculate oil & gas prices in USDollars as the international reserve currency. Doing otherwise would swim against the current in his words. The world's biggest oil company Rosneft made a sobering comment also. The company was bound by contract obligations and the fast switch to a different currency was simply impossible.

Parties cannot switch currencies in an already signed contract. Despite USD-based contract stipulations however, nothing stops parties from converting USD to Gold. New contracts will not feature USD payments. The future paths are being redesigned, along with uncommitted future oil supply. Russia controls a significant amount of oil coming out of Iraq. Any structured move to mimic the Iran barter swap based in Gold payments would be a crucial gesture and powerful blow against the USDollar. Look to the day when crude oil is priced in Rubles or Yuan, not USD terms. When that day comes, and it comes, it will be the Russia & China duo, and not the US & Saudi Arabia duo who will be the price setter. OPEC is soon to be supplanted. The Russian natgas supply contracts will enter the ring very quickly. China and India have already acknowledged this new pricing direction with full agreement. They wish to avoid oil price volatility created by the New York and London banks. More than any other nation, Russia has clear memories of the drastic oil price declines in the past. Vast swings in the oil price have reeked havoc with Russia. In a single decade, the oil price went from $30 to $10 to $100 in a military-like slam. In year 2009 another huge swing took place in price. The fluctuations were engineered by the Western banker cabal. They operate levers with motive. See the Russia Today article (CLICK HERE).

◄$$$ BRICS NATIONS ORGANIZE TO SET UP THEIR OWN IMF BANK FOR REGIONAL DEVELOPMENT... THE BRICS DEVELOPMENT FUND CAN SAFELY MORPH INTO A BRICS CENTRAL BANK FOR CONVERSION OF TOXIC SOVEREIGN BONDS (LIKE USTBONDS) INTO GOLD BULLION... BRICS AIM TO FINISH DEVELOPMENT BANK PREPARATIONS BEFORE THE JULY SUMMIT... THE USGOVT HAS BECOME A GRAND OBSTACLE ON CONTINUED DELAYS FOR VOTING ON KEY ISSUES, PROMPTING THE G-20 TO TAKE ACTION WITHOUT THE UNITED STATES... MORE ISOLATION COMES. $$$

The Intl Monetary Fund is being cut off from the upstart feisty BRICS group, no more Western funding or control strings. The IMF will soon cease to be the world's only organization capable of providing international financial assistance. The BRICS countries are setting up an alternative fund expected to use a currency reserve pool with a large associated development bank. The BRICS countries (Brazil, Russia, India, China, and South Africa) have made significant progress in setting up structures that would serve as an alternative to the Intl Monetary Fund and the World Bank. These Western offices have been implicated in devious control room functions, at the hands of the US, UK, and EU. A currency reserve pool (instead of IMF) and a BRICS Development Bank (instead of World Bank) will begin operating as soon as in 2015, the Russian Ombudsman Large Vadim Lukov promised. Brazil and Russia are both busy drawing up official charters. Each nation wishes to host a HQ site, so expect each nation to have a main office.

The BRICS group plan to support infrastructure projects has been slow in coming, with prolonged disagreements over its funding, management, and headquarter location. Best to have several. The group has struggled to take coordinated action on most issues in the past year, following the great disruptions on USFed central bank monetary policy changes, which have turned out to be on empty words much more than concrete action. The Jackass believes the USFed has engaged in Taper Talk to dupe the US markets into believing the corrosive bond monetization will be halted, but also to harm the Emerging Markets from a stampede of exiting hotmoney. South African Finance Minister Pravin Gordhan spoke to journalists after a meeting of the BRICS finance ministers in WashingtonDC. He said, "We have made very good progress on the new development bank and most of the formal documentation is ready. There will be a few issues left, which will be resolved between now and the middle of July, when we hope the summit will take place. On the contingency reserve arrangements, we are also almost 90 percent of the way towards agreement. Formal documents are ready and we have the basis to reach 100 percent agreement before the summit."

The purpose of the super fund is toward crisis management, a currency reserve pool to pull financial markets out of the pit, away from sharp declines. Think of it as an Emerging Market Plunge Protection Fund. The BRICS currency reserve pool is a form of insurance, a cushion of sorts, to deal with potential severe financial problems or budget deficit supplements. The motivation for the reserve pool has been made more clear during the recent Emerging Market declines. Problems could be resolved with balance of payments (trade deficits) by making up a shortfall in foreign currency. Assistance could come in the event of a sharp devaluation of the national currency or massive capital flight due in hotmoney exits prompted by vicious unliateral USFed policy shifts. Sudden banking system insolvency crises could also be addressed by the reserve fund. The overriding goal is to deal with extreme problems without the use of the USDollar or its devious agencies, all too often stacked with security agency personnel.

The BRICS countries have already agreed on the amount of authorized capital for the new institutions: $100 billion each. The start-up capital of $50 billion would eventually be built up to $100 billion. The share distribution is still to be decided, a BRICS source said, with much pressure for China to contribute an oversized amount, due to their huge reserves at almost $4 trillion. Alternative funding plans have been floated, like China at $41 billion, with Brazil, India, and Russia each at $18 billion, followed by South Africa at $5 billion. The alternative scheme would reflect the size of individual economies. The $100 billion fund should be quite sufficient for five countries to manage reserve crisis funding. The IMF promotes false information that it is in command of $369.52 billion set by Special Drawing Rights (SDR). Rubbish, since only pledges, and the USGovt pledge has been dishonored.

Gradually cooperation will be established without the use of the USDollar, but the process will take time. On a temporary initial basis, it has been decided to replenish the authorized capital of the Development Bank and the Currency Reserve Pool with USDollars. However, expect that soon the replacement by the Ruble or Yuan will come, given the ongoing threat of US and EU sanctions against Russia. Furthermore, and not an insignificant event, Russia plans to launch a domestic alternative to Visa and Mastercard.

The BRICS countries strive to alter the structure of grant loans. The goal is to arrange the project finance structure in such a way as to benefit the individual developing nations, and not the US, UK, or EU as controllers. The purpose of the bank is to primarily finance external rather than internal projects. The founding countries believe that they are quite capable of developing their own projects themselves. For example, a loan to an African country for a hydro-power development program would involve BRICS nations to supply their equipment or act as the main contractor. Control would not go to the Western operators, where decisions on diverted profits or power would be possible. Cutoffs would not come from the London office, but instead from BRICS national offices. The creation of the BRICS Development Bank has a political significance too, since it allows its member states to promote their interests abroad. The strengthening position of these fast growing countries is being highlighted. Lastly, the BRICS countries will necessarily quit the World Bank or the IMF, at least not initially.

The BRICS initiatives have been spurred by IMF quagmire caused by the USGovt inaction. The USCongress has failed to ratify reforms to the Intl Monetary Fund that would double the Fund's resources and give more say (voting rights) to emerging markets like the BRICS nations. It all seems like a strategic stall by the US side. Gordhan summarized, saying "We have discussed our mutual concerns about the slow pace of the IMF reforms and the kind of stalemate that we find ourselves in currently. We hope to work with everyone to find an equitable solution. But clearly a lot depends on the United States. We believe it is in the collective interest of all us to have a strong and well-resourced IMF, but also an IMF that is increasingly even-handed in the way it approaches both advanced economies and emerging markets as well." The feisty Group of 20 nations, led in spirit and principle by China, wishes to forge ahead. They have suggested moving ahead on the reforms without the United States. They are on the verge of changing the entire voting rights. Without funding channels come power to reform radically. A number of options are being explored. The BRICS bloc of emerging economies will have all preparatory work done for setting up its development bank by the group's summit in July, the South African Finance Minister Gordhan promised. See the Russia Beyond The Headlines article (CLICK HERE) and the Indian Reuters article (CLICK HERE) and the Zero Hedge article (CLICK HERE).

◄$$$ BRICS TO SET UP AN EXPORT-IMPORT BANK... THE EXIM BANK WILL BE DEVOTED FOR ASEAN INFRASTRUCTURE PROJECTS, WHICH IS WHAT THE BRICS DEVMT FUND WAS ORIGINALLY CLAIMED FOR... FUNDING DETAILS ARE SKETCHY, BUT PROJECT AMBITIONS ARE OFFERED IN CONSIDERABLE DETAIL... AFRICA IS ALREADY A MAIN TARGET REGION FOR THE EXIM BANK. $$$

The Export-Import Bank of China (EximBank) has provided credit support to 46 transportation infrastructure projects in the Assn of Southeast Asian Nations (ASEAN) countries by early 2014. The EximBank, one of the world's leading lenders, plays a critical role in the growth of China's external trade. It casts a long shadow even to the great African continent, the origin of many supply chains. With preferential loans from China, 24 highways, three railways, one port, three airports, and nine bridges have been built, rebuilt, or renovated in ASEAN countries, according to the pervasive bank. Their projects include a national railway system in Cambodia which stretches 2170 kilometers, the Second Penang Bridge in Malaysia which forms the longest seabridge in Southeast Asia, and the Luang Prabang Airport in Laos. The new Chinese leadership of President Xi Jinping has placed great emphasis on deepening economic links between China and ASEAN nations, their direct Asian neighbors. Meanwhile and not to be overlooked is the significant funding role that EximBank has in Africa, where it is the biggest lender. The current projection is for EximBank to account for 80% of a $1 trillion financing for the African continent through year 2025. See the BRICS Post article (CLICK HERE). View the EximBank as a regional IMFund with local dedication to China's neighbors.

◄$$$ DUMPING THE DOLLAR COMES... RUSSIAN OIL FIRM GAZPROM NEFT EXPECTS ASIAN BUYERS WOULD BE WILLING TO USE EURO CURRENCY... CURRENCY CONVERSION COSTS MUST BE AGREED UPON. $$$

Gazprom Neft is a large Russian state-controlled oil producer, only loosely associated with Gazprom. Upon queries, it has received positive responses from Asian clients about the possibility of using Euros as a settlement currency instead of the USDollar. The USGovt is pushing the Eastern giant to work around the USD payment system. Company executive Alexander Dyukov has discussed with buyers the possibility of switching contracts to Euros in a formal sense. The majority would comply, with 95% willing and prepared to make the switch. Gazprom Neft ships 30,000 barrels per day of oil eastward. Three buyers in Japan and China said they had been approached by by the oil supplier firm to settle oil payments in currencies outside the USDollar. Two of the buyers said they were still considering the proposal, while the third said they had bought crude using Euros before and did not see it as a problem. One small obstacle remains, pointed out by a Japanese buyer from the ESPO pipeline end. At issue is who will bear the currency exchange cost. See the Strat Risks article (CLICK HERE).

◄$$$ RUSSIA, KAZAKHSTAN, AND BELARUS ARE MAKING PLANS FOR A NEW JOINT CURRENCY... ITS TIMETABLE WILL SURELY BE MUCH MORE RAPID THAN IN TEN YEARS, DUE TO NECESSITY AND EXPEDIENCE... EXPECT OTHER REGIONAL CURRENCIES TO CROP UP AND BE EMULATED, WITHIN THE EURASIAN TRADE ZONE... CRITICAL MASS GROWS AGAINST THE USDOLLAR. $$$

In May 2014, the presidents of Russia, Kazakhstan, and Belarus will sign an agreement on the establishment of the Eurasian Economic Union. Portions of the agreement are devoted to joint monetary policy and to financial markets. Their central banks will tackle issues concerning national currency exchange rates, regulation of banking & insurance, and the securities market. According to the Moskovsky Komsomolets newspaper with a source within the Eurasian Economic Commission (EEU), the document cites the establishment of the Eurasian Central Bank. Regard the Trade Zone to have a crucible forming with two closeby former Soviet Republics. They are hammering out the makings of a supra-national regulator of the joint currency, to be emulated more widely. The Eurasian Central Bank will be subordinated to the council of presidents or prime ministers of the EEU.

Expect a regional currency to be formulated, the likely name to be the Altyn. The new currency is to be introduced in a matter of a few years, due to sanctions and international pressures. The idea of ​​the new joint regional currency belongs to Kazakh President Nursultan Nazarbayev. In 2012, his promoted concept found support with Vladimir Putin and Dmitry Medvedev. In Russia, altyn was the word to refer to three-kopeck coins. The Kazakh President is a longtime champion of a new supra-national reserve currency. He believes the USDollar is an illegal and non-competitive means of payment. Nazarbayev has long been a critic of the recognized world currency, calling it illegitimate, and going further, calling the world currency market an uncivilized market. The Kazakh leader believes that the world is moving towards a new monetary system, from what he labeled as defective capitalism to the new capitalism that would be based on a non-defective currency. It would promote the internal growth of global wealth. See the Russian Pravda article (CLICK HERE).

As rejoinder to the story, little Tajikistan has pledged security cooperation with China. The Asian giant and Tajikistan have improved political mutual trust, enhanced cooperation in various fields, boosted coordination within the SCO cultural framework, and supported each other on issues of major concerns since the strategic partnership was established one year ago. Cross border issues and criminal investigation will be part of the accord. The two countries will work together to fight organized crime such as drug trafficking, and to protect online information. In addition, Modova wants much closer ties with Russia, maybe annexation. Georgia wants to be part of the trade zone, and so does Latvia. The Eurasian trade partner list grows, as more nations sign on. See the Xinhua article (CLICK HERE).

## EURASIAN TRADE ZONE PROGRESS

◄$$$ RUSSIA EXTENDS TIES TO TURKEY, THE UPCOMING SOUTHERN SWING STATE TO THE EURASIAN TRADE ZONE... RUSSIA DONATED $1.39 BILLION FOR ITS FIRST NUCLEAR PLANT... KEEP IN MIND THAT FRANCE (FELLOW NATO MEMBER) IS A LEADING NATION IN THE NUCLEAR TECHNOLOGY BUSINESS... ANKARA IS LOOKING EAST. $$$

The role played by Turkey is extremely complicated and multi-faceted. Most roles they play are in opposition to Western interests. The only clear recent pro-West role is acting as US-French-Saudi broker in the new endless Syrian War. The longstanding pro-West role of Incirlik NATO base usage for transporting US heroin is the constant. The Turkish banks act as intermediary in Iran oil payments made in gold. The Turks are not inhibiting Russia on the Gazprom pipeline traffic, cooperating fully in flow through Greece. The Turks are exposing the corrupt bankers with close Western ties. The latest is that Russia will donate $1.39 billion for the first nuclear plant in Turkey. The gesture is not small, and might be a return favor in a subtle pact, my EuroRaj source suspects. Turkey is loaning out its territory for the Saudi usage against Syria, but only to a limited extent and little more. To be sure, forces inside Turkey to shoot down airplanes, to house Al-Qaeda elements, and to offer staging ground for incursions into Northern Syria frequently, all these aid the West. A proxy war is taking place in Syria indirectly with Russia. That all might change very soon. For the limited role against Syria, the Turks might have won a gift from Russia, who will be in a position to call in favors. The nuclear plants are just another Indirect Exchange, meaning Russia will fund the project with USTBonds as cash. They will be designed, constructed, owned, and operated by the Russians.

Some details. Turkey has received $1.39 billion from Russia for the construction of Turkey's first nuclear power plant in Akkuyu, this being the first down payment in 1Q2014. Russia has a state-run nuclear company named Rosatom. Its subsidiary Akkuyu NGS operates in Turkey, and has started increasing its investments. Ground breaking on the construction will begin as soon as the environmental evaluation report is approved by the Ankara officials, followed by key infrastructural investments. The entire Akkuyu NPP project is estimated to cost around $20 billion, of which $1.8 billion will be spent in 2014. A ripe $3.5 billion worth of equipment is expected to be used in the construction process. The Russian funds will be dedicated toward the infrastructure for the plant, in addition to extensive road work, power lines, water pipelines, temporary housing, and cranes. If the project license is approved, the reactor's construction is estimated to begin in 2016, and to be operational by 2020 with the entire plant being fully operational by 2023. The Russian energy company Rosatom has other deals at work. The firm signed an agreement in 2011 to build and operate a nuclear power plant with four reactors in the province of Mersin on Turkey's Mediterranean coast. The aim is to have the plant fully operational by the Turkish republic's 100-year anniversary in 2023. See the Hurriyet Daily News article (CLICK HERE).

EuroRaj comes from the India-Turkey-Iran triangle with London bank connections. His opinion is valuable. He wrote the following. "Turkey is just a broker in the Syria war. They stand ready to take their opportunistic cut. The infantry, men, and cannon fodder are the illiterate Saudis trained by the Al-Qaeda (run by the CIA at Langley). The equipment (arms, ammunition, logistics) is provided by the US, UK, and France but funded by the Saudis and Qataris. The war is basically a massive project funded by Saudi and Qatar, an exported war fought by mercenaries (just like Ukraine). Turkey is loaning its territory and that is all, and for that it must be asking for a small payout. Similarly, Turkey facilitates Iran by selling USD/EUR and buying Gold, with a nice cut taken there. From a very big picture, Turkey is the geographical and cultural bridge between the East and West. It exploits it by taking a toll where feasible. Nothing surprising about what Turkey is doing. They see better future opportunities with the East than the West." Summarize to conclude Turkey is the consummate bridge nation that takes tolls from numerous key positions, not just at the Bosporus Strait. This London banker with Eastern heritage has an excellent grip on events in his region. In other conversations, he mentions how Turkey is making other important gestures to the Eastern powers, offering a role, making gestures, to become a player in the Eurasian Trade Zone. In the Jackass opinion, three nations are the swing states. Turkey, Ukraine, and Germany will all turn eastward to join the trade zone, all in time, with Ukraine last.

◄$$$ RUSSIA & IRAN ANNOUNCED A $20 BILLION OIL FOR GOODS DEAL IN MARCH, WHICH IS HAVING FAR REACHING IMPLICATIONS... IT HAS GENERATED INDEPENDENT NEW THREATS, WHILE EXPOSING THE DESPERATE AND FUTILE (IF NOT PATHETICALLY HOPELESS) SITUATION FROM THE USGOVT STANDPOINT... THE USGOVT CONTINUES TO WARN RUSSIA OVER ANY OIL-FOR-GOODS DEAL WITH IRAN... THE UNITED STATES PAPER TIGER IS GRADUALLY BEING REVEALED... IT LAUNCHES FRANTIC SANCTIONS AGAINST ITS OWN PARTNER NATIONS, WITH THE IMPACT BEING FURTHER ISOLATION. $$$

Details on the oil for products deal were provided in the March report. The kicker in the deal was nuclear refinement equipment, like centrifuges or perhaps raw uranium supply, in addition to missiles from Russia. The most objectionable part of the complex large pact is the nuclear and military components. The entire deal has no USDollars involved in the funds flow. Such is the nature of Russian response, when the USGovt and JPMorgan pushed Russia into the corner. It is a USD-free corner. The pre-emptive JPMorgan strike against Russian Embassies using the SWIFT weapon will have a following chapter that reads much like Iran's response. They promptly were forced to indicate transactions in Rubles, Yuan, and Gold bullion in exchange for their vast energy supply.

The USGovt using its JPM hand has lit the fuse to blow up the Petro-Dollar, while the deed accelerates the formalization of the Eurasian axis of China, Russia, and India. The backfire against US interests is fast becoming a blossoming screwup. To be sure, Russia will continue to telegraph its use of barter, Rubles, Gold, and perhaps Yuan in trade. Watch for the arrival of other regional currencies also. They will continue to trade in USDollars, as payment for large scale investments and acquisitions. They will dump USTreasury Bonds, directly and through proxies. The Western blockade appears to have backfired, as the Jackass forecasted, with the biggest casualty to be the Petro-Dollar itself. It is the economic and banking foundation for the USDollar. The Russian solution will copy the Iran workaround, with the effect being a whiplash to the White House neck while driving an aging dilapidated jalopy bearing an expired USD/USTB license plate.

Iran and Russia make progress on the oil-for-goods deal, worth up to $20 billion. Tehran will boost vital energy exports in defiance of Western sanctions, and keep the cash flow going, an important aspect of the deal since Russia does not need crude oil. Expect Russia to act as intermediary on Iranian oil sales with several third parties. Think of the deal as creating multi-line highways with trucks and bank payments, done to work around the US sanctions, thus averting the US wrath. The barter deal would see Moscow buy from Iran up to 500,000 barrels per day in exchange for Russian equipment and goods, with an asterisk of nuclear equipment and advanced military missiles (despite continuous denials). The Russian side seeks to lock in a crude oil price to the contract deal.

USDept Treasury Secretary Jacob Lew met face to face with Russian Finance Minister Anton Siluanov. He threatened the Russians with empty words and vacant threats. He promised, "A deal between Russia and Iran involving oil-for-goods [xxx] could trigger sanctions against any entity or individual involved in any related transactions." The deal would run counter to an agreement between Iran and six world powers, including the United States and Russia, made in Geneva. At the indicated summit, Tehran promised to curb its nuclear program in return for a modest easing in Western sanctions. Conclude that sanctions imposed by the USGovt would further isolate the United States, and paint the US as the rogue nation. The Keystone Cops running around the White House threaten more sanctions, which should be viewed as more self-inflicted gunshot wounds in the chest, legs, and testicles.

In American eyes, Russia is explicitly violating UN sanctions against Iran, with a key Security Council vote to render the sanctions enervated and toothless. From their viewpoint, Russia is simply conducting trade in defiance of the paper tiger lurking in the weeds more like a snake. The entire bilateral deal is a grand F.U. to the United States, the British, the New York & London banks, the United Nations, and the Intl Monetary Fund. See the update story on the Zero Hedge articles (CLICK HERE and HERE) and the Reuters articles (CLICK HERE and HERE) and the Haaretz article (CLICK HERE).

◄$$$ IRAN HAS INAUGURATED A DIRECT SHIPPING LINE TO CHINA... IRAN IS CHINA'S THIRD LARGEST SUPPLIER OF CRUDE OIL, THE BASIS OF $45 BILLION IN ANNUAL TRADE... THE EURASIAN TRADE ZONE IS BEING BUILT, BRICK BY BRICK. $$$

In mid-April, Iran inaugurated a shuttle shipping line between its southern port of Bandar Abbas and China's Dalian and Lianyungang ports. Solid advantages are provided as a result to the cargo owners. Time of transit is reduced; trans shipment and feeders are eliminated; reciprocity fees are reduced; direct supply enabled; lower prices presented; winners all around. The cargo owners in Iranian ports will easily be persuaded to ship their commodities through the national container line. Iranian and Chinese officials have on several occassions emphasized the need for the further expansion of bilateral relations and exchanges, specially in trade fields. During an April meeting in Tehran, Iranian Deputy Foreign Minister Morteza Sarmadi and the outgoing Chinese Ambassador to Tehran, Yu Hongyang, explored avenues for firming and reinforcing mutual cooperation. The ambassador was quoted to say, "China attaches a lot of importance to the reinforcement of ties with Iran as an important and trustworthy partner. There are vast potentials for continuing the upward trend of the two countries' ties in all the various fields." Trade between Iran and China in the past year was estimated at $45 billion. Iran is currently China's third largest supplier of crude, providing Beijing with roughly 12% of its total annual oil consumption. According to the figures released by China's General Admin of Customs in January, China's crude oil imports from Iran reached 2.5 million tons in December 2012. The nation recently won a renewal of exemption from the USGovt oil embargo against Iran. See the Fars News article (CLICK HERE). China loves Iran energy deals, since they aid in undermining the Petro-Dollar and hastening its demise.

◄$$$ IRAN READY TO DO BUSINESS WITH BOEING AND GENERAL ELECTRIC, BUT ON A LIMITED BASIS... SERVICE PARTS TO OLDER IRANIAN AIRCRAFT IS THE CENTRAL FOCUS... REGARD THE RELAXED CURBS AS A TEST FOR FUTURE IRAN AIRCRAFT ORDERS, WITH AIRBUS THE LIKELY WINNER. $$$

The USDept Treasury awarded the US-based firms Boeing and GE a license to sell spare parts to Iran. The move is part of a temporary sanctions relief deal that began in January. The deal breaks a long trade silence between the US and Iran. The permit enables the service of 18 engines sold to Iran in the late 1970s. The service will be completed at facilities owned by GE or the MTU Aero Engines in Germany. Spare parts will be provided also by Boeing, the world's largest airplane company. They will be in communication with Iran to determine which spare parts will be exported. The granted license does not extend to sales of new planes and limits the company to only selling parts to ensure the safety of older planes purchased by Iran before the 1979 revolution. As such, it is a limited new open window, appealing to safety.

Iran owns an aging fleet of jet aircraft, having long passed their service life. They need aircraft replacements and parts on a large scale. Over the past two decades, Iran has had the misfortune of over 200 accidents, and over 2000 related deaths. All business activity between the US and Iran terminated in 1980 with the glaring hostage incident, followed by a hostile Ayatollah regime. The relief deal was struck between Iran and six world powers (US, UK, China, France, Germany, Russia) in November, as part of the Geneva Summit talks. Under the agreement, Tehran receives sanction relief in return for steps to curb its nuclear program. So Iran receives an open window, in return for nothing, since they have no nuclear weapon program. It is all US propaganda to obscure the fact that Iran sells oil & gas outside the USDollar, and the US wants to appear to make peace. Furthermore, the deal included easing restrictions on the trade of petro-chemicals and precious metals, as well as an insurance provision for oil shipments. The ban on vessels that transport Iranian crude will also be lifted as part of the Joint Plan of Action. See the Russia Today article (CLICK HERE). What comes next is Iran telling the US and Europe that they wish to make multi-$billion aircraft orders, on condition that restrictions are also lifted on their oil & gas sales and bank transactions for energy payments, even when transacted outside the USDollar sphere. Expect Iran to make some large AirBus orders, not Boeing, unless curbs are much more widely relaxed. Once more, the US will be isolated.

◄$$$ ON THE EURASIAN CORRIDOR PROJECT, CHINA CONFIRMED PLANS TO INVEST $5 BILLION IN RUSSIA'S FAR EAST TO UPGRADE RAIL AND SEA ROUTES... THE EURASIAN TRADE ZONE INFRASTRUCTURE IS COMING TOGETHER, AFTER A TRIAL RUN... KEY WILL BE AVOIDANCE OF THE SUEZ CANAL... THE TWO ASIAN GIANTS MUST SUPPORT THE BILATERAL TRADE SOON TO REACH $100 BILLION. $$$

Tensions with the West motivate increased cooperation between Russia and its Eastern neighbor China. The China Devmt Bank has confirmed its plans to invest $5 billion in the eastern frontier of Russia. Investments will be channeled to regional economic zones toward large infrastructure projects. Russia has committed to upgrade transit routes to manage cargo coming from the Asia-Pacific region to Europe. In concert, the Chinese Govt will revitalize the Great Silk Road, which will require the cooperation of various nations such as India and Turkey. The Russian Far East Development Minister Alexander Galushka is making the news. The Silk Road name is symbolic of a land and sea transport corridor for the purpose to link Asia and Europe, Galushka claimed, in keeping with the ancient route that connected China and the Mediterranean through Persia centuries ago. Russia will invest $18 billion to upgrade and modernize the Trans-Siberian and Baikal-Amur railroads, thus fortifying the land routes.

The trade routes will be reinforced by a seaway to the north. Galushka said, "Speaking of the Silk Way, it is necessary to mention the Northern Sea Route, which has a considerable advantage over the traditional seaways connecting Europe and Asia [via the Suez Canal]." The route that crosses the icy waters of the Russian Arctic is considerably shorter in time and saves on diesel fuel. According to the minister, the northern route is on average 25% cheaper than the traditional one through the Suez. The other hidden benefit is no interference by the US or British Navy waiting at the canal mouths. Some recent precedent exposed the northern arctic route for benefits. In the summer of 2013, Russian icebreakers led the first Chinese commercial ship through the Northern Sea Route to Rotterdam. It reached the destination 15 days earlier than it usually takes to go from China to Europe through the Suez Canal. Annual trade between Russia and China is growing rapidly, currently at almost $90 billion. It requires the circulatory system to transport the cargo, with railways and shipping routes the preferred methods. The Eurasian Trade Zone infrastructure is coming together. Upgrade of the two major trans-continental railroad lines is basic, which will complement the massive network of Russian-German railways. The formalization of the northern sea route logistics is coming together. See the StratRisks article (CLICK HERE).

◄$$$ JAPAN IS WORKING CLOSELY WITH RUSSIA ON DEVELOPING THE SAKHALIN ISLAND NATGAS WORKS... GRADUALLY BOTH JAPAN AND SOUTH KOREA WILL BE PULLED INTO THE EURASIAN TRADE ZONE... THE ATTRACTION WILL BE EFFICIENCY, EXPEDIENCE, AND LOWER COST. $$$

In February, the Jackass did a radio interview with the Plane Truth, the host residing in Tokyo Japan. Something important was learned. In the last few months, Russia has had 100 petroleum engineers in Japan working on the Sakhalin Island natgas project. The Russian workers have no VISAs, just working hard. They are working to connect Sakhalin natgas via pipelines and LNG stations, with an openly stated goal to connect to South Korea and Japan. Plane claimed the news is all over the Tokyo press that Japan is joining forces with Russia in a big new quantum leap commitment on the energy front to extend the Pacific Rim northward. He also mentioned that Japanese Govt officials just kicked out the top USMilitary head from Japan. He concluded something big is brewing, tensions rising, new alignment in progress. We concluded together that Japan is putting much of its full weight behind the Eurasian Trade Zone, but the Western press does not cover the news item. Much of his information came from personal reading of technical information in Japanese, in which he is fluent. The vengeance of Fukushima will not be covered here, but it might have invited an emphatic strategic reaction.

The Sakhalin project could be used as a seminal project to provide linkage between SKorea and Japan, both nations to eventually become significant entries into the Eurasian Trade Zone. The linkage will guarantee cheap natgas supply over long-term commitment. Together with Russia and China, the big four Asian giants will form the core of the trade zone along with India for its Asian half. Most stories on Asian economic unification are carefully omitted in the Western press. Plane found it very curious that so much has been written about the entire project, but only in Japanese language. Something big is brewing. He made a very big deal about the 100 Russians having no formal VISA papers, as red tape burokracy has been avoided in expedience. Confirmation on the story comes from Royal Dutch Shell. Executive VP of Shell Integrated Gas, Maarten Wetselaar remarked on the Sakhalin project. "We are starting to do some more serious design work on the third [supply] train. When that is finished, we will look at what the best timing is to take an investment decision." It is currently the only Russian project that supplies LNG to Japan and South Korea, which happen to be the world's biggest LNG importers. See the Wall Street Journal Stream article (CLICK HERE).

◄$$$ RUSSIA MADE A CRITICAL DEBT FORGIVENESS IN ORDER TO FACILITATE EXTENSION OF A NATGAS PIPELINE ACROSS NORTH KOREA... IT MEANS A WRITE-OFF OF 90% OF THEIR SOVIET ERA DEBT... SHIPMENT TO SOUTH KOREA AND JAPAN IS TO BE ENABLED, FURTHER CONNECTING TO THE ENTIRE PACIFIC RIM... THE RUSSIAN STRATEGY TOWARD ASIAN MARKETS IS ALMOST COMPLETE. $$$

The Russian Parliament has agreed to forgive almost $10 billion of North Korea's debt that dates back to the Soviet era. The deal is expected to facilitate the construction of a natural gas pipeline to South Korea across the obstructive wrecked Stone Age state. Amazingly, the GDP of North Korea's pathetic tattered moribund economy is a trifling two percent of the size of neighboring South Korean GDP. The Russian construction project plus transit fees could possibly lift the NKorean GDP by double. The giant Russian Gazprom has long dreamed of building a gas pipeline from its Chinese stations across North Korea to South Korea for supplying Pacific Rim customers. The goal is to ship 10 billion cubic meters of gas annually to SKorea. Moscow has responded to European conflict and challenge with a vast plan to diversify its energy sales to Asia away from Europe. While Russia strives to expand and develop the Eurasian Trade Zone, the duped Europeans follow the aggressive nazi nitwits out of WashingtonDC in hopes to cut dependence upon Russian oil & gas.

The US, UK, EU trio of losers, socialists, fascists, and lords over charred financial fields wish to revive the Old Cold War foe in one of the most absurd pathetic examples of political and economic stupidity and perdition on global stage display during the entire modern history era. The West, led by the US losing team of barely hidden nazis, walked into the Ukraine trap set by Putin. Their reward will be reduction of Russian natgas supply and obstructed Iranian natgas supply. The culmination of hapless suicidal USGovt sanctions response, going far past the Korean deal, is the Energy Deal of the Century between Russia and China. Moscow aims to reach a multi-decade deal to supply gas to China, following a decade of talks, the climax signing of the pact to occur this May. That is next month. Payments will be made on a monthly basis in USTBonds shoved down London's throat, offset by more USFed hidden monetizations with Weimar blessing. See the Reuters article (CLICK HERE)

◄$$$ ROSNEFT HAS ATTEMPTED TO ENGAGE IN JOINT VENTURE WITH AN INDIAN ENERGY FIRM, OFFERING THEM STAKES IN THE BARENTS SEA AND BLACK SEA... CONNECTING WITH LARGE INDIAN REFINERIES IS KEY TO EXTENDING THE EURASIAN TRADE ZONE, THE COMMON GOAL TO BE FUNDS, PARTNERS, ENGINEERING... IN THE NEAR FUTURE, THE INDIANS WILL ALSO PLAY A ROLE. $$$

Russia has offered India crude oil supplies to refineries, and has extended stakes in blocks for offshore energy projects. Russia will not be isolated, certainly not with leading global supplies (not to mention 12 time zones) and clearly not with China tied at the hip. Instead, it is extending and firming its ties with several Asian giants. The Rosneft CEO Igor Sechin in late March met with top Indian officials. The offer was for pledged crude oil supply as well as investment stakes in oil & gas offshore tracts. The affair was not a small time event. Sechen led a delegation of about two-dozen officials to meet Indian Oil Secretary Saurabh Chandra, seeking to expand formal ties with New Delhi. Sechen said after the meeting, "India is a very important country for Russia. We have a very efficiently run project with ONGC. Now we want to expand our cooperation." India is an bonafide energy player, with significant presence in offshore projects, like in the Mediterranean Sea and Indian Ocean. The Russian state oil major offered Oil & Natural Gas Corp (ONGC) a stake in nine offshore oil & gas blocks in the Barents Sea and one in the Black Sea. The discussions centered on commitment of Russian crude oil to supply the Indian refineries. Rosneft produces 200 million tons of crude oil a year. The Rosneft head Sechen visited Tokyo recently, in an effort to broaden ties with Japan as well.

India lacks a firm contract to import crude oil from Russia in any large scale volume. It obtains small volumes at times from the ONGC Sakhalin-1 project in Far East Russia. Indian officials admitted that logistics need to be worked out to import oil from the Rosneft fields. Some pipeline extensions might have to be made, details to follow. Indian officials revealed the results of preliminary studies from a working group. Of the blocks offered in the Barents Sea, ONGC Videsh Ltd (OVL) found five were not lucrative. Of the remaining four, it wishes to participate in two. It will decide on the other two projects after Rosneft makes available data by June. Rosneft had previously offered ONGC a stake in the Magadan 2 and Magadan 3 exploration blocks in the northern part of the Sea of Okhotsk, which the Indian firm is studying. Sechin stated, "We have a very efficient project with ONGC in Sakhalin-I. It is very well functioning. Now we are talking about expanding our cooperation." ONGC Videsh Ltd is the overseas arm of the state explorer. It owns a 20% stake in the Sakhalin-1 oil & gas field in the Russian Pacific Ocean rim. Rosneft has a similar 20% stake in the project, which is operated by Exxon Mobil. The Indians have been busy. The firm OVL had acquired Imperial Energy for US$2.1 billion in January 2009. They participate in some fields in Siberia. OVL is anxious to secure a foothold in the Arctic projects, enabling it to expand into both Siberia and Far East Russia.

Rosneft has been leading the charge in the Russian Pacific, including offshore. They need partners, funds, and engineering. Their other cross-linked agenda is to build partnerships toward the formulation of the Eurasian Trade Zone. Back in 2012, Rosneft acquired a license to explore five areas in the Sea of Okhotsk, namely Magadan 1, 2, 3, plus Lisyansky and Kashevarovsky. The area is estimated to hold a total of 2.8 billion tons of oil equivalent, which means also natural gas converted to oil in thermal units. Sources report that in May 2012, the Indian giant OVL had written to Rosneft expressing interest in taking a stake in oil & gas blocks in the Russia's Arctic region. The stakes have recently been given out to US major Exxon Mobil, Italian giant ENI, and Norway's Statoil for exploration. The Russian firm had also recently roped in Statoil for four new joint ventures, including exploring the Magadan 1, Lisyansky, and Kashevarovsky blocks that have recoverable reserves of 1.4 billion tons of oil equivalent. Statoil is world renown as having the leading offshore engineers with cutting edge technology. As reference, the Sea of Okhotsk is bound by mainland Russia, by the Kamchatka-Kuril peninsula of Russia, by Northeast Japan, and by the string of Kuril Islands (southern-most islands in dispute). See the Indian Zee News article (CLICK HERE).

◄$$$ ROSNEFT IS ON THE MOVE IN GLOBAL ACTIVITY, BUILDING THE GIANT... ITS WORK INCLUDES CRIMEAN AND ARCTIC PROJECTS WITH EXXON, SECURING A FOOTHOLD IN NORTHERN IRAQ (KURDISH REGION), EXPANSION TO BRAZIL IN THE SOLIMOES PROJECT, AND DEVELOPMENT OF EASTERN SIBERIA... ROSNEFT PLAYS THE INDIRECT EXCHANGE GAME WELL, DUMPING USTBONDS IN ACQUISITIONS... THE WESTERN BANK TRADERS HAVE BEEN AMBUSHING THE RUBLE TO THE POINT OF DISTRESS... THE NUMEROUS MAJOR PROJECTS, HUGE CASH FLOW, AND NEWEST OIL DISCOVERY SEEMS TO BE COMPLETELY IGNORED WHEN CONSIDERING THE RUBLE'S VALUE AND SNAPBACK VALUE. $$$

On Ruble currency interference, New York and London bankers are playing with fire hotter than gas flares at diverse oilfields. On the Crimean front, the Exxon partnership with Rosneft just feels plain weird. They are all looking over their shoulders. They might instead look more closely at the contract details, which are signed by the dead Kiev regime. The close partners Exxon and Rosneft are also busily exploring for oil together in the Arctic as part of a $500 billion joint venture formed in 2011. The two companies are planning to frack shale fields in Siberia, drill a well in the Black Sea, and start construction on a natural gas export terminal in Eastern Russia. Exxon has a good working relationship with the Russians, a fact rarely mentioned in the press. Last summer President Vladimir Putin awarded Chief Executive Officer Rex Tillerson the Order of Friendship during an economic forum in St Petersburg. See the Business Week article (CLICK HERE).

Russia is making a move in Iraq with the Kurdish oil blocks. Exxon Mobil is actually negotiating to bring OAO Rosneft into oil & gas licenses for fields located in Iraq's Kurdistan region, despite the bilateral conflicts and deep but fading US presence. Rosneft is considering the proposal but a deal is not final or guaranteed. Exxon and Rosneft are also working on ventures to explore the Arctic Ocean, to test the potential of shale oil in Russia, and to pump crude in Texas. To date, the USGovt sanctions have had no impact on the deals, projects, and efforts by international oil companies with Russia. The autonomous Northern Iraqi region of Kurdistan is ramping up oil production, while it attempts to resolve a dispute with the government in Baghdad over pipeline exports. Exxon has been eager to reduce its stake in one of the biggest oilfields in Southern Iraq after moving forward into Kurdistan. The Exxon giant signed six contracts to share production, covering more than 848,000 acres in Kurdistan in October 2011. The project has begun with seismic surveys and drilling one well. See the Bloomberg article (CLICK HERE).

Rosneft has a subsidiary in Brazil, really, no joke. Brazilian oil startup firm HRT Participacoes em Petroleo SA is based in Rio de Janeiro. The independent Rosneft Brazil has signed final agreements with HRT on the Solimoes project in late March. The HRT subsidiary HRT O&G will acquire an additional 6% in the Solimoes project. Afterwards, Rosneft Brazil will own 51% control of the project, and take over operations in the joint venture in the Solimoes basin. The two firms will continue related exploration activities, having come to agreement on the sale of four heli-transportable rigs to Rosneft. The relevant transaction amounts to $96 million. The completion of the sale is subject to approval by the Brazilian National Petroleum, Natural Gas & Biofuels Agency (ANP). Rosneft will also provide to HRT a loan facility up to $40 million to finance HRT investments on Solimoes for a period of twelve months from the closing date. The contracts were signed and agreements concluded during the visit to Brazil by CEO Igor Sechin in November 2013. The entire deal is small, but important as a foothold in South America. See the Your Oil & Gas News article (CLICK HERE).

Energy resources will drive the Siberian Economic development. In late February, Rosneft announced that it will invest $83 billion on developing the strategic Vankor oil & gas field in Krasnoyarsk region of eastern Siberia over the next decade. The Vankor fields began commercial output in July 2009, whose output is expected to be directed toward the growing energy sales to China. Vankor is the largest field to be discovered and put into production in Russia in the last quarter of a century. According to Rosneft VP Sviatoslav Slavinskii, the Vankor field contains an oil & gas cluster capable of producing 55 million tons of oil annually by 2025. With Russia's traditional Western Siberian oil producing regions in decline, Vankor and the other fields clustered nearby in Eastern Siberia are critical to the Kremlin plans. The key was an infrastructure element. In January 2011, they inaugurated the 3020 mile (=4800 km) long Eastern Siberia-Pacific Ocean (ESPO) pipeline. It created an outlet for East Siberian oil Russian crude oil eastwards to Japan, China, and South Korea. In its first year of operation, the ESPO pipeline carried 400,000 barrels per day, truly significant output flow volume. Rosneft has a natgas pipeline under construction. The ESPO is paralleled by the 1260 mile (=2020 km) long Yakutia-KhabarovskVladivostok natural gas pipeline, scheduled for completion in 2016. See the Oil Price article (CLICK HERE).

Another vast oil & gas discovery has been made in Southern Russia. It is the Astrakahn field along the Caspian Sea in southern part of European Russia. It has had no development yet, in the contract phase. It is estimated to contain 300 million tons of oil and 90 billion cubic meters of natural gas. The field is Velikoe (translated: The Great) and was discovered by the AFB Oil & Gas Company, which requires larger partners to develop its potential. Two likely candidates are Rosneft and Lukoil, both Russian firms. They each have projects in neighboring regions. The bids might come fast and furious from Rosneft, which has the Vanqor (Vankor) oil field in the neighboring territory. The last major land energy deposit discovery was the Vanqor field in 1988, which has over 500 million tons of oil in estimated reserves. Another Astrakhan region field is Lukoil's Filanovsky field, which has more than 150 million tons of recoverable offshore oil in the Caspian Sea. In 2012, the company opened the neighboring Tambov field, also located in the Astrakhan oil field, which is the world's fifth largest. See the Russia Today article (CLICK HERE). One can quickly smell a huge Ruble currency boomerang snapback coming, linked to monstrous oil reserves and staggering oil output. Better yet, the oil wealth will spawn a new Gold-backed Ruble currency. The West is playing with fire, suppressing the Ruble. It has enormous and ample resources in support, which always trumps paper interference gimmicks over time, when the cash flow turns from trickle to torrent to wash away corrupt hands on deck. The arrogance of London and New York bankers is intolerable. Putin will dispose of them easily, all in time.

The ugly open sore for the USTreasury complex is Indirect Exchange. It serves as a dumping ground and broad channel for foreign entities to use USTBonds as cash currency to pay for acquisitions of assets, or to just pay huge bills such as the Chinese oil bill to Russia. The Eurasian Bear is stuffing USTreasurys down the New York and London banker throats. The Cyprus bank incident was the initial volley. In a recent transaction, Rosneft repaid $10.6 billion in loans before the due date, in payments related to the TNK-BP takeover from British Petroleum. Rosneft CEO Sechin, a close ally of President Vladimir Putin, said the firm paid back loans ahead of time in the December-March period. The Russian energy giant Rosneft signed a deal for US$55 billion in order to acquire TNK-BP, once Russia's third largest oil producer. They said they used loans in part, but behind the tables is a brisk movement of USTBonds. See the Rig Zone article (CLICK HERE). A big thanks to EuroRaj, who follows the Rosneft activity like a hawk, supplying info to my INBOX on all these stories.

◄$$$ RUSSIAN, CHINESE FOREIGN MINISTERS MEET IN BEIJING... THEY CONTINUE TO MEET IN HIGH-LEVEL DISCUSSIONS FOR ECONOMIC PACTS, CONSTRUCTION DEALS, AND ENERGY CONTRACTS... THE ASIAN GIANTS ARE BOLSTERING TIES, MAKING FIRM PROGRESS ON THE EURASIAN TRADE ZONE... THE CRITICAL MASS IS EVIDENT TO RATIONAL STUDENTS, AS RUSSIA IS IN NO WAY ISOLATED... THE UNITED STATES WILL SUFFER BROAD UNSPEAKABLE ISOLATION IN BACKLASH, WITH HEAVY ECONOMIC COST. $$$

Russian Foreign Minister Sergey Lavrov has held high-level talks with his Chinese counterpart Wang Yi in Beijing during recent weeks, which will continue. During futile and laughable attempts by the US and EU to coordinate efforts in isolating the the Russian state over the Ukraine crisis, whose origin contains the fingerprints of the USGovt black ops gang of mercenaries, the Lavrov shuttle continues with visits to China. They are setting the stage for the upcoming visit of Russian President Vladimir Putin to Shanghai in May. The theme will be the super energy deal. Lavrov asserted, "We believe that the upcoming visit of the Russian president will become this year's major political event in Russian-Chinese relations, and its outcome will be an important step toward a closer Russian-Chinese partnership." He is modest and laconic in his words. He stressed how resolution in Ukraine will come from constitutional reform and a return of the rule of law to the violence stricken nation. He decried the use of miltiary force, and condemned the spurious initiatives to send security forces and army divisions, which stand in breach of the norms of Ukrainian and international law.

The talks between Lavrov and Wang in Beijing extended toward the situation in Syria, the Iranian nuclear program, peace in the Korean Peninsula, as well as the drawdown in Afghanistan in light of the recent presidential elections. Lavrov gave particular emphasis to elements of the Eurasian Trade Zone, citing importance to cooperation within BRICS nations and the Russia-India-China trilateral format (RIC). Think trade zone tripod of superpowers, or at least giant economic players. The language used was in direct opposition to the centralized Western banker power centers, as in more of a polycentric world based on fundamental principles of international law. As footnote, the bilateral trade between China and Russia reached $88.8 billion in year 2013. It will vastly expand in the next decade. Compare to US-EU trade which has reached $50 billion per month (see USGovt Census, CLICK HERE).

To hammer the point home, Russian deputy Prime Minister Arkady Dvorkovich previewed the upcoming May Sumit. He reiterated the 30-year deal by the two allies to supply pipeline natgas to China during Putin's visit to China in May. The energy pact has many sides. Let it be known that Russia is the world's largest oil producer, the largest natgas exporter, and China is the largest oil importer. The pieces are coming together on the Eurasian Trade Zone. See the BRICS Post articles (CLICK HERE and HERE) and Xinhua article (CLICK HERE) and the Philosophy Metrics article (CLICK HERE). Unlike the arrogant fool Kerry who jets around making an ass of himself and the US nation, Lavrov flies to Beijing to make deals with the new diplomatic superpower China in support of the Eurasian Trade Zone, in which the US and UK will not be active members.

## DERIVATIVE RISK ESCALATES

◄$$$ MANY ARE QUESTIONING WHAT MIGHT HAPPEN TO THE DERIVATIVES IF THE US-DX INDEX FELL SHARPLY... THE BETTER QUESTION IS WHAT MIGHT HAPPEN TO THE STRESS LEVEL ON DERIVATIVES DURING THE DEFENSE OF THE USDOLLAR AND USTREASURY BOND AS THEY ARE SUPPORTED AND AIDED BY SAME DERIVATIVES... THE DEFENSE IS ASSURED AND ALREADY FAR ALONG... THE ANSWER IS A GRAND BLOWUP OF DERIVATIVES, BUT FIRST THEIR GRADUAL FRACTURE AND ENORMOUS STRAIN... THE USGOVT & USFED WILL BE GROTESQUELY ISOLATED IN THE DEFENSE... THE GLOBAL REJECTION WILL FORCE THE USGOVT & USFED TO VASTLY INCREASE DERIVATIVE DEFENSE, WHICH WILL QUICKLY RESULT IN VISIBLE BROKEN PARTS, LIKE MORE LONDON WHALE SIGHTINGS... FAITH IS RAPIDLY LEAVING THE SYSTEM. $$$

The new super quetsion: What would happen to the $700 trillion of worldwide derivatives if the USDollar suddenly dropped to support at 73, then threatened to fall below, and finally did fall below into dangerous low ground. Much must first happen before such an event actually occurs. As preface, the total is more like $1.6 quadrillion in USD-denominated derivatives floating around in the global financial system. That is $1600 trillion, a figure hard to wrap one's head around. As reference, bear in mind that all economies of the world combined generate an aggregate Gross Dometic Product of $63 trillion. So quickly conclude, as many have done for well over a decade, that a cool 25x as much volume in bloated derivatives is balanced about the Global GDP.

The entire world economy serves as only 4% collateral for the flimsy ethereal phony derivative balancing act. As historical background, following the Black Monday of 1987, two important events occurred. The USGovt and USFed marshalled forces together to create the Working Group for Financial Markets (aka Plunge Protection Team), whose task was to intervene in financial markets in order to prevent a future plunge or catastrophe. The second event was the installation of numerous vaporous bank derivatives to serve as a spinning empty foundation for the US and Western banking structure. In the early 1990 decade, the US banking system would have collapsed without the extensive rafts of hollow derivative reeds. The banks would continue to bid on the derivative contracts in order to give the impression of value held on the books. But these derivatives were overbid nothing burgers that enjoyed musical chair bid processes. The High Frequency Trading emulates the process, but with stocks. The entire US financial system is bogus.

The US-DX index, the USDollar trade weighted currency index (from older days of trade which do not even include Chinese trade) is under strain. The principal disruptive forces are the reduced usage of USTreasury Bonds in banking reserve systems, and reduced usage of USDollar in trade settlement, even widespread Asian USTBond dumping. The two usages are integrally linked, since nations of the world have tended for 30 years or more to store USTreasurys in their banking systems in order to pay for crude oil shipments. The strain is growing by the month, as the rejection of the USD/USTBond increases in trend. What keeps the unstable system held together is the excessive application of derivatives, led by the Interest Rate Swap contract. This contract produces artificial demand for USTBonds, while the USFed prints fresh money for directed usage to purchase USTBonds in covering new USGovt debt and rolled over USGovt debt. The heretical bond monetization is the New Acidic Normal, the strain exerted on the over-stressed derivative buttresses. The initial strains will be on, and have been on, the USD/USTBond dynamic duo. But the duo is losing luster and potency, seen more and more as toxic.

The US-DX currency index will not fall hard, to cause a collapse of the derivatives. At first, like now, the USD/USTB duo will undergo tremendous strain, and thus cause a gradual burnout and breakdown of the Int Rate Swap derivative machinery. In the first several months, like in recent months, the background stress on the derivative complex is not very noticeable. Later, like in mid-2014 or late-2014, the stress on derivatives will be much more obvious. The great hint was indicated in May and June 2012 with the revelation of London Whale losses at JPMorgan's Chief Investment Office. They lied on the loss amount. The said initally it was a $900 million loss, then quickly later a $1.9 billion loss, then months later a $8.5 billion loss. At least two of the recent London banker murders were to hide the fact that the London Whale JPM losses from derivatives are well over $100 billion and continue to mount. A clear motive for murder, in maintaining the USD/USTB regime, but also its wealth printing machinery. The Jackass would personally like to give myself a $62 million gift on the upcoming 62nd birthday, with freshly printed money at 0%, never to be repaid.

The collapse of derivatives will not happen right away, thus almost making the moot question. The derivatives will show great strain from a seemingly successful defense of the USD/USTBond regime before any breakdown. The US-DX will be supported by USFed, Wall Street, and USDept Treasury. They have many tools. The USFed will continue its staggering volume of QE bond monetization purchases, aided by proxies at the Euro Central Banks, stuffing them in the Belgian central bank vaults. Other aid comes from the dutiful Bank of Japan, which is secondarily motivated to keep their JapYen currency from rising. Other important tools are brought to bear. The JPMorgan CIO will continue to apply Interest Rate Swap derivatives, using their resident standby at Morgan Stanley. Never forget that in the second half of 2010, Morgan Stanley applied a ripe $8.5 trillion in IRSwap contracts to produce a phony USTreasury rally when nobody was buying them.

Lastly, the USDept Treasury has at its disposal the Exchange Stabilization Fund with all its global machinery and levers at the ready. They have their filthy corrupt hands in everything, from numerous sovereign bond markets to numerous global stock bourses to the fast moving FOREX currency market. However, and importantly, the derivatives will ironically break in defense of the US-DX index of the USD/USTBond dollar regime. The thermometer might be the CDSwap insurance cost on the USGovt debt. The derivatives will not break from a rapid and obvious decline in the US-DX index itself. Consider it like sixteen Atlas strongmen beneath the USD/USTB platform stage. Right now a couple Atlas strongmen are killed off, dead and gone, like the London Whale. At least two or three Atlas strongmen are about to suffer spinal fractures and broken legs. Soon several more will have a broken spine, as six others will suffer spinal and leg sprains. The damage comes from the defense, which appears on the street to be successful.

Only when the derivatives completely break down in grand fractures will the USD/USTBond regime show grotesque damage. Then the derivative implosion will become visible, in the form of a banking system shutdown across the United States and London, with confiscations. The blame will be laid on the Chinese, the Arabs, Iran, and the Russians, with maybe absurd hacking attack stories. When the derivative linkages and false platforms break down, the losses will be impossible to conceal. The losses will quickly mount into the tens of $trillions, not the mere $billions like with the London Whale. The murders are intended to prevent a quick vacating and removal of vast swaths of capital reserves within the frail system. The system operates on confidence, magnified by the faith of the fiat paper currency system. Remove the faith, remove the capital, and the collapse is extraordinarily rapid as funds exit so fast that banks shut their doors.

EuroRaj offered to shed some light on the topic, from his London banker perspective. He added the following points, with my minor edits and filled in background portions for flow. In the end game, the derivatives will be sitting primarily with cabal bank entities who are financial in nature. The primary participants must by definition be financial firms, since if not, they would have been economically bankrupt years ago. Only the financial firms have received the lenient accounting treatment from the Financial Accounting Standards Board (see April 2009), which has enabled zombie banks to continue in operation. Hence, assume Morgan Stanley owes JPMorgan $10 or $20 billion. The act of JPM trying to collect on MS would drive JPM into bankruptcy. They are in fact both hollowed out dead entities. The group of major banks are tied (lashed like on ships) together. When one goes, the others go. The derivatives today are just numbers on a screen with no economic value attached to them. It is akin to a private poker game played strictly for entertainment purposes, and whether the players lose or win, no consequences exist. That is, unless the entire table forces the collapse of the entire banking system from its sheer weight. The Voice offered a simple observation. "There are $1.6 quadrillion US$ denominated derivatives floating around, in a world where all economies combined generate GDP of $63 trillion. You do the math. It is going to blow up, guaranteed." He means from simple over-leverage combined with lost collateral and deteriorating capital structure. But blowing up is a process, not a single defined event.

◄$$$ CREDIT DEFAULT SWAP CONTRACTS ARE A LIKELY SITE OF DERIVATIVE BREAKDOWN... THEY ARE MORE ACCOUNTABLE AND VISIBLE ON THE TRADING SCREENS... THE NEXT BANKING SYSTEM COLLAPSE IS MOST LIKELY TO BE CONCENTRATED... THE FLOW OF DUMPED USDOLLARS HAS BECOME A TORRENT... THE RISK LIES WITH A GROUP OF 20 OR MORE BIG WESTERN BANKS, ALL TIED TOGETHER... AN IMPORTANT WARNING SIGNAL HAS BEEN REGISTERED WITH THE US-STOCK MARKET DECLINE. $$$

The Financial Times revealed in early April that trades in index credit default swap (CDS) options had managed to avoid being listed on exchanges, with all the transparency requirements that brings. Instead, they have been permitted to continue trading on an over-the-counter (OTC) basis. The Credit Default Swap is a contract that operates much like an bond insurance policy, placed against a corporate bond or mortgage bond or some other special bond. Big banks and sovereign debt are common for CDS contracts on their bonds. The CDSwap options are the most leveraged of all products being actively traded. They happen also to be the most inaccurately rated by risk management procedures within the big financial firms. The argument goes like this. The CDSwaps have wrong prices and wrong ratings at this time. Since the profitability of a product to traders is directly proportional to the level of under-stated risks in conventional risk management systems, it therefore follows that CDS options are the location where the next banking system collapse is most likely to be concentrated. Regulators should take notice, but they undoubtedly do not. The regulators and debt rating agencies are too busy carefully assessing the risks on products that are not especially risky, or are more easily evaluated, or caused the last crisis. The regulators are never ahead of the game, and are paid not to be by their masters. See the Prudent Bear essay (CLICK HERE).

The Jackass is stubborn, but still a little flexible. The derivatives on collateralized bonds are important, and surely vulnerable. However, the interest rate derivatives will be the site of tremendous unspeakable strain, since QE bond purchases will be strained to the limit in defense of the beleaguered USD/USTBond regime. The foreigners are dumping USTBonds in Indirect Exchange in their pursuit of hard assets and productive assets. The foreign central banks are dumping USTBonds for domestic cash, and accepting a 30% to 35% quick conversion loss. The foreigners are showing increasing disgust of the USFed and USDept Treasury simultaneously, not making much distinction between the two crime syndicate entities. The Eastern movement to gold-backed currency and the demise of Petro-Dollar from altered crude oil payment systems is changing the major financial structure at its core, along with its extensions. It is too much for the financial markets to contain, even with derivative reinforcement, to absorb the growing pressures, even with bond monetization and derivative application. The arrival of tiny Belgium on the scene of the crime points to the desperation, with no attempt or ability to disguise the obvious gestures. Belgium is the new visible open sore with pus. Its growth might be the litmus test on the USD/USTB regime breakdown itself.

The derivatives will break the USD-based structures that use the USTreasury Bonds and Bills as vehicles and banking reserve asset items. The Interest Rate Swap derivatives will break, when working solo and overtime in defense of the the USTreasury Bond complex. The Achilles Heel to the entire system is the USTreasury complex. The banker cabal cannot permit the USTBond yield to rise fast. The vulnerable visible piece might indeed be the Credit Default Swap, but it is not of interest to the Jackass. It is like saying the risk of for a skin rupture, but the compound bone fracture is the cause. The bone is at immediate risk of massive sudden fracture from gigantic pressures exerted. My concern is not the tear of skin from a bone fracture, but of the actual bone fracture. The absent USD liquidity in trade (like from crude oil) will soon smack the derivatives in a noticeable undeniable way. Dumping of bonds will overwhelm buyers, even machines as bond buyers. Some CDSwaps might break in full view, and will make for a spectacle. The theater will be observed from the lies to explain the CDS ruptures (skin), when the compound fracture (bone) is from the IRSwap derivative. The interest rate derivatives hold the entire sovereign bond and currency system together, plainly stated.

My colleague George from Chicago pitched in with valuable perspective. He has COMEX logistics and broad futures experience. His viewpoint is always full of insight and backed by ground level experience. He knows a lot of people related to the den of thieves in COMEX and the vast logistics system. His comments follow, with my edits for flow. At some point a derivative breakdown will happen. However, it will not be a gradual decl ine when it does happen. My expectation is now for a full dislocation, during which time is horribly short to manage the breakdown. We are talking about weeks and months, not multiple years. Also, my point refers to US and London based derivatives, not the worldwide derivatives, which also face imminent stress and likely rapid breakdown. Then consider the plethora of the off-exchange derivatives, also under heavy risk at this juncture. The risks and stresses only continue to grow. Next to come are the USFed deceptions. The talk of Tapering comes because the world is already awash in USDollars, a result of past and present sins (think numerous cleanups and rounds of QE bond purchases). The world wants to redeem its USDollars held in whatever form. As the world turns on new axes and begins to trade in other currencies, the dumping of excess USDollars (in form of USTBonds & Bills), has resulted in a veritable flood. Up until now, that has been alright, or better stated manageable. Because the Western world has been stuck in a liquidity trap, the flood of USDollars has been used to hide and fund massive bankster losses. However the tsunami is finally starting to hit the US shore, despite the liquidity trap at work. The major players suddenly are painfully aware. The USDollar has hit the proverbial brick wall in exact synchronous timing.

George went further to extend his argument that the excessive USDollar flow will cause an undermined problem for currency itself. As this massive amount of USD starts to prove unwanted, the belief in the value of fiat currency will quickly vanish. It is all about timing. The game is late for the USD, and the former King Dollar has fallen way behind. The USDollar will go the way of the British Pound, which was displaced, but done as the friendly USD by the same crowd in London. Control was maintained to the British colony in New York and Washington. If these dislocations are abrupt enough and severe enough, the USEconomy will go through a depression that makes the 1930s look like a walk in the park. The following catastrophic event could repeat the 1940s, in world war. Time is very short. We are witnessing disruptions unlike any ever seen in our lifetime. Ukraine is evidence of the tendency and risk toward war as release of breakdown pressures.

Furthermore, risk is concentrated. The vast majority of all those hundreds of $trillions of one-off financially engineered pieces of toilet paper all pass though about two dozen international money center banks. If one bank goes down, they all go down. For over 20 years, all the extensive financial engineering went into pumping carry trades and US equities, the architects coming from these institutions. If massive amounts of US equities are held, then all the derivatives from official exchanges are equally exposed. The recent cardiac events (mild heart attacks) by the US stock market are extremely important. It is an initial shock and warning signal. Most have ignored it. The vacuum is more clear. Bank earnings stink badly. The next round of US home foreclosures is starting. The private equity funds might do more buying, but probably not at the current lofty prices. They are actually sellers, realizing the nightmare of hostile tenants and sabotage at work. Neither will the Chinese be rescuers to the US system, knowing a USDollar collapse is coming. They are busy with their endless unload of USTBonds. The big question remains the Chinese holdings in US commercial property. They might add to holdings. My gut says they will choose resource companies like energy exploration firms that own oil & gas fields and mining firms in possession of gold, silver, copper. They will continue to dump USTBonds.

◄$$$ JUST A QUICK REJOINDER NOTE... THE RESET PROCESS MIGHT HAVE BEGUN... IT IS A BROAD PROCESS THAT COVERS NUMEROUS MARKETS... THE STRESS LEVEL IS STRONG FOR SEVERAL INDICATORS IN THE LAST TWO WEEKS. $$$

Two weeks ago EuroRaj identified stresses in the US-DX index, the USTreasury Bond yields, the US stocks, big bank stock share prices, crude oil separation of Brent from WTexas, and a couple other indicators. He surmised that the RESET had begun, a long difficult process which will span perhaps several weeks or even a few months. The stresses within the numerous markets appear related and linked. Some stirred conversation took place, when The Voice offered a simple confirmation on the prospect of the RESET having already begun. He wrote, "YEP" and nothing more. The Jackass conclusion is that the vast derivative complex will be the victim of RESET, during which the USD/USTBond global rejection becomes crystal clear. Most astute observers are waiting for a single obvious event. It will not happen that way. It will instead be a process where integrated financial markets will come unglued, although gradually.

## FAILED CENTRAL BANK FRANCHISE SYSTEM

◄$$$ CHINA TO ALLOW FULL CONVERTIBILITY OF RENMINBI IN SHANGHAI FREE TRADE ZONE BY JUNE 2014... THE MOMENT HAS ALMOST ARRIVED FOR FULL YUAN CONVERTIBILITY, AFTER MUCH PREPARATION... INDICATIONS OF TWO YEARS OR MORE WERE INCORRECT... THE RAMIFICATIONS ARE ENDLESS, THE EFFECT ALMOST IMMEDIATE FOR ESTABLISHING AN INTERNATIONAL CURRENCY FOR TRADE AND INVESTMENT PURPOSES... HEDGE COSTS WILL BE REDUCED, AS GROWTH WILL BE PROMOTED, WHILE BOND FLOWS ACCELERATE AND LEAD THE YUAN TO BECOME MORE UTILIZED IN RESERVES MANAGEMENT... THE USDOLLAR WILL BE EASILY CHALLENGED AND SOON PUSHED OFF ITS PERCH AS GLOBAL RESERVE CURRENCY. $$$

Most analysts watching the radar for this event expected the Yuan full convertibility to happen in 2015 or 2016. It will happen much more quickly, in fact almost imminently, causing a global tsunami. The impact on the financial and trade systems will be worldwide and profound. When the Euro currency was born in 1999, it was a mere monetary union of several countries but without any fiscal or political unity. Meaning it did not have a single government behind it, no single leader or executive office, no organized force. The Euro currency is a disaster, which the Jackass did not anticipate in 2004 and 2005. Its users continue to remain divided and fight among themselves, since their budget deficits are out of control, their economies largely wrecked (including by Chinese outsourcing), and their sovereign bonds turned toxic, propped by the Goldman Sachs prince of arrogant fools Mario Draghi. Some Euro common nations are actually bankrupt, while others like Germany are supporting the weakest members. The disputes are so profound, that some nations refuse to allow free flow of labor. Austerity budget plans act like poison pills to the sick patients. Imagine putting a deathly sick hospital patient on a strict harsh diet.

The Chinese Yuan convertible news will rock the world an order of magnitude more than the Euro did. It will directly challenge the toxic USDollar. The Chinese Yuan (often called Renminbi, meaning people's money) will be allowed to be a freely tradeable currency, first in June 2014 inside the Shanghai Free Trade Zone (FTZ), and then later across all of China by September to December 2014 timeframe. The key to note is the introduction initially in the Shanghai metropolitan area where the trade zone is located. This will give much more beneficial attention to the trade zone, were foreign investment bankers will not be permitted entrance, and where business privacy on data will be honored vigorously. The impact will be massive. The directions are endless, the effect enormous, the risk to the USDollar regime lethal. Few seem to recognize that the event is imminent, not two or more years away. The Voice (with FTZ clients) tipped off the Jackass several months ago that it would not be years, but rather several months. The Chinese have been working vigorously on the broad preparations. The numerous Yuan Swap Facilities are like staging grounds arranged around the world.

Finally the Chinese people will have more financial freedom. Four major positive effects will result, each quickly identified. 1) The Chinese will be able to transfer their money overseas and do whatever they want with it. 2) The Chinese people will be able to borrow Yuan overseas, where interest rates are cheaper from greater competition among banks, and take the newly acquired funds back inside China. 3) Foreigners will be able to remit Yuan or mostly any other currency into China and use it for a wide variety of investment purposes, such as business ventures or real estate purchases or anything else, even gifts or support to family members. 4) Foreigners might be allowed to open bank accounts, just like India has relaxed some rules for foreigners, perhaps anticipating the upcoming Chinese competition. See the Live Mint article (CLICK HERE).

Cross-border usage is to be soon allowed in Yuan from Shanghai Free Trade Zone. The effect on investment is immediate, as it will allow foreign direct investment (FDI) to come into the free zone, then be easily converted into any currency without obstruction. Expect inspections and tariffs to be vastly reduced. The interest rate caps will have been removed. The entire concept of offshore financing has been allowed to bring Yuan into China from diverse international finance hub centers. The barriers for outbound investments from China will have been removed. The vast paperwork on VAT value added tax from the last six months will be halted in its tracks. For the first time in history, a single nation will open up its currency and capital account for trade. Before China was simply a developing country with complete capital controls. Next, and imminently, China will open itself as it strives to become banker to the whole world. The challenge to New York and London is obvious and well recognized. Maybe China will be declared a terrorist nation by the American bank nazis who run the USGovt, after declaring the same status to the Russians.

The United States, Canada, Switzerland, even UAE, were always open just like the United Kingdom. These nations never were required or challenged to open up their gates for liberal passage of money. Many small benefits will come. The cost of hedging will go down; the contract terms will see reduced volatility; much uncertainty will vanish due to business transactions done in the Yuan currency. In short, the entire FOREX currency risk will go away. The demand of Chinese stocks, bonds, property, and business stakes will surely rise due to new money flows from abroad. So will attorney fees and bank fees. Foreigners as well as resident Chinese will be able to move Yuan funds in and out of China without any questions or controls. As footnote, the Shanghai Free Trade Zone was initially opened in September 2013. It now has over 6000 companies already registered in less than six months. Shanghai Trade Zone stock shares have risen to high values on reports of additional reforms. Furthermore, over 40% of items currently on the official negative list in the trade zone are expected to be removed shortly. Even the den of thieves on Wall Street recognize the potential. Morgan Stanley recently released a report which suggested investment in Chinese stocks. The report stressed the long-term growth potential for various large state owned companies anticipated to undergo gradually privatization. The size of the Chinese Economy will continue to grow, as consequence to the convertibility, the trade zone, and additional trade zones. The irony is that China comprehends capitalism, while the United States embraces a sick type of socialism, often linked to nazi states.

The free convertibility of Yuan (RMB = renminbi) and its movement around the world is supported by opening trade and currency settlement as part of the numerous Yuan Swap Facilities. They quietly laid the groundwork to avert the USDollar fees and control gates. Agreements with New Zealand, Taiwan, Hong Kong, London, Switzerland, Germany, South Korea, and Australia lead the long list. Many minor nations such as Belarus, Uzbekistan, Indonesia, Singapore, Iceland, and Argentina also have the swap advantage for trade, which allows a select group (usually three to five) banks on each side to participate in net trade settlement affairs using direct bank transfers in their own currencies. This list of countries should also grow in 2014. The global bond trade in Yuan terms also adds to the mix. The Dim Sum Bonds are quite popular and often over-subscribed in Singapore, London, Luxembourg, and elsewhere. Dim Sum bonds are bonds issued outside of China but denominated in Chinese renminbi, rather than the local currency. They are named after dim sum, a popular style of cuisine in Hong Kong. Many corporations issue Dim Sum Bonds, like McDonalds. Issuers like such bonds in foreign currencies that they expect to rise in value, and therefore investor interest. As Yuan-based bond trade increases, watch for Chinese Govt Bonds to gradually become an accumulated (even desired) item in global banking reserves. The challenge to the debased USDollar and its toxic USTBond will be acute. The US will lose this battle, due to fraud, inflation, war, and economic decline.

The demand for Yuan denominated investments and deposits is high and growing higher. The depth of the Yuan currency market will continue to increase. Its full convertibility, as in fully convertible capital account, has been the final obstacle in its internationalization. But more, the convertible Yuan, the Free Trade Zone, the brisk investment, the Dim Sum Bond trade, the Yuan Swap Facilities, these indicate the inevitable displacement of the USDollar as the global reserve currency. The wrecked USTreasury Bonds have become toxic, from over three years of unsterilized central bank monetization, a horrendous development in absolutely unprecedented terms. The Americans shrug off the abuse, but foreigners bristle with anger. They eagerly seek to create a new global currency reserve, or set of them. The Global Yuan currency with full convertibility is a stepping stone in the Jackass view toward gold-backed currencies. See the Xinhua Net article (CLICK HERE) and the FOREX Magnates article (CLICK HERE) and the Indian Reuters article (CLICK HERE) and the Global Times article (CLICK HERE) and the Bloomberg article (CLICK HERE). For an always solid review in analysis, see the Jesse article on Cafe Americain (CLICK HERE). Short of a gold-backed currency, the full convertibility of the Chinese Yuan currency in a full blown free trade zone is the biggest news of the decade.

◄$$$ CHIEF ECONOMIST THE BIS CENTRAL BANK IDENTIFIED EXTREME DANGER AND SPECULATIVE BUBBLES, THE RISK PARALLEL TO 2007... HE DESCRIBES A BROKEN SYSTEM WITHOUT CALLING IT BROKEN... HE DOES DESCRIBE FAILED MONETARY POLICY... WHITE ACTUALLY EXPECTS ANY RECOVERY TO RESULT IN FEEDBACK MECHANISMS TO WRECK THE RECOVERY... HE FORESEES NO CHANCE TO BRING A RETURN TO NORMALCY. $$$

The communit of syndicate economist liars finally have a representative who honestly describes the huge risk. Bill White is former chief economist of the Bank for Intl Settlements. He issued a warning of grave adverse effects from the ultra-loose monetary policy everywhere in the world. He described conditions like 2007 all over again, with equity markets overvalued and spreads in the bond markets extremely thin. White accused central banks of making it up as they go along, which the Jackass calls adopted heresy founded in desperation and failure. Never in modern history have all major central banks been running expansive monetary policies for so many years. Constantly applied hyper monetary inflation in high volume invites a global catastrophe, and it is in progress.

The extreme measures put in place following the Lehman Brother collapse have remained in place as fixed monetary policy, in extreme desperation. Their uttered words can no longer conceal their fear. The USFed remains stuck in crisis management even after six years. They are flooding the entire system with money, hoping people feel wealthy, hoping for trickle down, and ignoring the huge risks, hoping for a positive outcome that will never arrive. It does not work, and is extremely dangerous. They need to be collectively fired and their central bank temples shut down permanently. The moral hazard has many visible warts. Financial markets have grown dependent upon easy money, while governments have lost the motivation to reform, and the big banks remain protected from necessary liquidations. The system needs debt reduction and recapitalization of the banking system. White called it facing up to reality.

The distortions are many, from artificially high asset prices to the spread of debt to emerging markets to the steady corrosion of capital destruction. This is the grandest bubble ever blown, to include the stock, bond, and currency market, not to mention the hidden derivative platforms. Macro effects are cancerous. Entire economies can be accused of being hedge funds. Central bank balance sheets have morphed into pus on tissue paper. The effect of USFed actions has lost its power and muscle, as the moral hazard is all through the system. Economist White sees no differences in the Greenspan Fed, the Bernanke Fed, and the Yellen Fed. He believes the system is so mucked up, that even against the backdrop of stronger economic growth, a disorderly reaction could come in financial markets that would destroy the economic recovery from basic feedback mechanisms. That is quite the indictment of conditions gone awry. There is no chance of returning in a stable manner to normal long-term interest rates, like 4% yields. He closed with a strange but provoking comment, that price inflation has not arrived because monetary policy is not working. He stops short of a deeper insight. He misses entirely the sudden slowdown in money velocity, in large part due to capital destruction, a massive signal of failed policy. He seems overly concerned about confidence, fear, and expectations, like the rest of his errant heretical economist crowd on such soft Keynesian fluff statistics. See the Zero Hedge article (CLICK HERE).

◄$$$ MONEY VELOCITY CONTINUES TO FALL RAPIDLY IN BOTH THE USECONOMY AND THAT OF CANADA, REACHING 60-YEAR LOWS IN THE UNITED STATES... THE INDICATION IS FAILURE IN MONETARY POLICY, AS HYPER INFLATION HAS KILLED CAPITAL ON AN EXTENSIVE BASIS... THE CAPITAL DESTRUCTION IS IN ITS FOURTH YEAR, PROBABLY HAVING REACHED CRITICAL MASS ON CORROSION... COMPARED AND CONTRASTED WITH FAST RISING MONEY SUPPLY, THE SYSTEMIC FAILURE IS OBVIOUS... EXPECT SOME DELAYED EFFECTS FROM COVENANT CLAUSES. $$$

The claim that the QE bond monetization is stimulus is pure propaganda, and could not be further from the truth. The claim disguises the nature of the hidden Wall Street bailout, which covers their worthless mortgage bonds, and covers all manner of derivatives, in addition to the obvious coverage of USTreasury Bond sales. Nobody wants the USTBonds anymore, except for Belgium operating as hidey hole on behalf of the Euro Central Bank, and for Japan operating as the usual lackey bitch. The claim of stimulus is 180 degrees wrong. The bond monetization is pure unsterlized monetary inflation, free money shoved into the system without positive economic effect, without longstanding financial market effect. The result is pure inflation, and extreme motivation for the entire world to take on hedge positions with energy, metals, and more in order to protect themselves from the ruin of money. The effect from unsterilized QE bond monetization is felt as a rising cost structure, and thus shrinking profit margins for the entire global business sector. As businesses and realize the lost profitability, they shut down and retire their capital. The same is true of corporate business segments. They turn idle their factor machinery, their design workstations, their office computers, their transportation vehicles, their company buildings and offices.

The destruction of capital is the certain indirect effect of Quantitative Easing, since it was not temporary. In 2011 and 2012, the Jackass warned that QE would never end, and occur in a succession of corrosive programs to cover bonds which nobody wants, indicative of negligible demand. Correcto mundo, Jackass! In 2009, the Jackass warned that Zero Percent official rates would never end, and continue year after year, indicative of no recovery. Correct mundo, Jackass! Contrast the declining Money Velocity with fast rising Money Supply growth (presented in March). The conclusion is both gallopping economic recession, and systemic failure. Rarely is a chart repeated in presentation. But the systemic failure and breakdown is upon us. The two charts back to back make the point convincingly.

The Money Velocity picture is not pretty. The declining rate has broken lows set 50 years ago. Technically, the velocity of money is the frequency at which one unit of currency is used to purchase domestically produced goods and services within a given time period, like an inventory cycle time. In other words, it is the number of times one dollar is spent to buy goods and services per unit of time (one year). If the velocity of money is increasing, then more transactions are occurring between individuals in an economy and the growth (as measured in GDP) should be rising. With falling velocity of money, then fewer transactions are occurring and a recession is indicated. To have the slowdown occur during hyper monetary inflation is the worst imaginable central bank signal. Since they are stuck with QE and ZIRP, conclude systemic failure is in progress. Consumers and business are holding firm their money rather than investing it, as they see poor prospects. In this climate, investing it in a business or a bond means acute risk of losing it or having it caught in a federal bureaucracy web, or even subject to onerous taxes (see ObamaCare). It should be noted that the velocity of money has also been falling in the EU and Japan. The entire global economy is in recession.

As Chapman points out, "It all seems counterintuitive that the velocity of money should be falling even as the ECB, the Fed, the BOJ and the Bank of Canada have been maintaining low interest rates for years in order to encourage borrowing and keep the cost of money low. The central banks have also pumped billions of dollars into the economy through QE and other stimulative measures. The result has been an explosion in the monetary base, a sharp rise in M1 but lower growth for M2 and sluggish M3. The economies are weighed down with debt, banks are reluctant to lend, consumers and corporations are unwilling to borrow. The money instead has been used for speculation, primarily going into risk assets such as the stock market. Corporations instead of investing in new plants and investment are sitting on cash hoards or buying back their own shares. Both are non-productive."

Chapman cites an estimate that US corporations are sitting on $1.6 trillion in cash. In Canada, the corporate cash hoard is estimated at around $600 billion. Such verification is very difficult to obtain, but his figures are within the range of other competent estimates. The ample cash stored up would typically indicate imminent growth and wide prosperity, but not now. The central banks are spreading cancer that kills capital. The Western governments are imposing austerity plans that act like poison pills. The hostile US & NATO bands of nazis are promoting war. The USDollar and fiat paper currency regime act like contaminated blood within the system. The sovereign bonds are supported by hyper inflation, a travesty. The national debts are growing worse each year. The capital markets are screaming under a severe strain. The entire set of business conditions could not be worse, and thus the money is not moving, not being invested, and being protected. Even the prudent purchase of gold & silver bullion and coins removes money from the system, as the stored precious metals are a safety security maneuver to avoid acidic and toxic monetary conditions founded on deep heresy from the central bank high priest lunatics, and even basic confiscation in bank accounts. See the Gold Seek article by David Chapman (CLICK HERE).

The capital destruction has an additional device at work on the credit contract side. It relates to bank loan covenants. The following is from CliffV in Alabama, a Hat Trick Letter subscriber. He wrote, "Add the comment that with the destruction of capital and the lowered margins, the owners withdraw their capital and quit using their assets. What I am seeing is that with lowered margins, our company which is highly leveraged and beholden to a big bank, is forced to put on more expenses until compliance covenants are not met. At some point the bank may force the withdrawal of capital and assets by declaring a loan default and selling our assets. I wonder how many other businesses are in this situation of being forced to close at some point, [but are kept going due to harmful covenant agreements]."

## USTREASURY BOND BUSTING AT SEAMS

◄$$$ JANET YELLEN IS PLAYING A HIGH RISK GAME WITHIN A FRAGILE SYSTEM... THE USFED IS REVEALED FOR DESPERATE ACTIONS AND PROFOUND LIES... THEY TALK ABOUT REMOVING SUPPORT, BUT INSTEAD MOVE THE SUPPORT TO A SET OF HIDDEN HANDS... DESPITE WHICH PATH TAKEN, A FAILURE WILL OCCUR, AS NO CHANGE IN ALTERNATIVES HAS COME SINCE THEY BECAME STUCK IN THE CORNER BACK IN 2009. $$$

For decades, anticipating correctly the USFed and its monetary policy maneuvers has been a successful trade. If their policy had been overt and clear, it was the convenient and slightly dim-witted motto for a winning side. A change has come, an important change, as the desperate central bank is finally cornered. It policy is no longer beneficial in any remote sense. Taking the opposite side has suddenly become the smart move, since the hint of systemic failure has grown intense. The investor community finds itself split between those who continue to nervously ride the USFed wave of easy money, versus those who have trimmed the hedges. The new Chair Janet Yellen must feel uneasy too. She wants an exit, but none is available. The USFed is trapped, and has been trapped since year 2009. If she exits the QE hyper monetary inflation room, the financial sector would break down rapidly, the economy would break down rapidly, and the currency regime would break down rapidly. The result would be a colossal mess, with climax being the breakdown of the derivative complex. The Jackass does not personally believe Yellen is removing any bond support, not one single piece from the vast support. She is talking about removing pieces, big difference. The QE3 volume in monetization is between 3 times and 10 times what they claim. The hidden buttresses are located in several places, from allied central banks to big bank derivatives to government ministry tentacles. These are desperate banker liars, destroyers of wealth and income engines. They are cornered like rats on a grand stage. Their lies are obvious, as their desperation can be smelled.

Yellen has been exposed as playing a high risk game, much like Jenga, where pieces of a sprawling structure are removed one by one, under the hope that the teetering wooden tower will not collapse, the strain coming from a badly overstretched financial system. Such is the USFed monetary policy, stepping out of a mine field slowly, except that the mine field is of infinite size. The strategy has zero hope of success, and every chance of igniting a catastrophe. The only alternative strategy is the chosen path: doing nothing, keeping QE in firm place, and permitting the capital destruction to kill the system from internal rot to the profit engines. Expect wobbles, breakdowns, and collapse, no matter which strategy is formally taken. With each wobble and urgent reaction, the Yellen Fed will accommodate the need with continued easy money. They will not wish for a systemic failure to occur on their watch. Slow collapse is preferred to sudden collapse, an ugly Catch-22. Failure will come with all options, whether passive or active. See the Detlev Schlichter article (CLICK HERE).

The latest deceptive move by the Yellen Fed is reformed wholesale funding rules to Wall Street banks. The stated goal is to avoid bond market freezes like during the 2008 crisis that had the Lehman failure (killjob) climax. Yellen stressed liquidity issues in big banks, with rules on capital requirement enforcement. Specifically, the new regulations target the world's largest banks: JPMorgan Chase, Bank of America, and Citigroup, but not all lending institutions. The three have one trait in common, staggering narco money laundering participation. JPM runs the Iraqi Export Bank in Baghdad Iraq, the Afghan narcotics sale clearinghouse. BOA is the primary New York entry point for US-bound narco funds. Citibank is the chief center for narco fund management in Panama banks, where it is also dispensed for covert Langley projects. Think covert QE with back doors. These banks surely will rush to support the USTreasurys in such a way as to conceal the extraordinary volume of continued USTBond buying by the USFed. They probably have been using narco fund support of USTreasurys for well over a year or two. See the Fox Business News article (CLICK HERE).

Back in 2009, the Jackass claimed that putting on bond props (ZIRP & QE) would wreck the system, from the financial side by rendering great harm to the financial markets and turning asset valuations bonkers from free money. The adjoining claim was that not putting on the bond props would result in sudden economic failure, from liquidity drain shock and high untenable cost of borrowing. Nothing has changed, as the USFed is still stuck in the same intractable corner with no options. So they continue the course.

According to Wikipedia, Jenga is a game of physical and mental skill created by Leslie Scott, and currently marketed by Parker Brothers, a division of Hasbro. During the game, players take turns removing one block at a time from a tower constructed of 54 blocks. Each block removed is then balanced on top of the tower, creating a progressively taller but less stable structure, due to gaps in the interior.

◄$$$ THE USGOVT IS SPENDING 26% OF AVAILABLE TAX REVENUE JUST TO PAY INTEREST... THE FIGURE OF 17% APPLIES ONLY IF THE SOCIAL SECURITY & MEDICARE PAYMENTS ARE CONFISCATED WITHIN THE CALCULATIONS... FINANCING THE DEBT FROM THE UNITED STATES CANNOT PERMIT HIGHER RATES... ALSO THE CARRY TRADE PUT ON BY JAPAN FORBIDS A HIGHER RATE SCENARIO, SINCE IT WOULD WRECK THE TRADE. $$$

Empires come and go, but they usually go after wrecking their finances and debasing their currency. Rome in the 3rd century debased its coins by removing over 90% of its gold, a practice called sovereignty. Consider it the right of emperors to steal from the till, for which nothing has changed as Clinton-Rubin stole Fort Knox gold. By the 19th century, the Ottoman Empire faded into the history books, their glory days as the world superpower passed like a mist on the indebted floor. Once upon a time, they had supplanted by the French, the British, and the Russian empires in all matters of economic, military, and diplomatic strength. Their fast demise was principally due to the Ottoman Empire's massive debt burden. In 1868, the Ottoman Govt spent 17% of its entire tax revenue just to pay interest on the debt. When they were compelled to borrow money just to pay interest on the debt, they were doomed. By year 1871, the government was spending 32% of its tax revenue just to pay interest. By 1877, the Ottoman Govt was spending 52% of its tax revenue just to pay interest. They were kaput, victims of debt. They defaulted that year. This is a common story throughout history. They needed a printing press, a fine American invention. The USGovt went one better. They print money to cover their over 80% of their new debt, plus cover their interest, starting in 2011, with full applause and genuflection. They even finance wars on the printing press. In the past they coerced foreigners (often victims of the war aggression) to finance the outsized debts. Johannes Gutenberg had nothing on these American Nazis.

The French Govt failure reads like the same chapter, different cast of characters. They saw a meteoric rise in their debt throughout the late 1700s. By 1788, immediately before the French Revolution, they spent 62% of their tax revenue to pay interest on the debt. An unsustainable debt burden creates a situation marred by death throes. The death knell of a nation's economy and its government is heard from its debt burden and mismanagement. The American arrogance is found no farther than the Full Spectrum Dominance uttered by ex-VP Cheney, a diabolical figure in a long list of vile US political and banking leaders such as Kissinger, Bzezinski, Clinton, Bush, Rubin, Greenspan, Paulson. They destroyed the United States as a nation and world superpower. Power does not come from military might that corrodes the body economic as it is gutted. It comes from economic strength and integrity, which breed respect more than fear. Worse, the governments have a vested interest in not being transparent about their debts and interest payments. So failed systems are concealed, like since 2008.

In the USGovt financial accounting, routinely the interest payments are not counted on borrowed money from the Social Security Trust Fund. The official debt tally does not count the pension and other fudiciary obligations like Medicare. But obligations stand, no matter what type or pledge to whomever. The total US interest payments in Fiscal Year 2013 were a sizeable $415 billion, equal to 17% of total tax revenue. The figure matches the Ottoman Empire debt ratio in 1868. Consider the details for a horror show. The IRS collected $2.49 trillion in taxes last year, net of refunds. However, $891 billion from this amount was from payroll tax. According to FICA stipulations, these funds are tied directly to funding Social Security and Medicare. They are not to be used for interest payments or general revenue, a violation of the 1935 law. Therefore, the amount of tax revenue that the USGovt had available to pay for its operations was $1.599 trillion in FY2013.

The USGovt actually spent 26% of their available tax revenue just to pay interest last year, when separating the confiscation of the FICA payroll taxes. This is an incredible figure. Great deceptions are being used, and the public is not alarmed. They are too ignorant of economics, and too distracted by their own household and small business woes. They are to become financial cannon fodder, their home equity already gone, their stock accounts of dubious value, their jobs insecure, their pensions next to be confiscated. See the Sovereign Man article (CLICK HERE).

◄$$$ RISING INTEREST RATES ON ONE SIDE, OR SCLEROSIS ON THE OTHER... THE USFED IS STUCK, AS RADICAL RISING RATES WILL OCCUR, OR ELSE A DEEP CAPITAL SCLEROSIS ROT SETS IN... THE SHEER SIZE OF THE USFED BALANCE SHEET DICTATES SOME ACTION, LIKE RESIGNATION. $$$

Michael Pento echoes the Jackass forecast of rising interest rates, as the USFed loses control of the bond market. The head of Pento Portfolio Strategies was recently censored on CNBC for stating the stark truth about failed monetary policy and their effect to distort financial markets. The following are his thoughts, with my edits for flow. Pento began by pointing out how fragile the financial markets are to even hints of withdrawn monetary easing. The entire thought process has become distorted. The apologists argue that even if the USFed eventually moves to hike interest rates, it will merely be a sign of economic health, a move the equity market should embrace. Pento expects that rising interest rates will soon arrive, either courtesy of the central bank or through free market forces. A rising cost of money never bodes well for the stock market or the USEconomy. The Jackass reminds of an old rule which should be kept in mind, that the longer a harmful policy is in place, the more violent the reaction will be once removed. This time, removal of the USFed's all-encompassing and price-indifferent bid for Treasury debt will place tremendous upside pressure on rates. The effect might be transferred to the Interest Rate Swap derivative structures.

Pento paints a nasty scenario. If the debt-laden USEconomy is subjected to normalizing interest rates, the many weak municipalities would come under great stress from soaring debt service payments from a tax base that is quickly eroding. Home prices would begin to tumble once again. Equity market investors would sell off, as the record amount of margin debt is forced into liquidation. The adjustable rate consumer debt would come under duress. Bank capital would decline as portfolios go underwater. Even the USFed balance sheet would be deemed insolvent, due to its meager capital vanishing quickly. Interest payments on USGovt debt would soar, causing annual deficits to skyrocket. The over $100 trillion market for interest rate derivatives would go bust, the fractures causing a financial nuclear event. Such is the result of creating a system completely addicted to debt, asset bubbles, ZIRP, and QE for almost 20 years, but hyper inflation for over three years. In essence, the entire economy would collapse.

Pento believes the USFed is on the verge of ending QE not because the USEconomy has reached the inflation and unemployment goals it set out to achieve, but rather from fear of the monstrous size of the balance it has created. He remarked that if interest rates stay at these record low levels, it will be because the private market compensated for all of the central bank purchases at these radically low yields. Such an event would occur only if the tremendous deflationary forces were unleashed. The sudden absence of the USFed bond bid would cause a massive vacuum. The absent support of money supply growth would cause stock and property prices to tumble, taking the economy into the pits for the ride. Market participants should prepare now for the failed exit of QE and a long series of shocks. Expect a nasty volatility between inflationary and deflationary forces. The future offers bleak options, but plenty of derivative shock waves. They can stop printing money and allow a devastating deflationary cycle to pop the broad asset bubbles built up, OR continue the money supply expansion until hyper-inflation eradicates the middle class and washes out the economy. Pento warns investors. An anemic global economy, a record amount of margin debt, and the USFed tapering of asset purchases will cause a sharp selloff very soon. To be specific, sometime between now and before summer is well along. See the King World News article (CLICK HERE).

The Jackass expects the USTreasury Bond complex to break. The derivatives act like flying buttresses at Notre Dame in Paris, but here to support the USTreasury Bonds. The bond market might not offer much higher rates. The recent Jackass forecast for 3.5% on the TNX 10-year yield might be in error, not to occur. But in the process of keeping the long-term bond yields suppressed, the derivative machinery is ready to break. That is the real story, the big story, the relevant event to report. One should suspect the USGovt will shut down the USTBond arena before that happens.

◄$$$ TINY BELGIUM IS ACTING AS PROXY FOR A SIGNIFICANT FINANCIAL HIDDEN ENTITY... THE OBVIOUS SUSPICION IS THE PRINCE DRAGHI PALACE AT THE EURO CENTRAL BANK... THEY HIDE BEHIND THE EUROCLEAR FUNCTION... BY YEAREND, THE BELGIAN HIDEY HOLD COULD CONTAIN ALMOST $1 TRILLION IN CONCEALED USFED QE BOND PURCHASES... RUSSIA CONTINUES TO DISGORGE THEIR USTBONDS. $$$

Belgium might be the finger in the USTBond dike. It is quite clear that Belgium itself is not the buyer, since their economy is small and they post deficits every year. The USFed has hooked up with the Euro Central Bank to conceal sizeable USTBond monetized purchase. The mysterious buyer is using Belgium as a front. In their account another whopping $31 billion in USTreasurys in February were purchased, bringing the Belgian total to a record $341.2 billion. The USTBond game has become a floating farce. The Euroclear buying rampage continues. They stand as the third largest holder of USTreasurys behind China and Japan. They easily stand above the biggest hedge funds. The Belgian account has added a record $141 billion in USTonds since December, when outgoing USFed Chairman Bernanke announced the start of the Taper. The smell of Prince Draghi grimy fingers is obvious.

To be sure, the mystery buyer is not Russia. The data shows that in February, when the Ukraine conflict was starting, the Big Bear sold another $6 billion, bringing the Russian total down to $126 billion. Their account now stands at the lowest level since 2011. The annual drop of 24% was their biggest annual drop in holdings in history. The Russians have been making big reductions for a full year. See the Zero Hedge article (CLICK HERE).

◄$$$ A HUGE HIDDEN INDIRECT EXCHANGE IS TO TAKE PLACE... GAZPROM WILL TAKE OVER A NATIONAL GAS FIRM IN KYRGYSTAN FOR THE SALE PRICE OF A MERE ONE USDOLLAR... THE ENTIRE $40BN DEBT IS ASSUMED, TO BE SURELY PAID BY USTREASURY BOND CURRENCY. $$$

Yet another huge Indirect Transfer is to take place, in a small former Soviet Republic. The giant sprawling Russian Gazprom will go bigger. It has bought a 100% stake in Kyrgyzgaz for a symbolic $1, with the real substance of the deal being the assumption of the company's $40 billion debt. The deal makes Russia's natgas monopoly the sole gas supplier to Kyrgyzstan. The Gazprom CEO Aleksey Miller is very pleased to extend the monopoly, which undertook to rename the firm as Gazprom Kyrgyzstan. The Russian giant energy firm pledged to invest at least 20 billion Rubles over the next five years. The existing transportation wires and trunk pipelines will be renovated, modernized, and rebuilt. New fields will be explored for expansion. Gazprom has an exclusive 25-year deal to export gas from Kyrgyzstan, which will facilitate the transfer of foreign payments connected with the investment. The $40 billion in debt represents a big chunk of USTBonds. Gazprom will also have the right to set gas tariffs for Kyrgyzstan supplies to third party countries and to determine the price of storing gas in underground storage facilities. See the Russia Today article (CLICK HERE).

## THANKS

Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and more.