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
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
Washington cannot stop this [Russia-Iran]
deal, it could serve as a signal to other countries that the
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)
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)
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
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")
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
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
◄$$$ 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
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
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
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
and China in many commercial respects.
is building a 3G cell phone network in Nicaragua,
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,
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
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 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
◄$$$ STRANGE MARKET REACTION TO RUSSIAN STANDOFF CONFLICT, IN MILD US-STOCK
DECLINE BUT A STRONG 10% RISE IN RUSSIA...
THE MONEY IS BEING BET, AND IT IS GOING AGAINST THE UNITED
◄$$$ 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
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.
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
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
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 the Russia Today article (CLICK HERE) and
the Indian Rediff article (CLICK HERE)
and the Spiegel article (CLICK HERE).
◄$$$ ON POLITICS:
The USGovt has stated the G-7 Nations are open to more Russian sanctions. Just
like with QE bond monetization and austerity budget measures,
if it does not work, apply more of the same ineffective pressure.
is leaving the USDollar based system entirely, making them
immune to sanctions. Global cabal architect Brzezinski sees
a Finlandization process coming to Ukraine as deal maker.
Perhaps the black nobility prince will slither into a negotiator
role of West surrender. Propaganda drivel from London is ripe, with claims that Putin is caught in a pincer. More
like he is in the driver's seat to force a Global Paradigm
Shift on the doubly vulnerable United States. It is over-exposed with the USTreasury
Bond and over-stretched with the USMilitary. See the Al Jazeera
article (CLICK HERE)
and the Bloomberg article (CLICK HERE)
and the UK Telegraph article (CLICK HERE).
◄$$$ 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."
◄$$$ ON DISUNITY:
Israel has begun to side with Russia
over the Ukraine
battle, citing an endangered security. The Gazprom angle with
Israel's prized Floating Tamar
platform might have been used as a chess piece. Great irony
is evident. The Massad is very active in Ukraine
against nazis, but a Massad agent at the central bank opened
the midnight door for the US Nazi bankers to steal the Ukraine gold bullion. A multitude of Jews live
in Kiev and Odessa, and besides, a significant portion of Israeli immigrants are
of Russian descent. Israel is not White House friendly, since it is
loaded with Muslim Brotherhood. More north, Switzerland has snubbed the
USGovt effort to sanction Russian billionaires, by obstructing
or freezing their accounts. Too much money is involved. The
official scorecard of US Friends List is becoming shorter
by the week. Total isolation is directly ahead, except of
course for the British handlers. See the Before Its News article
and the Yahoo News article (CLICK HERE).
◄$$$ ON FINANCES:
Delusion is ripe. Intl Monetary Fund chief sternly holds that the Ukraine bailout will not fail. Lagarde expects
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
and the Russia Today article (CLICK HERE).
◄$$$ ON ECONOMY:
Ukraine only has enough gasoline for a month,
28 or 29 days to be exact. Rapid economic collapse comes to
their economy as reward for the coup d'etat and collusion
with the West. Vacuum of leadership, capital, supplies, and
tax revenue will be the billboard messages soon. Putin has
been waiting patiently, allowing the collapse. The Crimean
ports are vital for agricultural exports. Ukraine's next casualties
could be its farmers, who are priced out of fertilizer and
other supplies, even as fuel costs have risen. The economic
implosion moves quickly. Ukrainian farmers control a bountiful
land. The nation was the #3 world exporter of corn and #6
exporter of wheat in 2013. Suspect the Chinese will try to
buy the Ukrainian land before the West can steal it. In view
of China being stiffed on a $3 billion grain deal
a picture emerges. The Asian giant might work to control their
farmland resource before it is subjugated and stripped by
the West. More details on the natural gas and energy issues
related to Ukraine will be addressed in the Gold & Currency
China has filed lawsuit against Ukraine
for breach of contract in a grain deal. Citing a Ukrainian
parliament official, the ITAR-TASS news agency reported that
the State Food & Grain Corporation of Ukraine
has diverted part of the $3 billion Chinese loan to provide
crops for other countries and parties, including Ethiopia,
Iran, Kenya, and Syrian opposition
groups. See the Zero Hedge article (CLICK HERE)
and the Russia RBC article (CLICK HERE) and the Business
Week article (CLICK HERE)
and the South China Morning Post article (CLICK HERE).
EuroRaj added a different perspective. "Ukraine is
also a big fertilizer supplier and exporter to emerging markets
like Brazil, India, and Turkey.
Ukraine is a grand scheme to mess with the BRICS, a serious
violation. Hence there are no takers of the Russia
isolation within the G-20 nations."
## BRICS ROAD WIDENS AWAY FROM USDOLLAR
◄$$$ 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,
Africa) that have supported all initiatives
to circumvent USD financial abuse. These four nations have
each supported the Russian position on Crimea against both
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
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
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
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
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
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
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
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
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,
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.
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,
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,
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
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. $$$
The Export-Import Bank of China (EximBank) has provided
credit support to 46 transportation infrastructure projects
in the Assn of Southeast Asian Nations (ASEAN) countries by
early 2014. The EximBank, one of the world's leading lenders,
plays a critical role in the growth of China's
external trade. It casts a long shadow even to the great African
continent, the origin of many supply chains. With preferential
loans from China, 24 highways, three
railways, one port, three airports, and nine bridges have
been built, rebuilt, or renovated in ASEAN countries, according
to the pervasive bank. Their projects include a national railway
system in Cambodia which stretches 2170 kilometers, the Second Penang Bridge
which forms the longest seabridge in Southeast Asia, and the
Luang Prabang Airport
in Laos. The new Chinese leadership of President
Xi Jinping has placed great emphasis on deepening economic
links between China
and ASEAN nations, their direct Asian neighbors. Meanwhile
and not to be overlooked is the significant funding role that
EximBank has in Africa, where it is the biggest lender. The current projection is for
EximBank to account for 80% of a $1 trillion financing for
the African continent through year 2025. See the BRICS Post
article (CLICK HERE).
View the EximBank as a regional IMFund with local dedication
to China's neighbors.
◄$$$ 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. $$$
Gazprom Neft is a large Russian state-controlled oil producer, only loosely
associated with Gazprom. Upon queries, it has received positive
responses from Asian clients about the possibility of using
Euros as a settlement currency instead of the USDollar. The
USGovt is pushing the Eastern giant to work around the USD
payment system. Company executive Alexander Dyukov has discussed
with buyers the possibility of switching contracts to Euros
in a formal sense. The majority would comply, with 95% willing
and prepared to make the switch. Gazprom Neft ships 30,000
barrels per day of oil eastward. Three buyers in Japan
said they had been approached by by the oil supplier firm
to settle oil payments in currencies outside the USDollar.
Two of the buyers said they were still considering the proposal,
while the third said they had bought crude using Euros before
and did not see it as a problem. One small obstacle remains,
pointed out by a Japanese buyer from the ESPO pipeline end.
At issue is who will bear the currency exchange cost. See
the Strat Risks article (CLICK HERE).
◄$$$ RUSSIA, KAZAKHSTAN,
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,
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
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.
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...
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
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
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
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
is loaning its territory and that is all, and for that it
must be asking for a small payout. Similarly, Turkey
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
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,
and Germany will all turn eastward to join the trade
zone, all in time, with Ukraine
◄$$$ 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
response. They promptly were forced to indicate transactions
in Rubles, Yuan, and Gold bullion in exchange for their vast
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,
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
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
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 the Reuters articles (CLICK 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
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).
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
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
has had the misfortune of over 200 accidents, and over 2000
related deaths. All business activity between the US
terminated in 1980 with the glaring hostage incident, followed
by a hostile Ayatollah regime. The relief deal was struck
and six world powers (US,
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
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
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).
◄$$$ JAPAN IS WORKING CLOSELY WITH RUSSIA ON DEVELOPING THE SAKHALIN ISLAND NATGAS WORKS... GRADUALLY
KOREA WILL BE PULLED INTO THE EURASIAN
TRADE ZONE... THE ATTRACTION WILL BE EFFICIENCY, EXPEDIENCE,
AND LOWER COST. $$$
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
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
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
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
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 &
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
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
◄$$$ 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
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
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
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,
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
The talks between Lavrov and Wang in Beijing extended toward
the situation in Syria, the Iranian nuclear program, peace in the
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,
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 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
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
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
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. $$$
Two weeks ago EuroRaj identified stresses in the US-DX index, the USTreasury
Bond yields, the US stocks, big bank stock
share prices, crude oil separation of Brent from WTexas, and
a couple other indicators. He surmised that the RESET had
begun, a long difficult process which will span perhaps several
weeks or even a few months. The stresses within the numerous
markets appear related and linked. Some stirred conversation
took place, when The Voice offered a simple confirmation on
the prospect of the RESET having already begun. He wrote,
"YEP" and nothing more. The Jackass conclusion is
that the vast derivative complex will be the victim of RESET,
during which the USD/USTBond global rejection becomes crystal
clear. Most astute observers are waiting for a single obvious
event. It will not happen that way. It will instead be a process
where integrated financial markets will come unglued, although
## FAILED CENTRAL BANK FRANCHISE SYSTEM
◄$$$ 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
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
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,
Germany, South Korea,
and Australia lead the long list. Many minor nations
such as Belarus,
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,
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
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
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
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
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.
◄$$$ TINY BELGIUM IS ACTING AS PROXY
FOR A SIGNIFICANT FINANCIAL HIDDEN ENTITY... THE OBVIOUS SUSPICION
IS THE PRINCE
AT THE EURO CENTRAL BANK... THEY HIDE BEHIND THE EUROCLEAR
FUNCTION... BY YEAREND, THE BELGIAN HIDEY HOLD COULD CONTAIN
ALMOST $1 TRILLION IN CONCEALED USFED QE BOND PURCHASES...
CONTINUES TO DISGORGE THEIR USTBONDS. $$$
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
◄$$$ 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
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
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 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.