MONETARY CRISIS REPORT
CLIMAX OF FINANCIAL FRAUD
COMPREHENSIVE GUIDE

* Monetary Fragments
* China Plays African Card
* Banker Scandals Erupt
* Brush Fires Spread
* Money Market Vulnerable Link
* Central Banks Squirm


HAT TRICK LETTER
Issue #101
Jim Willie CB, 
“the Golden Jackass”
19 August 2012

"The result is a doctrine of financial war not only against labor but also against industry and government. Gaining the financial power to indebt economies at increasing speed, the banking and financial sector is siphoning resources away from the real economy. Its business plan is not based on employing labor to expand output, but simply to transfer as much of the existing flow of revenue as possible into its own hands, by capitalizing all such revenue into interest payments, on loans collateralized and pledged to creditors." ~ Michael Hudson (who compares the state of the US economic polarization to ancient Rome before its ruin, truly parasitic in its internal function)

"When a restaurant has been used to launder money by the mafia and has been running for a few years, it must be burnt down to hide the fact there are no clients from the IRS. When Enron (the OTC derivative restaurant) went broke, the accountants burned it down by shredding the transactions made with thousands of straw partnerships. Now it is time to burn down the mega banks, too big for jail, in order to hide the facts from the eyes of newly inspired police of all kinds." ~ Jim Sinclair

"Debt has been growing exponentially everywhere. Debt is backed with debt, based on debt, dependent on debt, and leveraged with yet more debt. For example, today it is possible to buy a bond (i.e. lend money) on margin (i.e. with borrowed money). The time is now fast approaching when all debt will be defaulted on. In our perverse monetary system, one party's debt is another's money. A debtor's default will impact the creditor, who is usually also a debtor to yet other creditors, causing him to default, and so on. When this begins in earnest, it will wipe out the banking system and thus everyone's money. The paper currencies will not survive this." ~ Keith Weiner (New Austrian School of Economics)

"And as policymaking turns increasingly desperate, it is almost guaranteed that Risk-on Risk off turns only more unwieldy. Indeed, it is clear at this point that the more global policymakers turn to monetary inflation to thwart the downside of the credit cycle, the greater the amount of fuel injected into a dangerous global speculative bubble. In anticipation of next week's scheduled Federal Reserve and EuroCB meetings, Steve Liesman (CNBC) today referred to Monetary Madness. I will use the term to describe the past couple decades." ~ Doug Noland (Prudent Bear)

"After twenty years of service, I am ashamed to have had any association with the Fund at all." ~ Peter Doyle (departing IMF economist, angry over favor given to Europeans, and over repeated suppression of reporting on extreme warning signals)

Editor Note: The implosion of Morgan Stanley is near. A Hat Trick Letter subscriber has a friend whose father is a fund manager inside Morgan Stanley. They are all talking about implosion internally at the MS firm. It is to happen soon. The father, along with many colleagues, sold his personal legacy MS stock holdings. They are abandoning ship. Something big is brewing. An internal disaster has also occurred, as the firm made a transition from state of the art technology with their software back to trading software that takes five times longer and is at least 10 years outdated. The move has caused chaos at the trading desks. The Facebook IPO was another disaster. My concern is whether the massive Interest Rate Swap application by Morgan Stanley in early 2011 has had repercussions, like the lead Wall Street giant banks trying to kill off Morgan Stanley, in order to bury the evidence of criminal derivative trading. Recall that a few months ago, Jim Sinclair shared information that over 600 accounting experts and financial analysts were poring over the the books of a major Wall Street firm, trying to determine if they were indeed dead meat. Many surmised it was Morgan Stanley. Perhaps the internal chaos is related. When the Jackass checked with a Central European banker who has shed light in the past, he wrote back, "Morgan Stanley is a small casualty in the coming chain reaction of things to unfold. We shall see Deutsche Bank and Credit Agricole in France each go through failures, taking everything down with it. The fraud and crime is so big that people cannot see the elephants in the room. The faster all comes crashing down, the faster we can start rebuilding." A second event much like the Lehman Brothers failure is coming, which will enable JPMorgan and Goldman Sachs to grow larger as last survivors. They must consolidate the control rooms, which will resemble bunker war rooms.

See the Special Report entitled "Personal Account of National Crisis" as part of the August package. It includes various perceptions of the US Presidency in recent  years, as the narco barons dominate in the lineage. Political parties are a mere distraction. The up-to-date revelant fact is that Romney has gathered almost five times as much Wall Street banker campaign contributions than the incumbent president occupying the White House. The report includes various perceptions of the Treasury Secretary within the Administrations, loyal since 1994 to Goldman Sachs. A theory is offered to explain the oddball John Snow of the lot in the Treasury post. The report includes numerous interactions with Jackass college friends, one in particular, the smartest of the bunch. He is a law school graduate and scholar. The conflicts and agreements are described with friends, which typify the American public, at least among the educated and semi-intelligent. Lastly, the report includes various perceptions regarding the most significant event in decades for the nation, the World Trade Center attack. It was a concealed major bank heist, perhaps the greatest in world history, surely modern history. It was the most significant mass murder in US annals, to enable a Coup d'Etat of the US Government by the Syndicate, simply put. Just a collection of personal thoughts, perceptions, and hypotheses.

## MONETARY FRAGMENTS

◄$$$ BARNHARDT QUOTES PROVIDE A LATE STAGE WARNING. THE SENTINEL CASE HAS GIVEN PRECEDENT TO ELIMINATING ALL LIABILITY FROM FINANCIAL FIRMS WHEN LOSING CLIENT FUNDS (OR STEALING THEM). IT IS OPEN SEASON TO STEAL CLIENT FUNDS WITH IMPUNITY. THE BIG BANKS ARE BEING PLACED IN FIRST POSITION ILLEGALLY, AHEAD OF CLIENT SEGREGATED ACCOUNTS. THE COURTS ARE BLESSING THE ILLEGAL ACTIONS. THE PATTERN IS SET, AND THE DIE CAST. THE PUBLIC HEEDS LITTLE THE WARNING FOR STOLEN PRIVATE ACCOUNTS, DONE WITH COURT PROTECTION. AS THE CLIENT ACCOUNT SEIZURES AND THEFTS CONTINUE, LOOK FOR CONSOLIDATION AMONG THE GIANT BANKS. THEY WANT CONTROL FOR FORTRESS DEFENSE AND FOR FUTILE IMPLOSION PREVENTION. $$$

Anne Barnhardt has become a vigilante warning like Paul Revere. She believes the entire financial market paradigm is being guillotined, and client accounts are being harvested like crops. The Sentinel case from 2007 has finally received a court ruling. It is a shocker, giving license to snatch client accounts even if segregated. "That Sentinel failed to keep client funds properly segregated is not, on its own, sufficient to rule as a matter of law that Sentinel acted with actual intent to hinder, delay, or defraud its customers," wrote US Circuit Judge John Tinder. See the full story from the 2007 case and recent ruling (CLICK HERE). The ruling goes counter to many legal statutes and bankruptcy procedures. No matter, since the ruling protects the big banks and financial firms.

Barnhardt has made several past warnings, writing in detail, with specifics on the breakdown of the financial brokerage practices. What follows are her points, assembled in cohesive fashion without quotations. The National Futures Assn (NFA) collusion with the banksters, government, and judiciary has achieved their goal. The entire concept of customer segregated funds is officially, completely, legally dead. Strong words. The public is still to some degree cowering in normalcy bias, unable to deal with reality. The marketplace is destroyed. The private investors must exit these markets, since all legal protections are officially gone. Harken back to the Ponzi scheme called the Sentinel Management Group that imploded in 2007. They stole over $500 million in customer funds. The NFA was the auditing regulator of Sentinel. The perverse part is that the NFA admitted after the Sentinel Ponzi meltdown that they signed off on their audits even though the NFA claimed not fully understanding Sentinel's books or accounting methods. Hence the NFA did not audit Sentinel at all. It was a blatant example of auditor accounting fraud. They have been forgiven of all liability, given a grand pass in violation of the law. The Fascist Business Model prevails.

Barnhardt was clear, calling the NFA a criminal mafia, in cahoots with the auditors. She said, "There is no real regulatory oversight of the financial industry in this country!! The NFA is not auditing anybody in any realistic sense. If you are in the NFA mafia, they will coast you right through. If you are not in the NFA mafia, they will tear you apart and destroy you with malicious auditing and malicious litigation. The coup de grace is that the courts are now completely complicit in all of this!! The courts facilitated the fraudulent bankruptcy filing of MFGlobal, and now the 7th Circuit Court of Appeals upholding a decision from the District Court has now made this absolutely mind blowing decision, setting precedents that say customers have absolutely no right to their segregated funds held in any depository or financial institution!" This is outrageous.

Sentinel illegally seized customer segregated money and fraudulently used it as the collateral on a loan from Bank of New York Mellon for $312 million, which funded their own in-house proprietary trading operations. When the Sentinel Ponzi collapsed, BNYM sued to go to the front of the line of creditors, ahead of the customers of Sentinel whose money was fraudulently used as collateral. The pattern is repeating, with MFGlobal and PFG Best. This is the exact same path of criminal malfeasance taken by JPMorgan, jumping ahead of MFGlobal clients. JPMorgan has announced that it wants to hold customer collateral. It wants to be the body that holds customer collateral for Futures Commission Merchants. They urge the system to enable a third party to hold customer collateral. But it will be JPMorgan once again. The reporting of the Sentinel story used the linguistically sanitized word hypothecated, not stolen. The federal appeals court has ruled last week that not only does BNYM stay at the front of the line, but that using customer segregated funds as collateral is not a crime, and that co-mingling customer segregated funds with proprietary funds is not fraud. This is a horrible low point in American financial precedent setting cases. Co-mingling is most certainly financial fraud.

The Federal Appeals Court has explicitly stated that a Futures Commission Merchant (FCM) can use customer deposits to pay its debts, and that the customers themselves are subjugated and have basically no legal right to funds in their own accounts. The rules goes in direct violation of what standing legal statutes and regulations state. No longer are legal assurances, claims, or guarantees valid for client segregated funds held with an FCM or any other brokerage or depository institution. Whichever big bank is involved in the illicit mix can move to the front of the line in the final disposition of funds, after the financial brokerage firm is dead. The big bank is free to make fraudulent loans using the stolen customer funds as collateral. The firm will be treated like an ordinary financial firm, and not a brokerage firm. The die is case for precedent. Extend the implications in a basic logic step.

Conclude that all client funds in the United States are now legally available property of JPMorgan, Goldman Sachs, Bank of New York Mellon, or other giant banks standing as the counter-party on the loans the FCM or depository institution. They are free to hypothecate (pledge as collateral for illicit usage) any client funds to operate their mega-levered proprietary in-house trading desks. The public must heed the warning, and remove all funds from the US financial brokerage system, all the major banks in private accounts, and all money market accounts. They are not safe. The Jackass has been making this point since the MFGlobal case broke out in December 2011. The final Sentinel ruling sets precedence for every depository institution, not just futures brokerages. It is now legal in the United States for any financial institution to steal customer funds, and borrow against those funds for whatever purpose with impunity. The giant banks are desperately attempting to save the system, making crazy bets, apparently with funds from private accounts. The customers have zero claim to their own funds in court. The case rulings are showing a pattern of consistency, moving big banks ahead of clients illegally with court blessing. The Fascist Business Model is blossoming in stark criminal fashion.

Barnhardt sees the entire high level bank processes completely revolving around JPMorgan and Goldman Sachs. She expects the Wall Street power center to try to consolidate these mega banks even more. Look for JPMorgan to make a play for Citigroup at some point. Their merger grab for control might include a play for Bank of America as well. The giant bank is going to try to have as much as possible under Jamie Dimon's control, since they know that the end is coming. It is all rotten under the JPM roof. Steve Quayle confirms this JPMorgan consolidation plan to be put in motion after an upcoming bank virus event that paralyzes the big banks in the United States. See the scoop from the Silver Doctor article (CLICK HERE).

◄$$$ A TOTAL SNAFU OCCURRED WHEN KNIGHT ATTEMPTED TO LAUNCH ITS NEW TRADING SYSTEM. SOMEWHERE ALONG THE LINE, A MAJOR ACCIDENT OCCURRED THAT ESSENTIALLY KILLED THE FIRM. THE RESCUE INVOLVED HEAVY DILUTION AND NEAR WIPEOUT OF INVESTORS. $$$

Knight Capital Group was brought to its knees by a software glitch that caused errant trading in dozens of stocks. The company tried to do damage control, claiming the loss would be in the $150 to $250 million range, but it turned out to be more like $440 million. The Securities & Exchange Commission is mum on the story, from ignorance, not malice. The deal might be at risk if Knight's bold action is insufficient to restore confidence in the firm from its counter-parties. Worse, since the convertible bond is unsecured, investors are subject to full writedown on their investment quickly. The only perceived benefit is to 1400 Knight employees, who will will have a job until the true fallout of the mega trade blunder is understood. No indication of dastardly deeds like sabotage or flash trading gone awry here.

A group of investors will rescue embattled market maker Knight Capital Group in a $400 million deal that keeps the company in business, but the deal comes at a huge cost to eradicated investors who will be diluted badly. The bond will be convertible at a $1.50 conversion price, greater than a 60% dilution. Hence the pro forma share count will soar from 90 million to 350 million upon conversion. Bankruptcy is hardly worse. The rescuing companies will buy convertible preferred stock with a 2% dividend to save Knight. The preferred shares are convertible into about 267 million shares of common stock. Knight will ensure the investors would receive a stake of a little more than 70% in the company. The New York Stock Exchange will temporarily transfer Knight's market making responsibilities to Getco in Chicago, until the recapitalization is complete. See the Chicago Tribune article (CLICK HERE) for deal details. See the Reuters weblogs (CLICK HERE) for more information on the regulatory theme.

The Knightmare occurred upon the release of their new market maker software to work in real time with the NYSE stock market as a Retail Liquidity Provider. The post mortem indicates that Knight accidentally released the test software they used to verify that their market making software functioned properly, into NYSE live system. The software handles buy & sell orders, but might have been tripped up when hitting the bid & sell prices for stocks that Knight did not make a market in. It was a disaster that went out of control, without providing value on losses to the Knight managers in prompt time frames. See the Zero Hedge article (CLICK HERE) for details on the launch of the trading system.

◄$$$ THE UKGOVT DEFICIT DEATH SPIRAL FEEDS UPON ITSELF. THE PENSION UNDER-FUNDING IN BRITAIN HAS WORSENED BY A FACTOR OF TWO IN THE LAST YEAR. THE ULTRA-LOW RATES MAINTAINED BY THE CENTRAL BANKS ARE KILLING THE SYSTEM FROM INTERNAL ROT. MORE CONSERVATIVE MANAGEMENT IS RESULTING IN REDUCED BUSINESS INVESTMENT. THE IMPACT IS FELT WITH REDUCED INCOME BY EMPLOYED, AND REDUCED INCOME BY PENSIONERS. THE UKGOVT DEBT HAS CREATED A BLACK HOLE IN PARALLEL TO THE USGOVT DEBT. $$$

The insolvent banking system has a way of spreading the rot and capital decay, done by the ultra-low interest rates. The UKGovt (like the USGovt and EU govts) are stuck with the artificially low rates since they cannot properly fund their official debts. The insolvent housing market remains comatose. The pensions go worse in under-funding with each passing month, since their bonds under management earn next to nothing. The rot spreads like a cancer across capital bodies. The many pensions face a death spiral. The same force that ruins capital from a chronic 0% official rate, due to rising costs and shrinking profit margins, also attacks income by providing next to nothing as a return on savings in a grand spin cycle. The entire pension system requires income from the stored capital, but it is not provided.

Ros Altmann is a leading respected economist in England. She has become the spokeswoman for SAGA, the over-50's advocacy group. She plainly states that the national pension system faces a death spiral. She accuses the Bank of England for its monetary policy in doling out deep damage. The Quantitative Easing has done irreparable damage to Britain's final salary pension schemes in her opinion. Its policy has run into a fourth year, like in the United States. By forcing down long-term interest rates, it has caused huge problems for the pension schemes of many firms. She estimates that the pension deficits at FTSE 100 firms have more than doubled in the last year alone, despite companies pumping millions into their schemes to repair their pension shortfalls.

Altmann said, "This is turning into a Death Spiral. The lower UKGilt yields fall, the worse pension deficits become. The worse pension deficits become, the more trustees will feel they need to de-risk. This often means buying more Gilts, which itself means worse deficits because trustees are competing with the Bank of England, which is also trying to buy Gilts due to QE. Firms are left trying to find more money to plug pension deficits, causing funds to be diverted from creating jobs and expanding operations. Worryingly too, companies trying to borrow money to expand, or to meet a pension recovery plan, are finding the banks increasingly unwilling to lend because of the pension deficit. This vicious circle must not be allowed to continue. Artificially inflating pension deficits is hampering economic recovery."

England faces a pension vortex with extreme power. A truly vicious circle has turned powerful and nasty. Witness in England the open discussion of what the Jackass has called the Black Hole effect of government bonds, describing it fully in the June monthly analysis. The same force works with USTreasury Bonds, sucking capital, removing fixed income, and undercutting business investment. Job cuts are the natural consequence, as income within the system is reduced from the employed AND the pensioners. The fund managers at the many firms would prefer to eliminate their pension risks altogether, but they cannot. They struggle mightily from being able to cover the cost of future liabilities, which rise as the Gilt rates fall. See the UK Telegraph article (CLICK HERE).

◄$$$ THE UNITED STATES HAS LOWERED THE $10,000 REPORTING ON THE MOVEMENT OF CASH TO $3000. CAPITAL CONTROLS ARE NOT COMING. THEY ARE ALREADY HERE AS THE VISE IS TIGHTENING. $$$

Martin Armstrong has been compromised in my opinion. He has softened his message, even altered certain themes, as a concession in order to exit prison, marked by regular beatings. But he has a message worth noting that pertains to legal reporting requirements. The vise is tightening on cash movements. Soon even Western Union money transfers will face lower limits. Armstrong said at a recent promotional flyer for a conference in San Diego, "Governments are out of control. This is the worst possible outcome we face globally. The United States has lowered the $10,000 reporting on the movement of cash to $3000. They are going to cause a worldwide economic implosion of untold proportion. They are now trying to criminalize natural human behavior of protection ones self-interest from basically thugs. This is like saying the police can beat your wife or child and if you dare try to defend them, you go to jail for obstruction of justice. You cannot confiscate the wealth of any individual because you are fiscally irresponsible. This is like a landlord renting you an apartment and saying that at any time he can raise the rent if he spent too much money having a good time." See the Armstrong flyer (CLICK HERE). This is pure Gestapo in capital controls, which the Jackass has been warning about for a few years.

◄$$$ THE ITALIAN BORDER HAS SEEN A HUGE RISE IN CASH SEIZURES. MONEY IS ATTEMPTING TO ESCAPE, FOR WHATEVER REASON. MOTIVES INCLUDE PRESERVATION OF SAVINGS, AVOIDANCE OF EURO CURRENCY DECLINE, PROTECTION FROM BANK COLLAPSE, AS WELL AS TAX EVASION. THE CAPITAL CONTROLS ARE TIGHTENING IN EUROPE. $$$

Cash seizures from smuggling are soaring at Italy borders. Italian police say seizures of cash at airports and border checkpoints have risen this year to exceed EUR 41 million in confiscations during the first seven months. That is a rise of 78% from the same period in 2011. The haul is part of a crackdown on tax evasion, the justification offered by Italian police and government officials. The reality is that people are attempting to protect their money and savings from a collapsing system, not just tax levies. Specially trained dogs have sniffed out cash stashed inside bags, household articles, clothing, even underwear. See the Euro News article (CLICK HERE). The important point is that officials are claiming criminal intent when preservation of capital is the practical motive. The banking system is collapsing. The USGovt does the same thing, calling any funds in a foreign account the result of money laundering, or worse, funding terrorism.

◄$$$ AN INTRIGUING SANTELLI RANT VERSUS LIESMAN AND KASHKARI TOOK PLACE, EXPLAINING THAT BANDAIDS AND PATCHES SOLVE NOTHING. THE PROBLEM IS INSOLVENCY. IT IS THE NATIONAL PROBLEM, NOT LACK OF LIQUIDITY. THE SOLUTIONS BY THE CENTRAL BANKS ARE STEEPED IN FUTILITY. $$$

The US financial system is not suffering from diminished confidence or liquidity, not from excessive volatility or warrantless fears. It is suffering from insolvency, lack of legitimate income, corrupted markets from chronic interventions, and profound distrust from shattered integrity. It is dying from capital destruction. The financial platforms are cratering from tainted money whose foundation is debt during a time when all debt is being downgraded, the money being disguised bond instruments facing downgrades and writedowns in value. The financial remedies are almost all ineffective, because they use the same elixir as a solution that caused the problem, money without a hard asset foundation.

Rick Santelli from the Chicago trading pits comprehends the problem and fatal ailment well. He laces into two system wonks, Steve Liesman of CNBC and Neil Kashkari of PIMCO. Santelli consistency offers a breath of fresh air in truth and reality. See the Zero Hedge article for the vid eo clip (CLICK HERE), and from Before Its News (CLICK HERE). The point is that heavy liquidity doses do not fix insolvency. A bigger credit line to a man whose financial house is broken, whose income is paltry, does not bring remedy to the household.

◄$$$ THE USGOVT DEBT BOMB IS PRESENTED IN A PARODY, OF A POLITICAL STATE OF THE UNION MESSAGE. AN EXTREME FISCAL MESS HAS EMBROILED THE AMERICAN NATION. $$$

Almost no major group is spared. In a funny but biting video clip of a short song, check out the professional burlesque from the Daily Bail (CLICK HERE). It is well done and tasteful. We all require some levity and laughter.

## CHINA PLAYS AFRICAN CARD

◄$$$ THE CHINA HARD LANDING HAS HIT. ECONOMIC DATA FROM CHINA MIGHT BE EXAGGERATED MUCH LIKE IN THE UNITED STATES. GIVEN THEIR COMMITMENT TO THE USDOLLAR AS A MONETARY EXTENSION FROM TRADE SETTLEMENT IN RECENT YEARS, THEIR VULNERABILITY TO DEBT EROSION IS CLEAR. EMPTY CITIES, VACANT THEME PARKS, IDLE FACTORIES, SUPPLY VESSELS STRANDED OFF PORTS, REGIONAL DEBT RESCUES, THE STORY READS LIKE THE WEST. YET CHINA COMMANDS A $3 TRILLION RESERVE WARCHEST THAT WILL BE VITAL IN MANEUVERING THE CHOPPY WATERS. $$$

To be honest as preface, the Jackass has minimized the Chinese bust. It is worse than imagined. Since late in the 1990 decade, China has endured risks from a tight currency peg to the USDollar. After the July 2005 decision to gradually move away from that peg and permit the Yuan currency to rise slowly, its exchange rate has risen over 25%. Yet the rise is terminally inadequate in the eyes of USGovt officials, who seek to place blame elsewhere always. The Jackass consistently calls the USDollar toxic, so when China accumulates $3 trillion in reserves, mostly in US$ form, it is natural to conclude that China has a grand problem in holding, managing, and disposing of its toxic paper. It has effectively conducted many resource deals, many in Africa, but the total commitment is a fraction of their total assets held in reserve. The recent proposal at a G-20 Meeting to offer over $1 trillion toward a global trade settlement fund facility showed the path they intend to take. The USTBond mountain commanded by China might be used to fund global trade in a new system not US$-based. What incredible irony! What huge intrigue! Meanwhile, China must deal with the harmful effects of a decade of growth using toxic financial water, the USDollar. They have put a stack of Euros and British Pounds also in their reserve pot. The problem more generally is that Chinese reserves are built from fiat currency.

The bumpy (possibly hard) landing for China in in full force. Factory prices have fallen and deflation forces are being felt. Factory gate prices in China fell at an accelerating rate of 2.9% in July as the economy flirted with industrial recession. The giant newly industrialized nation must defend against a Japanese style deflation. Profits for Chinese exporters have been shrinking by 5% per year since 2004. Compounding the profit squeeze is the fast wage rise, quicker than productivity. Like with the United States, the Shanghai stock market rises and falls on speculation of futher central bank easing. Those hopes are bolstered by the reported small consumer price inflation at 1.8%, given the Peoples Bank of China room to promote inflation. The housing and construction boom in China has been halted. New property starts fell by 27% in July. Industrial output growth fell to 9.2% for a year ago but has been flat over recent months. Many analysts regard such data as greatly exaggerated, since other factory indications are worrisome. Its GDP growth is 5%, much more linked to reality. The turmoil in Europe, combined with the hidden galloping recession in the United States, contribute to a nasty foreign wind that renders deep harm to the Chinese Economy. Morgan Stanley describes the situation as Chinese exporters facing a margin call. Profits have been squeezed 5% a year since 2004 as wages rise faster than productivity, and the renminbi strengthens against the Euro and the USDollar. That makes exports more costly to foreign customers.

The Chinese Politburo has thrown all engines into reverse throttle. The reserve asset requirement for banks has been cut several times. Regions have been given the green light signal for another blitz of stimulus financed by credit from state banks. Wei Yao from Societe Generale said, "The bottoming-out process is taking even longer than we anticipated. The easing policies announced so far have not fully passed through to the real economy. Expert opinion is split on the severity of the threat. Nomura said the latest spending drive will filter through just in time for the Communist Party hand-over later this year, carrying the economy into mid-2013."

However, other corners view the current measures as inadequate and ineffective. Global Insight wrote, "The government might not want to pile on debt and revert to grand state-led stimulus, but it increasingly appears that there are few other choices." The concern is shared by Premier Wen Jiabao, who is openly reluctant to turn the credit spigot on again. He was warned repeatedly that the Chinese Economy is badly out of balance, and must find less dependence upon exports and direct investment. Business investment generally is at a world record 49% of GDP. If America is under-capitalized, China is over-capitalized. The trouble spots are obvious and hidden. Caixin magazine reports that China's entire solar industry is on the verge of bankruptcy as it struggles with debts. Chinese exporters are in serious difficulty as customers are in dire straits, and loaded barges sit off ports not making delivery. The post-Lehman credit spree in 2008 urgently attempted to continue the unsustainable. Reformers and hawks are doing battle at the national political level. Keeping growth going is imperative, but not easily accomplished in the current climate. Debts have piled up in a parallel fashion with the West, an extension of the monetary colony owing to the USDollar commitment in trade. That is changing, as a new trade system is almost ready for full bore usage.

China Securities Journal confirmed in early August that Beijing officials are steering the Yuan currency lower in order to cushion the shock. Already the Yuan exchange rate has entered a slide downward. The unintended consequence is to short-term capital outflows, which run at $110 billion in 2Q2012. It is expected that the benefit to bolstered exports will render an overall positive effect. Some stagflation, just like in the West, is due to hit. Worse, serious confrontation with the USGovt is assured on the currency front. See the UK Telegraph article (CLICK HERE). China is prepared yet more banking measures to soften the impact of economic slowdown. They will make more stimulus after several rounds of past stimulus. See the UK Telegraph article by Ambrose (CLICK HERE). The other hidden impact is to Australian mineral firms like Rio Tinto and BHP Billiton, together with port facility operators. Many are already Chinese owned Down Under.

◄$$$ CHINA IS TAKING CONTROL OF AFRICA, LOCKING UP MINERALS WHILE THE UNITED STATES IS PRE-OCCUPIED WITH OIL AND NARCOTICS. HOWEVER, A HOT MILITARY WAR IS IN PROGRESS BETWEEN THE CHINESE AND USMILITARY IN SOUTHEAST AFRICA OVER CONTROL OF THE RED SEA OUTLET AND MINERALS. THE COLONIAL POWERS HAVE RENEWED INTEREST IN AFRICA. THE CONFLICT IS RAGING ALTHOUGH QUIETLY. $$$

Colonization to exploit natural resources in Africa is not a new concept. The process began way back in 1885, when the General Act of the Berlin Conference launched the Scramble for Africa. What followed was the partition of the continent by the dominant European superpowers, formerly a loose aggregation of various tribes, into the countries that currently make up the southern continent. Afterwards, Africa was pillaged and plundered. The dark continent has not seemed to benefit much from a trade system reliant on Petro-Dollars, as economic development never went past the stage of leader tribe plunder in like manner. In more recent years, a so-called Beijing Conference quietly took place to organize the new colonial powers, where curiously only Goldman Sachs was invited among white faces. The everpresent giant vampire squid has been quietly but aggressively expanding in Africa.

A map assembled by Stratfor shows that since 2010, the continent has become defacto Chinese territory. For the last two years, the Chinese pledges of over $100 billion to develop commercial projects in Africa has begun to take root. As in the norm, following infrastructure spending are strategic sovereign investments, then other modernization pathways, finally commerce. Gradually Africa will transform into an annexed territory for Beijing, full with critical raw materials, resources, and supplies heading eastward. The Chinese are in many cases spending their USTBonds and other US$-based assets in locking down resources in Africa. The United States remains transfixed with the Middle East for its oil and Afghanistan for its heroin. Not all the Chinese projects are resounding successes with the local population benefiting after work is done in mineral extraction. See the Business Insider article about the Angola ghost towns for instance (CLICK HERE). A global consultant with experience in Africa shared a view. He wrote, "The Chinese are after their natural resources. Each and every Chinese sponsored infrastructure project in Africa exclusively serves Chinese interests only. Long-term thinking and working was neither invented in the US nor in Africa. Africa could and should be the most prosperous continent on the globe." The Chinese are the new colonialists with first motive to create their own dedicated supply lines. Africa is vast and ripe for exploitation.

Stratfor wrote, "In late July, Beijing hosted the 5th Forum on China-Africa Cooperation, during which China pledged up to $20 billion to African countries over the next three years. China has proposed or committed about $101 billion to commercial projects in Africa since 2010, some of which are under negotiation while others are currently under way. Together, construction and natural resource deals total approximately $90 billion, or about 90 percent of Chinese commercial activity in Africa since 2010. These figures could be even higher because of an additional $7.5 billion in unspecified commitments to South Africa and Zambia, likely intended for mining projects. Of the remaining $3 billion in Chinese commercial commitments to Africa, about $2.1 billion will be used on local manufacturing projects. While China has proposed $750 million for agriculture and general development aid and about $50 million to support small and medium-sized business development in addition to the aforementioned projects, it has been criticized for the extractive nature of its relationship with many African countries, as well as the poor quality of some of its construction work. However, since many African countries lack the indigenous engineering capability to construct these large-scale projects or the capital to undertake them, African governments with limited resources welcome Chinese investments enthusiastically. These foreign investment projects are also a boon for Beijing, since China needs African resources to sustain its domestic economy, and the projects in Africa provide a destination for excess Chinese labor." See the Zero Hedge article (CLICK HERE).

The key factor not cited in the Stratfor report is the hot battles with soldier deaths and casualties in SouthEast Africa, between China and the United States Militaries. The news blackout is effective. The battlegrounds are real and center on Djibouti, Ethiopia, and Somalia. The smuggling in the Democratic Republic of the Congo is mindboggling in its tremendous volume. A large discovery of crude oil was recently confirmed in Uganda and under Lake Tanganyika. The control over the Red Sea outlet is obvious.

◄$$$ AFRICAN NATIONS ARE SHUNNING THE USDOLLAR. TIGHTER RULE CHANGES ARE MET WITH RESISTANCE. CHINA IS SOON TO DEMAND YUAN CURRENCY IN SETTLEMENT FOR AFRICAN COMMERCE. THE DARK CONTINENT IS THE TIPPING REGION TO TURN TRADE AWAY FROM THE USDOLLAR IN A FINAL STEP TOWARD TRADE SETTLEMENT BEYOND THE DOMAIN OF CRUDE OIL. IF HISTORY REPEATS, THE ENTIRE CONTINENT OF AFRICA WILL BE LABELED ROGUE AND TERRORIST STATES BY THE ALMIGHTY USGOVT, AND CONFLICTS WILL PROLIFERATE. $$$

Africa is proving to be rebellious against the USDollar fortress and pathways. Following the Conference of Beijing, much of Africa has been slowly but surely converting to a continent controlled almost exclusively by China. What comes next is adoption of the Yuan currency, and an exit from USDollars. China has been the sole source of infrastructure funding in Africa, but the continent has long been a legacy USDollar preserve. A conflict comes. On an increasing basis, Africa is saying NO to the USDollar. Even the Wall Street Journal sees the wind change. They reported numerous developments in varied nations. Starting next year, Angola will require oil and gas companies to pay tax revenue and local contracts in its currency the Kwanza, no longer in USDollars. Mozambique will push companies to exchange half of their export earnings for Meticais. They wish to convert vast coal and natural gas deposits into wealth, usable within the domestic economy. Ghana strives similarly to reinforce the primacy of the domestic currency Cedi after it plunged over 17% against the US$ in the first six months of this year. The more vigorous steps come from Zambia, a nation of rich copper deposits. Its central bank has banned US$-denominated transactions completely. Watch for USGovt retaliation there first. Violations in broadly defined rules can result in up to 10 years in prison, according to the central bank. As astute and critical Tyler Durden mentions, look for a misdirection on currency investments supplied by Goldman Sachs to confirm the strength of various resource rich African currencies.

Africa is finally pushing for development of its own capital markets, but many being very basic. The movement toward hard asset currencies might take the greatest strides in Africa. The dark continent has come a long way from the Zimbabwe Dollar fiasco. Some nations must contend with rapidly changing harsh rules when the local companies had been accustomed to doing business in USDollars for a long time. Look for an end to some aspects of colonial African projects. Oftentimes, the proceeds from African resource and mineral sales have circumvented the individual nations in pure exploit laced with graft and corruption by government officials. The industrialized West is not different, since corporations offer cover. The streak of criminality is coming to light. In some cases, local banks might enjoy the benefits of increased business in hedging instruments and FOREX transactions. They are maturing, albeit slowly.

The Zambian Kwacha currency has risen handsomely this year. Hard asset linkage does that, as the USDollar moves in the other direction, down from paperweights. It is backed by debt, arrogance, and fraud. The Ghanan Cedi currency should rise also, due to new rules to keep all reserves at their central bank in domestic currency. Ghana is loaded with rich mineral deposits and a rising consumer class. Some merchants believe their government is bluffing and cannot possibly enforce the rules against widespread USDollar usage in transactions, like paying rents on property. Look for China to be pulling the strings behind the curtains, forcing change even if disruptive. A strange footnote story centered on Chinese importers in Ghana. In reaction to central bank ceilings on US$ transactions at banks, the import firm executives and agents are reportedly doing brisk business with street vendors in foreign currency exchange and storefronts. They are eager to trade local cash for $100,000 before returning to China. Eventually, most of Africa will conduct trade in Chinese Yuan currency. The entire continent is critical to commodity trade, and could tip the balance against the USDollar in global trade settlement outside of crude oil transactions. See the Zero Hedge article (CLICK HERE). The risk to African nations with motive to move away from the USDollar, for whatever reason, will put them in direct aim of USGovt wrath. They will be branded as terrorist states run by rogue leaders. Some will be invaded, with numerous past precedents. It is almost humorous to watch tiny nation currencies show strength as soon as they exhibit a hard asset backing, which is lacking on the supposedly mighty USDollar.

Bear in mind that Iraq around year 2000 was selling crude oil in Euro currency. That action angered the USGovt, which has claim to the global monopoly on reserve currency. Then since around year 2010 Iran has been selling crude oil outside the USDollar currency. Their action has also angered the USGovt. Both nations were deemed terrorist nations, with attempts to isolate the rogue nations. Watch the developments in Africa, since numerous nations have begun to conduct ample trade outside the USDollar in settlement, but in relatively small volume. The United States has a pattern of brandishing nations rogue and promoters of terrorism when they venture away from the USDollar windows.

The leaders in WashingtonDC should take a closer look in the mirror. History will not treat them well for hegemony in markets, and dastardly political deeds, all part of a strategy to maintain power. They should instead attempt to renew the American roots of industry, trade, cooperation, and mutual advancement. But that is NOT the way promoted by the banker-controlled USGovt leaders, who put into practice the highly destructive Fascist Business Model. The very dirty secret is that the hands controlling the USGovt leaders behind the curtains belong to Nazis. The sealed their power after 911, their blitzkrieg, which will someday in the near future be exposed.

## BANKER SCANDALS ERUPT

◄$$$ CONNECTION BETWEEN THE USFED AND THE U.S. SECURITY AGENCIES IS BEING ESTABLISHED. THE MILITARY NEED FOR SILVER IS COMING TO THE FORE, OR ELSE A BUST OF JPMORGAN OVER ITS SILVER SHORT POSITIONS WOULD REVEAL VAST MONEY LAUNDERING AT THE GIANT SYNDICATE BANK THAT EXPOSES A VERTICALLY INTEGRATED NARCOTICS INDUSTRY RUN BY THE SECURITY AGENCIES, A NEAR GLOBAL MONOPOLY. IN TIME THE SECURE ARENA OF C.O.M.E.X. WILL BE BARREN AS THE INTERNAL MECHANISMS ARE BREAKING DOWN. $$$

The complete loop is realized for the JPMorgan for its primary hub role in financial criminal activity related to several key arenas. Consider that JPMorgan runs the Iraqi Export Bank in Baghdad. It is the narcotics clearing house for sales of Aghan heroin produced by the US security organizations. It includes growing fields, production facilities, chemical factories, processing plants, distribution chains, NATO base abuse, and vast money laundering to the British and New York banks. Each soldier coffin contains 100 lbs of narcotics, never inspected, an insult to soldiers who made the ultimate sacrifice. The Jackass never holds detailed information, as generalities suffice, safer too. The monopoly protects American freedom and way of life. Without the money flows through New York City banks, the banks would collapse from lack of liquidity quickly. The big US banks are badly insolvent. JPMorgan is the active agent for US Federal Reserve operations, the expression done through the New York Fed and its many cable lines into the USTreasury Bond market, the FOREX currency market, the COMEX market, the stock market, and the sprawling derivative market.

JPMorgan is a principal operator of the Interest Rate Swap contracts in their Chief Investment Office, which control the USTreasury Bond yields. They fabricate the false flight to safety in USTBonds, at a time when foreign creditors are long gone, domestic savings has vanished, and chronic USGovt deficits are outsized. The connections for criminality all run through JPMorgan, thus the required protection by the US security agencies. The involvement of intelligence and security agencies confirms the urgency of the matter, as they stepped forward close from out of the shadows. Any breakdown and bust for a primary JPMorgan function would reveal vast criminality in several other arenas. Thus the footprint from the intelligence agencies. The hidden story is the gold dust trade out of the Congo, which has grown huge. Military deaths among US soldiers is becoming well known in many circles, like where the soldiers are treated for wounds suffered on African battlefields.

The expected revelations by JPMorgan whistle blowers was halted. The men in black probably threatened death to any JPMorgan employee acting to publicize criminal activity. They act to serve the Syndicate, to make America strong and to protect our freedom. Of course, the murder would be in the name of national security, all perfectly legal. The supposed miscreants would put the nation at risk by exposing criminality at the national leadership level, sure to destabilize the nation and disrupt our way of life. The Fascist Business Model is being shaken in a powerful manner, enough where leading figures will fall from the toxic trees and putrid branches.

What comes in the following weeks is likely a grand metal shortage within the COMEX, which has gradually been abandoned by legitimate players. Raising hope, then dashing it, and doing so repeatedly has a very detrimental effect on the metals market. The players will simply go away, steeped in distrust, seeking other honest venues. Members will remove their inventory and cause great pressures toward a default, all in time. What comes is likely a massive assault on other JPMorgan desks, as their vulnerability is enormous. Look for the internal works for Interest Rate Swap reckless management, or Credit Default Swap mutual vulnerability, or money laundering routes, or mortgage bond lawsuit rulings, or SLV silver inventory raids, to be exposed at the most awkward inconvenient moments. The wild card is exposure of USTBond counterfeit, the data records for which were in the infamous Building #7 of the World Trade Center. It contained damaging Enron records also, which would implicate JPMorgan for fraud. Multiple sources inform that two dozen dead bodies littered the lobby in a grand shootout on that terrible morning, between USGovt legal authorities and the Syndicate security cops, before the building was demolished without aircraft impact. The enemies of JPMorgan are legion. See the ETF Daily article (CLICK HERE).

◄$$$ NUMEROUS SUBPOENAS DIRECTED AGAINST JPMORGAN CHASE OVER L.I.B.O.R. ARE COMING FROM AGGRIEVED PARTIES ACROSS THE WORLD. THE JPMORGAN FORTRESS IS UNDER SIEGE. POWERFUL BANKS ARE SEEKING REDRESS OF SERIOUS LOSSES. THE LAWSUITS WILL MOUNT, BUT THE BIGGEST TARGET IS THE BIGGEST BANK, JPMORGAN CHASE, THE SYNDICATE CENTER AND CORE OF CRIMINAL OPERATIONS. $$$

Since a publicly owned firm, JPMorgan must supply information on court actions. In early August, the giant criminal syndicate bank revealed actions taken against it to the SEC. The bank made a similar disclosure in its previous quarterly filing in May. Regulators from the United States, United Kingdom, Canada, Switzerland, and other nations had formally requested information. JPMorgan Chase has received subpoenas and requests for documents (even interviews) from the the USDept Justice, the CFTC, the SEC, the European Commission, the UK Financial Services Authority, the Canadian Competition Bureau, the Swiss Competition Commission, and other regulatory authorities and banking associations around the world. That is a whole lot of subpoenas. The JPMorgue dead asset lab must open new offices. At issue are deep losses from price rigging allegations linked to the London Interbank Offered Rate (LIBOR). The device sets borrowing costs for homeowners, companies, and borrowers throughout the world. It also sets swap rates for $350 trillion in credit derivatives. This nightmare for the big banks will not go away.

The scandal is being called the grandest financial sector criminal event in history. Not really true though. The LIBOR case merely has raised awareness with ugly revelations of what have been going on for a half century. Stealing Fort Knox gold by the Clinton-Rubin gang surely qualifies as a huge banker crime, along with lacing gold bars with tungsten and distributing 100,000 fake gold bars across the world, mainly to Hong Kong where resentment is acute. Sales of $trillions in fraud-ridden mortgage bonds across the world surely qualifies also. It is a real debate as to which $trillion crime is the worst or biggest within the banking sector in the last couple decades. Together, they paint a picture of profound Western bank depravity.

JPMorgan is cooperating with the investigations. They do not wish to add obstruction of justice to the laundry list of violations. The bank must respond to numerous requests for information about its involvement in setting EURIBOR and TIBOR, the European and Japanese versions of LIBOR, respectively. JPMorgan has been identified as one of 16 banks in the US, the UK, and Europe under investigation for manipulating LIBOR. The key to LIBOR is that the price is set by a group process, where collusion is therefore obvious. One should keep a very important factor in mind. Since collusion is charged, the big Western banks are not communicating with each other any longer, since legal counsel advises a cutoff. Therefore, the big banks are poised to attack each other, to use local immunity in turning evidence against the other banks. The LIBOR case has resulted in the big banks setting out to attack and kill each other in self-defense. Other big banks besides Barclays in  London will be forced to admit guilt and pay huge fines. Barclays has already agreed to pay $450 million in fines in the case. Other banks will likely soon follow, and regulators are building criminal cases against individual traders and maybe banks as well.

Previously, Bank of America and Citigroup have said that they have been served with subpoenas in the LIBOR case. These two banks have mentioned fewer regulatory agencies have knocked on their office doors than JPMorgan did. JPMorgan has disclosed being the subject of a large and growing number of lawsuits emerging from the LIBOR scandal. State and local governments, along with numerous official agencies, are suing banks for keeping LIBOR artificially low, rendering harm to the value of various swaps they purchased as protection against rising rates. See the Huffington Post article (CLICK HERE).

An update. JPMorgan Chase, Barclays, and UBS are among seven banks subpoenaed conducted by investigators in New York and Connecticut concerning alleged manipulation of LIBOR. New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen are working together. One might wonder why Bank of America is not on the list targeted. As alert colleague Craig McC of California points out, Schneiderman rolled over earlier this year on the mortgage fraud settlement case, yielding to pressure from the Obama Admin. He might do the same and issue a hand slap for LIBOR price rigging. Rob Kirby adds that "The reason BofA was not included is that they merged with Merrill Lynch back in the relevant timeframe. Once their books were co-mingled, it becomes a tough task to untangle the constituents and then accurately place or lay the blame." See the Bloomberg article (CLICK HERE).

◄$$$ LIBOR SCANDAL COULD COST BIG BANKS $BILLIONS IN LAWSUITS. WHEN FIGURING IN THE GIGANTIC UNREGULATED DERIVATIVE INDUSTRY, THE LAWSUIT LOSSES COULD BE AN ORDER OF MAGNITUDE HIGHER. $$$

Already 20 lawsuits are lined up in the United States, some of which are expected to be organized into class action suits. The plaintiffs range from various US cities to a powerful Russian oligarch Vladimir Gusinsky. Santander of Spain plans to review Interest Rate Swaps for corruption. Also add 500 non-profit hospitals to the plaintiff list. See the Larouche article (CLICK HERE). Politicians in Europe, but not yet in the more sleepy United States, are winning office after campaigning against the big banks, calling for harnesses to be put on the bank sector. The outrage against LIBOR collusion extends from New York to London to Berlin. Past bank losses have come from buying mortgage bonds and leveraged mortgage assets without understanding them. But outright LIBOR price manipulation to squeeze higher profits from a colossus of industries reeks of $trillion fraud that has been caught in the open field. An insider within the German banking industry commented that a sizeable part of the industry does not realize the depth of the problem for banks. Targeted banks like Deutsche Bank cannot expect leniency when charges are investigated. Some big banks will be rendered toothless, as some executives will see their careers abruptly cut off.

The table displays the potential civil lawsuit losses. The biggest liability stands with two London banks, two New York banks, and Deutsche Bank, at a cool  $1 billion each. See the Spiegel article (CLICK HERE) for an interesting informative background on the LIBOR makeup, its gaming, and the consequences. My sources indicate that these figures are grossly under-stated, since they do not include derivative liability. It is inconceivable that the first round of fines and penalties at $500 million will be a large slice of the overall bank losses. What is wrested from the big banks will be many multiples of this paltry fine. Expect the losses to be well over $100 billion, just like the JPMorgan losses from Interest Rate Swaps. The figures are always silly low to keep the public asleep and unaware of the magnitude of the criminality. Finally the regulators have something to chase, and thereby regain their integrity. They might soon use Organized Crime laws like the RICO Act to seize bank assets. If taken to the limit, the Western banks might be taken over by plaintiffs, except that many aggrieved plaintiffs are themselves banks.

Application of LIBOR rates extends into every conceivable nook and cranny. The FOREX trade is over $500 trillion per year. The LIBOR priced derivatives are integrated. To call the damages minor since fractions of a percent, mere basis points, is naive and ignorant. A one basis point shave on $500 trillion translates into $50 billion, shared across numerous banks in collusion. This is not small money.

◄$$$ EXPECT A SLEW OF SMALL US-BANKS TO SUE THEIR GIANT CRIMINAL COMPETITORS IN A FASCIST BUSINESS MODEL BACKFIRE. FURTHERMORE, LOOK FOR SOME FIREWORKS AS R.I.C.O. LAWS AGAINST RACKETEERING WILL BE INVOKED. ECONOMIC CHARLATAN SHAMANS LIKE LARRY KUDLOW MIGHT BELIEVE NOBODY WAS HURT BY ARTIFICIALLY LOW L.I.B.O.R. RATES, BUT REALITY TELLS A DIFFERENT STORY. DEFENSE OF THE CRIMINAL FINANCIAL SYNDICATE WILL TURN STRANGE. $$$

Incredibly, foppish economist Larry Kudlow has stooped to an embarrassing low point. In sevice to his CNBC sponsors and banker masters, the boot licker expressed the opinion that nobody was hurt by the LIBOR price rigging. He even went to say that the entire system benefited from the lower costs. The reality is a different story. Mortgage underwriters are the main site of aggrieved LIBOR parties. Countless others will appear in lawsuits, but focus on the mortgage arena since so simple. The mortgage underwriters are paid less from home loans in interest paid, but carry huge risk of default still. The underwriters will provide gory detail for their losses from the price rigging. On any transaction, there are two sides. The underwriters made cheap mortgages, too cheap, as they suffered major losses with artificially low monthly payments. Worse, they offered undue stimulus to attract mortgages at such low rates, bringing in the worst possible clients with the lowest FICA scores. The losses from mortgage defaults will not be an easy bridge to cross in proving damage from LIBOR price rigging.

Thousands of small US banks are getting ready to sue the giant Western banks. The armies of Lilliputian community banks finally have their chance at vengeance, worn thin over the years. The much larger competitors have routinely trampled on them. The latest Wall Street scandal of the month could give them ammunition to strike back. Consider the tiny Community Bank & Trust of Sheboygan in Wisconsin. It filed lawsuit against against JPMorgan Chase and Bank of America and Citigroup and other major banks, accusing them of colluding to set interest rates artificially low. The damage is plain, illicitly low interest margins that wrought damage and reduce profits. Many such small banks struggle to continue operations and remain profitable. Charles Tompkins of the Boston law firm Shapiro Haber & Urmy filed the lawsuit in late May on behalf of the tiny Wisconsin bank that contains 11 branches. It boasts assets of about $554 million. It seeks class-action status so other community banks can join the litigation. That parade will find many other players eager and willing to join with banners held high.

The scandal is reverberating far beyond the boundaries of Wall Street and the City of London. Big banks are already facing an array of LIBOR-related lawsuits by some big investors, as well as state and local governments. Tompkins, whose class-action firm has handled securities, antitrust, and consumer lawsuits, said US community banks could possibly prove over $1 billion in direct damages over four years on loans to small businesses at artificially low rates. That is just a tiny slice of the aggrieved groups. They operate on thin profit margins and rely more on interest income than large banks with diverse trading operations. The lawsuit accuses the banks of violating the mob-busting US Racketeer Influenced & Corrupt Organizations Act by rigging rates. Can you say RICO?? Finally, RICO has come out with the potential to rip the heart & guts out of the big banks!! But watch for the national security blanket to be tossed over the putrid picnic. In a pathetic defense, the bank defendants have written court briefs seeking dismissal of LIBOR lawsuits elsewhere on other dockets, claiming that plaintiffs have failed to show how banks acted to restrict competition, even if rates were misstated. The big banks are in dire trouble if that is their best defense. See the Business Insider article (CLICK HERE).

◄$$$ THE PATH OF INTERNAL EMAILS REVEALS $100 BILLION IN AID TO A.I.G. FOR HELPING BUDDIES. TREASURY SECY GEITHNER MIGHT BE THE INITIAL TARGET FOR BANK SCANDALS WITHIN THE UNITED STATES. HE WAS SELECTED TO BE THE MINOR PLAYER AND BAGMAN. $$$

USTreasury Secy Tim Geithner might be the weakest link in the sprawling Syndicate team that extends into several financial chambers. His original work with the New York Fed is highly vulnerable. He was critical in the last Bush Admin in fulfilling the lusty TARP Fund distributions and assuring that his old firm Goldman Sachs was paid 100 cents on the dollar for its crippled Credit Default Swaps when no other firm benefited from such largesse. The action was patently illegal, but permitted within the Fascist Business Model of deep banker corruption. If and when the players within the USGovt are pursued via prosecution, Geithner might be the first to go down. He always was a weak low ranking lieutenant with no great accomplishments, and more importantly no strong friends. If he attempts to turn against his masters and to provide evidence to avoid jail time, he might suddenly begin flying exercises from a high rise building without wings. The evidence is slowly coming to light. Whether it will be acted upon depends on the tide of power shift. Watch for some surprising legal events extending from the damage done by the LIBOR scandal. The bankers are losing their power base. See the Daily Bail article (CLICK HERE).

◄$$$ LIBOR DETAILS ARE GIVEN ON PARTICIPANTS AND DEVICES. THE LEAD SLED DOG BARCLAYS IS SPECIAL AMONG THE BANKS. IT HAS OWNERSHIP STAKES IN A GAGGLE OF GLOBAL BANKS. BARCLAYS IS LIKE A BANKER MUTUAL FUND. THUS THE IMPORTANCE OF HITTING BARCLAYS FIRST IN AN ORGANIZED ASSAULT FROM THE NEW SHERIFF IN TOWN. $$$

It is extremely important to realize that the LIBOR scandal breaks the banker power structure at the heart and core. It shatters the collusion links while prosecutions proceed. The list of LIBOR banks is impressive, all subject to legal assault in the next round. Here are the 17 banks that form the committee to set LIBOR: Bank of America, Bank of Tokyo-Mitsubishi UFJ Ltd, Barclays Bank, BNP Paribas, Citibank, Credit Agricole CIB, Credit Suisse, Deutsche Bank, HSBC, JPMorgan Chase, Lloyds Banking Group, Rabobank, Royal Bank of Canada, Societe Generale, Sumitomo Mitsui, Europe Ltd (SMBCE), The Norinchukin Bank, Royal Bank of Scotland Group, and Union Bank of Switzerland. That is an impressive comprehensive list that touches many nations, mostly in the West.

Among the banks on the list of LIBOR participants, none is more important than Barclays. It is a part owner of dozens of global banks. It is called the banker's bank. Thus when the LIBOR scandal broke out, and Barclays quickly admitted guilt and agreed to pay a whopping fine, the billboard was painted. The marquee message is that the big banks are under attack, and the integrity of the lead bank was the first smashed. The new sheriff in town from the East knew exactly where to hit first, in order to cause the most damage and to force silence among partners that might quickly convert into attacks of self-preservation.

Rob Kirby explained in rough terms some of the LIBOR dynamics. The big US banks have multi-$trillions in USTBonds acquired via Interest Rate Swap derivative abuse. The holdings (hardly assets, more like casino markers) are wrapped within USTBond carry trade devices. The big US banks are essentially derivative banks with off-balance sheet bond assets, not admitted. The hidden assets are USTreasury Bonds themselves in large volumes, embarrassing volumes. The short-term FRA devices are hedged versus USTBills, under 6-month maturity. Refer to the Future Rate Agreements. The long-term contrived devices are hedged versus USTBonds. The short-term EuroDollar futures contract is marked and settled with the LIBOR like part of a weave, which sounds simple. In practical effect, it is very complicated to enforce once the corruption entered the picture in 2009 following the Lehman Brothers failure bust. In fact, one might make the argument that the LIBOR price rig happened because the big banks are all insolvent, broken, and running on corrupt devices.

◄$$$ FINALLY JPMORGAN WILL FACE A SUBPOENA OVER THE PFG-BEST PILFERED ACCOUNTS. THE MFGLOBAL REPEAT IS IN PROGRESS. HOWEVER, THE CASE MIGHT BE MOOT AFTER THE SENTINEL THEFT RULING. $$$

The trauma from MFGlobal client segregated account theft perpetrated by JPMorgan is still relatively fresh in memories. The recent bankruptcy of Peregrine Financial Group, aka PFG Best, appears to serve as chapter two in an MFGlobal redux. At least $200 million in PFG client account funds has evaporated. The first party of interest is none other than JPMorgan, which together with various other banks, will be the target of a subpoena by the PFG trustee. Once again, the monster criminal bank JPMorgan is implicated in this particular episode of client account vaporization, also known as plain sight theft. See the Zero Hedge article (CLICK HERE). The ruling by the courts over the Sentinel Mgmt Group case might offer usable precedent called upon hastily in order to throw the entire PFG Best case out. It will be interesting to observe the bold whitewash on a public stage.

## BRUSH FIRES SPREAD

◄$$$ THE LIKELY MURDER OF AN H.S.B.C. EXECUTIVE WILL WORK EFFECTIVELY TO COVER UP A NEST OF MONEY LAUNDERING VIOLATIONS. HOWEVER, THE GLOBAL BANK WITH LONDON AND HONG KONG ROOTED CONNECTIONS WAS TARGETED BY THE USGOVT SECURITY AGENCIES. MORE IMPORTANT, IT REDUCES THE IMMEDIATE RISK FOR PRODUCING EVIDENCE THAT WOULD EXPOSE FURTHER THE NEW YORK BANK VIOLATIONS OF HIGHER MAGNITUDE. THEN A DELOITTE PARTNER APPARENTLY COMMITTED SUICIDE OVER THE PRESSURES OF THE STANDARD CHARTERED CASE. $$$

No sooner had the HSBC been fingered in narco money laundering with Mexican banks, but my Central Europe bank source offered a quick comment. Apparently, the US security agencies who control the monopoly of global narcotics were angry at HSBC for venturing off the beaten established pathways used to launder money. So they called out HSBC and will attempt to bring them back into the fold. Such task will not be easy, since HSBC is the primary bank used by the massive and powerful Asian Triad organized crime rings for processing money from such sources. Usually the groups do not trample on each other's turf, nor their banks, nor their routes, nor their customers, since all parties are huge winners. A comment from a Central European banker, "The HSBC Mexico business activities exposure happened due to HSBC's involvement with drug cartels acting as competitors to the ones the Langley Boyz transact with. That disturbed the Langley narco business transaction flow. It is quite obvious now that the old established structures are caving in, and that banks are out for self-preservation. Since most of the people in the system are managed on a 'Need to Know' basis, often the players do not know when they step on other's turf and cause mega upsets." Wow!!

The HSBC executive, Michael Foreman, aged 48 years, was reported missing the day before his death. That alone arouses suspicion. Then he dived from the fifth floor balcony to his death, to announce he was no longer missing. The body parts were then collected, which closed the missing person case. The show horrified attendees at a gallery on the South Bank. Obviously, police are not treating the incident as suspicious, under orders from the masters. The abnormality of a missing person, followed by a jump suicide, goes far beyond suspicion, more like indicative of plain sight murder. A the coroner's inquest, the senior bank manager was declared to have died of multiple traumatic injuries. Being thrown off a high balcony for wanting to come forward with criminal evidence often results in head injuries. Foreman knew too much, and probably was about to offer critical evidence and testimony. Or else the Boyz wanted to win HSBC attention with a knock. Recall back in April 2009, the chief financial officer of Freddy Mac supposed committed suicide. CFO David Kellermann was about to produce a mass of evidence also. A closer look would find both men happily married with families and a strong hopeful view of their futures, not men dragged by depression. But police have their orders. Justice is always compromised when bank criminality is at issue and in need of protection.

Another victim appears more like an apparent murder suicide. Deloitte partner Daniel Pirron was shot in the head, maybe by his own hand. He was linked to the Iran scandal at Standard Chartered. He worked in the legal department in London. He had been under the pressure over the entire case. An investigation into Pirron's death has begun with the local Fairfield Police, but if high level foul play is involved, the federal cops will push them aside. His office in New York has been sealed off. This could be yet another cover-up victim, if he knew too much, or if the Powerz wished to make a message. Time will tell, maybe. See the UK Telegraph article (CLICK HERE).

◄$$$ THE MONEY LAUNDERING THEME AMONG BANKERS TOOK AN UNUSUAL TURN WHEN STANDARD CHARTERED WAS ACCUSED OF DIRECT BANKING FUNCTIONS WITH IRAN. THE USGOVT HAS UPPED THE ANTE IN THE BANKER WARS, THREATENING A HEAVY FINE. AFTER NEGOTIATION, THE FINE WAS TINY AT 0.14% OF VOLUME. THE RETALIATION IS NEXT. THE USGOVT HAS A TENDENCY TO PAINT WITH A BROAD BRUSH, MIXING MONEY LAUNDERING AND COMMERCE WITH DESIGNATED TERRORIST NATIONS. THE BANKS ATTACK EACH OTHER AS CLEAR LINES ARE DRAWN AND DISTRUST GROWS. THE LIBOR SCANDAL AND INVESTIGATIONS HAS TURNED THE COLLUSION INTO A DEFENSIVE DISTRUST. $$$

The primary violation by Iran has been and still is selling crude oil and collecting payment outside the USDollar sphere. As consequence, they are painted as terrorists. Perhaps the United Nations should examine widespread drone aircraft killing of civilians in Pakistan by the USMilitary if terrorism is to be identified, akin to video games. The Iranian nuclear facilities are ripe with dispute. Many USGovt agencies have concluded they are not involved in, nor do they possession, weapon capability or delivery systems. The entire Iran terrorism theme is absurd on its face, as the weapons of mass destruction was a movie viewed in 2003 over the Iraqi theater. What short memories the sheep have. As for money laundering, take a closer look at JPMorgan and their management of the Iraqi Export Bank for its staggering volume of narcotics money flow in clearing house operations. A European banker source made severely critical comments on the topic, claiming most senior bankers with experience fully comprehend that New York banks are the champions of money laundering. Some measure of retaliation comes.

Standard Chartered Bank, with London and Hong Kong offices, could have faced costs potentially up to $5.5 billion after being accused of violating USGovt money laundering laws concerning its transactions over years with Iranian banks. At risk was the Standard Chartered license to operate in New York state, after the Dept of Financial Services found the bank conducted $250 billion of deals with Iranian banks over seven years and earned hundreds of $millions in fees for handling transactions for institutions subject to USGovt economic sanctions. With the settlement and relatively small $340 million fine, the SCBank will retain its license. The London headquarters offered a stern rebuttal, by rejecting the portrayal of facts. The bank was in line to be hit by $1.5 billion in fines by US regulators, but will likely lose about $1 billion of revenue from its Iranian bank services unless the paths are re-routed through subsidiary banks, or else reworked in non-US$ transactions. Standard Chartered executives claimed great error and distortions by the regulator. They issued a statement said 99.9% of its transactions with Iran complied with USTreasury regulations, and that the total value of transactions that were not in compliance was less than $14 million. Witness the two sides a gulf apart.

The bank's operations inside the United States are unique. While Standard Chartered does not have any domestic US banking operations, the loss of the New York license would obstruct its ability to process USDollar payments for clients with businesses in the United States and in emerging markets. It is unclear what the impact would be on emerging market operations, since many nations share defiance against US hegemony rule as the global bank cop but also a primary violator of laws against fraud and narcotics money laundering. Standard Chartered handled transactions involving Iranian entities such as the Central Bank of Iran, Bank Saderat, and Bank Melli, according to the regulator complaint. The Dept of Financial Services is also investigating similar activity in dispute between Standard Chartered and entities in other countries under US sanctions, including Libya, Myanmar (Cambodia), and Sudan, according to the filing.

A Wall Street classic quote came from the London offices. The contempt held by Standard Chartered Bank for US banking regulations was concisely and unambiguously communicated by Group Executive Director in response. He stated, "You fuxxing Americans. Who are you to tell us, the rest of the world, that we are not going to deal with Iranians." The United States will earn isolation in response, all in time, together with extreme retaliation in criminal prosecutions. Expect in the end, the USDollar will be rejected in numerous trade centers so that US bank laws can be avoided entirely. Couple the SWIFT bank code selected actions by the USGovt with these recent charges of money laundering and terrorist funding. The Brush Fires are heating up in the Banker Wars. See the Business Insider article (CLICK HERE). Also, Royal Bank of Scotland has been targeted by the USGovt for money laundering.

Quick update. Prince Geithner and King Bernanke closed down the probe, and in my opinion backed off with better judgment in a massive bluff. They agreed to a wrist slap to Standard Charter. In dispute was the total amount of money involved in Iranian transactions. Regardless, the New York State received a $340 million infusion into its general fund from a tiny 0.14% fine. All the regulators are happy. But the United States has fired the first shot which put a hole in an important global vessel. The retaliation will come, but now more slowly since the US relented somewhat. The enemies of the Wall Street banks will not be so lenient in reprisals, since their heavy hand applies pressure every single day in numerous arenas, loaded with fraud and gigantic role programs run by American offices visible to the insiders. See the Zero Hedge article (CLICK HERE).

The big US banks are soon to be attacked by foreign banks and foreign governments and foreign law enforcement. The motive will be chock full of retaliation. The owners of huge expansive American glass houses have begun to hurl numerous stones. The greatest money laundering banks are in the United States. They realize well that Iran is not a terrorist threat. The greatest instigator of violence within Syria is Saudi Arabia. The resentment against US hypocrisy is incalculable, sure to fuel vast secretive financial retaliation. The US has vulnerable points scattered all over the globe. The three regions are establishing lines now: United States, London, Western Europe. They will attack each other, protect themselves with immunity, and set up jurisdiction lines. A new wrinkle has them prepared for attacks. They are accused of collusion in LIBOR. Therefore they are not communicating with each other. So the attacks will be only natural. The camps will attack each other until they are all mortally wounded. The jurisdictions will establish the war camps. The deals for immunity will not apply across to the other camps.

◄$$$ NEXT BANKER SCANDALS WILL FOCUS ON GOLD, THE PROCESS ALREADY BEGUN. THE COMPETENT ALTERNATIVE PRESS IS MOVING FOCUS TO THE NEXT SCANDAL ARENA. LIKE A BOIL WITH PUS, THE GOLD MARKET RISES TO THE SURFACE. BUT IT WILL TAKE MORE FESTERING TO BE SEEN. LOOK FOR SOME INTRIGUE IN THE CURRENCY MARKET FOR CORRUPT PRACTICES, PERHAPS WITH HEDGE FUND COLLUSION AND FLASH TRADING DEVICES. THE BROKEN DERIVATIVE MARKET IS RIPE FOR SCRUTINY. THE RUPTURES ARE COVERED BY PAPER MACHE IN VAST FLORAL ARRANGEMENTS THAT WOULD BEST BE SET FOR FUNERALS. THE INTEREST RATE SWAP CORRUPTION AND FALSE CREATION OF A FLIGHT TO SAFETY IN USTREASURY BONDS WILL BE UNMASKED AS JPMORGAN IS STRIPPED, LAYER BY LAYER. $$$

The Gold price fix process is a likely candidate for a serious scrutiny in a corrupt process. Twice per day the price of the precious metal is set, formally called 'FIXED' by five banks: Bank of Nova Scotia, Deutsche Bank, HSBC, Societe Generale, and Barclays. The leader of the fix begins by proposing a price. What follows is a simulation whereby the five banks go through exercise that attempt to balance the buy and sell orders on their client books. When a stable price converges, the Gold price is set and announced. All transactions in gold in London are based on this price in a massive set of transactions. The process is surely arcane. Until 2004, the process used to be done in conditions of high secrecy at the offices of NM Rothschild on St Swithin's Lane. The modern method of the last several years involves a teleconference where the members simply call out a Flag to indicate a change in position, or Flag Down when complete. The market is regulated in a loose manner under the auspices of the London Bullion Market Assn, which follows a code of conduct. There are also Silver and Platinum price fixes. Expect all of these collusive price fixing procedures to be subjected to scrutiny, then called for corruption. The part that is rarely mentioned is the giant basket of naked shorts put in the mix when price is fixed by the five banks, acting as clearing house for the corrupt gamers. Their constant goal is to keep the price down for precious metals, as they defend their fiat paper currency regimes.

The foreign exchange (FOREX) market is hardly a dark corner. It is the biggest market in London, or in the world in terms of the sheer volumes of trade. On a daily basis $4 trillion trades, equal to 2.6 trillion British Pound Sterl ing. On a regular and frequent basis, the intervention from the English speaking central banks can be felt. The USFed uses the Exchange Stabilization Fund, while the Bank of England use their own fund of similar branded name. They attempt to push their currencies higher when they fear a forced devaluation and inflation, or to send their currencies lower when the need is acute to make exports more competitive. Their efforts meet with fleeting success, usually promoted by the press so as to attract funds and big investors to follow the leader. But the success is very limited over time. Speculators lodged in hedge funds had been oppositional for years, their active role seen as highly controversial. In more recent years, Wall Street firms have been effective in smashing many hedge funds, exploiting their own client relationships, enlisting them in collusion to suppress a sector (like the mining stocks). Notice in recent months the prosecution for insider trading among hedge funds. This is part of their strategy to keep the group in check, under the thumb, and co-opted. Although hedge funds are involved with FOREX trading, they seem more devoted to commodity trades.

The role of High Frequency (Flash) Trading will be given more scrutiny over time also. It is a well known and publicized factor within the stock market, given blame for some mini crashes. It is laced throughout the FOREX and commodity markets as well. Many influential people question the flash activities and want the hammer brought down. What began as legitimate hedging, like of soybean crop prices later at harvest, or natural gas prices later when a project under contract kicks in, has turned into a gigantic fiasco of casino proportions. The derivative industry has put the entire global financial system not only at risk, but on a certain unavoidable path of destruction. As it breaks further, the criminal aspect will be revealed since the losses will be staggering. The banks have been placed in the middle of hedge practices. Over the years, they realized they could build a profit center, control the game, and buy another decade after the system actually fell into semi-ruin in the 1990 decade. What remains is a massive Interest Rate Swap contraption that keeps the official rates near zero percent even though the new debt security in supply is outsized, even though the willing creditor buyers in demand are nearly vanished. The spreading effective deep scrutiny for illegal practices within the derivative market has begun. It will extend to the other side, to Credit Default Swaps. These bond insurance contracts are laced with hoodlums, deceptions, and propaganda in the press also. The netting concept is a grand lie, as counter-parties tend to be dead on both sides, instead of mutually strong in corresponding support. The scandals most assuredly will reach the corrupted derivative arena traded over the counter, in a completely unregulated setting. See the UK Independent article (CLICK HERE).

◄$$$ BRUSH FIRES ARE TURNING INTO FOREST FIRES, THEN JUMPING INTO SEPARATE RAGING FIRES IN AN ORDERLY SEQUENCE. WATCH THE JUMPS ACROSS RAVINES INTO NEW SCANDAL AND TOPIC OF CONTROVERSY. THE PROCESS IS ALREADY WELL ALONG, HAVING HIT THE MONEY LAUNDERING OFFICES. THE TRUE EXCITEMENT WILL COME WHEN IT HITS THE DERIVATIVES MARKET AND GOLD MARKET. JUMPS IN THE BRUSH FIRES ARE ASSURED, SINCE L.I.B.O.R. COLLUSION HAS FORCED DEFENSIVE POSTURES AMONG THE BANKS. SOME WILD CARD FOREST PATCHES ARE VULNERABLE TO JUMPS IN THE FIRES, LIKE BIG BANK BALANCE SHEET ACCOUNTING, AND FINALLY THE WORLD TRADE BUILDING BANK HEIST. $$$

The narcotics money laundering is conducted by continental regions. HSBC is primal in Asia to service the Triad. JPMorgan is primal in North America to service the USMilitary and security agencies. Barclays and Royal Ban k of Scotland are primal in England, in service to the Queen. The lines are not so clear, since publicity and leaks could result in big problems if the public were made aware. But codes are followed. At times, travel lanes overlap, causing problems like with HSBC recently. If truth be known, narcotics money laundering has kept the big Western banks from collapsing in the 2007 to 2009 timespan. HSBC is primary drug money laundering bank for the Asian crime syndicate. This item was confirmed by a Central American contact having 15 years experience with global banks. He claimed all the Big Six US banks are exactly the same, which points out a risk. So expect the big brush fire to jump from LIBOR to DRUG MONEY in the scandal, a process already in progress. It is at risk of escalating greatly, since RBS of London has been fingered. Just two months ago, the royal family was tarnished with a narco brush for its banking involvement. The Queen don't stay rich selling pancakes and conducting tours of Buckingham Palace.

My focus is on jumps in the big brush fire that escalate the financial criminal exposures. It is has been focused on LIBOR. Next will be a jump to INTEREST RATE SWAP defense of the USTBond bubble. Another jump in the brush fire later will be to the ALLOCATED GOLD account that is marred by gold bullion seizures via swaps to gold certificate shell games. That process will be thorny, since it will begin with the GOLD PRICE FIX and extend to the offices where gold has been illegally snatched in order to maintain the gold price in vast intervention projects that occur daily. As the source of gold bars is uncovered to be a combination of Allocated Gold accounts and the GLD exchange traded fund inventory, the controversy will erupt. My gold trader source assures that the shortfall deficit from illegal Allocated Gold account raids totals well over 40 thousand metric tons globally. The multi-$billion class action lawsuits in Switzerland are underway over this precise illegal practice of taking Allocated Gold. The brush fire could realize some powerful ignition if these lawsuits find their way to the press for some good old fashioned publicity and public awareness.


Other forest patches for potential jumps in the brush fire can be identified. The GROWING NON-US$ TRADE SETTLEMENT could be elevated in importance. If it becomes over 50% of trade (excluding crude oil, or maybe not), the phenomenon could become powerfully important and highly explosive. Imagine a string of big banks letting it be known, or having officials leak the plan, that they are moving away from the USTBond not because they are toxic and controlled by JPMorgan derivative offices, but because global trade dictates the shift in the new vehicles that settle trade contracts upon deliveries. Check again the African story about trade in minerals expanding outside the USDollar. The trend is clear. In the last couple months, the Hat Trick Letter has dutifully reported on the sprawling defiant non-US$ trade in crude oil, mostly with Iran as a partner in transactions. Some bilateral deals use Gold to settle the oil trade. Some use bilateral currency swap deals, which is essentially barter.

Perhaps another forest patch for jumping brush fires will be a jump to INSOLVENT BIG BANK RECOGNITION. The big banks are all painfully insolvent, wretched hollow structures from the mortgage bond fiasco, kept afloat in appearance by the adopted phony Financial Acccounting Standards Board rules blessed by the USCongress in April 2010. The scandal in bank insolvency will implicate the phony FASB accounting pervasive in banking industry, and the absurd valuations given to hundreds of $billions in currently stated assets on their corrupted balance sheets. The violations of Sarbanes Oxley law could be the crowbar that forces the corrupt balance sheets into the legal spotlight. The stock investors are protected by this law, and the violations are countless and significant.

However, the game changer, the story that will alter the nation once again in a counter measure event will be the Mother of All Jumps in the brush fires. It is inevitable, as forces are gathering and building in a powerful manner. The big jump will be the outing of the 911 INSIDE JOB and it full exposure. The real story will be told of how it was actually a bank heist. The movement of stolen assets in gold bars, bearer bonds, and diamonds will be revealed since the volume of close to one third of a $trillion in total assets is simply too large to hide forever, especially when friends of the Syndicate responsible are dwindling. Those in power responsible are attempting to create a new war in order to continue the cover layers, which is opposed. Those in opposition are under great pressure, which should break down and result in exposure of the USGovt officials complicit. The criminal aspect is horrific, since almost 3000 people perished in the World Trade Center buildings. Furthermore, people die to keep it covered up, as eyewitnesses on the ground are dying violent mysterious deaths. See the Jackass article entitled "Banker Brushfires Risk Jumps" on Market Oracle (CLICK HERE).

My crucial Central European banker source expects a few other jumping brush fires in time, related to World War II, which are not oriented toward bankers. The fuller account of many details from WW2 could come to light, such as raids of central banks in Eastern Europe, participation in Nazi war machine financing by Wall Street banks, death count revision at the gulags, role of the Vatican with bankers and generals, and completing the picture on the Swiss bank collusion with grand benefits. A Jackass friend in Ohio is of German descent, a nice bright warm-hearted fellow. His grandfather owned a small factory in Germany before WW2, but sold it before the war blossomed into a nightmare. The older gentleman placed his $5 million in a Swiss bank. The records were conveniently lost by the Swiss bank. Lawsuits pressed by my Ohio friend have resulted in zero satisfaction, but heavy costs, the blame placed on the chaos of war. Ken will never give up.

The same Central European banker actually has a deceased uncle who rotted for two years in the Eisenhower Detention Centers in Germany following World War II. Little is known about these other camps managed by the USMilitary to house German prisoners of war, since the Western press has its own tilt. The victims died by the thousands from exposure and malnutrition, without the ovens of Dachau or Auschwitz. Many German citizens called them the other death camps. Recall that the victors in war write the chapter of history. The uncle did not die in the camp, but rather walked through a door kept open by disgusted USArmy low ranking officers in charge of the overnight shift. He lived out his years in Germany, and kept in communication over the years with the officers who made the escape easy.

## MONEY MARKET VULNERABLE LINK

◄$$$ SYSTEMIC RISK IS POSED BY MONEY MARKET FUNDS. ODDLY, MONEY MARKET FUNDS ARE NO LONGER THE STAID BORING TYPE. THEY ARE NOT CASH, BY OFFICIAL DECLARATION. A PROGRESSION OF RISK HAS HIT MORTGAGE BONDS A FEW YEARS AGO, SOVEREIGN BONDS IN THE LAST YEAR, AND FINALLY MONEY MARKET ACCOUNTS, WHICH HOLD TOGETHER THE ENTIRE BANKING SYSTEM AS THE LAST ELEMENT OF LIQUIDITY. $$$

Given how money market funds are the last pool of liquidity that holds together the entire Western banking system, it is under attack. More like being corralled by the banking leaders, to make sure it does not exit and roam the golden fields looking for better pasture. The new rule concept is called Minimum Balance at Risk (MBR) and is direct capital control applied domestically within the United States. Cash accounts are no longer cash, since the big banks need the money to prevent illiquidity busts, otherwise called bank runs. The MBR could provide a disincentive to run from a troubled money fund. The MBR would be a small fraction (like 5 percent) of each shareholder's recent balances that could be redeemed but with a delay. As long as an investor's balance exceeds the marked MBR, the rule would have no effect on the transactions, and no delay would occur on any redemption. The ostensible stated purpose for the rule is to reduce the potential costs that redemptions impose on non-redeeming shareholders. Imagine requiring people in a theater to remain inside during a fire, to reduce the risk to other people being stuck without access to the exit doors. Such is their logic. Thus the MBR would ensure a more fair and orderly allocation of losses among investors. Think socialism applied to limit bank runs, to share the loss but more importantly to prevent a panic. See the Safe Haven article (CLICK HERE). See the Zero Hedge article for specifics on the rule changes (CLICK HERE).

◄$$$ A STUNNING PROGRESSION IS UNDERWAY, THE EROSION IF NOT RUIN OF ASSETS IN A SEQUENCE. NOTICE THAT SUPPOSEDLY SAFE PAPER ASSETS ARE AT GREAT RISK. THE EXTER PYRAMID IS AT WORK. THE END GAME IS TO HOLD GOLD, THE LAST ASSET STANDING, THE ONLY SURVIVOR. $$$

In recent years like in 2006 through 2009, investment in mortgage bonds proved unsafe. They used to be the stable staple among paper merchants, located with their real estate brethren of assets in the red group (highest risk). More recently, sovereign bonds have been shown to be unsafe, the supposedly sacrosanct bonds backed by governments. Finally, cash set aside in money market accounts is not safe. The progression of risk is palpably clear in the systemic breakdown. The present focus of interest is the orange group that includes government bonds. Money market funds lie in the yellow group since the ultimate in short-term paper, in my opinion. Next will be attack focused upon the short-term government bills. The winner and final survivor will be gold, the last asset standing to look over the charred ruin landscape. It is inevitable. It is written by the annals of history.

◄$$$ AN ATTACK ON THE $2.7 TRILLION IN MONEY MARKET FUNDS HAS COME, THE TRADITIONAL STATIC STABLE SHELF. OBSERVE THE STEALTH ACTION TOWARD CAPITAL CONTROLS. NEW RULES COULD FORCE A MAINTENANCE OF A MINIMUM AMOUNT IN EACH ACCOUNT. THE MONEY MARKET FUNDS SERVE AS SCARCE CAPITAL, A LIQUIDITY SOURCE THAT HOLDS TOGETHER THE INSOLVENT BANKING SYSTEM. $$$

Back in January 2010, it became apparent that money market funds were in danger. They are typically very safe, the safest, like cash funds. No longer. They have been abused to sustain the corrupted system. Depositors (investors) gradually have been losing their right to redeem money market accounts, in fallout from the extreme distress extended from mortgage bond holes followed by sovereign bond growing holes followed by more hidden derivative gaping holes. The USGovt is implicitly placing capital controls on the primary forms of cash aggregation available, such as $2.7 trillion in US money market funds. The regulators are leaning on proposed Money Market Rule 2a-7, which grants money market fund managers the option to "suspend redemptions to allow for the orderly liquidation of fund assets." The rule is obviously designed to prevent money market runs, thus bank runs, in veiled domestic capital controls. The all important Group of 30 which is basically the shadow central planners of the world is about to be revived by the New York Fed. A publication reveals their plan to mitigate systemic risks posed by money market funds, since they serve as the primary liquidity source in a land of dry scorched earth. The de-leverage process is devastating to the banks. The USFed does not wish to publicize the dire market liquidity conditions that are sure to worsen in the future months.

Basically, according to the USFed, the minimum balance rule would make the financial system more fair, would reduce systemic risk, and would protect smaller investors who can be left with losses if larger investors in their fund withdraw cash first. The proposal would require fraction of each fund investor's recent balances to be segregated into a sinking fund to absorb losses if the fund is liquidated. Later redemptions of these minimum balances at risk would be delayed for 30 days, thus creating a disincentive to suddenly redeem if the fund suddenly is at risk. The rule essentially socializes the losses and reduces the risk of panic. The actual motive for what the USFed is suggesting is open capital controls to avoid a banking system implosion. It is near; it is not avoidable. Once this proposal is implemented, the USFed or some other regulator will effectively have full control over how much money market cash can be withdrawn from the system at any given moment.

The pot contains $2.7 trillion in total, which if withdrawn in significant manner could cause ruptures in the US banking system. The big banks are insolvent, and money market funds are the current glue holding it together in this critical liquidity and capital buffer. The big bank planners are hoping that money market funds that do move, go into big bank stocks, not to other nominal rate income instruments. The last few months in Europe have proved that hope to be falsely laid. The investors do not seek return on capital but return of capital. The public will seek Gold in droves.

◄$$$ RENEWED REPO ACTIVITY APPEARS TO BE A LAST DITCH INITIATIVE TO RESCUE THE MONEY MARKET FUNDS FROM SEVERE ILLIQUIDITY CONDITIONS. THE AMERICAN MASTER BANKERS CANNOT MAINTAIN CONTROL OF THE MONETARY SYSTEM, GIVEN THE ARTIFICIAL 0% RATE. IT IS ALL BREAKING DOWN. NEW GOVERNMENT RULES SHOW STARK DESPERATION. $$$

Counting the money markets, a ripe $3.5 trillion in idle cash sits on the sidelines. The central bankers, their lieutenants, and their henchmen at the big banks lust for it. They are frustrated by such idle funds. They have always been one of the most hated liquidity intermediaries by the central planners. They do not go into stocks. They do not go into bonds. They sit and collect miniscule interest. More importantly, they are inert, and cannot be incorporated into the re-hypothecation strategies of shadow banking. A repeat in conditions has developed, as money market funds (MMF) have once again begun to show signs of the climate before the Lehman Brothers implosion, better depicted as controlled demolition. In secretive maneuvers, the USFed Chairman Bernanke has eyes for at least $400 billion sitting in money market funds to shore up the banking system. If cable lines, tension rods, and containment chambers are installed, then future bank busts would force a vanishing act on the money market funds. This is the vile nature of re-hypothecation, soon to reach money market funds.

The gold community and hard asset money crowd have long argued that the core reason for all developed world problems is the gradual disappearance of good collateral and viable money assets. Suppose the MMF cash were to shift by force into bonds, or any other traditionally (not anymore) safe investments. The cash based assets would enter the shadow liquidity system and buy time. The implosion appears more assured with each passing month, except to those citizens with heads in the sand, those unable to comprehend red light signal semafores, those eternally optimistic in the face of sequential storm centers, and the plain dullard loyalists who believe the system will prevail as always. The goal of the central planners and fortress defenders is to securitize the cash mountain in order to provide at least a year or so in additional breathing room for a system that has essentially run out of good liquidity. In Europe, they are in worse condition, having run out of any collateral. The USGovt vividly displays desperation. See the Zero Hedge article (CLICK HERE). The next step soon will be a grab at other real asset classes as the wide capital controls spread their wings. Watch for grabs of individual pension funds like 401k, IRA, and Keough, perhaps even bank certificates of deposit (CD's). They will be forced into USTreasury Bonds in all likelihood, using tax and insurance angles.

◄$$$ BIG BANK LIQUIDITY PROCESSES ARE BACK ON TAP. THE USFED HAS RESUMED THE REPO PROCESS AFTER A FOUR-YEAR HIATUS. THEY ADDED $600 MILLION ON A SINGLE DAY. THE BANK LIQUIDITY STRESS HAS BEEN CLEAR, BUT THE NEW PATH APPEARS TO SEEK REINFORCEMENT FOR THE Q.E. TO INFINITY THAT IS FAILING TO SHOW ONGOING BENEFITS. THE FRACTURE LIES IN THE MONEY MARKET FUNDS. $$$

The Reverse Repo Process is a liquidity drain event, when the USFed sells USTreasury instruments to the banks and dealers. The big bank excess reserves have typically been arranged as a zero cost base via TARP, TALF, or whatever liquidity device was used by the USFed, basically money giveaway schemes. Regular Repo Processes are liquidity adds, where the USFed purchases USTreasury instruments from the dealers, giving them cash with which they are free to speculate, buying anything from equities to commodities or possibly even making a loan. Here is the big change event. The last regular Repo Processes were done were in December 2008, all basically 1-month Repos. Put aside the point made by Rob Kirby that a 1-month duration does not make them regular at all, because 1-month repos are very rare. Kirby explained further. Most Repos are shorter, like 1-day or over-the-weekend.

The heavy Repo Process usage in the wake of the Lehman Brothers bust in autumn 2008 made intuitive sense since the USFed wanted extra liquidity gushing within the market during the crisis aftermath. The big banks needed to reach past the year end, a notoriously costly tight time for banks to obtain short-term funds in the inter-bank market. Exactly why on August 7th the USFed did the large $600 million over-the-weekend Repos and followed that up with another 3-day repo the next day, is not exactly clear. Four years have passed, and one can conclude a serious threat has arisen. Stress is building within the banking sector, likely arising in some monetary aggregate the USFed follows closely. Another possibility is the USFed sees something ugly, or has planned something drastic, or is anticipating something they do not want to share with us.

While the USFed assures these are merely test runs, adept bank analysts realize the central bank is issuing giant signals to the banks of what is in store. One day after the last Repo expired, a new 3-day Repo kicked in for a whopping $600 million, including not only USTreasurys, but also Agency Mortgage Bonds and standard Mortgage Bond securities. The event sticks out like a giant red flag. The highly dependent financial markets enjoy the liquidity infusion, celebrate the advantage, but ignore the red flag. Look further and conclude that the massive QE programs have lost their spark, no longer contain the magic. That is the nasty nature of Ponzi Schemes, currently run by the USFed in bond monetization. The appetite for liquidity becomes insatiable. The QE programs never ended, but their benefits have stopped. See the Zero Hedge article (CLICK HERE).

## CENTRAL BANKS SQUIRM

◄$$$ THE IDENTITY OF THE USTREASURY BOND CREDITORS IS MADE MURKY BY THE INTEREST RATE SWAP DEVICE. IT IS LEANED UPON TO EXTRAORDINARY DEGREE. IF FINAL DEMAND IS ARTIFICIAL, THEN THE PRIMARY CREDITOR FOR USGOVT DEBT IS A BYPRODUCT OF THE DERIVATIVE MACHINE AND OUTPUT FROM THE USDOLLAR EXPANSION BASE TOOL, THE PRINTING PRESS. THE BIG US-BANKS HOLD AN ORDER OF MAGNITUDE MORE USTBONDS THAN THEY ADMIT. THE SITUATION WILL MAKE THE DEBT DEFAULT EXTREMELY DIFFICULT TO RESOLVE, PERHAPS IMPOSSIBLE. CHAOS WILL REIGN. $$$

Great debate comes to describe what will happen to the USTBond complex as time passes, since the situation is entirely untenable. It cannot be sustained. The USGovt debts are well over $1 trillion per year. The creditors have largely left the process. The Printing Pre$$ is used heavily. The USFed lies about the extent of its usage. The Jackass has described it as a Tower of Babel growing to the sky, sure to topple. The Interest Rate Swap is the leveraged device to produce the artificial demand that prevents the USTreasurys from rising dangerously toward 7% or 9%, even higher, from basic market forces like Supply & Demand. Rob Kirby anticipates a sudden Weimar storm of monumental liquidity bursts, lost control of the monetary expansion, powerful price inflation, and horrific disruptions to the entire financial system. The Jackass expects something along that path, but also a breakdown where the USGovt debt cannot be practically managed, resulting in a global conference to force writedowns and forgiveness at the point of threats and coercion, that themselves will prove futile in stemming the chaos.

The USGovt will eventually be isolated, be involved in grotesque self-dealing of the bonds, be called out as a Banana Republic, and make unilateral decisions on its own bonds to the point that the world will force the issue. At the inevitable global conference for a massive writedown and debt forgiveness, all hell will break loose. The big US banks might claim to be majority owners of the USTBonds. The final accounting of bond ownership will be extremely confusing and highly controversial, with charges of derivative corruption, counterfeit, and false claims greatly muddying the water. The rebuttals made in the open will tarnish the United States as a rogue criminal nation. Most bankruptices require a final accounting. This one will bear the stench of chaos. The nasty side will be threats of violence and evidence of past violence to defend the USDollar regime.

A footnote. No new anticipated QE3 will ever come, since the Quantitative Easing never stopped. If a new QE3 is supposedly ordered into effect, then no benefit would be realized. That is the major undermining motive. The camp of critics would gain insight that the QE parade never ended and grand lies have been told. The financial markets would feel betrayed and make their anger known in a loud manner. The benefit from recent bond monetization has lost almost all traction, precisely as Ponzi schemes play out. The USFed is using the public hopes of QE to levitate the financial markets, like waiting for Godot. The sham is slowly being understood. The USFed is not  printing like crazy because creditors complained about damage done to reserves, and about rising costs like with food. Entire societies have been destabilized. See the Aziz Economic article (CLICK HERE).

◄$$$ USFED MIGHT BE INSTALLING INTEREST RATE SWAP AS POLICY WITHIN THE USTREASURY BOND STRUCTURE. THE USTBOND RALLY HAD BEEN FLASHING A DANGEROUS SIGNAL UNTIL EARLY AUGUST WHEN IT BEGAN A MARCH TO 1.8%. IT IS UNCLEAR WHO THE SELLERS ARE. WITH THE PROSPECT OF NEGATIVE BOND YIELDS RISING, THE PLAN FOR FLOATING RATE NOTES APPEARS LIKE A PLOY BETTER LABELED WEIMAR NOTES. INTEGRITY IS SOON TO SHOOT OUT THE WINDOW. $$$

The USGovt debt limit is expected to be reached at the end of this year. By that time, extraordinary measures will be used to fund the federal operations into early 2013. As if the Printing Press and supporting derivative machinery was not enough. The USDept Treasury announced it is developing a Floating Rate Note program that could be operational in a year or more, in response to possible negative rate bidding. An official auction where negative yields dominate would erode all integrity from the lead sovereign bond linked to the USDollar global reserve currency. They might as well call it the Weimar Note. The sale of $72 billion in notes and bonds in refunding processes over the first full week of August had an impact, with a damaging followup last week. The 10-year USTBond yield was steady at 1.6% all of June. The TNX touched a 1.4% low in late July. But a momentum swing to 1.8% has occurred, sure to place tremendous unwieldy pressure on Interest Rate Swaps that manage as stabilizers the USTreasury Tower. The derivatives respond very badly, with leveraged aggravation, to abrupt changes either up or down. Great stress resides within.

The Floating Rate (Weimar) Notes would be the first new USGovt debt security since Treasury Inflation Protected Securities (TIPS) were introduced in 1997. The TIPS have been turned into a travesty sideshow with direct bond monetization directed toward their purchase, which alters their capability to protect from inflation in obvious manner. It is like keeping a thermometer under ice to prevent the indication of fever. The financial press totally misses the TIPS bond monetization contamination. With a budget deficit estimated at $1.21 trillion this year, the USDept Treasury must expand its base of investors. The deep deception of Weimar Notes might sufficiently appeal to investors wishing to accept the false protection from a possible increase in interest rates or faster inflation stemming from the USFed hyper monetary inflation. See the Bloomberg article (CLICK HERE).

◄$$$ A BILL FOR USFED AUDIT PROCEEDS SLOWLY BUT SURELY. THE BILL WAS APPROVED BY THE US-HOUSE. COMPROMISE LEADS TO EXPOSURE. THE CORRUPTION OF THE BANKING LEADERSHIP IS GRADUALLY GOING MAINSTREAM. $$$

The Dodd-Frank Financial Regulatory Bill contained some compromises by the banking industry to permit audits of the USFed. They seem to care little, since it is like an accounting of the barn after the horses left. The gigantic multi-$trillion loans continue unabated, unchecked. USFed Chairman Bernanke and USHouse Finance Committee leader Frank have openly expressed their discontent. But the USFed Audit Bill moves along in the approval process. A potentially stunning blow has come to the dark Syndicate forces by none other than Harry Reid, out of the Obama camp. No wonder the Wall Street donations pour in for Romney. See the Bloomberg article (CLICK HERE) and the Road To Roota article (CLICK HERE). The Jackass does not hold out much hope for the audit process. It is so incremental and toothless. So one more window into the dark castle is granted. No halt will come to their unbridled devotion with false money loans made to the cohort global banks, $23 trillion in two tranches. However, the bigger benefit is the gradual perception that the USFed and USDept Treasury are engaged in gross criminal activity. The perception is going mainstream, to my surprise.

◄$$$ EURO CENTRAL BANK HEAD DRAGHI IS CAUGHT IN AN INTRACTABLE BIND. HE IS USING BRINKSMAN MOVES TO SECURE POWER. ON ONE SIDE HE ATTEMPTS TO IMPOSE A QUARANTINE ON SOUTHERN EUROPE. THEIR TOXIC BONDS ARE INFECTING THE ENTIRE CONTINENT. HE TRIES TO FORCE GERMAN SUPPORT. ON THE OTHER SIDE HE ATTEMPTS TO LOOSEN COLLATERAL STANDARDS AS THE EURO-CB TRIES TO PROVIDE LIQUIDITY. THE MARGIN CALLS ARE RISING. PRESSURES ON THE MONEY MARKET FUNDS WILL CONTINUE. THIS IS A NO-WIN GAME. $$$

High noon approaches. Great power struggles ensue. The actions taken by Mario Draghi appear to be misdirected assaults, like a feint in sword fighting. He raises the market expectations for liquidity grants, then falls short of delivering them, which leaves the seniority bond issue in limbo. The result is more added pressure to Spanish and Italian Govt Bonds. He could be deliberately forcing them down the bailout route, never having wanted to support them from his first month in office. Once they request bailouts, Germany is forced to commit one way or the other. He might be forcing the German hand. If they commit to supporting the EuroCB by purchasing bonds and approving QE, then they are trapped. Draghi would then control the purse strings of the EuroZone. Control of money means control of the politicians. The end game approaches. The ball & chain nations of Spain and Italy are trying to win support from the rest of the EuroZone to bail them out without conditions. That will not happen. For their part, Germany might prefer to provide an intravenous drip to feed Spain and Italy with the Bundesbank in control of any new bond issuance. But the Twin Enchilada nations in the South do not want to follow the Greek path on dependence. It seems riot and ruin lie at the end of that path. A power game is underway. The Euro Central Bank is trying to make itself the unelected and uncontrolled issuer of the Euro currency and its bonds, similar to the USFed. See the Market Oracle article with contributions by Excalibur (CLICK HERE).

In early August, Mario Draghi of the ECB announced possible rule changes on bond collateral used for loans at its window. Discussions would take place in September. The central bank is leaning toward a repeat of such measures as its wrecking ball of cheap loans, known as Long-Term Refinance Operations (LTRO). Clearly, if another LTRO is launched with a big participation by Spanish banks, where Spanish Govt Bonds are used at the window, the Repo market could grow much unmanageable. The fostered reliance by peripheral banks on the central bank is certain to remain high. The buzz among analysts was that the LTRO extension could contribute to the decline of the cash market because the Repo is needed to grease the cash market. The money market funds will face tremendous pressures until they break wide open in a grand controversy, complete with bank runs. Unlike Spain, the Italian Repo market is still functioning relatively well, supported by the deeper liquidity in their debt market. See the Reuters article (CLICK HERE).

◄$$$ CHINA DUMPS USTBONDS WHILE JAPAN GATHERS USTBONDS, LIKE THE LOYAL AMERICAN SUBJECT. CHINA WILL DOMINATE THE NEXT DECADE. JAPAN IS PLACING THEIR BET BEHIND THE FADING AMERICAN EMPIRE, TOTING RICKSHAWS LOADED WITH TOXIC PAPER. $$$

A review of USTreasury Bond demand in the last year reveals a theme that reflects on the next decade with a bright billboard. It is difficult to change commitments after two generations, even if the debt picture is abysmal. Over the past three years, the biggest institutional buyer of USTBonds has been the USFed. No surprise there, except to the lapdog US financial press, which still dickers over QE when it never stopped. To be sure, China has been a major seller of USGovt debt. However, the big surprise has been Japan, the dominant source of marginal demand for USGovt debt, likely never to be repaid. Japan has entered the room with a double-down philosophy since the ruin is clear at home. The Treasury Intl Capital (TIC Report) reveals that even as China was quietly selling its US$-based bonds, including their offshore operations that show up as UK holdings, Japan quickly stepped in to catch the falling paper, filling the void in a big way.

The Chinese total USTBond holdings had fallen from over $1.3 trillion to $1.15 trillion in December, where it has stayed without change in 2012. China is on a buyer's strike. According to TIC data, Japanese holdings of US paper have soared from $882 billion in June 2011 to a whopping $1119 billion in June 2012. Japan, recently $430 billion behind the emerging Middle Kingdom, will soon overtake China in USTBond holdings. See the Zero Hedge article (CLICK HERE). The Japanese nation is throwing its weight behind the US train, but it is an express in motion heading over the fiscal cliff with no conductor. One can only think the Japanese Govt has struck a scummy deal with the USGovt, perhaps to undermine China in copyright violations, perhaps to obstruct the Yuan currency convertibility, or perhaps to cease HAARP hits. Time will tell.

◄$$$ GREECE IS PRINTING EUROS TO REMAIN AFLOAT AND LIQUID, WITH THE TACIT APPROVAL OF THE EURO CENTRAL BANK. THE ACTION IS FROM EXPEDIENCE RATHER THAN A FORMAL PLAN. NO MAJOR PLAYER WANTS A WORSE WRECK IN GREECE. EXPEDIENCE IS VERY UGLY. $$$

No solutions ever came, only patches. The Greek Govt is out of money. The prospect of debt default smacks in the face every single day, not with cultured intervals of two months when meetings are arranged. As politicians bide time, Greece prints money when under duress, with the uneasy approval of the Euro Central Bank. Recall that Ireland has been doing the same thing. Greece is at risk of default on bonds held by central banks tied to internal obligations. At issue is a EUR 3.2 billion bond that comes due on August 20th, held by the Euro Central Bank. Europe is on vacation. To avert mayhem, Greece prints, crisis averted, and nobody blamed. The liquidity spigot is never turned off, only to appear elsewhere. When the Troika turns its back, Greece prints. It sent inspectors, who probably ended up at a fine Mykonos beach. The battle is still on, since at the turn of August the Euro Central Bank stopped accepting Greek Govt Bonds as collateral for its repurchase operations. The Greek banks were cut off their lifeline. Greece requested a bridge loan or delay on the deadline to bide time through the summer, but the ECB rejected it. So Greece prints. The Greek Bonds are in the process of rotting on the ECB balance sheet, the high cost of inaction.

The farce of Weimar sideshows continue on the Greek stage. The ECB has allowed the Greek Govt to sell worthless treasury bills with maturities of three and six months to its own bankrupt and bailed out banks. Under the Emergency Liquidity Assistance agreement, the Greek banks would deliver these T-bills to the Greek central bank as collateral in exchange for real Euro currency. However, the banks would then pass the funds to the Greek Govt. In effect, the Bank of Greece would fund the Greek Govt in an indirect debt monetization circle. This is Weimar again, and worse, very much prohibited under the ECB governing rules. The disinterested Bundesbank acquiesced, perhaps bored by it all. Perhaps the Germans are spending more time on the alternative financial structure soon to emerge, as the current structure is collapsing. Besides, no party wanted to e blamed for a Greek debt default. The losers are making noise. EuroGroup President Jean-Claude Ju ncker said pathetically, "We do not have any time to lose. The Euro [must be saved] by all available means." In interviews, he gives every indication of deep pessimism for the future of the continent. See the Testosterone Pit article (CLICK HERE).

◄$$$ A BIG BUYER OF FRENCH GOVT BONDS IS EVIDENT, BUT NOT PUBLICIZED. MY GUESS IS GERMANY, HOLDER OF THE FRENCH POODLE DOG LEASH. FRANCE IS A MUCH GREATER PROBLEM THAN REALIZED, ESPECIALLY FOR THE GERMAN BANKS. SO THEY STEP IN. $$$

The following came from the LeMetropole Cafe run by Bill Murphy in early August. The French Govt Bond auctions are showing less stress, more demand, and ample liquidity in a surprising manner. Some party finds favor with French debt. The bond summary was as follows.

"Yields fall sharply at French auctions: France sold EUR 8.96 billion of three, four, and five-year notes today. It sold EUR 1.81 billion of three-year notes at an average yield of 0.12%, down from 1.09% at the last auction. The bid-to-cover fell to 3.02x from 3.30x. It also sold EUR 2.64 billion of four-year notes at 0.53%, down from 1.89% at the last auction. The bid-to-cover improved slightly to 2.14x from 2.10x. Finally, it sold EUR 4.5 billion of five-year notes at 0.86%, down from 1.43%. The bid-to-cover fell to 1.88x from 2.17x." Hmm. Improvement without a story behind it, only conjecture.

◄$$$ INDONESIA HAS CHALLENGED THE LEGAL VALIDITY OF EURO NOTES ISSUED BY THE EURO CENTRAL BANK. THEIR NATIONAL GOLD FROM A GLOBAL ACCOUNT HAS BEEN VICTIMIZED BY THE EFFLUENCE OF EURO NOTES, FULLY CHALLENGED. $$$

Neil Keenan is a noted Dragon Bond lawyer. He shared some interesting news from an Asian backwater, Indonesia. The island nation with over 250 million population is difficult to ignore. They are making rumblings. Apparently a large swath of Euros printed by the European Central Bank are in possession by Indonesia. These notes are being labeled as outright fraud, made as payment for the interest on the Gold from the Global Accounts. Challenges are coming to the EuroCB on their validity. They wish to expose the Euro currency as corrupted. Accusations have been laid regarding the Kazars & Nazis in control of the US Corporation, who allegedly have smothered the Collateral Accounts. The Indonesian authorities have appealed to higher powers. It seems the Bank For Intl Settlements has cooperated, the result being a freeze for 90 days on their account. The story is admittedly obscure, and should be investigated.

## THANKS

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