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

* Intro Monetary Fragments
* Big Banks as Crime Nexus
* Systemic Failure at the Doorstep
* USTreasurys Face the Shredder
* Global USDollar Defiance
* Japan in the Spotlight
* USEconomy Fights Depression


HAT TRICK LETTER
Issue #113
Jim Willie CB, 
“the Golden Jackass”
18 August 2013

ERRATA FROM JULY GOLD REPORT

A) The Shanghai story on global status via newly established free trade zone had a blank link. Here it is (CLICK HERE). B) The big banks have switched from massive net short to moderate net long in gold futures contracts. Jackass had it backwards in an obvious error. Not net long, error of total opposite. C) Giant Russian energy firm Rosneft signed a US$270 billion supply deal with China National Petroleum Corp, which is not known as Sinopec. Apologies, mea culpa, but so much information!

EDITOR ALERT: Word came yesterday (August 17th) from a Central Europe bank source that Deutsche Bank is the object of a massive new investigation on money laundering. The lead is taken by the Financial Action Task Force (FATF). It is curtains for D-Bank, already under severe scrutiny for accounting fraud and grotesque lack of capitalization. By year end, numerous walls will cave in for the giant bank. The contagion will be horrendous and very dangerous for big Western banks.

MONEY QUOTES

"The surveillance state seems incapable of grasping that they might not win this fight, and if they do not make an effort to get on this bus, they really could wind up under it." ~ Naked Capitalism

"Tolerance is the last virtue of a dying society" ~ Aristotle. "The best argument against democracy is a five minute conversation with the average voter" ~ Winston Churchill. "In times of universal deceit, telling the truth will be a revolutionary act" ~ George Orwell. "The government will make use of these powers only insofar as they are essential for carrying out vitally necessary measures" ~ Adolf Hitler.

"By signing this Federal Reserve Act, I have just destroyed my own country by putting too much power into the hands of a few men." ~ President Woodrow Wilson (1913)

"The race for the Fed Throne as chairman is all bullshxx and a clown show, more like totally irrelevant Kabuki theater. The next one needs to be and will be a bankruptcy trustee. Of the over $3 trillion on the Fed balance sheet, perhaps close to half is worthless, since the esteemed central bank did such a good job of serving as buyer of last resort for toxic bonds of all stripes. Any responsible idiot can do the job of trustee. The central bank needs to return to its original function, to count money and to act as a utility firm that keeps the lights on." ~ The Voice

"The Fed's days are really numbered. All of this is going to going forward very quickly. We are also going to have to think about how are we going to be retiring these banks. We have to find ways to smooth the transition." ~ Karen Hudes (formerly of the World Bank, who expects some key state banks to arise with asset-based currencies, which will swiftly put an end to the current fiat currency in the United States, while the USDept Treasury will start issuing USDollars instead of the Federal Reserve)

"These fines hit the bottom line to be sure, but if I had to do it all over again, I would not change a thing. It [the criminal deeds punished by heavy fines] was worth it." ~ Jamie Dimon (after JPMorgan was hit with a $410 million fine for rigging the energy market, just a cost of doing business, whose criminal settlement payments plus fines and penalties all tolled have come to $7 billion in the last two years, as crime is a mere cost of doing business)

## INTRO MONETARY FRAGMENTS

◄$$$ THE TNX RUNUP ANTICIPATED AS THE LONDON WHALE HAS TURNED INTO A LONDON SNITCH. HE HAS REVEALED SCATTERED JPMORGUEN ACTIVITY IN THE USTBOND MARKET, MOSTLY FROM HIDDEN OPERATIONS. BROAD DEBATE HAS COME CONCERNING THE USTREASURY BOND MARKET, INCLUDING WITHIN THE JACKASS OWN CAMP. MY FORECAST IS FOR A SMALL RUNUP IN BOND YIELDS PAST THE 3.0% MARK, WHICH WILL BE CONTAINED BY THE POWERFUL LEVERS. $$$

Foreign selling will combine with some degree of lost control of the leveraged tools. The US Treasury Bond bubble recognition has begun on a global scale. The Paradigm Shift in China has been at work for ten years, with the urbanization movement, the industrial trend, and the usage of USTBonds to finance their national development and supply chain, from metals to food.

Bruno Iksil might provide some damaging data about the cabal. The London Whale Iksil has unofficially become the London Snitch. As preface, consider that Fabrice Tourre of Goldman Sachs has been prosecuted as a scapegoat, but hides in France under protection, under benefit of short reach extradition laws. That the London Whale has been permitted to walk free from the JPMorguen proprietary desk disasters is indication of his new role as whistle blower, sure to provide juicy details in the months to come about the JPM devious devices put to use from the 2003 to 2007 period. Curiously, both Tourre and Iksil are French citizens. See the Zero Hedge article (CLICK HERE). What follows is a debate within my own inner circle of sources and analysts. Quotes will not be used much, but the concepts and thoughts will be identified for their sources.

The Jackass does not expect too many important big stories to emerge from the London Snitch in revelations. Many people do, thinking othersise. Iksil does not wish to be murdered. One cannot name two stories in recent months from the London Whale, turned Snitch. Not much in the way of big revelations at all, perhaps in highly notable absence even. Not the JPMorguen vaults going dry, as that data is public. Maybe he helped to reveal the JPM hogging of deliveries in June and July for Gold & Silver futures contracts, not permitting standard G&S delivery to clients with standing contracts. We need some big stories from Iksil, with ripe potential for their arrival, but nothing seems to come from him despite his new name (misnomer). The Voice made a direct comment, saying "Nothing will happen on the news front. It is all a mega charade. But as for the USTBond market and its supporting mechanisms, it will be like pricking a balloon. One big bang and all will be gone." Uh-oh! The biggest asset bubble in modern history is at risk, and wealth evaporation on the paper tables could be astonishing.

The Jackass forecast is for a move above 3.0% on the TNX, the 10-year USTreasury Bond yield. Its powerful control device has had to withstand high winds as the TNX has risen from 1.7% in early May to 2.8% in August. It will not break totally, but it is at great risk from the Interest Rate Swap, the derivative buttress in support. Normally a 30 basis point (0.30%) move would de-stabilize the IRSwap. Also, the bond market has begun to see the flood of USTBonds returned to sender, sold on the side corridors. Part of the channel is stuffed with Indirect Exchange, the return to sender of USTBonds, often through the Chinese hands. So the Jackass position is for a move above 3.0% on the TNX in the coming several weeks. All hell might break loose, but for reasons stated by Rob Kirby, control will be exerted, certain mechanisms turned on, in order to reduce the TNX. My guess is Wall Street banks have very big option calls in place on the TNX, to profit from the rising bond yields. They were told of the Taper Talk early, and did huge frontrunning (because they could) so as to reduce losses. The TNX option calls would reduce the damage from the USTBond carry trade. The big US banks had used free money to finance long USTBond futures with leverage. They suffered staggering losses in the process.

Despite the valid points made by Kirby, from his experience and perspective, the
requirement to maintain control cannot always result in desired outcomes. The financial world has entered the land of Unintended Consequences of lost control. The USTBond Asset Bubble is ripe for bursting, but very slowly, even very uncontrollably. One cannot assume almost all is under control because it must be. If under great control, the Jackass position is that the TNX never never never would have moved up so much. The rise in rates smacked the USFed by $300 billion in lost portfolio value. It already rendered serious damage to the real estate market, along with numerous stock bourses across the world, in addition to the pension funds which bought the USTreasurys when yields were under 2.0% for a full year. Expect more USTBond dumping and more Indirect Exchange offloading by foreign entities. The forecast call of a rise over 3.0% on the TNX is not a whole lot worse than what is seen today. It will cause problems and soon an Interest Rate Swap derivative burst of losses is due to arrive. These derivatives cannot withstand big moves in the bond yield, like what have occurred. Usually the damage is seen a few months down the road, just like in May 2012.

EuroRaj entered the debate, from his European post and keen view of London. He expects the USTreasury 10-year yield (TNX) to tell the outcome of the information flow, whether scummy or damaging. The JPM Chief Investment Office in London is nothing but a front in his opinion, designed to suppress USTBond yields via the vast Interest Rate Swap machinery. He expects a break above the 2.75% resistance level very soon. It just happened!! The worst damage to come, he warns, is from the Indirect Exchange. It is very likely already in process with extremely high volume, enough to cause problems. China is going to gobble up Australian gold miners and pay it off the large transactions with USTBonds, just like they have with energy projects in Iran and Saudi Arabia, as well as mineral projects in several African nations. China is also grabbing peripheral European businesses, in the payoff process shoving USTBonds at the weak European banks. These banks in turn become forced sellers, since they suffer from deep liquidity problems which threaten collapse.

Add to the big pot mix a sense of desperation on the part of the bond king himself at PIMCO. Bill Gross cannot speak publicly about the Int Rate Swap that proved his investment transition in 2011 to be extremely damaging, ripe with lost opportunity during a bond rally (even if contrived). The Total Return Fund saw only $5 billion in redemptions that entire underperforming year. He has vowed to take control of the bond market investment portfolio, following massive redemptions from investors who suffered losses. Their Total Return Fund is the flagship among the PIMCO funds, which collectively grew in size to $2 trillion in 2008. In the last few weeks, investors pulled out $18.7 billion since May alone. Gross promises higher performance, but with risk, as he described various techniques in the low bond yield environment. They pertain to spreads from non-USTBond vehicles like mortgage bonds and other foreign sovereign bonds. The method also include carry trade, using higher yields on long-term bonds to gain profit when shorting the lower yields on short-term bills. He emphasized the credit risk element, which could result in further losses in the treacherous bond arena. It is the current sea of asset bubbles. See the Bloomberg article (CLICK HERE).

Rob Kirby entered the debate. He anticipates the establishment or engineering of a false narrative to support the forced reduction in 10-year rates back to or below the 2.0% mark. By that he means the USGovt will pour out story after story on how the USEconomy has become weaker suddenly, despite the fact that it has not changed at all from weak, every single year since 2008. The USDept Treasury has the ability, via the Interest Rate Swap devices, to lower rates. He admits that permitting rates to go higher does harm to the USTreasury complex. He points out that JPMorguen is an extension of the USTreasury itself, acting as primary market agent. The bank colossus will not be prosecuted or thrown under the bus for any violations ever. The reason they permitted rates to go up to the current 2.7% range is to falsely have people believe there is a fair market, he reasons. However, there are no free markets. No financial market anymore has the freedom to seek equilibrium and fair prices. There are only interventions. This point by Kirby was cited in the July Money War Report with some detail, including other devices like the income tax funds used on forward supply. It is a valid point, about powerful machinery operated by the Exchange Stabilization Fund and run by the USDept Treasury's hired agents on Wall Street and in London City.

The Jackass came for rebuttal in the debate. The Kirby point is well taken and understood. But then again, one can no longer assume that all is under control. Since late 2008, very little has been under full control despite monumental efforts to coordinate interventions, to strap on lashing at big bank centers, to patch up toxic holes with government funds, to hire sympathetic hack operators to sustain the rigged game, and to paint false stories endlessly in support. The Jackass is in disagreement with Kirby though, having full recollection of the factors and devices cited in July. They use the Internal Revenue Service tax flow of funds in a special way to fortify other devices, thus keeping the USTreasury Bond yield (TNX) down. The Jackass position is that the USTBond complex is gradually seeing lost control, a very slow process of cut lines, severed cables, and less effective tools, at a time when the entire world has begun to stand in opposition. A major transition is in progress. While two years ago, the Jackass position was for a move down to 1.0% on the TNX, no longer is such viewpoint held. More learning has taken place on the treachery of holding the interest rate derivatives in place during volatile times, while foreigners are dumping USTBonds en masse, not just China.

The many foreign entities are ganging up against the USGovt and defying the American finance ministry. They are angry at the unilateral USFed monetary policy dedicated to hyper monetary inflation. The USFed policy is undermining foreign interests, and debasing their FOREX reserves, causing losses, and reverberating in their entire leveraged financial systems. Their national stock bourses have been hit hard, without intervention devices like the United States deploys. As a result, foreign entities have redoubled their national efforts to seek a USDollar alternative in trade, while shifting reserves management away from the USTreasury Bond as center.

The Jackass does not believe the USDept Treasury permitted the TNX to rise to 2.7% as an intentional maneuver. It is not so credible that they would permit such unspeakable damage worldwide, with $trillions lost in paper wealth, just to exploit an issue. They have rendered severe damage to financial markets and stock markets and real estate markets across the world. Instead, it should be seen as a situation where they said to their own loyal subject troops, "This has gone somewhat out of control, so let's exploit the situation. We must take advantage of the prevailing perceptions that do not fully consider the powerful devices in hidden regular usage." In my view, it the powerful devices were available, they would have been used. They were used. They did not halt the TNX rise toward the 3.0% mark. And since the outcome was a fast rising TNX bond yield, one must conclude that the devices were overwhelmed by foreign selling en masse, by pension fund selling in volume, by PIMCO redemptions in volume, and in a nasty reversal of the big US & London bank carry trades.

Leveraged bond schemes are a bitch when they go into reverse. Their leveraged long-term bonds had to be sold when losses were amplified by the futures contract leverage. We just witnessed a severe display of bond convexity, where the damage to the market was seen as faster rising bond yields than ordinarily would have occurred, from surprising high volume sales (leveraged) combined with big bank reversals of carry trades. To be sure, a rational exploitation by evil camps can be done to take advantage of a situation gone somewhat out of their control. Like allowing the financial markets to believe the USFed has lost a little control, soon to be reined back in. The Jackass believes the USDept Treasury and the USFed lost some control and will lose a little more, maybe a lot more.

Lastly, enter George from Chicago, a savvy veteran with COMEX logistics experience, with futures arbitrage experience, with bond derivative experience as well. He had been the eyes on the MF-Global crime scene. He focuses upon the Chinese factor, as they relate to the USTreasury Bond market, since it has become historically enormous as a factor within the many equations. He points out that China has been gobbling up resources for a decade, using USDollars in payments. China has been reducing virtually all but a small percentage of USTreasury holdings below 3 years in maturity, as a policy shift for a full decade. Any USTBill below 3 years is considered interchangeable for cash, valued and treated like cash in the international market. Consider China a main participant in Operation Twist, to switch from long-term maturities to short-term. The entire operation might have been forced by China, in fact, just like they forced the nationalization of Fannie Mae.

The Beijing leaders made a conscious decision on a huge level a decade ago to divest from USDollars at a rapid but manageable pace. They concluded that the US machine, the mass of American consumers was tapped out and dying. In George's view, they concluded that the USGovt was a mortal enemy with its partner the USFed, acting with central bank decisions made that did not serve China. The decisions actually did not serve the American interests either, but rather served Wall Street interests as highest priority. The entire Chinese strategy toward Urbanization and Industrialization has directed attention to a fostered consumer driven economy. It stems from and leads to their attitudes toward USTBond usage in acquisitions. Missing this grand Paradigm Shift would mean to miss one of the monster macro economic and political shifts of our lifetime, certainly post-WW2. Agreed totally with George, a sage veteran who has provided guidance on numerous thorny topics.

◄$$$ A RIVAL SAUDI PRINCE HAS DEFECTED TO GERMANY. HE SPOKE OF BRUTALITY AND OPPRESSION AS THE GOVERNMENT HAS TURNED FRIGHTENED OF ARAB REVOLTS. THE UNITED STATES WILL NOT CRITICIZE THE MONARCHY, NO MATTER WHAT. HUMAN RIGHTS GROUPS ARE ON WATCH. BROAD DISSENT IS RISING. THE DEATH TOLL IS RISING. THE PRISON POPULATION IS RISING. DISORDER IS RISING. TEMPERATURE IS RISING. THE FALL OF THE HOUSE OF SAUD IS APPROACHING, AND WITH IT WILL GO THE PETRO-DOLLAR STANDARD. BEHIND THE SCENES THE NATURAL GAS COOP WILL BECOME A SERRIED PHALANX TO SEPARATE ARAB MONEY FROM THE USDOLLAR. $$$

In recent weeks Saudi Arabia has launched an offensive against anti-regime activists, using widespread arrests and long jail sentences. The Ministry of Interior has taken control with total power, much like a Gestapo. The total number of political prisoners has now surpassed 30 thousand, according to some reports. A critic was recently sentenced to 600 lashes and seven years in prison, for merely speaking out against Islam. Welcome Saudi as the latest big fascist nation with strong ties to the Anglo axis. The crackdown has even forced a member of the ruling family to defect. RT Arabic spoke exclusively to Saudi prince Khaled Bin Farhan Al-Saud, who accused the monarchy of corruption and silencing dissent. Human Rights Watch is on the scene. Rumors conservatively of tens of thousands in political prisoners have been taken, many denied legal counsel. Reports has circulated that a few have been killed in prison.

Saudi Prince Khaled Bin Farhan spoke to RTNews from Dusseldorf in Germany. He confirmed reports of increased persecution of anti-government activists. Such actions forced him to defect from his country. He accused the monarchy of severe criminal behavior. In Jackass view, such actions are a signal that Abdullah's leadership is gone. Khaled explained how the Saudi mechanism for suppression worked. He said, "There is no independent judiciary, as both police and the prosecutor's office are accountable to the Interior Ministry. The ministry officials investigate crimes (they call them crimes), related to freedom of speech. So they fabricate evidence, and do not allow people to have attorneys. Even if a court rules to release such a criminal, the Ministry of Interior keeps him in prison, despite a court order to release him. There have even been killings! Killings! And as for the external opposition, Saudi intelligence forces find these people abroad! There is no safety inside or outside the country." See the exclusive report by Russia Today (CLICK HERE) that includes a video.

One might be reminded of the Shah of Iran in the 1970 decade, with the long reach by the dreaded SAVAK. Under the orders of Mohammad Reza Shah, it went deep into Europe to murder its opponents, like into Germany and France. As the situation turns to a boil, the legion of Saudi princes will flee with hundreds of $billions of plundered national wealth. At that time, the Petro-Dollar defacto standard will be dead and buried. Watch for the new Persian Gulf protector to arrive with military shields. The story in Syria might be important, but not fit for regular Hat Trick Letter updates. However, it is the site of the end point for what could be called the Shiite Gas Pipeline that originates from Iran. Thus the stern opposition by the USGovt. The Syrian pipeline port will be an important link in the NatGasCoop, certain to gain important geopolitical power under Gazprom's watchful eye. Ditto for the Iran-Pakistan Pipeline, with USGovt opposition and Coop importance. The OPEC union is soon to be splintered, a spinal chord for the USDollar. The Saudi disorder receives no US press attention. See the Pepe Escobar article on SGT Report about the civil breeding in Saudi Arabia (CLICK HERE).

◄$$$ THE FLIGHT OF SAUDI WEALTH BY PRINCES WILL MAKE FOR COMPETITION BY FASCIST AND DESPERATE BROKEN NATIONS ALIKE. THE RESULT WILL BE A CONSIDERABLE FLOW OF USTBONDS SPENT TO RECREATE THEIR LUXURIOUS LIFESTYLES. HENCE MORE INDIRECT EXCHANGE IN REDEEMED USTBONDS, RETURNED TO ANGLO SENDER. $$$

Enterprising people might do well to start a Vegas line on when the House of Saud falls, an ended regime in disgrace, tyranny, and pilferage. The Jackass estimate for the fall of House of Saud is 14 to 18 months, around end 2014. Watch the scared princes scatter with hundreds of $billions to Spain, France, Great Britain, the United States, Switzerland, and Persian Gulf hideyholes. Their wealth will be welcomed by fascist and rebuilding nations. They might be hunted by the Saudi natives, and reform driven tribunal officials, looking to recover plundered national wealth. Some irony might come, as welcoming nations might exact a heavy price for offered asylum by the bandit princes who abscond with Sau di national wealth.

The fascists nations would be the most comfortable, like the UK and US, the axis of global fascism. The nations might turn around and sell the USTBonds, creating more bonds returned to the sender, more Indirect Exchange dumped back on New York and London bankers. Imagine France and Spain offering asylum for the price of $10 billion per prince, plus $3 billion per family member. Recall these low life inbred thieves have several wives. In addition, the fleeing princes would immediately embark on construction projects, to build grand super-mansion estates, monuments to their outsized egos. The locals would welcome the job opportunities. The displaced royals would purchase banks and shopping malls, but not have the luxury to extort money in appropriation from the local enterprises, a favorite royal practice done in Saudi Arabia. The combined spending would make for hefty USTBond redemptions, and more Indirect Exchange. Many are the channels directed in redemptions of toxic paper.

◄$$$ CHINA HAS ACCUSED THE UNITED STATES OPENLY OF TRYING TO CONTROL NATIONS. THE PUSH FOR FREEDOM AND DEMOCRACY IS REALLY FOR CONTROL OF RESOURCES AND ESTABLISHMENT OF FINANCIAL OUTPOSTS. THE FOREIGN NATIONS HAVE NOTICED THAT WESTERN DISARRAY IS NOT DESIRED FOR EXPORT. ALL TOO OFTEN, SOLDIERS DIE FOR A SYNDICATE MOTIVE. $$$

A direct and somewhat scathing article came out of China about the United States and their push for freedom and democracy around the world. The Beijing leadership accuses the US of hegemony and indirect sinister pursuit of resources under the false banner of freedom and democracy. The article was approved by the government controlled Chinese news site, the Peoples Daily. With the direct confrontation, China removes the mask from the US, with descriptions of taking control of nations without a shot being fired, from doled out friendly advice. They warn the USGovt to stop doing what they are doing in China, causing a clash of cultures. The object of pursuit is all too often resources of foreign nations, whether in Iraq (oil) or Aghanistan (heroin). Some hypocrisy is noted, as the USMilitary deploys drone weapons that kill civilians on a routine basis, while maintaining the embarrassment of the Guantanimo torture center in Cuba.

China is clearly saying to halt the promotion of Western Values in China, while making reference to how the US has caused the Russians some problems from promoting Western values there. Any legitimate push with integrity for Democracy and Freedoms would not involve the all too frequent USGovt support of dictators who commit genocide when it serves a purpose (see Mugabe in Zimbabwe). Any push should not attempt to select a better dictator (see Syria, Yemen). Any such push, if honest and sincere, would not follow the scrapping of the US Constitution and Bill of Rights in favor of the misnomered Patriot Act (better labeled a Nazi Manifesto). That the US President was bestowed a Nobel Peace Prize has diminished the value of all past such prizes, even redefined peace through war. In 2013, the re-elected Obama announced the broad support of democracies on several continents, for those yearning for freedom. In 2008, Obama campaigned with a promise to shut down the torture chambers in Guantanimo.

The current decade is a far cry from past decades, when legitimate calls for democracy, human rights, and freedom did indeed carry a halo of sanctity. After the passage of decades, the scrutiny has changed, bringing with it questions about why the situation in Western nations, whether financial or political, is in such decrepit condition and disarray, with colossal loss of wealth and forfeited industry, including complete banker criminal impunity. The East does not want export of these slimy scummy values. Other questions follow, wondering why conditions have grown worse after a variety of color revolutions in countries touched by US foreign policy. It seems destabilization and chaos are the ends, not just the means.

A certain resistance is evident to prevent the onset of Western hegemony, to which some in object nations are willing to be enslaved. Nations like China will choose to retain their identity, their culture, their devices, and their theories. Their native system will be welcomed for winning the support of its people, during the revival of the Chinese nation. A case in point from a Chinese perspective. Lin Yifu worked for several years in the World Bank. In his quest to gain expertise from the West to help with Chinese economic development, eventually he came to realize that the West is far from perfect, often beset with problems. Many countries and regions have succeeded in achieving development without slavishly adopting the Western methods and platforms. Clearly, economic and political structures share common features. Success will come with a clear view, independence of thought, and the capacity to learn and achieve steady improvement through fair systems and innovative opportunity. As with individuals, so with countries.

A facade is being pulled away. Other nations see through the United States while they push for freedoms around the world. The ulterior motive is visible. Many leaders have pointed out behind closed doors the indirect hidden motive. For the first time in recent memory, a shot has been fired across the bow of the expansive (if not imperalist) United States by a superpower. The US has been warned by China to stop what they are doing so boldly with interference. If only the people of the US could see more clearly what the nation is doing overseas. The sacrifice of soldiers in the USMilitary is all too often not for freedoms, but instead for US control and domination of other lands for their resources. See the Sherry Questioning article (CLICK HERE).

◄$$$ CONGRESS AS FAILED INSTITUTION, TRUST LOST, NO ACTION. $$$

The political gridlock is a nasty reality. The lack of action is obvious, especially toward the deficit and spending, even the endless wars, especially the march toward a police state. The special interests have turned obscene. Against the background where control levers are pulled by the bankers and military contractor arms, the public does not believe members of the USCongress are doing a good job. In a recent Gallup poll, Americans gave the current Congress the lowest confidence rating ever measured for any institution in 40 years. An assortment of ratings were provided, the trend being lost confidence over the last couple decades. It is difficult to see how the trust ratings could go any lower. Petty partisan politics and failure to make important decisions led the list of complaints. The public is very disenchanted, but this is the only government offered. Unlike the finance sector, where individuals can escape the corrupt game with gold & silver ownership, the political stage is one to observe during the collapse with horror. See the Zero Hedge article (CLICK HERE).

◄$$$ THE BANK OF ENGLAND HELPED THE REICHSBANK SELL PILFERED NAZI GOLD DURING WORLD WAR II. THE ANGLOS ACT MORE LIKE NAZIS THAN GIVEN CREDIT. THEIR HISTORY IS LONG AND ESTABLISHED. BRITISH AND AMERICAN BANKERS EVEN FINANCED HITLER. THE CORE OF THE FASCIST CORE IS COMPRISED OF BANKERS, NOT MILITARY. $$$

To set the criminal environment, the Bank of England has exhibited flagrant behavior in hiding of the truth about the Bundesbank official gold stored in the New York Fed vaults. Soon after a bold refusal by NYFed officials to even permit a viewing of the German official gold, the Bundesbank dramatically shifted its position to demand that its gold be repatriated back to Germany. Chaos has resulted since in the entire gold market during a scramble to avert failure. The scummy history of London goes further. In yet another one of the darkest episodes in central banking history, the Financial Times reports the Bank of England facilitated the sale of gold widely looted by the Nazis after their invasion of Czechoslovakia in 1938. The pattern of central bank activity appears scandalous, egregious, diabolical, with collusion toward crime organzations. Wall Street is an extension of London. Few seem to realize, the American and Anglo bankers are nazis. Check their past relationships and even bloodline. Leave out any ethnic or religious assumptions. Follow the deeds and alliances. See the Zero Hedge article (CLICK HERE) and the Financial Times article (CLICK HERE). Worse, the bankers in Wall Street and London City financed the Hitler war machine. See the YouTube video (CLICK HERE).

Many wonder who are these modern hidden fascists. In March, the Hat Trick Letter reviewed the fascist links to the Vatican and the new Pope Francis. Notice Pope Fascist sounds a lot like Pope Francis. Start the modern list with Bush, Kissinger, Clinton, Paulson, Dimon, Blankfein, Bernanke, and Greenspan. Add Grasso, Geithner, Summers, Feldstein, Rubin, Mack, Bloomberg, Schumer, Cuomo, Tenet. The deeply hidden members are Rothchild, Rockefellers, the Bilderburg group. May they all see  justice, or a sweet view of sharks in underwater prisons. On the Fascist list, leave out Milton Friedman and Paul Samuelson, noted economists, not to be confused with bankers. The arch enemies to the fascist bankers reside in the School of Austrian Economics. Many shared some ethic background in common, but the likes of Von Mises, Shumpeter, Rothbard, Von Hayek, Horwitz, and Weber despised the Wall Street arrogant criminal class of economists. After WW2, these fine expert Austrian economists were shunned by Wall Street and shown great disrespect.

## BIG BANKS AS CRIME NEXUS

◄$$$ BANKSTERS OPERATE FREELY IN CRIMINAL ENTERPRISE. BANKER CORRUPTION IS THE NEW NORMAL. THE USGOVT HAS BEEN TAKEN OVER, CONTROLLED BY THE BIG BANKS, SUBORDINATED AND TAPPED FOR ITS WEALTH. THE NATION IS HEADED FOR A CERTAIN FINANCIAL COLLAPSE AND ENDURING DEPRESSION. $$$

On an increasing basis, big powerful banks like Goldman Sachs and JPMorguen have set their hooks into governments, financial markets, and even the military security apparatus. They have taken control of the USGovt and the news networks, swaying decisions and shaping public opinion. The biggest of banks have emerged as the role models in competitive battles to thrive and to survive. In the shadows of the Fascist Business Model, mass corruption has arisen as the new normal for big global banks. Analyst Barry Ritholtz, author of "Bailout Nation" and lead contributor to The Big Picture website for exposure of the big banks conspiracy, has detailed the pandemic of corruption across America and the global banking world. His terminology uses the term Manipulation to mean corruption, fraud, scam, conjob, gaming, cheating, misrepresentation, rigging, and price fixing. He accuses the banking industry of being deeply committed to broad but subtle conspiracy of unethical, dishonest, illegal, and blatant criminal behavior in pursuit of profits and maintained position of control. They defraud investors and tap into taxpayers, deceiving the government, buying off politicians. In doing so, they set up the United States for a massive crash and climax in systemic failure.

The conditioning of participants has occurred, so as to justify the corrupt behavior in most corners of the financial sector and its many extensions through the economy. Most every market is rigged. The populace accepts the rot as the new normal, as does the business community. The USGovt is under direct banker influence, inducing fiscal policy to institute extreme deep banker welfare, which does not aid or stimulate the economy. The US Federal Reserve was a major cause of the current unresolvable crisis, and banker welfare only locks the nation in that crisis with wealth drained off. This is precisely the Modus Operandi of the champion fascists. To stabilize the economy, the big banks must be broken up, but they own the USGovt politicians. This prime failing is the main theme of the Hat Trick Letter for several years. The US nation is being driven into the Third World with a certain collapse and stinging depresssion. See the Market Watch article (CLICK HERE) which includes dozens of specific examples of deep corruption. The capitalist body has been hollowed out and gradually destroyed on a systematic basis. The ideals of Adam Smith have been gutted. Crime prevails. However, a grand global reaction has formed, as numerous elite powerful groups have decided to oppose them, to isolate them, to remove them. It remains to be seen whether that happens with an outbreak of war and pestilence.

◄$$$ JPMORGUEN FINES AND PENALTIES ARE PAID, A RISING LEDGER ITEM AS REGULAR FEATURE IN ITS FINANCIAL STATEMENTS. REGARD IT AS COST OF DOING BUSINESS FOR A CRIMINAL ENTERPRISE, JUST ANOTHER ITEM. $$$

The JPMorguen fortress is slowly crumbling, with deep cracks showing. The Jackass theory is that under the Fascist Business Model, which began under the Clinton Admin, truly flourished after 911 with billboard signals to expand fraud. Criminal activity is protected by the USGovt, with total impunity for any and all felonies, including murder, which is managed by the US security agencies. Under the model, crime has a cost, just another business cost, in fact a relatively minor cost until recently. The quintessential turning point for recognition was the fine for money laundering of narcotics funds paid by Wachovia in 2009, in connection with Mexican drug cartels. The courts ordered a fine of 0.03% of volume transacted, under 1/30-th of one penny per dollar. Crime does pay for the protected big banks, considered far worse than simply too big to jail. Recently, the costs have risen dramatically.

In the last two years, JPMorguen has paid out a whopping $7 billion in fines for a wide range of violations and improprieties. The big bank's once sterling image has been tarnished beyond repair. In 2008, the bank tried to refuse a bailout from the infamous TARP Funds. The CEO Jamie Dimon, reputed to chase wives of associates, led the market to believe the robust institution could handle anything thrown at it. Then the London Whale came along to shatter the fortress image completely, no more omnipotence for image. Lies and losses followed in succession. Slowly the revelations came that their vast $50 trillion derivative book where the Whale swam was not solid, of a size that could crater entire nations. What has grown recently out of control is the string of litigation cases lined up against JPM. It has become a court case magnet even greater than Bank of America.

The new impression that paints the nastiest and most corrosive of coats on its image is that the big bank's success for a decade has been an extension of criminal activity. And the cases have not touched the Afghan narcotics money laundering via the Iraqi Export Bank under their charge. The executives and legal counsel have become experienced and expert at dealing with criminal case resolutions, which admit no guilt and pay out heavy fines. The settlements rack up, just like the victims. Review a summary of the recent JPM exorbitant and seemingly endless fines, courtesy of the Daily Beast (CLICK HERE). Recall a few months ago, a special report was scribed in the Hat Trick Letter devoted specifically to JPMorguen and its criminal facades. Close with a dastardly defiant devilish quote by the CEO himself. Dimon said, "These fines hit the bottom line to be sure. But if I had to do it all over again, I would not change a thing. It was worth it." Indeed, crime pays for big US banks.

◄$$$ JPMORGUEN WAS OFFICIALLY ACCUSED BY THE F.E.R.C. REGULATOR OF MANIPULATING THE POWER MARKET. THE FINE DOLED OUT WAS A TRIVIAL PITTANCE, A MINOR COST OF DOING BUSINESS FAR LESS THAN A BILL FOR KEEPING LIGHTS ON IN THE BUILDINGS. $$$

The news headlines were clear, that JPMorguen had manipulated the electrical power market, or manipulating energy contract bid strategies. Bloomberg heralded the violations, having taken place in California and the Midwest between September 2010 and June 2011, according to the Federal Energy Regulatory Commiss ion. Using the regular method of business, the big bank agreed to pay sanctions that include a fine of about $400 million, with the potential to forfeit excess profits at a later date. Sounds like a big sum of money, but not really. The federal agency had investigated the market activities of the JPMorgan trading unit for more than a year. Case closed, with $99.5 billion in projected 2013 revenues, and fines that amount to about 0.4% of revenue earned. The cost is less than electrical lighting at office facilities, but much more than the Wachovia drug money laundering fine a few years ago. See the Zero Hedge article (CLICK HERE).

◄$$$ JPMORGUEN PLANS TO EXIT THE COMMODITIES TRADING BUSINESS, SO THE STORY IS TOLD. HARDLY LIKELY. JPMORGUEN WILL PROBABLY NOT DEPART FROM THE IMPORTANT PRICE FIXING BUSINESS FOR COMMODITIES AT ALL. THEY WILL MANAGE THE TASK AT ARM'S LENGTH, USING THEIR SUBORDINATED BOY. $$$

Rather than giving attention to the official story, consider the headline that JPMorguen plans to spin off its commodities trading unit. The action is questionable, while the real motive is dodgy. It sounds like a noble gesture, to step aside and permit the free market to work, and to seek equilibrium. Never give such thoughts more than a second of time. Methinks it is a BS story. JPMorguen will never walk away from any market, since it can do whatever it wishes with 99% impunity and permit to steal. Consider that Morgan Stanley runs the commodity trading main desks on Wall Street, as the official resident harlot for hire. Just a phone call away. They take orders from JPMorguen and Goldman Sachs. The Morgan Stanley crew of skilled market riggers is in charge of the Interest Rate Swap shop and the energy shop at Platts.

Consider some viable motives. It could be that JPM wishes to bury some old bones in a designated outhouse they wish later to kill. They might prefer to export what eventually becomes a black hole in implosion. Perhaps they will jettison the vulnerable pieces, and concentrate efforts on offshore subsidiaries in a more hidden manner, such as were used with Enron in collusion with other giant Citibank and esteemed Harvard Univ. Be sure to know they will sidestep whatever liability that appears. Recall the profound liability they held with Enron. The associated evidence perished in the infamous Building #7 at the World Trade Center. If it had been demolished off the Manhattan island, some attention would have been given the event. Expect business as usual for the House of Morgan in the commodity business, with hidden hands at work, and maybe a scuttle in the near future. See the Bloomberg article (CLICK HERE) and the CNN Money article (CLICK HERE).

◄$$$ CRIMINAL FINANCIAL FRAUD IS JUST A SMALL PART OF DOING BUSINESS FOR CITIGROUP ALSO. A JUDGE APPROVED A $590 MILLION SETTLEMENT WITH CITIGROUP. OF COURSE, NO GUILT ADMITTED, AND BETTER YET, NO OPEN COURT TRIAL WITH THE ATTENDANT RISK OF A HUGE DAMAGE AWARD TO STOCK HOLDERS FOR HIDING SCUMMY MORTGAGE ASSETS ON ITS BALANCE SHEET. $$$

Citigroup used to have a big mortgage liability hanging over its head. It might still have some lingering liability, but some risk has been chipped away. A federal judge gave final approval in the last week of July to a $590 million settlement by Citigroup Inc. The deal resolves a shareholder lawsuit accusing the bank of hiding tens of $billions in toxic mortgage assets from its balance sheet. The bank had been made to look more healthy to stock investors by the ongoing deception. US District Judge Sidney Stein in Manhattan wrote, "Although the $590 million recovery is a fraction of the damages that might have been won at trial, it is substantial and reasonable in light of the risks faced if the action proceeded to trial." Highly doubtful, Sidney! A court trial might have resulted in a few $billion in damages, especially with public hatred of banks growing each month. See the Reuters article (CLICK HERE).

◄$$$ DEUTSCHE BANK PROFIT UNEXPECTEDLY DECLINED ON LEGAL COSTS AND RESERVES SET ASIDE FOR FUTURE LEGAL SETTLEMENTS. THE BIGGEST BANK IN EUROPE PLANS TO REDUCE ITS BALANCE SHEET, IN A BIG MOVE TO SATISFY COMPLIANCE. THE DEUTSCHE BANK PROBLEMS STEM FROM MAGNIFICENT ACCOUNTING FRAUD, LINKED TO FOREX SWAPS TO CONCEAL SOVEREIGN DEBT. $$$

Deutsche Bank announced it will reduce its balance sheet by EUR 250 billion (=US$330 bn) so as to comply with stricter capital rules, in much the same manner as Barclays and UBS. DBank will liquidate some of its EUR 73 billion asset portfolio. It claims it will change its derivatives accounting, but offered little information on details. A proper derivative accounting would reveal a EUR 20 billion capital shortfall. The big European bank (biggest) announced 49% lower income for 2Q2013, coming in at EUR 334 million, a wide miss by half on expectations. The kicker was a massive increase in Loan Loss Reserves, to be tapped from anticipated legal settlements lined up on the court docket. Co-CEO Jain openly stated an expected acceleration of settlement costs in the coming quarters. The funds set aside at end Q2 were EUR 3 billion. That means EUR 5.4 billion in funds set aside in the last two quarters, just for awards in court cases, lawsuits, with penalties and fines, including potentially restitution of bond victims. The insolvency rumours surrounding Deutsche Bank are persistent, impressive, and from reliable corners. The bank faces daily death threats from implosion. See the Bloomberg article (CLICK HERE).

◄$$$ DEUTSCHE BANK IS DELEVERAGING AT THE FASTEST PACE SINCE THE CRISIS OF 2011. THIS IS THE OLD LEGACY DERIVATIVE BOOK ACQUIRED FROM BANKERS TRUST IN 1998, WHICH GREW MUCH BIGGER. BEWARE THAT D-BANK HAS A BOOK EVEN LARGER THAN JPMORGUEN'S, AND D-BANK IS IN THE PROCESS OF FAILING. NOTHING CAN STOP ITS FAILURE. $$$

Deutsche Bank is the biggest derivative bully on the block in the Western world. Its total gross derivative exposure of EUR 55.6 trillion is even bigger than that of JPMorguen. Much consternation within German political circles has arisen, since its death is a constant worry. Recall that Deutsche Bank back in 1998 acquired Bankers Trust from New York. It was a huge event, but little noticed. BT was a huge computer customer of my old Digital Equipment Corp firm, the Jackass employer from 1980 to 1993. BT was called the USFed's private bank, a grand silo of derivatives, which no US-based bank was large enough to acquire in prevention of a massive failure that would have been an order of magnitude larger than Lehman's. The derivative collapse threat has origins back in 1998. This is not a new phenomenon.

Back in May 2012, the Zero Hedge vigilantes provided disclosure that the Core Tier 1 ratio at Deutsche Bank was the worst of any bank in Europe, and the entire world. This viewpoint was reinforced by former Kansas Fed president and current FDIC Vice Chairmam, Tom Hoenig. He called Deutsche Bank so horribly undercapitalized, it is ridiculous. One could easily extend the conclusion that almost every big US and London bank is horribly under-capitalized. Notice the two Deutsche Bank net derivative exposures since 2011. Something hits the observer in the face. Over the past year, the nominal net exposure of the bank's positive and negative derivative market values has collapsed from a combined total of EUR 1.678 trillion to just EUR 1.253 trillion. In fact, over each of the last four quarters it has shown consecutive declines for a cumulative net deleveraging of EUR 425 billion.

Notice that bank deposits are in rapid decline, a 20% decline in deposits in twelve months. They serve as capital core, rapidly vanishing. If the exposure declined with a constant capital core, it would flash a healthy signal. A reasonable person would therefore inquire with due diligence, as to why the biggest bank in Europe was deleveraging at the fastest pace since Europe's near-death experience in the summer of 2011. Stand clear, as the biggest bank in the entire world is about to collapse. It is shrinking as fast as it is eroding in the capital base. See the Zero Hedge article (CLICK HERE). More attention was given to Deutsche Bank when Max Keiser mentioned that the big teetering bank was officially on suicide watch, according to his Swiss fund source. See the Silver Doctors article (CLICK HERE).

◄$$$ BARCLAYS FINALLY ADDRESSED ITS EXTREME INSOLVENCY. THE BIG LONDON BANK WILL RAISE $12 BILLION IN NEW CAPITAL TO DEAL WITH A CAPITAL SHORTFALL. THEY INTEND TO CLOSE THE GAP THAT HAS LEVERAGE AT 2.2% (EXTREMELY LOW). AN $8.9 BILLION STOCK SALE WILL TAKE PLACE, DONE AS A RIGHTS ISSUE AT DISCOUNT TO EXISTING SHAREHOLDERS. THE DILUTION WILL BEGIN, WITH LIQUIDATION DONE LATER. $$$

A kingpin bank in London is Barclays. It is involved in everything under the financial sun, and most of it is corrupt, related to price fixing. A large slice of every business they are involved in is insolvent. They had to react to capital requirements, adding more capital. The Jackass belief is that Barclays will need fresh capital every several months, since it is burning capital rapidly. The new Basel III Rules might have played a role in pressuring action by the broken bank. It still has managed to wiggle out of responsibility and damage awards from rigging the LIBOR money market. That liability runs in the hundreds of $billions, according to bank analysts of repute, not the harlots who ply their trade in New York and London. The colossus Barclays announced in late July that they will raise $12 billion in new capital. They do not state future needs though, or a capital burn rate from ruined business segments. Such news items will be seen as future surprises.

Barclays disclosed it will raise up to GBP 7.8 billion, equal to US$12 billion, in new capital after the bank reported a GBP 168 million loss in 2Q2013. The big brokers Barclays, Credit Suisse, Deutsche Bank, Bank of America Merrill Lynch, and Citigroup are coordinating the planned multi-billion capital offering. The thrust would be to increase the qualifying Tier One securities, to reduce leverage by up to GBP 80 billion though risk management actions, and to retain earnings to boost capital. The big British bank, beset by a series of scandals that has forced it to pay huge settlements and set aside billions of Pounds for legal costs, has come under pressure from British authorities to improve its capital position. The local regulators judged their leverage ratio dangerously low, a measure of deployed credit to assets on the books. A major negative turnaround is in progress, seen by comparison to a GBP 746 million profit in Q2 of year 2012. Revenues were about even with the past.

As part of capital infusion, the British bank will raise GBP 5.8 billion through a Rights Issue of stock. Launched in September, it will give existing investors the opportunity to buy one new share for every four shares that they currently own, the price at a 40% discount to a given recent day's closing price. Dilution is the outcome. The size of the equity increase is much larger than expectations. The corrupt bank also plans to issue up to GBP 2 billion in contingent capital, which are financial instruments converted to equity if the total firm capitalization falls below a certain threshold. It plans to reduce assets on its balance sheet by up to GBP 80 billion in order to lift its leverage ratio to 3% by June 2014. Repeat that, they plan to reduce the portfolio by GBP 80 billion! The Barclays stock price fell almost 6% in the London morning trade activity on the day of the announcement. The bank said the capital raising and other efforts to improve its balance sheet would help to close a GBP 12.8 billion gap that the Prudential Regulatory Authority said had reduced its current leverage ratio to a paltry 2.2%, claimed the British regulator.

The bank has been adjusting, adapting, and remolding itself since the series of scandals, led by LIBOR price fixing. The moldy microbes are still there, the odor still strong. Barclays announced plans to shift its focus towards a smaller number of activities in its investment banking operations, as well as to reduce its exposure to unprofitable business units in Continental Europe. All the while during redecorating the vile walls, Barclays continues to suffer from legal problems. It set aside an additional GBP 2 billion during the second quarter for legal costs. The focus in legal wrangling has been inappropriate selling of insurance and complex financial hedging products to its clients, whose legal costs include a related GBP 1.35 billion charge. A further GBP 650 million provision was made for reckless sales of financial hedging products to small and medium-sized business customers. The investment bank reported a meager increase to 1 billion Pounds in its pre-tax profit, from trading activity hampered by declines in the many financial markets. However, the firm's corporate banking division doubled its pre-tax income to GBP 219 million, while the credit card division saw its income rise 2% to GBP 412 million. See the New York Time article (CLICK HERE) and The Street article (CLICK HERE).

◄$$$ THE NEW EUROPEAN UNION BAIL-IN LAW WAS HURRIED THROUGH, BUT THE TEMPLATE WAS PREMEDITATED AND CLEAR. CONFISCATIONS WILL ENABLE WIDESPREAD POVERTY, THE HIDDEN GOAL. THE BAIL-IN PROCESS WILL IN NO WAY RESTORE SOLVENCY TO THE BANKS. BY SEPTEMBER, THE MOMENTUM OF COLLAPSING BANKS WILL BE MORE EXPLICIT AND STRONG. THE PRIME DEATH WATCH IS THE ENTIRE SPANISH BANKING SYSTEM, THE BIG SOCIETE GENERAL BANK IN FRANCE, AND THE ROYAL BANK OF SCOTLAND IN GREAT BRITAIN. $$$

The European Commission rushed its new bail-in law through the European Parliament at the beginning of August. When the United States returns from vacations after September 2nd, and when the German elections are completed on September 22nd, expect to see more rampant momentum in bank collapses. Some analysts believe the risk is high for premature bank failures during the idle final days of the August month, when desks are often not staffed fully. Be sure to know that despite nice sounding words about protecting shareholders and creditors, the depositors will see their accounts confiscated and ransacked. The key fascist motive is to inflict poverty, not to repair the banks and financial firms. MF-Global was not fixed, but rather dissolved.

The situation in Southern Europe does not improve. It worsens by the month. The Spanish bank exposure to Portuguese sovereign debt, as well as unrealized domestic losses on Spanish real estate loans, are two reasons a collapse is inevitable in the once proud nation. It is the land in focus, with horrendous unemployment over 25% to boot. Spanish bank exposure to Portugal is higher than French bank exposure was to Greece in early 2010. A restructuring of Portuguese sovereign debt like what was done by Greece, which involved writedowns of over 50%, would wreak havoc on Spain's banking system. Spain will collapse! All parties are delaying the inevitable, as writedowns on government debt and property debt are hitting quickly. The result is obviously going to cause bank failures.

No parties, whether finance ministers or regulators or bank officers, wish to start the bank failure chain reaction, as contagion is a certainty. The Slog judges the most worrisome potential casualty to be Deutsche Bank. The main point of contention is that the bank must absorb a monstrous hit on currency swaps. Last month Max Keiser described the bank as on suicide watch, and in June the FDIC vice chairman Thomas Hoenig called Deutsche Bank horribly undercapitalized. Another commonly mentioned bank in the troubled category is Societe Generale of France. It will die a horrible death. However, the Slog favorite for Collapse of the Century in his words remains as Royal Bank of Scotland. It is the people's bank of Great Britain, with mortgage losses side by side with the lost wealth of home equity across its eternally cloud covered lands. See the Slog article (CLICK HERE).

◄$$$ THE ARAB HAWALA SYSTEM IS ON THE RISE FOR WIDESPREAD USAGE. THE ARAB NATIONS ARE MOVING AWAY FROM THE WESTERN BANKS FOR BASIC TRANSFERS. THE HAWALA SYSTEM IS FASTER AND CHEAPER, AND MORE EFFICIENT, WITHOUT THE DELAYS (KITING) AND INTERFERENCE OF COMMERCE. THEY BOAST QUICKER CASH TRANSFER, LOWER FEES, AND FEW MONEY TRAILS. $$$

Hawala means transfer in the Arabic language, also known as hundi. It is an informal value transfer system based on the performance and honor of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and the Indian subcontinent. It is basically a parallel or alternative remittance system that exists or operates outside of, or parallel to traditional banking or financial channels. Hawala has its origins in classical Islamic law and is mentioned in texts of Islamic jurisprudence as early as the 8th century. Exploding in recent months in usage and popularity, Hawala is believed to have arisen in the financing of long-distance commerce around the emerging capital trade centers in the early medieval period. In South Asia, it appears to have developed into a fully-fledged money market instrument, which was only gradually replaced by the instruments of the formal banking system in the first half of the 20th century. Today, hawala is used mostly for migrant worker remittances to their countries of origin. In the most basic variant of the hawala system, money is transferred via a network of hawala brokers, or hawaladars. It is the transfer of money without actually moving it. In fact, a defining goal of the Hawala system is money transfer without money movement, from clever management that is not direct exchange.

Hawala is attractive to customers because it provides a fast and convenient transfer of funds, usually with a far lower commission than that charged by banks. Its advantages are most pronounced when the receiving country applies unprofitable exchange rate regulations (as has been the case for many typical receiving countries such as Pakistan or Egypt) or when the banking system in the receiving country is less complex (e.g. due to differences in legal environment in places such as Afghanistan, Yemen, Somalia). Moreover, in some parts of the world it is the only option for legitimate funds transfers, and has even been used by aid organizations in areas where it is the best functioning institution. Furthermore, the transfers are usually informal and not effectively regulated by governments, which is a major advantage to customers with tax, currency control, immigration, or other concerns. In some countries however, hawalas are actually regulated by local governments and hawaladars are licensed to perform their money brokering services. See the Wikipedia description (CLICK HERE). One banker source reports an enormous rise in the usage of hawalas across the Middle East, as they avoid the Western banks, due to distrust. Look for the USGovt to declare them as terrorist funding mechanisms. As the Western banking system further implodes, look for a Hawala broker in a neighborhood near you. Perhaps Western Union and MoneyGram will adopt their more efficient and established methods. They could take business away from the broken banks.

## SYSTEMIC FAILURE AT THE DOORSTEP

◄$$$ THE EMBASSYS SHUTDOWN EVENT IS SIGNIFICANT. MANY ARE THE SUSPECTED MOTIVES. NOTHING IS CERTAIN. NATION BUILDING IS NOT PART OF ANY PLAN, BUT DE-STABILIZATION INDEED IS ALWAYS. MONEY IS MOVING FAST. REGIMES ARE FALLING. SUPPORT BY ARAB NATIONS OF THE PETRO-DOLLAR IS BEING CHIPPED AWAY. $$$

The shock announcement in late July that the United States would close numerous embassies has come with scattered reports on the underlying motive. The Swiss Federal Intelligence Service (NDB) reported a stunner for a reason. As a result of Obama Admin fears of further computer thefts of top-secret documents relating to the WashingtonDC regime's collusion with extreme Islamic terrorists groups in connection with the Libyan Embassy attack, the several MENA embassies were be shut down. The Swiss agency surmised that doing so would allow them time to purge all of their embassy computer servers of incriminating information. The main focus has been on details relating to the true events of the 2012 Benghazi Attack led by hired rogue CIA agents. A tireless US Congressman Trey Gowdy warned the agents were being kept from testifying before the USCongress, as they had been relocated and given new identities.

Other justifications are possible, not exclusive of the above motive, for the widespread embasy shutdowns across the Middle East & North Africa region. They could be budget cuts for the countless embassies. They could be to buy time to purge other files back in the myriad USGovt offices. They could be tend to local contacts, as in their elimination (i.e. bribed silence or murder). They could be to clean up materials, weapons, and cache of USDollars, even narcotics stored at the embassy sites. They could be to take defense against over 1000 escapees in prison breaks, a development that would far reaching in importance. Opponents to the USGovt and its Banker Syndicate leader corps might have reached a critical mass. Reports swirl that several major global elite groups worked to pressure the USGovt leaders to take steps toward reversal of their key role in creating violence toward popular uprising and insurgence using outside agents in numerous Arab and Moslem nations. The USGovt dons are being attacked on all flanks, as their time is running out. See the EU Times article (CLICK HERE).

◄$$$ AN EPIC INTERNAL BATTLE IS ON FOR CONTROL OF THE USGOVT BETWEEN THE WHITE HATS AND BLACK HATS. IT IS TAKING PLACE WITHIN THE RULING SECURITY AGENCIES WHICH TOGETHER HAS SACKED CONTROL OF THE NATION SINCE 2001, ON THE DARK DAY OF SEPTEMBER. VARIOUS GOOD ELEMENTS HAVE FORMED AN ALLIANCE BUILT AROUND THE PENTAGON JOINT CHIEFS OF STAFF, TOGETHER WITH WHITE HATS IN VARIOUS SECURITY AGENCIES LIKE AT THE PENTAGON. $$$

There are encouraging yet unsettling stories circulating, far more tangible and reliable than simple rumors. Reports are persistent and broad about an intense internal struggle between the Pentagon and the CIA, a war between nefarious security offices and moral virtuous security offices, in pitched hidden battle for control of the highest levels of the USGovt. A breaking point in the long-term conflict has surfaced over events surrounding Benghazi at the Libyan Embassy. It appears that treason once again is the issue, and dead Navy SEAL soldiers were not tolerated by the White Hats at the USMilitary high command. SEALs are elite warriors of the highest skill and tribute. The details are muddy, but it is reported that people working for the CIA and the State Department were not in agreement with soldiers who work for the Pentagon. It is confusing, to be sure. The National Security Agency is the agency that is spying on everybody, the focal point hive of Black Hats. The NSA in my view is a monolith with ultimate self-proclaimed power. It has in recent years hogged budget increases and pushed through budget cuts for its rivals. The FBI has been converted into a Gestapo, and in my view might be culpable for numerous national events such as the various public shootings, school massacres, and recently the Boston Marathon explosions, a clever orchestrated production event.

Edward Snowden, who exposed the NSA, used to work for the CIA. He turned against the Black Hats. The imaginative observers might wonder if he migrated to the NSA Black Hat camp in order to gain access to the back doors for the benefit of the CIA White Hat camp, before launching an exposure campaign. This episode is an integral part of the internal war within the vast array of USGovt security agencies, of which over 15 exist. Defense Intelligence is the oldest of such security agencies. A battle is on between the dark side of the CIA (with its narcotics business and genocide programs) and the Pentagon (with its devotion to the Constitution and service to the People). The public has been largely forgotten during the blossomed Fascist Business Model in the shadow of 911 events. The NSA colluded with the dark side of the CIA and the dark side of the USMilitary (see NORAD) to organize and coordinate the 911 incident. The ongoing question in the Jackass mind is where so many sociopaths and murders come from, and whether they are born or made???

The Pentagon is the last vestige and hope for the nation to be restored to integrity and order. General Petraeus was dismissed, not for sexual dalliance, but for planning a Coup d'Etat and military takeover of the White House. The CIA benefits from between $800 billion and $1.2 trillion in illicit profits per year, tied to the Afghan War narcotics enterprise, using Baghdad banks as clearing houses and NATO airbases as distribution locations and New York money center banks as laundering sites. The Pentagon wishes to restore the rule of law, to imprison some in leadership positions, and to rebuild the nation. One must keep in mind that many good officers work in the CIA, and wish to pursue information, while taking strategic action in order to ensure security for the nation. The NSA through its Wall Street cohorts exacts control of the legislative and ministerial offices by means of bribery, coercion, violence, press stories, and smear tactics. The Pentagon is planning to take back control by a complex sequence of events, starting with revelations about the standard practices that have been at work for over a decade. Sooner or later, the nation will realize that the internal battle is for control of the nation, and for rescuing the nation from the fierce grip of a vast criminal organization that includes the big banks, military contractors, large pharmaceutical firms, and news networks. The people must prevail, but the challenge is formidable and the earth's integrity has become at stake.

◄$$$ SNOWDEN WAS NOT ALONE AND THAT IS TERRIFYING FOR THE CABAL. THE DE-CENTRALIZED GROUP CALLED ANONYMOUS WITHIN THE USMILITARY IS EXPANDING IN SIZE, SCOPE, AND IMPORTANCE. THE LEAKED STORIES ARE GROWING. $$$

The USMilitary has become in many a highly integrated distributed center using technology. Meantime, the internet itself serves as a medium of communication that cannot be fully controlled. The armed forces service men and women are tech savvy, even on the battle fields. Numerous are the non-commissioned officers in the military. They have been eagerly sharing information, as they slowly conclude they are actually selling their souls to the syndicate as supply chains are secured for the USEconomy and its own USMilitary. This is especially true of those with long service tenures. They realize many secrets need to remain secrets, but other secrets must come out since they are basically kept in order to protect criminal elements. The movement Anonmyous has influence that extends deep into the bowels of the military industrial complex. See the Buzzfeed article (CLICK HERE) and the summary Zero Hedge article (CLICK HERE). Ultimately the natural reaction is for the soul to seek goodness, which is very hard for any centralized pathological cabal to fight. The Wikileaks, the Snowden Security Database leaks, and the Anonymous leaks are extensions of the people involved in coordated counter-actions.

The Snowden files are the most awesome organized counter-movement in modern US history. Actually, Snowden is part of a very large organization, with him as the visible object (for praise or scorn). Anonymous has a message, that Snowden is not alone, and the spirit of the individual is still alive. It is very difficult for a criminal organization to defend against a de-centralized resistance movement. It occurs as multiple fronts in battle, each without a central base. The press networks are used to paint the movement as treasonous. The distributed aspect is seen also in USD trade, database outlets, website hosting, portable PCs, smart phones, and so forth. The Powerz will attempt to discredit the Snowden Files by false accounts and absurd fantastic nutty stories that are not from his sources.

◄$$$ THE RUSSIAN LEADERS WARN TO REMOVE MONEY FROM WESTERN BANKS BEFORE THE CONFISCATIONS BEGIN. THEY WILL BE THE LARGEST IN MODERN HISTORY, A CLIMAX NAZI THEFT WITH FULL GOVERNMENT BLESSING. FOREIGN SOURCES ISSUE MORE COMPLETE WARNINGS THAN THE WESTERN NATIONS. THE WARNINGS ARE WITHOUT PRECEDENT IN THE MODERN ERA. $$$

The direct warning by Prime Minister Dmitri Medvedev is consistent with what the Jackass forecasted precisely one month ago. It appears as though the Kremlin used Snowden to block off the US leader crew from any influence in the upcoming G-20 Meeting that combines with the Intl Economic Summit. The agenda is clear on both conferences, establishment of non-USD trade alternative under continued development. The Gold Trade Settlement mechanisms and platforms will proceed full tilt in development. The USGovt delegation will not attend, and if it does attend, expect low level under-secretaries to appear as observers.

Bill Holter makes many powerful comments which echo the Jackass sentiment on the importance of the G-20 summit due to take place in early September. It will be held in St. Petersburg Russia. Holter believes it will be a significant meeting where the world decides to abandon the USDollar, or at least set some large wheels in motion. The United States has greatly angered the world, to such a degree that the US delegation was not invited. The US Manchurian Candidate leader has refused to meet with Vladimir Putin because of the Snowden affair, giving Team Obama the insecure high moral ground. The mutual shun will isolate the United States even further, exactly as the Jackass has preached for a couple years. The US will be looking in from the outside while the rest of the world votes on its fate, making grand plans for various mechanisms and platforms for trade to be conducted outside the USDollar sphere. The consequence to follow will be reserves management no longer centered upon the USTreasury Bond. A Paradigm Shift is underway, the Russian summit to further it with a grand push.

The speculation is that a new currency might be announced, one gold-backed. To be sure, the odds are better than 80% (in Holter's view) that non-USDollar settlement of crude oil and other commodities will be discussed. The billboards and subway walls are loaded with messages, that the USDollar must be averted in new mainstream channels, emanating from the Eastern trade corridors. As a keynote message in a diversionary tactic, Prime Minister Medvedev issued an alert to Russians all over the world to remove their money from the US and Western banks, in order to avoid account confiscations during bank failuress. The Cyprus model is to be used for confiscations, with due warning that is almost totally unheeded. Western citizens seem oblivious to what is happening. The Medvedev warning set a tone of a criminal Western banking system lacking integrity, with no respect for private accounts and wealth.

The common thread of events is staggering, fully indicative of a sea change. The G-20 summit is being held in Russia, which has joined China as leaders of the vast Eastern sled teams. The second in Russian command has warned its citizens to stand aside during Western bank collapse and account thefts like what Cyprus wrought. The Western Gold inventories are being depleted in a bullion bank run that is making history. The GOFO (Gold Forward Rates) have been negative almost 30 days running, citing negative rates in future monthly contracts. The early warning signals of a COMEX gold market default are seen and heard every day. Even the USDollar index has softened and broken trendlines and support levels again. See the EU Times article (CLICK HERE) and the CountDown article (CLICK HERE) and the Money News article (CLICK HERE).

◄$$$ TWO INTERVIEWS AT KING WORLD NEWS HIGHLIGHT THE CRISIS IN PROGRESS. IT IS UNSTOPPABLE. THE INSTABILITY IS EVERYWHERE. $$$

In the interview of John Embry: "We Have Never Seen Anything Like This in History" is a review of the highly unstable financial markets (due to constant interventions) and highly unstable banking system (due to ever-present derivative supports). The system cannot stand on its own merit. He points out that the mining costs for Gold & Silver (higher than current metal prices) will cause a rapid rebound in their interfered metals prices. See the King World News interview (CLICK HERE).

In the interview of Michael Pento: "Expect Economic Chaos and Financial Collapse" is a review of the high risks inherent due to the USEconomic recovery that never arrives, but is always promised (and expected in asset prices). He sees no substance to supposed solutions, only high debt burdens. The true solution lies on the other side of a sharp brief depression, after significant debt reduction. But instead the nation will be dosed with more debt and higher price inflation. See the King World News interview (CLICK HERE).

◄$$$ THE USGOVT HAS IMPOSED SOME HARSH PENALTIES RESULTING IN LIFTED PASSPORTS. THE FASCIST STATE HAS EXTENDED ARMS. TAX DELINQUENCY CONSEQUENCES ARE A DRIVING FORCE. THE PRACTICE IS SPREADING TO SOME STATES LIKE NEW YORK, WITH DRIVERS LICENSES. $$$

The USCongress wants the IRS to cancel American citizen passports if big tax obligations are present on the books, unpaid and overdue. Other ways to cancel or refuse passport renewal exist. Hidden within the 2013 highway funding bill are a few paragraphs on passport revocation. The bill is titled "Moving Ahead for Progress in the 21st Century Act." But it seems to include a fascist provision in Section 40304, which would revoke a passport if a seriously delinquent tax debt looms. If a tax bill of over $50,000 is owed to the IRS, the USGovt might soon be able to revoke the passport. There is no hearing and no opportunity to contest this decision, the lack of due process being much like in a totalitarian state.

The present law permits the USGovt to prevent travel to foreign countries a) if a federal court has issued a warrant for your arrest, b) if a federal or state court has ordered you not to leave the United States, c) if another country has requested your extradition, d) if you owe more than $2500 in delinquent child support payments, or e) if doubts arise about the legitimacy of your eligibility in US citizenship. Then consider the obtrusive USDept State new Biographical Questionnaire being used during routine passport renewals. Questions of its legality are in constant debate. They focus on religious ceremonies surrounding the birth event to be worthy of note. Absurd questions might demand information about the mother's medical appointments or hospital stay details, even names of attending doctor and nurses. Of course, 90% of duly bred citizens could not provide such information, nor could the USGovt officials and their dutiful bureaucrats who enforce such rules.

A new law proposed in 2011 would revoke both the US passport and citizenship if "engaging in, or purposefully or materially supporting, hostilities [against the United States]." The interpretation is strictly within the judgment of the officials, and can thereby be used to protect criminal activity by the officials themselves. See the Nestmann article (CLICK HERE). The State of New York has followed in the same vein. A serious tax delinquency can result in a revoked drivers license. See the News Day article (CLICK HERE).

◄$$$ THE ECONOMISTS DO NOT COMPREHEND WHY THE USECONOMY HAS ENTERED SYSTEMIC FAILURE, FROM THE CHINESE INDUSTRIAL PRESENCE. THE ECONOMISTS DO NOT COMPREHEND WHY THE USFED MONETARY POLICY IS DESTRUCTIVE AND GUARANTEES SYSTEMIC FAILURE IN THE FINAL STEP, FROM RISING COST STRUCTURE. THE UNITED STATES GAVE AWAY THE CORE TO INDUSTRY AND LEGITIMATE INCOME. AS A RESULT, THE ECONOMIC BUBBLE BROKE WITH NO OPPORTUNITY TO RECOVER. THE NATURAL CONSEQUENCE TO OFFICIAL MONETARY INFLATION IS RISING COSTS, LOWER PROFITABILITY, AND DESTROYED CAPITAL. GAME OVER. NO MORE ASSET BUBBLES TO DEPEND UPON, SINCE THE USTREASURY BOND BUBBLE IS THE FINAL DEATH BUBBLE, SOON TO BE A CONFISCATION BLACK HOLE. $$$

The key on this cycle was granting China Most Favored Nation status in 1999. With industrial buildup taking place in Asia and not in the United States, the entire stimulus from the next asset bubble bust would be neutered in effectiveness, rendered null. Then came the systemic failure. Exploiting cheaper Asian labor for a full generation has resulted in a build-up in wealth in the East, and a dependence upon asset bubbles in the West. The income lies in the East, while the debt piles up in the West. However, few economists grasp the significance of why in the 2000 decade the bust was assured. Many like my own older brother, who has an Economics BS degree, have no idea what is going on with the cycle. He just says blithely and ignorantly, "The US always pulls through after the crisis. The monetary stimulus will eventually kick in. The bankruptcy process always works." My disagreements have been the cause of frequent discussions, good arguments, and heated exchanges. My qualifications are only of a Statistician with wide reading experience. My response has been steadily, "Not this time, since the capital expenditure mechanism has been disrupted by the Chinese industry presence. Thus no traction exists for new business creation. At the same time, the bankruptcy process has been totally averted, like with the big US banks." That has earned a response of "Huh? I don't know about those things." Amazingly, those trained in economics do not know much about capital formation, about business incentive, or its critical importance. My three college courses in Economics helped some, but reading the Wall St Journal on 100-150 issues, and reading Barrons on 50-70 issues, helped with an informal education for the Jackass. An eager mind can find good material.

The big difference this time is that the US corporations are not investing to take advantage of the low interest rate. The new capital investment is taking place in Asia still, even by many large US corporations. They do not wish to deal with extremely high corporate taxes, nor meddlesome federal regulations. In 2005 and 2006 and 2007, the Jackass concluded it is game over when the housing market crashes. My brother wondered why anyone could be so certain. My response was simple, "Because the entire USEconomy had been turned dependent on the housing and mortgage bubbles, with industry sent to China. It is GAME OVER, wherein events had only to be played out." His response was hoping not. My insult in final reply was again rough but direct. "Hope is for the the poorly informed, the compromised masses, the unprepared, the ignorant, and the clueless who do not think much and waste their opportunities to comprehend." End of conversation.

My brother has talked with me about the aftermath in the following years, but he cannot detect the ruinous state of the USEconomy and its financial structures. He is busy with his life, his work, and his family. He calls me arrogant and too self-assured in forecasts, without taking the time to listen to the skein of correct mega-forecasts, and their justification at the time. The Jackass has no family and reads widely, converses with smart people often, and analyzes endlessly. We do not talk much anymore, not in the last four years. We talk every year like a ritual during Wimbledon and the USOpen Tennis in July and September. He is tired of my insults. On my end, the fatigue is with the cocky display of educated ignorance, with not a single explanation of how the nation arrived at the doorstep of systemic failure. All that is heard on the other end is denials, hope, challenge, disrespect, and ignorance. It has turned to painful ignorance, whereas years ago it was more blissful ignorance. Time to make a new family, with ex-pats and latinos.

◄$$$ A BIG EVENT IS NEAR. IN NO WAY IS IT CERTAIN WHERE THE CLIMAX EVENTS WILL BE TRIGGERED. ONLY THEORIES AND SUSPICIONS CAN BE OFFERED. WATCH THE BIG BANKS AND A GLOBAL USDOLLAR REJECTION. MANY ARE THE PRELUDES TO THE REJECTION, A SORT OF CONDITIONING. $$$

The Voice offered a brief unnerving warning in early August. He wrote, "Something big is cooking. I know that there are multiple pots on the stove, not just one. The breakdown continues with more systems suffering irreparable damage each month. A big event is near, which will capture the attention of the world." My contact EuroRaj pitched in. He wrote, "There are way too many catalysts that can cause the house to burn down. The Powerz will pick a story they can sell to the public, one that which causes them the minimum pain. Other than that, it very hard to be specific as to what will go down in the manner we are hoping and guessing. The list is long for potential triggers." My Jackass view is simple. The trigger will come from either a big bank failure or a site where the global rejection of the USDollar is hosted. Consider Deutsche Bank or a large French bank, burdened by the extreme weight and intense temperature of derivatives on fire. Consider a location where tens of $billions in USTBonds are dumped on a single trading session, and the USFed is caught off guard. The failure of any one big Western bank will cause a contagion failure of several other big banks in Europe, London, and New York. Since the Lehman Brothers failure, the big banks have tied themselves together, lashed to withstand the stormy seas with damaging smacks of powerful waves of absent liquidity against facades of insolvency. The big dead banks are all connected with FOREX swaps, Credit Default Swaps, Interest Rate Swaps, and various commitments to each other's survival.

The Eastern Hemisphere, largely led by China, has been working avidly on a USDollar alternative. Their progress is slow, steady, broad, careful, and relentless. The introduction of the Chinese Yuan Swap Facility has become in recent months a broad global device to step away from the USDollar in trade settlement. The weaning of the world off the USDollar has been enabled by the Yuan Swap between three large Chinese banks and three large national banks from an individual nation, and other nations. The Yuan Swap Facility has encroached into financial camps of Western European nations, as well as Australia and New Zealand, even Canada. The list of participating nations is as long as a laundry list, and finally includes the likes of England, France, Switzerland, and Germany (home site of the Euro Central Bank). If the Saudis announce acceptance for crude oil payments outside the USDollar sphere, a faster fuse will be lit. If the BRICS nations make a quantum leap of progress in Gold Trade Settlement, a gigantic fuse will be lit. If the Eurasian Trade Zone opens shop for business in a grand gesture, over half the world will see fuses lit. If the USDollar is forced into devaluation during a global currency reset, a self-immolation fuse will be lit. The list of dangers is endless for the USDollar in sunset, which will not go quietly into the night.

◄$$$ LOST CONTROL IS THE MESSAGE FROM WEEK TO WEEK. SOME EXTREME EVENTS LIE ON THE HORIZON. THEY WILL BROAD IN SCOPE. THE ADJUSTMENT PROCESS WILL BE VERY DISRUPTIVE. GIVEN THE HIGH LEVEL OF CORRUPTION PRESENT AND FORCE EXERTED, A MASSIVE SHOCK WAVES IS COMING IN THE RESET, IN THE WHIPLASH. $$$

In the Jackass view, it started with Black Monday 1987 under Greenspan. What followed was a mass construction of vaporous banking derivatives which created a new foundation, but of paper mache and not substance, and surely not capital. It acts like a quickly passed hot potato for a dinner never served, a bite never offered. Following the powerful Reagan Admin recession, and a housing market recession, the October 1987 stock market collapse signaled an important watershed event. The lost control accelerated with the fall of the Soviet Union and the collapse of the Soviet Bloc. The equivalent of the Roaring Twenties that preceded the Great Depression occurred. The Roaring Nineties in parallel caused a stirred cauldron of abused debt and speculative ladles, followed by a collapse in the tech telecom bust at the turn of the millenium. The lost control went visible in 2001 with 911, with fingerprints of the fascist bankers in every conceivable corner and crevice. The lost control went critical in 2008 with the Lehman Brothers failure and the adoption of AIG and Fannie Mae. The lost control has been visible all this year 2013 with the COMEX Gold market ambushes and raided gold vault inventories, against a background of failing sovereign bonds whose patches are bleeding profusely. A big event is shaping up, with countless signals.

The insurance giant AIG was taken under the USGovt aegis so that the wreckage of the derivatives could be handled with free money dispensed by the USFed, inevitably with 0% interest policy enacted. The mortage giant Fannie Mae was taken under the USGovt aegis so that the multi-$trillion fraudulent center could be kept out of the spotlight, since Papa Bush and Clinton had been exposed for stealing $1.6 trillion. The lost control went critical with the 2009 installation of Zero Interest Policy forever, and the 2011 Quantitative Easing to Infinity. All during the ZIRP & QE integrations, the Southern European Bond market went bust, and the USTreasury Bond market bubble was born with glee. The lost control hit the currency market in April and June 2013 with the Gold ambushes, using naked shorting as the weapon. The lost control has turned visible in a physical sense, since the COMEX and GLD Fund have both suffered massive reductions in their gold inventories. It is game over, wealth evacuated.

EuroRaj pitched in with his interpretation of the next elements for lost control.

  • The Petro-Dollar will become history with the formation of the Natural Gas Coop. It will eclipse OPEC and bring about a newly formed alliance centered around Gazprom of Russia. The OPEC unity will give way with the Saudi disarray in progress.
  • The USTreasury and USDollar will see the absolute control slowly splintered, with internal and external support structure in tatters. The internal Interest Rate Swap will gradually lose its power, due to pronounced swings in the long-term bond yields. The external forces will be felt from foreign sales of USTBonds. The new twist has already begun, in the advent of a powerful Indirect Exchange, whereby foreign nations will send their USTBonds back to New York and London for redemption, often through third parties like after large scale acquisitions.
  • Prices will be determined by the return of Demand & Supply fundamental factors, and not by derivatives such as futures contracts, option contracts, swap contracts, and brute force of official interventions. As a result, prices will rise for essentials, and fall for luxuries.
  • Significant price inflation in the USEconomy is right around the corner. It will send shock waves through the nation and the entire Western economies. The inflation will be accompanied by supply shortages in food, fuel, and cash. The adjustment after two decades of price interference will be acutely felt and very disruptive.

## USTREASURYS FACE THE SHREDDER

◄$$$ THE MISFIT LAWRENCE SUMMERS WOULD BE FAVORABLE TO GOLD. THE MONETARY HAWK (WITH NO FRIENDS IN LOW PLACES OR HIGH PLACES) IS THE ODDS-ON FAVORITE TO BECOME THE NEXT USFED CHAIRMAN. WE GO FROM BAGHOLDER BERNANKE TO ARROGANT ASS SUMMERS. DURING THE PASS OF THE BATON, THE USFED IS HARSHLY CRITICIZING THE EURO CENTRAL BANK FOR NOT DOING ENOUGH. THE USFED URGES MUCH MORE MONETARY EXPANSION. $$$

The Lawrence Summers stakes have risen significantly to replace Ben Bernanke as USFed Chairman. Thanks to some strategic trial balloons floated over Wall Street and WashingtonDC, the setting is more clear. The Irish bookmaker Paddy Power has taken the spotlight as the unofficial odds maker venue in the absence of InTrade. Money is put on the line, like in Vegas. On July 24th, the hawkish Larry Summers was at a distant 20% probability in his challenge against Janet Yellen, who was a solid 75% favorite to become the next Fed chair. In just two weeks, Yellen's chances have crumbled to just 33% currently. At the same time, Summers has jumped significantly higher with current chances seen as 67%. See the Zero Hedge article (CLICK HERE). Pass the magic wand, the one that creates wealth at zero cost. Although competent, although having served on the Fed Board for years, Yellin is not a syndicate insider. At the risk of sounding ethnically biased (my friends know me as fair minded), she does not come from the accepted required breed, from the lineage of Abraham, Moses, and David. The candidate Summers carries the correct ethnic breed, but he carries a weaker resume than Yellin. Capability is not the primary job requirement. Brethren linkage is. Yellin would vomit in public after the first Federal Open Mouth event, after seeing first hand the scummy innards of the USFed, its operations, its correspondent banks, its balance sheet, its historical records, and its deep criminal activity. Summers would take it all in stride, as team player.

The top post will be given to Summer even though nobody in his recent past has ever worked effectively with him, due to insufferable arrogance. Summers is an extremely unimpressive person, which means that the USFed post is being abandoned, to be filled by a true Bagholder. No worthwhile candidate will step forward. Timothy Geithner had the Bagholder image firmly in place, but he was likeable and played well with his cohorts on the playground. Summers does not. He will act like a monetary hawk, attempt to rein in debt, then make stunning shocking reversals that make it clear even to the biggest economic morons in Summer School that inflation will continue forever and a day. The wreckage will open the flood gates for Gold and assure a COMEX crash, a much desired event.

The baton, or magic money wand, must be passed to the next wizard of liquidity, at a time when conflict has arisen and collapse seems assured. The USFed has launchd a nasty blistering attack on the European Central Bank. The US central bank calls for Quantitative Easing across the board to lift the EuroZone out of its slump, including bundles of small business loans. The US camp urges much greater monetary growth in order to foster economic growth, unconcerned about debt levels. Europe has always been wiser in debt management, for the last 50 years. See the Business Insider article (CLICK HERE).

◄$$$ FOREIGNERS SOLD MORE US$-BASED SECURITIES IN JUNE THAN AFTER THE LEHMAN BANKRUPTCY. AN ACCELERATION OF FOREIGN DUMPING IS IN PROGRESS. THE USFED MUST LAP UP ALL THE DUMPS, OR ELSE USTBOND YIELDS WILL FLY PAST 3% TO 4% QUICKLY. BIG PRESSURE IS ON PRIMARY DEALERS, WHICH THE USFED MUST RELIEVE. THE TAPER TALK WILL REVERSE INTO AN ACCELERATION OF BOND PURCHASES. A GLOBAL USDOLLAR REJECTION IS IN FULL SWING. $$$

In June and July, the Jackass indicated that the USFed would eventually be forced to buy up all the foreign dumping of USTreasury Bonds. It is happening. That includes the Indirect Exchange from foreign entities which pay off asset purchases and acquisitions, using USTBonds as currency in settlement. The June data indicates the USFed cannot taper their bond monetization programs, and in fact, they might have to amplify. The TIC Report is compelling. The propaganda notwithstanding, a massive wind has come to New York blowing foreign held USTBonds in the window. Another correct forecast. The USFed must buy what the foreigners sell, or what they dump en masse. The risk is near for a move past 3.0% in the UST 10-year Bond. Any quick move not addressed immediately by the USFed and USDept Treasury will mean a breakaway toward the 4.0% level in a matter of several weeks. The primary dealers are under tremendous pressure to absorb the foreign dumping, but the USFed must take the bonds off the dealers hands to prevent the dealers from suddenly going insolvent, then closing offices. If they suffer insolvency, they risk going out of business and not serving as USFed squires. In a word, the foreigners are dumping with a vengeance, dumping boatloads.

Paul Mylchreest added a great point regarding the tighter capital requirements imposed by Basel III Rules. He said, "Leverage ratio regulations might preclude banks using REPO's to accommodate sudden influx of Treasury [being dumped by foreigners.] Maybe they will use the Exchange Stabilization Fund if BRICS start swapping USTreasurys for Gold as you suggest." So the big US banks, and London banks too, might not be able to withstand the huge flood of USTBonds returned to the sender from foreign sources due to stricter rules on stretched capital.

The recently released Treasury Investment Capital (TIC) Report showed every single type of US$-based securities sold on a net basis, a rare occurrence. Corporate stocks sold net $26.8 billion, Corporate Bonds sold net $5.0 billion, Mortgage Agencies sold net $5.2 billion, and the big culprit Treasurys sold an record setting net $40.8 billion. That is the largest single month sale of USTBonds in history. The consolidated foreign sale in June 2013 was greater than either month when Lehman failed, September or October 2008. But it is not in the financial news. Conclude that the Bernanke Taper Tantrum (Tyler Durden's clever term) was a more shocking event than the biggest bankrtupcy filing in history. Obviously the stage was set by ZIRP & QE monetary abuses. See the Zero Hedge article (CLICK HERE). The conclusion is simple and staring the nation in the face. The USFed must accelerate the QE bond monetization program, not reduce it. The public statements and declared rationale will be interesting, if not a comedy in lies. The bigger conclusion is that the USGovt debt default is within view, no longer over the horizon.

Some details are revealing on the USTBond dump in June. The TIC Report provides details with nations in the rows and months in the columns. Much can be discerned. The big sellers were China at net minus $13.0 billion, Brazil at minus $12.2B, Switzerland at minus $12.4B, Singapore at minus $9.5B, and Canada at minus $8.4B, France at minus $6.1B, and India at minus $5.5B. Quickly, if Canada had the same US population, their net sale would be $84 billion. The same point for the tiny island state of Singapore. Conversely, and surprisingly Russia was a net buyer with plus $8.6 billion, perhaps to bring about a cheaper Ruble currency from which to aid their export trade. The Swiss might be converting to Gold bullion in a mad scramble. The Singapore bankers might be doing the same, but under the motive of diversifcation instead. The Brazilians might be addressing powerful insolvency. The Competing Currency War (with incentive to buy USTBonds) will be put aside while the grand parade to dump USTBonds takes over in the next phase. See the USDept Treasury website for the TIC Report (CLICK HERE).

◄$$$ USFED CONTROLS KEY LEVERS, BUT NOT OTHERS. THE CONCEPT OF PUSHING ON A STRING HAS NEVER BEEN MORE RELEVANT. IT CANNOT RULE OVER INNOVATION OR DICTATE WORK ETHICS. IT CANNOT FORCE RISK-RIDDEN BUSINESS EXPANSION. ITS MAIN ROLE HAS BEEN TO FOSTER ASSET BUBBLES, AND CLEAN UP WHEN THEY GO BUST. $$$

Charles Hugh Smith is a wise warrior with some insight. He points out what the USFed does and does not control, in assessing the danger level. Examine what the USFed does control. It controls the Fed Funds Rate, the lending rate between banks. It can influence interest rates in the real economy by buying and selling USTreasury Bonds and other securities, thus increasing or decreasing liquidity within the banks through altered money supply. It can make funds available to the financial sector. During the 2008 crisis crunch time, the USFed made sweetheart loans over $16 trillion to large global banks, followed by another $9 trillion. So it can give away money to the banker elite for later purchase of the world. Smith added some excellent wisdom, concluding, "The USFed can turn on the propaganda machines in the press to talk of stimulus and kickstarting the economy, when their true effect is far more destructive than productive."

The USFed cannot force any enterprise, a household, or individual to borrow more money or to expand business segments. It cannot differentiate between productive investments and financial speculation, or even malinvestments. It cannot distribute money to households by dropping cash from helicopters. Its main function is to make money available to banks. In many respects, its powers in the real economy are severely limited, with insignificant control or influence over critical elements that make an economy thrive and hum. Innovation, patent development, technology advancements, and work ethics matter in the real economy. Forget the financial innovation that shot massive holes in the Economic Ship. That was as destructive as it was deceptive. What truly matters is the innovations in energy, agriculture, transportation, media, medicine, along with the work ethic and student development in education. It cannot increase the supply and availability of natural resource abundance, or how efficiently it is gathered.

Smith concluded, "The supposedly omnipotent Fed has virtually no positive role in the key driver of wealth creation. On the contrary, the Fed's policies have had an actively negative influence, as its monetary manipulations have distorted the investment landscape so drastically that capital pours into unproductive speculative bubbles rather than into productive innovation." The big indictment against the USFed is its historical promotion of asset bubbles, their rise and burst, with tremendous damage. Note the sequence of asset bubble generation since the 1990 decade, when the US industry has been notably absent in significant critical mass. It is the all important source of legitimate income. In summary, the US central bank matters much less than one might think. In fact, it is a highly destructive force. See the Financial Sense article by Smith (CLICK HERE). By the way, MATA is Spanish means to kill, as in this example to kill wealth.

◄$$$ A USTREASURY BOND BACKFIRE IS IN PROGRESS, AS LOST CONTROL IS SEEN IN RISING BOND YIELDS (AND USTBILL YIELDS). THE USGOVT DEFICIT WILL RISE BY AT LEAST $100 BILLION JUST FROM THE IMPACT OF THE LAST SEVERAL WEEKS. $$$

The UST maturity distribution might be less than 5 years for two thirds of the portfolio, and the rest 10 years or more. Rough calculation would mean two thirds rose by 50 basis points, and one third by 100 bpts. The aggregate yield rise comes to about a 66 bpt rise in aggregate, which on a $16 trillion debt load means a $105 billion increase in borrowing costs. It is difficult to accept that without any hint of recovery, with new ObamaCare tax, and with higher commodity, energy, and food prices, that any USEconomic upsurge is remotely possible. The USGovt deficit will be near $1.0 trillion again. Any reduction in spending by the military industrial complex might be offset by further unemployment and higher debt service costs. To be sure, the USFed will ramp up its $85 billion in bond purchases per month. So Bernanke will resign before the mess explodes, just like Greenspan departed before the mortgage bond mess exploded. See the Bloomberg USTreasury Yield Curve chart below, which site can be retrieved for later updates (CLICK HERE).

Expect the USFed to announce soon an increase in their bond monetization, and come up with a grand lie as to why. The central bank will not admit the foreign dumping of USTBonds, since that would indicate displeasure for the USDollar itself. The foreign dumping plus Indirect Exchange means the USFed must lap it all up, or else bond yields will rise quickly past the 3.0% mark. The USDept Treasury has many devices in its machine shop to put the brakes on, as Rob Kirby indicates, with the Exchange Stabilization Fund and the IRS tax flow vehicle. But foreign sales and the Interest Rate Swap breakdown will cause major problems, and lift the TNX past the 3.0% mark. The TNX has already threatened the 2.8% mark last week.

◄$$$ JIM ROGERS BELIEVES THE USTREASURY BOND BUBBLE COULD POP SOON. THE JACKASS AGREES, AND BELIEVES THE BUBBLE HAS ALREADY BEEN PRICKED BY THE TAPER TALK FROM BERNANKE HIMSELF. ADD THE DYNAMICS OF UNILATERAL MONETARY POLICY DECISIONS, WHICH UNDERMINE THE FOREX RESERVES IN FOREX BONDS, MOTIVATING FOREIGN NATIONS TO DIVERSIFY. THE GLOBAL PLAYERS SEEKING A SOLUTION OR BASIC PROTECTION WILL CONVERT USTBONDS TO GOLD BULLION. THE BIGGEST ASSET BUBBLE IN HISTORY IS FATED TO BURST. $$$

The USFed under Bernanke started the motivation process for FOREX reserve managers to unwind the USTreasury Bonds in their portfolios. Foreigners had already been led to diversify out of US$-based bonds of many stripes, like USAgency Mortgage Bonds and Corporate Bonds. The Chairman, who disproved his own doctoral thesis (that liquidity overcomes depression and insolvency) induced foreigners to sell USTBonds further, in response to a series of QE bond purchase programs, otherwise known as the acidic hyper monetary inflation. The big US and London banks must reverse their carry trade in USTreasurys, since the leverage is killing them, certain to deliver the nasty convexity from leveraged selling. As the non-USDollar trade alternative comes online, and the BRICS Bank begins the process to convert USTBonds into Gold bullion for the Gold Trade Central Bank vaults, the outflow will turn into a torrent, a veritable flood. Jim Rogers believes a USTBond bubble could pop soon. Agreed 100%, or 90% depending upon definition of soon. See the Before Its News video (CLICK HERE).

◄$$$ USFED BOND MONETIZATION EXTENSION COULD COME SOON TO MUNICIPAL BONDS. LATER COULD BE CORPORATE BONDS, STARTING WITH FINANCIAL FIRMS LIKE THE SYSTEMICALLY IMPORTANT ONES (WHICH ARE PERMITTED GROTESQUE FRAUD). $$$

Recall that Lehman Brothers showed its death throes first in its book of mortgage bonds and with its own corporate bonds. The USFed is under great pressure to continue to serve as the bond purchaser of last resort. The bond world has a flood of such toxic bonds outside the USTreasurys and USAgencys. As long as their balance sheet is wrecked and loaded with toxic toilet paper, they might decide to add some small volume MUNI Bonds and some Corporate Bonds from the financial firms. In just the last three months, the USFed balance sheet has fallen in value by a staggering $300 billion, a byproduct of their own reckless Taper Talk on reduced QE bond purchases. They revealed themselves as trapped in the monetary corner, as the Jackass has described for four years. My firm belief is that the USFed has already been buying the bonds from systemically important financial institutions (SIFI). For a good analysis of the QE monetary policy and its brief history since 2010 at the US Federal Reserve, see the Financial Sense article by Paul Kasriel (CLICK HERE), who has emerged as an independent analyst apart from a past bank affiliation with Northern Trust. He works for Legacy Private Trust. The lessons in his analysis are many, like the current USFed policy does not stimulate economic growth, and surely does not promote credit expansion in depository institutions (commercial banks). He dispels some commonly held myths.

◄$$$ TRUE USGOVT DEBT IS $70 TRILLION, COUNTING OBLIGATIONS, USING SIMILAR METHODS TO HOW CORPORATIONS DEAL WITH ACCOUNTING. IN A USECONOMY MIRED IN RECESSION, IF NOT A GRIP OF DEPRESSION, NO WAY OUT APPEARS FOR MANAGING THE DEBT BURDEN. A USGOVT DEBT DEFAULT LIES AHEAD IN THE FORM OF A FORCED RESTRUCTURE. $$$

More accounting deceptions circle the USGovt wagons. The United States has accumulated over $70 trillion in unreported debt, an amount nearly six times the declared figure, according to a new study by University of California at San Diego economics Professor James Hamilton. The higher amount includes future obligations that corporations would be forced to declare on their balance sheets. The official support for housing, loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds, lift the total final debt amount. Since the crisis hit in 2008 (marked by Lehman, Fannie Mae, and AIG), the USGovt debt has gone through the roof, increasing by an additional $7 trillion. No recovery is within sight or even attempted, since big bank liquidations are forbidden. Even at the ultra-low bond yields, the interest on the debt costs around $220 billion annually just in service. Any return to semi-normal interest rates would send the net interest expense on US federal debt higher than the entire defense budget by year 2020.

The details since 2008 are horrifying and ugly. Unprecedented efforts on the part of the leaders (steered by the bankers with firm yoke) to rescue the USEconomy from financial ruin led to a grand rise in the debt burden. A better description is enormous toxic bond redemptions led to the grand debt increase. The controversial bond purchase program known as Quantitative Easing, complete with diverse large scale asset purchases, has resulted in no tangible growth in the USEconomy, but certain higher cost structure from market reaction. According to Hamilton, the net effect of emergency lending programs between 2006 and 2008 was to increase the net debt level of the USGovt by over $1 trillion dollars. The USFed has all the while stacked up a $3 trillion balance sheet, loaded with the most rancid putrid of toxic bond assets. The hidden debt obligations center on the cost of Medicare and Social Security, which ran at $27.6 trillion and $26.5 trillion respectively. The infirmed and the elderly are joined by students, adding to the US debt burden. Government loans for students also featured high in the report, equaling $714 billion at the end of 2012, which is seven times higher than end 2007. Student loans are the fastest line item for debt growth. Factor in the poor prospect of job generation from a failing USEconomy, and many studen debts will surely default.

Hamilton offered a stern warning in clear terms. He concluded, "These numbers are so huge, it is hard even to discuss them in a coherent way. The US population is aging, and an aging population means fewer people paying in and more people expecting benefits. This reality is unambiguously going to be a key constraint on the sustainability of fiscal policy for the United States. One would think we should be saving as a nation today as preparation for retirement. If in fact we are not, the current enormous on-balance-sheet federal debt is all the more of a concern." Demographics again loom as ominous.

As dire and worrisome as Hamilton's report states the debt burden to be, another prominent economist paints a worse picture. The USGovt debt burden is much greater. when factoring in military costs. The Boston University economics professor Laurence Kotlikoff, once on the Reagan Admin Council of Economic Advisers, arrives at a $211 trillion debt load, after netting out tax receipts in a sliding environment. Do some simple math, and the USGovt debt of $16.8 trillion parses out to $53,000 for each US citizen. Considering the growth rate of the debt, a reasonable person cannot square the aging population, and poorly educated masses, with video game expertise and nimble smartphone aptitude rather than math & science & language skills, against the harsh reality of the modern economy with global competition. See the RT News article (CLICK HERE).

## GLOBAL USDOLLAR DEFIANCE

◄$$$ THE WORLD PREPARES TO REJECT THE USDOLLAR. THE PREMIER POST HAS BEEN SEVERELY ABUSED. MONITOR AND INTERFERENCE BY THE USGOVT IS NO LONGER DESIRED BY FOREIGN ENTITIES. THE EASTERN HEMISPHERE HAS MERGED FORCES TO DEVELOP A USDOLLAR ALTERNATIVE FOR TRADE. BASIC ALTERNATIVES LIKE THE YUAN SWAP FACILITY WILL BE FOLLOWED BY OTHER MORE INNOVATIVE AND RADICAL SYSTEMS BASED ON GOLD TRADE SETTLEMENT. THE USDOLLAR IS BEING WIDELY RECOGNIZED AS BACKED BY ITS MILITARY, WITH BANK FRAUD AS ITS FOUNDATION. $$$

Because of USDollar dominance, if not abused hegemony, the majority of all global denominated transactions pass through New York funnels to settle payments. In a great many cases, the two parties are not from the US and the companies are not registered in the US. The transactions often have absolutely nothing to do with the United States. In turn, the tremendous global flow of transactions is monitored by the New York State Dept of Financial Services, which was created in 2011. This agency plays a special role in the exposure of bank and company wrongdoers, real or imagined. Around 4500 organizations, with assets of $6.2 trillion, find themselves under watchful eyes and scrutiny by this agency. It is not desired. The world did not bestow such power to the fascist US bankers. The power was simply exerted, due to the basis of payment settlement in the global reserve standard in the USDollar. The world has grown weary of the interference, the snatched privilege, abused power, the prevalent controls. The unlimited surveillance and invasion of privacy have pushed foreign entities into a strong reaction.

The non-US banks and companies possess powerful incentives to replace the USDollar with the currencies of other countries when making international payments, especially the Yuan Swap Facility. At the same time they are working vigorously to create their own regional systems of international payments. On a greater scale, little reported by the Western press or even the gold community, the multitude of Eastern nations have banded together to develop new platforms for settlement of trade in Gold, with Turkey as intermediary. They include some complex bilateral systems with some simple characteristics. They include a new type of currency, namely Gold Trade Notes. The world will be hearing much more about Gold Trade Settlement in the following months, a frequently mentioned Paradigm Shift concept by the Jackass. The showdowns are planned and will go off with friction to cause sparks seen the world over. The next sparks will be seen in Russia. Putin don't take crapp, and China is staging face-offs with the Americans over hegemony. See the Zero Hedge article (CLICK HERE).

The USDollar rejection will be the second biggest story of this generation. The first will be the USGovt debt default restructure, possibly conducted behind a USMilitary escort. The reason is simple. Before the USDollar was backed by Gold. Now it is backed by the USMilitary, a point made by the Jackass since 2004 amidst considerable criticism and mockery. Now it is obvious.

◄$$$ THE MONEY SUPPLY HAS GONE TOTALLY BALLISTIC COMPARED TO USECONOMIC ACTIVITY. NO CHANCE OF EVER RETURNING TO THE NORM. EITHER GROWTH ZOOMS OR LIQUIDITY IS SEVERELY TIGHTENED, BUT NEITHER IS A VIABLE OPTION. THEREFORE THE MONETARY EXPANSION WILL CONTINUE FROM DESPERATION UNTIL THE USDOLLAR IS PUSHED ASIDE AND REJECTED BROADLY. THE SYSTEM BREAKDOWN IS OCCURRING FROM INSOLVENCY, FRAUD, ROT, AND DEFIANCE. THE GUARANTOR FACTOR OF SYSTEMIC FAILURE IS THE USFED POLICY ITSELF. $$$

John Hussman does great work. His insights are steady and deep, often shared in the Hat Trick Letter reports. His summary is extremely astute, pinpointing precise problem areas. He summarized, "Frankly, I view the present course of monetary policy as reckless, not because it threatens inflation (which I do not think it will for several years), but because it diverts scarce capital away from productive investment and toward speculative activities; because it fails to act on any economic constraint that is actually binding here, so has little hope of providing the economic support that it purports to offer; because decades of historical evidence provide no basis to expect a material wealth effect from stock values to the economy; because the policy lowers hurdle rates and encourages borrowing for unproductive purposes including stock buybacks at record highs (and there is no evidence that buybacks are a good indication of value); because it punishes the elderly on fixed incomes; because it perpetuates a bubble & bust cycle created by Fed intervention, which is not the medicine but the very poison itself; and because moving to the left on the liquidity preference curve will likely be as painful as moving to the right has been pleasant." See the Global Economic Analysis article (CLICK HERE).

The message from the chart is compelling and highlights the impossible exit for the USFed. Since 2009, the Jackass has described the Bernanke Fed as trapped in the monetary corner with no exit options. Now it is obvious. A tremendous amount of liquidity has flooded the entire USEconomy and its financial system. The ample flow has not produced much of any response in five years with any economic growth, nor fixed the bank insolvency problems. The USTreasury Bill yield is miniscule. No stimulus has occurred, only toxic bond redemption in bank rescues. The tightening will not be permitted, while the growth will never arrive. Instead, systemic failure will creep into the structures pervasively. The USFed must either soak up a sea of massive liquidity in the most severe tightening in modern history, or else a miracle of astounding growth must occur for over a decade to save the system. The risk of USGovt debt default with restructure grows by the month. As footnote, the only missing factor from the Hussman indictment list was the capital destruction from the QE bond purchases. The rising cost structure guarantees the failure of the USEconomy itself. Businesses are shutting down from lost profitability, the biggest blind spot in the entire arena. The ObamaCare insurance costs add to the vanishing profit margins. The USFed monetary policy assures a systemic failure, which almost nobody connects to the QE policy itself. The policy is the cause, not the cure. The Jackass is the heretic for saying so.

◄$$$ CHINA JUST FIRED THE FIRST SALVO TOWARDS A NEW GOLD STANDARD. UNTIL RECENTLY, THE CHINESE GOVT HAD BEEN WORKING QUIETLY BEHIND THE SCENES WITH YUAN SWAP FACILITIES FOR TRADE, WITH A BROADER CAPITAL ACCOUNT, WITH SITES TO SELL CHINESE GOVT DEBT, AND MORE. THEY ARE CALLING FOR A BRETTON WOODS SYSTEM WITH A GOLD STANDARD REINSTATED, IN DIRECT CHALLENGE TO THE ANGLO BANKERS. CONCURRENTLY, CHINA IS WORKING TOWARD A GOLD-BACKED YUAN CURRENCY. $$$

A shock not well enough heard around the world was the blunt comment from the official Chinese Govt monetary offices. Yao Yudong of the Peoples Bank of China monetary policy committee has called for a new Bretton Woods system to strengthen the global financial system, in order to ensure proper global liquidity. It would quickly address the solvency plague also. He made the startling pronouncement in the China Securities Journal. Now that the Intl Monetary Fund is under more Chinese control, Yao called for more power to the IMF to foster greater cooperation and supervision. China is hedging its bets, pursuing the bigger solution in a more unilateral manner. China could opt to have its own hard asset backed option for the future route, namely a gold-backed Yuan currency. The PBOC comments and challenge are barbed, serving notice. China has done much in the accumulation of Gold bullion in its reserves, holding between 5x to 8x as much gold as admitted officially. The IMF would have to abandon their ruse of a solution in the Special Drawing Rights, their official basket currency which represents nothing more than a continuation of the past failed fiat paper currency system. Given their heavy role at the IMFund, phasing out SDR talk would be easy. They even suggest the new Bancor would be a relic. The writing has been on the wall for China's push to end the USDollar reserve supremacy for over two years. The world urgently needs a new Gold Standard, in whatever form through banks and FOREX or through trade settlement in distributed manner. No solution has been seriously pursued since the 2008 crisis began. See the Zero Hedge article (CLICK HERE).

As footnote, the only way a gold-backed Yuan currency would succeed is if it is widely used, crushing the non-participants. If not widely used, it would kill the Chinese economy quickly from a sudden rise in the Yuan exchange rate. This is a key point, and the principal reason why new currency systems with integrity are difficult to hatch and bring into usage. Without wide usage, they would kill their designers.

◄$$$ KAREN HUDES DESCRIBED THE INNER ELEMENTS OF THE USDOLLAR STRATEGIC BREAKDOWN, FROM HER PERSPECTIVE WITHIN THE WORLD BANK. HIDDEN POWER CENTERS ARE IN A PANIC, YET THE PUBLIC SEES NONE OF THE SHIFT IN CLOUT, BRAWN, CONTROL, OR AUTHORITY. GOLD HAS GONE INTO HIDING, AND SOON WILL NOT BE AVAILABLE AT ANY PRICE USING FIAT PAPER MONEY. A NEW GOLD STANDARD IS SOON TO EMERGE. THE NEW LORDS ARE WORKING TO MAKE A SMOOTH TRANSITION, BUT A COLLAPSE OF THE BANKING SYSTEM SEEMS NOT TO BE AVOIDABLE. $$$

The unfolding exposure by World Bank counsel Karen Hudes of its deep corruption has evolved into a focal point of growing leverage against the cabal. Better yet, a potential strategic convergence with other powerful entities concerning the so-called World Funds. The intrepid Hudes has brought to light evidence of financial corruption at the bank, which never would have happened without its lost power from elite hands. Her past attempts to alert World Bank leadership were met with persecution and trumped-up charges by the USDept Justice, which have since been dismissed. She has revealed that other whistle blowers are now prepared to step forward to institute reform at the World Bank, a former field fortress overtaken by the elite financial interests. Its actions and behavior in the last two to three decades have gone counter to it stated purpose, the alleviation of global poverty. Its work has been to maintain US and UK banker control and to exploit wealth opportunities.

Karen Hudes is a brave woman, former World Bank economist and official insider. She turned whistle blower a couple months ago, making great waves that have turned into a tsunami. As preface, she offered "I argued that the World Bank was needed to prevent an economic armageddon as people lost confidence in the paper currency issued by the Fed. Before my hearing, I made sure that the District of Columbia, Virginia, and Maryland knew that countries had been threatening to further decentralize jobs in the World Bank's headquarters in Washington because of the corrupt business climate, and of the decision of Brazil, Russia, India, China, and South Africa to set up their own development bank." She comprehends the potential power and disruptive influence of the BRICS Bank. She might not be aware that it will serve as a processing plant to convert USTBonds into Gold bullion. Perhaps she is so informed. Hudes believes all fiat paper currencies are on the brink of collapse, along with the platforms they move through. She made numerous important points. See the Project Camelot article (CLICK HERE) and the In5D article (CLICK HERE). On the other side of the storm lies conditions where Gold & Silver seek out their true price, an order of magnitude higher.

  • All fiat paper currency and their sovereign bonds are on the brink of complete collapse, as world leaders are scrambling to make the transition into a new currency as fast and smoothly as possible. Alternatives are being constructed in the East.
  • The collusion for LIBOR is from the same tactic used to game the stock markets, by putting syndicate heads as directors of the exchanges. The method is used in almost every market and regulatory body with oversight.
  • US Federal Reserve controllers and World Bank controllers are in a panic, since they are being exposed. Their system only functions in secrecy. Their balance sheet is a mountain of toxic paper.
  • The banksters, who control money, are trying to start World War III, in order to cover up their crimes and to exploit outcomes of war again. They wish for continued subservience by the population through debt and poverty.
  • The Vatican bankers run by Jesuits have been kicked out of the power chain. They have been in the top position for decades, laying claim to the US income tax stream. They are now scrambling, realizing their lost power and control. The same Jesuits own Bank of America, which is the primary narcotics money laundering bank in the United States.
  • For years, the corporations of each US State and WashingtonDC had been dissolved, as all IRS revenue had formerly been directed in channels to the Vatican with a small amount going to the Bank of England, while none went towards United States Govt operations.
  • The USDept Treasury will once again start issuing USDollars instead of the Federal Reserve. Some state banks will spring up along with asset based currencies which will swiftly put an end to the current fiat currency in the United States. She said, "The Fed's days are really numbered. All of this is going to going forward very quickly. We are also going to have to think about how are we going to be retiring these banks. We have to find ways to smooth the transition."
  • Whether or not the banking collapse happens in the near future remains to be seen. The current system is unsustainable. Its collapse is inevitable, only a matter of time.
  • Soon the fiat paper currency will be worthless, not accepted even to purchase Gold & Silver. Gold is being hoarded. She said, "At a certain point, you will not be able to buy any gold at any price using fiat currency."
  • In order to overcome the current financial system, Hudes recommends that we need a currency that is back by precious metals or some other valuable commodity along with a systematic way of retiring the current fiat paper.

◄$$$ THE G-20 MEETING WILL BE JOINED BY THE INTERNATIONAL ECONOMIC SUMMIT MEETING. EXPECT SIGNIFICANT PROGRESS ON DECLARING FIRM PLANS FOR A USDOLLAR ALTERNATIVE IN TRADE. LOOK FOR DETAILS TO BE WORKED OUT ON CERTAIN KEY PLATFORMS THAT SERVE THE GOAL OF GOLD TRADE SETTLEMENT, WITH INTERMEDIARY. MOMENTUM IS BUILDING FOR THE G-20, AS THE BRICS NATIONS HELD A PRELIMINARY MEETING. THEY INVITED 19 NATIONS FROM THE AFRICAN UNION TO ATTEND. THE USDOLLAR ALTERNATIVE MOVEMENT IS GAINING HUGE MOMENTUM. $$$

Obama is scheduled not to go to Russia in September for the Group of 20 (G-20) economic summit in St Petersburg. He will not make a stop in Moscow for one-on-one talks with Putin. The Russian President regards the US President as a rank amateur on the global chessboard, a viewpoint easy to agree with. The White House demand for the return of Snowden from Russian asylum has served as a bizarre roadblock for the US to participate in the phase-out of the USDollar itself. In no way did the Jackass expect the US finance or political leadership to attend the meetings in Russia, in any city in Russia, in any meetings at all. The plan is to kick the corrupt US bankers and their London handlers to the curb, to phase out the USDollar in commercial trade settlement, to diversify away from the USTreasury Bond in banking reserves management. See the Huffington Post article (CLICK HERE). The US and Russia are at odds in numerous other arenas, such as the organization of the Eurasian Trade Zone, the creation of the Natural Gas Coop, the energy pipelines construction, the war in Syria (with its hidden gas pipeline angle), the Iran sanctions, the crude oil price interference, the USFed monetary policy, and more.

Here is the agenda at both conference sites in Russia. It has been unclear to what extent the Intl Economic Summit would overlap with the Group of 20 Meeting. By the way, the G-20 Meeting has rendered the G-7 Meeting as totally irrelevant and obsolete, another Jackass forecast call in 2011. On September 2nd through 5th, the G-20 Finance Ministers Deputies Meeting in Moscow, under what they call the Finance Track. On September 2nd through 5th, the G-20 Sherpas Meeting and Joint meeting with Finance Deputies in Moscow, under what they call the Sherpa track. On September 5th and 6th, the G-20 Leaders Summit in St Petersburg, under the Governmental Track. Do not expect any gate crashing by the Western leaders, who preside over broken systems, insolvent banks, and wrecked sovereign bonds. Moscow is not Ankara Turkey. Watch for low ranking USDept Treasury officials to attend in observation, and not say a word, while not given any respect, even ignored. As footnote, a sherpa is a pack carrying man. Therefore, expect the Sherpas Meeting to be where the nuts & bolts of gold trade settlement are discussed and developed.

In a bid to include greater participation of the African Union, the BRICS Business Council has invited business leaders from 19 other African countries to the launch meeting. Everything is picking up speed into the G-20 Meeting in pursuit for a non-USDollar alternative. The dark continent of Africa already has significant ties with China in resource and mineral pacts. Look for a grand merger among the BRICS nations, the G-20 nations (led by China), the Shanghai Coop Org (mostly former Soviet Republics), and the African Union. The entire Eastern Hemisphere is banding together to work out a new trade settlement system and to hammer out a new climax currency. Look for an invitation to the Organization of American States (the big piece Latin America) in the near future, which Brazil will lead. Brazil is a key member of the BRICS. See the BRICS Post article (CLICK HERE).

## JAPAN IN THE SPOTLIGHT

◄$$$ THE FUKUSHIMA NUCLEAR  PLANT IN NORTHERN JAPAN IS POURING WATER LOADED WITH HEAVY RADIATION OVER THE CONTAINMENT RIM. THE DAM HAS BROKEN. THE ENTIRE PACIFIC OCEAN IS AT RISK, FROM THE ASIAN FLOODGATE. THE FOOD SYSTEM IS AT RISK, THE MOST ACUTE IN FISH. THE WORLD INTEGRITY IS AT ACUTE RISK. $$$

The USGovt reaction has been to keep the news quiet, and to increase 100-fold the legal limits for food bearing radiation at severely high contamination levels. Apart from motive or deed in the creation of the problem, the world is at high risk from its environmental integrity. The problem is far beyond what the Japanese Govt can control or solve. Due to pride and stubbornness, the Japanese leaders do not seek help from world experts. Observe the map of radiation fanning out, from the National Oceanographic and Atmospheric Agency. In amazement, Australia is protected by flows. The only part that does not make sense is that trade currents flow northeast from Hawaii (west of Mexico) toward British Columbia, which is not evident on the mapped currents. See the Zero Hedge article (CLICK HERE).

◄$$$ JAPAN IS THE LAND OF SETTING SUN ON THE FINANCIAL HORIZON. SOME INCREDIBLY UGLY FORCES ARE AT WORK. THE NATION MIGHT BE A WEAKER SPOT THAN SOUTHERN EUROPE, SINCE UNDER AMERICAN HIDDEN ATTACK. $$$

The amazingly obvious factor, visible on any financial stage, is that for over two decades, the nation has been offering Zero Interest Rate Policy with no exit, no progress, no solution, and no hope. The arrival of China ten  years ago has resulted in key steps backward for the Japanese economy and its debt structure. The annual surplus is gone, long used to push down the Yen currency safely. Now the Yen is kept in a downward trajectory with far more dangerous risk in consequence. The decision to align with China against the USDollar, using the Yuan Swap Facility in the short term but a greater alliance in a pan-Asian trade zone in the bigger picture, has wrought the vengeance played out in Fukushima. Reliable reports indicate a nuclear device was set off under the northern part of Japan, followed days later by direct strikes against the string of nuclear reactors by HAARP weapons. The finger is pointed at the USGovt security agencies, as well as the USMilitary. The scientists of Asia have noticed the accident did not bear a natural earthquake signature, but rather a detonation signature. They are experienced in such basic detections.

The result is chaos to Japan, high endless reconstruction costs, an insurance nightmare, widespread price inflation, and higher electrical utility costs. The criminal element is strongly rumored to be ongoing. Numerous diverse and independent reports indicate the USGovt has employed for many years the Yakuzi, the Japanese mafia, in order to maintain control over the Bank of Japan, like with regular death execution threats. The US banker syndicate offered to halt the hidden geological weapon that shakes the tectonic plates into a rumble with its own local nuclear powerpack, called HAARP. The cessation was offered with a $800 billion payoff to stop. The payment was reportedly made by Japan to the Syndicate, but the vile vicious attacks apparently did not stop. The nation is site of a highly probable financial meltdown and systemic failure, even while the Fukushima waters pour over the containment walls finally for an environmental failure. The breakdown, apart from a radiated Pacific Ocean, will have a financial component and an industrial component with an inflation kicker.

The desperate moves to devalue the Yen currency have turned far worse than what can be described as merely dangerous. The latest rounds of what surely can be labeled as QE to Infinity have brought a backfire of rising price inflation, rising costs to export industries, and risk to Japanese Govt Bonds. Their entire national pension system depends upon these bonds, whose decline has reduced pension income. An acute risk for Asia of systemic failure has risen in Japan. The trade with Japan, done increasingly by means of outsourced production in China, is settled in the Yuan Swap Facility, fully embraced by Japan, and seen as an alliance against American interests. A firm Asian handshake is being made, more like a broad acceptance of the next chapter no longer US$-centric. Japan signed up for Gold Trade Settlement, noticeable to those with opened eyes, not for those who continue waving the US$-trade flag and wear red white and blue jockey shorts. The greatest Asian powers have met and decided to take responsive action. Think war of the worlds, the day time stood still, or close encounters of the worst kind. Some incredible events are on track.

◄$$$ JAPANESE GOVT DEBT HIT ONE QUADRILLION YEN. THEIR CUMULATIVE DEBT HAS SURPASSED THE COMBINED SIZE OF THREE ECONOMIES IN GERMANY, FRANCE, AND GREAT BRITAIN. NO REMOTE HINT OF SOLUTION FROM 23 YEARS OF ZERO BOUND RATES. $$$

Nobody in the West prefers to pay attention to the Japanese debt meltdown. The nation of Japan has crossed into uncharted fiscal territory with its national debt. It has reached a milestone new high, one quadrillion Yen. The public debt burden is over 200% of its GDP, the size of the economy, the world's third biggest. Their cumulative debt is the worst of any major industrial nation, yet nobody seems to notice it has locked in the ZIRP lever (straitjacket) without solution. What makes it different these years is that China has been handed a large slice of the manufacturing sector from Japanese industries, taking away the famous and critically important trade surplus. The magnitude of the debt is clear. The Japanese total debt volume is larger than the economies of Germany, France, and Britain combined. Only Saudi Arabia's debt is worse. See the Business Week article (CLICK HERE).

◄$$$ JAPAN DEVELOPMENTS ARE IN FLUX, STILL VASSALS TO THE ANGLOS. THEY REACT TO THE RISE OF CHINESE BLUE WATER NAVY. THE BATTLE OF ASIAN WATERWAYS HAS HEATED UP. THE JAPANESE ARE SETTING THE STAGE FOR TIGHTER ALLIANCE WITH CHINA, AND DISCARDING THE LONGSTANDING USMILITARY & ECONOMIC ALLIANCE. JAPAN IS AT A STRATEGIC TURNING POINT. $$$

The lingering effects of World War II have never gone away for Japan. A queer and questionable reform program under the Abe Admin has injected some costly temporary life into the stagnant $5 trillion economy, owing to a mindless initiative to drive down the Yen currency. For several months, the JapGovtBonds served as a safe haven in the Asian region, for nations not wishing to remain bound to the USTreasury Bond paddock. The Japanese military remains a bound midget, constricted to the so-called Self-Defense Forces agreement. The US wrote the Japanese pacifist constitution that prohibits all offensive military operations or exports of arms and military equipment. The 1960 US-Japan Security Treaty laid the foundation of relations between Washington and Tokyo. The USGovt pledged to defend Japan against any invaders. In return, an empty pledge by Japan was given to help defend the US, but without any dispatched military forces abroad. Implicit is defense of the USDollar and support of the USTBond. The key to the treaty was the establishment of permanent USMilitary air, land, and sea bases in Japan. Half a century later, they remain in place. Japan thus became a giant aircraft carrier from which the USMilitary dominates the highly strategic North Asia region. In exchange, Japanese industry was given open access to the US market, thus laying the foundation for Japan's economic expansion a generation ago. South Korea enjoyed a similar deal for access, with ambassadors from Samsung, Hyundai, KIA and LG riding the wave. The USEconomy has many hidden military links.

The current decade with ripe crisis has challenged the longstanding arrangement, due to the rapid rise of Chinese Military and economic power. Last week, an incident provoked a minor uproar in Japan when a Chinese military aircraft flew over waters near Okinawa, the biggest airbase operated in the nation by the USMilitary. Over the past year, Chinese aircraft, warships, and submarines have challenged Japanese territorial waters around the Senkaku Islands in the East China Sea, the basis of disputed ownership fanned frequently by the USGovt in order to keep the two superpowers at odds. The USGovt security agencies organize public demonstratinos in both countries, to fan the flames. Some strange claim over Okinawa ownership has cropped up, associated with tribute paid to Imperial China in the past. Such assertive claims, alongside China's rapid development of a true blue water navy and long-range aircraft, are deeply alarming to Japan.

With island access, China can project its power into the Pacific, long the province of the USMilitary overlords. As the nationalist drums beat ever louder in China, Japanese increasingly feel vulnerable. The Japanese openly wonder if the US would risk a hot war with China over a confrontation in Senkaku or Ryukyu Islands. The island chain stretches from Taiwan to Japan. Notice the obstruction for open water access by the long chain of 500 miles (800 km). Most of the islands are small and of little significance, hardly bearing much in minerals. They form a seawall of some strategic importance.

Conversely, China perceives its rising naval and maritime power as constricted by the Japanese archipelago that acts as a giant barrier, blocking China from the open access to the enormous Pacific, the largest ocean in the world. Not left out, the old Soviet Union faced a similar problem accessing the North Pacific just two decades ago. The battle over waterways has ratcheted up. China maintains a huge fleet of oil tankers, container vessels, dry cargo freighters, and cargo ships. Reaching the open waters of the Pacific Ocean means running the barrier of Japan's home islands, the Senkaku and Ryukyus (Okinawa), or going through the narrow Luzon Strait in the Philippines. In a recent chess move, the United States is negotiating with Manila to reopen the Subic Bay base that the USMilitary vacated in 1992. Commentary is replete with interpreted power games and gestures. China wants to muscle its way out of the East China Sea and into the open Pacific. Moreover, China is trying to demean and exert dominance over Japan for actions in World War II, when atrocities were numerous. The proud Japanese, by virtue of newfound Chinese industrial strength, ironically aided by the Japanese corporations, stand to lose face over the naval and air challenges. Asia has begun to welcome the new big dog on the block. It barks, it growls, and it bites. It is China with a navy.

Eric Margolis concluded, "Japan is perfectly aware of this grave challenge, but undecided on how to respond to the biggest threat it has faced since World War II.   The choices seem to be: hope the US will block China's expansion, or to abandon the US-imposed strictures from the post-war period, develop a real foreign policy, and create credible military forces, including nuclear arms. Doing so means casting off Japan's eternal bowed head, apologetic attitudes, and obedience to its former WWII enemies.   That would be a vast sea change in Japan, where most people appear happy to accept the status quo, or at least until another big military scare from China." See the Lew Rockwell article (CLICK HERE). As footnote, the big unknown to a changing formula in Japan could turn out to be the Yakuzi threats to the Japanese Govt and even bankers. They might be hired by the Chinese, as the US contractor in Langley Virginia is pushed aside. The TRIAD has big money.

## USECONOMY FIGHTS DEPRESSION

◄$$$ THE US-CONSUMER IS TAPPED OUT, AND THE MIDDLE CLASS IS NEARLY BROKE. THE OBAMACARE TAX IS HAVING AN IMPACT ON DISPOSABLE INCOME. THE KEY SIGNAL FLARE IS WAL-MART, WHOSE BUSINESS IS SAGGING BADLY. $$$

Wal-Mart issued weak earnings and lower sales, but the company remains an efficient operator, according to Howard Davidowitz, the outspoken retail consultant. It is suffering from a weak economy. He said, "Wal-Mart is a terrific operator. They did not suddenly become stupid. The USEconomy is in a state of collapse. That is what is going on." He went on to explain that the labor market is generating new jobs, but 75% are part-time with low wages. The 2% payroll tax increase for ObamaCare continues to impact the US household customers. Essentially, the lower middle class is broke. The company stated some challenges from currency fluctuations in their supply chain. See the Zero Hedge article (CLICK HERE).

◄$$$ THE CASS FREIGHT INDEX SHOWS THE USECONOMY SLOWING DOWN RAPIDLY. THE DATA IS UNDENIABLE, NOT EASILY GIMMICKED. $$$

Freight volumes are down significantly. The Cass Freight Index has been a trusted measure of North American freight volumes and expenditures since 1990. Data within the Index includes all domestic freight modes, derived from $22 billion in freight transactions processed by Cass annually on behalf of its client base of hundreds of large shippers. These companies represent a broad sampling of industries including consumer packaged goods, food, automotive, chemical, OEM, retail, and heavy equipment. The diversity of shippers and aggregate volume provide a statistically valid representation of North American shipping activity. The data for 2013 is lower than in 2012 and 2011 and 2010, and is falling again. See the Cass Info website (CLICK HERE).

◄$$$ BUREAU OF LABOR STATISTICS GRADUALLY BEING EXPOSED AS GRAND LIAR AND FACTORY OF LIES. THE DIVERGENCE WITH THE JOLTS DATABASE SIGNALS ANOTHER MAJOR EVENT, SINCE THE EXTREME IS AS GREAT AS RIGHT BEFORE THE LEHMAN FAILURE. A MAJOR WARNING! $$$

The Bureau of Labor Statistics is a grotesque tool office. They gimmick labor data, then revise downward heavily every March. The widely watched Non-Farm Payroll report has a gross discrepancy with the (one month-delayed) JOLTS survey. The difference is 40% below the trendline of cumulative job additions implied by the Non-Farm Payroll. The difference is stark and noticeable, and amounts to just shy of 60,000 jobs per month on average for 2013 alone. If not the Household survey, the JOLTS survey exposes the Non-Farm Payroll as a farce, a tool, a deceptive monthly story. The past seven months have seen a dramatic imbalance in data benefitting the Reich Finance artisans. The two series are diverging. See the Zero Hedge article (CLICK HERE). Even the former head of the BLS stat fabrication team admits the ruse. The New York Post article (CLICK HERE).

Conclude the following.

  • In April, according to JOLTS, there were 108k job additions. According to the NFP data, the job gain was 199k, equal to 84% more than per JOLTS.
  • In May, according to JOLTS, there were 109k jobs additions. According to the NFP data, the job gain was 176k, equal to 62% more than per JOLTS.
  • In June, according to JOLTS, there were 120k jobs additions. According to the NFP data, the job gain was 188k, equal to 57% more than per JOLTS.
  • Adding across for all of 2013 (through the end of June data), JOLTS would show that only 837k jobs were added (or 140k per monthly average). Compare this to the 1185K new jobs according to the Establishment Survey (198k per monthly average).

◄$$$ MORTGAGE CLOSING COSTS ARE UP 6% THIS YEAR. THE RISE OFFSETS ANY BENEFIT FROM A LOWER MORTGAGE LOAN RATE. BESIDES, THE RATES ARE RISING, THANKS TO THE TAPER STOOL TALK. $$$

Homebuyers have benefited from record low mortgage rates over the past year, but they have paid up bigtime to close the deals. Closing costs averaged $2402 over the past year nationwide across the United States, up 6% from $2264 in 2012, according to a survey by Bankrate.com. The estimates were based on a $200,000 mortgage for buyers with good credit using a 20% down payment. Origination (underwriter) fees rose 8% to $1730. Meanwhile, third-party fees such as appraisal costs and credit checks ticked up 1% to an average of $672. Within the same survey, Hawaii was identified as having the highest closing costs in the country, at an average of $2919, followed second by Alaska at $2675, then by South Carolina at $2658, and by California at $2639. Buyers in Wisconsin paid the least, at an average of $2119, followed by Missouri at $2118 and by Kansas at $2193. See the Yahoo Finance article (CLICK HERE).

◄$$$ OHIO REJOINDER ON BANK OWNED HOMES WITH DEEP DAMAGE FROM VANDALISM AND THEFTS. MIAMI AND FLORIDA ARE NOT ALONE IN THE RISKS TO PRIVATE EQUITY FIRMS GRABBING BANK OWNED PROPERTIES IN TRANCHES LIKE CARPET BAGGERS. WHERE THERE IS URBAN DECAY, THERE WILL BE RISK TO AGGREGATE INVESTMENT SCHEMES. $$$

Regarding REO properties bought en masse by the private equity funds and others, the story broadens. The risks are very much engrained, but seemingly ignored or minimized by the fund managers. Thanks to the subscriber in Ohio, whose identity has slipped through my fingers. He provided a personal account. "Having been a landlord with scores of properties in Northeast Ohio for over 30 years, I absolutely agree with the assessment from the guy from Miami-Dade. The hedge fund and mass buyers of repossessed homes have no idea what they are getting into. They think they can buy on the cheap and garner some cash flow. If they hire managers, they will find that managers will throw tons of money into fixing the various damage during turnover problems. But this will solve nothing. What these professional managers will do is GO BY THE BOOK with reference to the various problems, and will have very little to show for the expenses besides negative cash flow. Going by the book will not work in today's residential rental world. Tenants know they can abuse professional management companies, and will play the non-payment rent games, forcing the managers into filing for eviction. This is about a two-month process in most areas. Meanwhile, trash and damages accumulate while no rent is being paid. Furthermore, the aluminum siding (on older properties) and copper plumbing, doors, fixtures, even kitchen sinks will disappear. Then, once the tenants vacate, without additional repairs done, there is no way to rent the place to the next deadbeats.

Tenants are tenants (as opposed to owners) for a reason, usually very unfavorable to the landlord. There are some exceptions. Heck, some landlords will give a positive recommendation to a proposed new landlord, just to get rid of the deadbeats. I have done it myself! The best way to get rid of the bad renter is to pay him to leave. I have used this technique many times, and it actually saves a lot of money, as well as reduces damages. But these hedge funds do not have a clue. I could go on and on, but you get the point. Bravo to you the Jackass for bringing this issue up. Beware of residential REIT funds also. Commercial is an entirely different game, with each property (even in the most depressed areas) standing on its own merits and cash flow possibilities." In 1983, the Jackass gave one month free rent to a good but sloppy tenant during a rental home sale. It succeeded in winning tenant cooperation. The sale was done, profit gathered, and we moved on.

## THANKS

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