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

* Monetary Shrapnel
* USTreasury Bond Bubble
* Destructive Derivative Forces
* MF Global Market Impact
* Implications to Private Accounts



HAT TRICK LETTER
Issue #93
Jim Willie CB, 
“the Golden Jackass”
18 December 2011

"There is no economy in the world, whether low income countries, emerging markets, middle income countries, or super advanced economies that will be immune to the crisis that we see not only unfolding, but escalating at a point where everybody would actually have to focus on what it can do. [Without international cooperation] the risk from an economic point of view is that of retraction, rising protectionism, isolation. This is exactly the description of what happened in the 1930s and what followed is not something we are looking forward to. It is going to have to start from the core of the crisis at the moment, which is obviously the European countries and in particular the countries of the EuroZone, which are sharing this monetary union." ~ Christine Lagarde (IMF chief, describing the imminent Depression)

"We are heading for a global depression that will lead to nationalistic isolationism and protectionism. The globalization scheme to enslave people has failed to work. Being a very smart lady, Lagarde finally came to here senses. Sarkozy is on very thin ice and might not make it for a second term." ~ German banker source (in response to Lagarde's quote, which should be accepted as good news since decentralization cuts the legs out of the monolithic power advocates)

"The SEC, the CFTC, they have never prevented a single thing, [not with] Madoff or MF Global, [which is evidence of] corruption in the legal system, the regulators. I know from an inside source at the SEC, there were going to be rules to prevent Corzine from doing exactly what they are doing. Corzine went down to the SEC, met with Mary Schapiro, and she personally revoked it. People on Capitol Hill even say the SEC is bought and paid for. If Congress asks the SEC for documentation, they resist. These are unelected government agencies. They do not play ball with the elected side of government. It is a contentious relationship. This is not one government and we should understand what the structure really is. In our conferences,  investors report that they have been moving money dramatically from New York. What is going on around the world, everybody is really concerned at practically every level. Now we have MF Global, which is bringing into question the validity of the US financial system." ~ Martin Armstrong (Princeton Economics Intl)

"The reason for my decision to pull the plug [and shut down the futures broker firm] was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets, because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy." ~ Ann Barnhardt (who shut down BCM Capital after the MF Global thefts)

"Anyone who thinks the MF Global situation cannot happen to whatever custodian their financial advisor uses is braindead. The integrity of our system is eroding. As it further erodes there is going to be a serious flood of money into physical gold and silver." ~ Dave in Denver (referring to the risk of private accounts vanishing)

"I do not think the COMEX has the Gold, and I have been hearing stories coming out that what they are delivering is not as fine as it is supposed to be. I also do not believe that the Chicago Mercantile Exchange has the money to back what they are saying were going to do." ~ Gerald Celente (Trends Journal, who advised the world to buy Gold, but he bought some paper gold to spice up his bullion holdings)

"You have warned over and over since the Fall of 2009 that Europe would come apart and it sure looks like exactly that is happening. You have warned continually about the COMEX and now the entire CME seems to be unraveling. I know you must receive a lot of criticism regarding your analysis. Trash the man, but don't debate him. I appreciate your work and I do not care how politically incorrect or how impolite your style is. What is happening to our economy and financial system is neither politically correct or polite." ~ DanC (subscriber in Washington)

MONETARY SHRAPNEL

◄$$$ MORE AND MORE AMERICANS ARE CHOOSING TO LEAVE THE UNITED STATES. WHETHER A RESPONSE TO OUTSOURCING BY BUSINESSES, OR DISGUST WITH NATIONAL LEADERSHIP, OR GREATER FREEDOM IN FOREIGN LANDS, PEOPLE ARE VOTING WITH THEIR FEET. MANY SIMPLY WANT TO AVOID THE GRAND CORRUPTION AND TOTAL LACK OF CRIMINAL PROSECUTION FOR MASS CRIMES, BOTH VIOLENT AND FINANCIAL FRAUD. THE AMERICANS WHO REMAIN SEEM EXTREMELY GULLIBLE AND INCAPABLE OF RECOGNIZING THE CURRENT PATH. $$$

Last July, the Jackass met a very well informed fellow who shared that 24 thousand Americans were departing the United States per month. Assume they have money and are removing it from the endangered system. He also claimed the emigration as an order of magnitude larger than what it was five to ten years ago. Americans leaving the US in record numbers, which have skyrocketed only in recent years. Americans between the ages of 25 and 34 years living abroad have surged from almost 1.0% to over 5.1% in the last 24 months time. For those under 25 years of age, the number has also jumped from 15% to 40% during the same time span. The spirit of entrepreneurs is evaporating inside the US, where the atmosphere is seen as depressing. A sense of lost direction prevails. A grand symbol has shut down in the NASA space program, in particular the shuttle. The nation is a grotesque victim of outsourcing. Few economists grasp the gravity of one main factor that has rendered the US labor market uncompetitive and overpriced, the war effect of a full generation. The costs drove up the labor wages in the 1980 decade, and pushed corporations into seeking cheaper outsourced options. The climax was China with the so-called Globalization that has wrecked the entire Western Economy. See the RT News article (CLICK HERE).

Today in America the senses have been dulled, the blinders put on, and attention diverted or shortened. Americans cannot put a face on the scourge within. The people cannot recognize a fascist or a nazi even when bloodline is in plain view. People either endured the Great Depression or studied it, but cannot notice the parallels to today. They were exposed to World War II atrocities but cannot see them today in Iraq, Afghanistan, and Pakistan. They lived through the Watergate scandal but seem indifferent to any and all scandals today, as though they have become the New Normal. They understood Air America and its nascent narcotics element in the 1970 decade, but cannot see it in Afghanistan where it has grown 15-fold under the US aegis. The USGovt never gave a war that the people did not embrace since Vietnam. The soldiers and the cause are not only glorified, but respect is forced in movie content, sports events, and more. The US press gives respect to utterly false national events in 2001, to the false terrorist threat, to the cause for the endless wars, not noticing the US has become the central nation for the Axis of Fascism (along with England and a small ally), where freedoms have eroded.

◄$$$ GERMANY AND THE NETHERLANDS REVEALED THEIR NEW EURO COIN. THE COIN'S USAGE HAS NOT BEEN FULLY DETERMINED. THEY BIDE TIME BEFORE THE EASTERN ALLIANCE ALTERNATIVE STRUCTURE IS UNVEILED IN DETAIL. GERMANY IS PLAYING A FINE GAME, ONE FOOT DANCING WITH ANGLO BANKERS AND THE OTHER FOOT LEARNING THE DANCE STEP WITH RUSSIANS. $$$

Do not be deterred by the 1988 date on the coin, since it has been blessed for usage as legal tender by the two stalwart nations. The promotional event to display the coin is a gesture by the Other Forces not aligned with Merkel. She and her master bankers retain ties to London and New York. They reek of stench. The current system they desperate support is like a rotting corpse. The Eastern Alliance awaits a launch in its major platforms when the Anglo financial system further collapses. The process is well along. The new accord with signatory nations of Germany, Russia, and China excludes France. The Persian Gulf nations will hitch their camels to any nation that protects their traditional seizure of national wealth. They have accepted a security arrangement with China and Russia. That is the other half of the Petro-Dollar defacto standard which enables the United States to live in First World comfort but Third World finances, an arrangement soon to fall to the wayside. As the Anglo banking system continues to crumble, watch talk of the Eastern Alliance emerge, while the Petro-Dollar is gradually scrapped. A telling event came when France struggled to offer its nuclear technology, arsenal, and generating capacity to Germany, who refused. The Germans shocked Sarkozy by claiming that Russia will provide them whatever they do not grow themselves. The French are desperately trying to cling to Germany, offering to carry their bags to meetings, when the reality is the French will lead the pack of PIIGS.

◄$$$ THE SPREAD BETWEEN THE HIGHER BRENT AND LOWER WEST TEXAS CRUDE OIL PRICES HAS NARROWED SIGNIFICANTLY. SAVINGS HAVE BEEN PASSED TO CONSUMERS, HELPING TO LESSEN THE RECESSION IMPACT. AN EXPORT TRADE OF ENERGY PRODUCTS HAS BEEN CREATED, BUT IT WILL LIKELY GO AWAY. $$$

Numerous theories have been floated as to why the US-based crude oil price has been so much lower than the Europe-based crude oil price. The reason has little to do with the quality of US oil in superior grade of contaminants, nor the more extensive network of oil pipelines in the United States. In my view it can be traced to corrupted Wall Street interference, shorting the oil contracts in order to bring lower cost structure to the USEconomy. They even short the USO exchange traded fund, which has lost half its value ratio to crude oil. They serve the public, so it seems. They had employed direct arbitrage since the Libyan War, pushing up the Brent price. Now that the war has ended, they likely have covered their mass of short contracts. The spread difference in the two major oil types has gone from $20 per barrel to $10 in the last few weeks. An interesting analysis has been provided. US refiner costs have followed the US oil price down. The degree of sour grade has not changed among the two types. Also, savings in refiners acquisition cost have been passed through to customers to some extent. The differential has enabled a growing export trade of all types of energy products from the US, helping the trade deficit, but it is a drop in the very big bucket. See the Financial Sense article (CLICK HERE).

◄$$$ PSYCHOLOGY OF FORECASTS HAS BEEN A TOPIC BOTH INTIMATE AND SPITEFUL. NO LONGER DOES THE JACKASS SEEK ACCLAIM FOR CORRECT FORECASTS. INSTEAD, THE PHENOMENON HAS BEEN OBSERVED LIKE WITH A LAB RAT. $$$

The usual claptrap nonsense is often heard. Nobody could have known and forecasted correctly what happened during the financial breakdown since 2005 in many arenas. Obviously, numerous analysts, many from the gold community, including the Jackass, foresaw most of the wreckage, $trillion losses, corporate failures, banking system collapse, housing market decline, and more. Afterward the wrecks, it was all somewhat obvious, we are told in arrogant tones by the news media. Those within the Sound Money camp are ignored and dismissed as being broken clocks. Yet what is broken is the system, and the camp has been proved consistently correct. The insistence on Gold being part of a solution and lack of Gold being a cause for financial instability if not ruin has seemed to be the precise disqualification card by the system mired in quicksand. The valid message is too frightening to be adopted and implemented, since the entire system would have to be plowed under and all wealth reclassified. The sheeple resent being warned, preferring a fantasy world of security that in no way exists. They cling to the past image of the US, the beacon of freedom and bastion of capitalism. It is neither anymore.

The correct track record by the forecaster incites contempt rather than respect. They hate the correct forecaster before, during, and after the events unfold to reveal the reliability, integrity, and pain of forecasts. The correct forecaster tends not to work within the system. Past correct forecasts recalled only add contempt held by the listener. Contempt for the messenger grows with each warning. Contempt reaches a climax when the reality of loss is understood and felt, especially when the complacent find they are trapped. Their inaction two to four years ago, even eight or ten years ago, has gradually made them boiled frogs in a pot, a grand misfortune that has befallen on friends and family alike. This human tendency toward contempt makes the Jackass want to vomit and has left me a bit cold toward non-gold investors. They rejected solid analysis. They chose their lot. They made their bed. Their indifference created a noose around their necks. They are less likely to take corrective action as time passes. Their catastrophic losses are assured, as the paper monetary system collapses further. What a grand tragedy!!

The denial is as developed as the entrenched financial system. Denial is prevalent. People hope for the best. They believe the ruin could never happen in the United States. They believe in account integrity without bothering to comprehend new legislation or the fine print of disseminated contracts. They tend to idealistically believe in the rule of law. They rely upon a capitalism in the United States that leaked out of the system two to three decades ago. As the Fascist Business climate took root, the capitalism roots rotted and spread their toxin throughout the business sector. The toxin is found in the bonds. Many people are way too busy with their lives, their jobs, their families. To be sure, holding the job can be a major challenge. Even small businesses have seen diminished income, forcing a great struggle. Some point to stock accounts which always go up over time. Some point to savings accounts protected by the FDIC, without concern that its fund is depleted and its backer the USGovt is running $1.5 trillion deficits.

Those who are deeply worried believe that doing nothing is often the safest course. However, holding steady results in losses like with the rust of exposed metal. The amount of incurred loss equals roughly the difference between the true CPI minus TNX per year. The Consumer Price Index minus the 10-yield USTreasury bond yield approximates the distortion in the economic growth estimates and reflects the personal loss in basic savings accounts through withering inflation. The loss from galloping inflation amounts to at least 50% since 2001. For all these stated reasons, many people have no interest in worthwhile correct forecasts that can prevent them from becoming victims. They are stuck with powerful mental inertia and a plan that used to work, but no longer does. They will be either victims of inflation with its erosion or vanishing acts on their accounts as the financial conglomerates tumble.

◄$$$ THE MARCH TO FASCISM IN THE UNITED STATES CONTINUES. THE F.E.M.A. CAMPS ARE ACTIVE FINALLY, TIMED AGAINST A BACKDROP OF THE NEW LAW THAT PERMITS US-CITIZENS TO BE IMPRISONED INDEFINITELY WITHOUT CHARGES OR DUE PROCESS. THE NATIONAL DEFENSE AUTHORIZATION ACT OPENS THE DOOR FOR THE USMILITARY TO DETAIN AMERICANS (JAILED FOREVER). EXPECT THE REGIONAL LAYOUT FOR CAMP MANAGEMENT TO SHOW THE TERRITORIAL BREAKUP OF THE UNITED STATES AFTER ITS DEBT DEFAULT. IT WILL LATER ENTER RECEIVERSHIP. THE WAR IS COMPULSORY DEFENSE CONTRACTOR FUNDING WHICH HAS GROWN OUT OF CONTROL, CONTRIBUTING TO THE FAILED STATE. THEY BLEED THE NATION. $$$

Hardly a coincidence, the rise in the Occupy Wall Street movement might have triggered the next chapter in the fascist clampdown. It also risks open dissension and breakdown of command, even state revolt. The police state has been ratified. The FEMA Camps are open, numbering almost 250 scattered across the United States, the largest in Alaska. They were built ostensibly to house terrorists and disease victims. Management of the camps, like with contractors, has divided the regions into territories. Those with a future view can anticipate the breakup of the United States along these lines as preparations are made for the receivership tribunal after the USGovt debt default. The initial entrants into the camps are likely to be domestic demonstrators responsible for personal violence or destruction of property. Later expect unruly and violent homeless demonstrators to be interred. Beware of the next epidemic and tainted vaccination program, the Swine Flu exposed as a sham, laced with Guillain Barre syndrome and a cocktail of nasties. The cynical expect a wave of intellectuals to be rounded up and placed in the camp. Three Hat Trick Letter subscribers have visited the outer fences of three different camps, in New York, Washington, and Alabama. They are real. They exist. Past Hat Trick Letter reports have featured an Indiana camp, fully equipped like the others with large industrial gas powered incinerators. It would not take much stretch of the imagination for them to become concentration camps, even death camps. But that would be cynical. Enough, since beyond the scope of the reports.

The most recent amendment to the National Defense Authorization Act (NDAA) gives the USMilitary the right to operate on American soil, to detain people without trial for an indefinite period of time, including US citizens. They only have to declare the Americans enemies of the state. Assume opponents to the Syndicate are deemed enemies of the state. Read that carefully: imprison forever without charges or trial. It seems fashioned after the Berlin Enabling Law in the 1930 decade. The common link is along bloodlines of certain leaders, from grandfather to grandson. A Nazi element operates close to home. Again, enough, since beyond the scope of the reports. See the Real News (CLICK HERE). On the other side of the border, a new trend seems spurious. A special seal on US passports is required for visas to many nations on an increasing basis, like in Central America. The seal must be obtained by US Homeland Security, even if a return to the US must be made. Seems like a certain quasi-CIA passport without the fanfare or Congressional stamp of approval. This too is beyond the scope of the reports.

The endless wars are not improving with age, part of the wallpaper nowadays, a constant blemish supported by the lapdog press & media. The War on Terrorism is a smokescreen to enable costs for the narcotics production to be covered, as Afghanistan is the global prize. Its heroin production (up radically since 2003) accounts for 85% of global output. Its distribution passes through most NATO bases. Its clearing house is the Iraqi Export Bank in Baghdad, managed by JPMorgan. The ruling Syndicate in the United States has many sides. Their numerous businesses center on the narcotics, whose annual income is between $1.0 and $1.2 trillion. Although a huge sum of money, easily directed to influence and acquire, it is largely built with a USDollar ball & chain not easily discarded. Numerous vessel containers (from ship to truck & rail) in Greek ports and elsewhere are loaded to the gills with shrink wrapped packages of $100 bills, a huge commitment totaling hundreds of $billions. Dangerous topics not to be touched remain the September earthquake in Virginia of suspicious nature (underground city & tunnel network accident), the gradual purchase of Vatican wealth, and retaliation over salted Tungsten bars (fake Gold) in global distribution along familiar routes. At the risk of testing patience, this is beyond the scope of the reports.

Retired Admiral John Hutson was Judge Advocate General of the Navy from 1997 to 2000 and is dean emeritus of the University of New Hampshire School of Law. He regards the NDAA  law as a victory for US enemies, as the US defeats itself. He said, "In this war, the enemy does not have to win. They can cause us to do things we would not otherwise do, such as indefinite detentions, in the name of fighting a war." The imprisonment without due process contradicts the legal concepts that have underpinned guarantees of freedom in America, including the Habeas Corpus, Due Process, and the Posse Comitatus Act passed after the Civil War to limit the military role in law enforcement. Witness the solidified fascist dictatorship, the United States as a military police state. As a footnote, the Research in Motion woes continue. Their market share has plunged from 24% to 9% in the last two years. Their European blackout a few months ago was not an accident, but sabotage. They had resisted CIA controls in the communications devices and software. So they were taken down a few notches. Recall that the Motorola chipset was very popular in the early personal computers. They were displaced by the Intel Pentiums, which provided CIA backdoor ports designed to monitor all internet commerce. The Motorolas did not and were pushed out, even though of excellent design.

The march to Fascism in Europe has made progress with the installation of technocrats with US and GSax training as prime ministers in Greece and Italy without an election. The votes of confidence seem like a rubber stamp compulsory sham. To help the movement along, all fingers point to Operation Gladio 2.0 across Western Europe for a new wave. Violence in Germany, Belgium, and Italy has the fingerprints of the usual suspects at the CIA and MI6, operating off NATO bases. Their last project was in Oslo, which refused to integrate their $1.5 trillion from North Sea oil revenues. The first Gladio chapter was a grand success years ago, except they were discovered. The motive was to keep the Cold War alive. For those who believed the Baader Meinhof gang was responsible for most 1970 decade violence, think again. State sponsored domestic terrorism keeps the political path on course for the benefit for those sitting in power, hungry for totalitarian power. Fear and disruption are their calling cards, not much different from the 911 climax on US soil. See the DProgram article (CLICK HERE). The topic is beyond the scope of the reports.

◄$$$ TWO DIRECTIONS ARE AT WORK. THE GLOBAL POLICE STATE AND ITS TOTALITARIAN RULE WILL BE PITTED AGAINST LIBERTY AND THE RULE OF LAW. THE OUTCOME IS UNCLEAR. THE BATTLE IS ON. $$$

Lindsay Williams is a former religious counselor and minister to large oil industry outposts. He warns of a significant event in 2012, a very disruptive year, and a divine manifestation. He warns to expect five key events and trends. Williams does not mention whether or how the clergy will be enlisted. Students of prophesies are explicit in describing the Beast and the Whore, a wicked partnership to rule. My expectation is the harlot will hail from an enclave in Rome.

1)      October 2012 is a key time frame for violent disruption

2)      Iran War will come later on, like in October 2012

3)      Debt is to be vastly increased in order to crush the masses

4)      People and entities with paper fortunes will see them vanish

5)      More destruction in war during 2012 comes than the previous 2000 years.

A sage reliable extremely well connected and informed contact from Central Europe shared some future views. He has been recounting lately some important changes in progress. His comments over the last few weeks are assembled for a fascinating account. He has been the most reliable provider of advanced warning on numerous events, like Lehman and Fannie Mae going bust in 2008, like Dubai debt bust in 2009, like Greek debt going bust in 2010, like the Chinese raiding the COMEX in 2010, like Chinese buying discounted sovereign PIGS bonds in 2011, and the Gold price divergence between paper and physical underway. He has become a trusted source of information in a Future Look. He provided many messages, summarized here as his thoughts. "The bankster criminals believe hiding in the open will save their skin, but they have run out of options. Bankers might soon be arrested and prosecuted, starting in the German speaking countries and Holland. A special task force (300 strong) has been formed. Judges, state attorneys, and SWAT police units will operate without bowing to political pressure. They already grabbed numerous documents from Deutsche Bank CEO Ackerman's office as evidence, above his objections and hasty phone calls. The Europeans are cutting off the daily commercial banking from the investment banking. The commercial banking function will become a public utility, not impacted by the unfolding crisis. Germany will lead the reorganization movement, as all their banks are to be nationalized soon. Once Berlin dismembers Goldman Sachs in Europe, many people will go to prison. The gloves are off. Mountains of debt will go worthless that people never heard of. With the British having castrated themselves and France caught on a leash, the Berlin-Moscow-Beijing alliance can make contingency plans for the day after the Anglo/American collapse. The United States just lost its influence in the EU, since their London partners pulled the plug on themselves. This is more complex and multi-layered than can be explained easily. The Powerz will not get away with what they are doing. The cracks in their own columns, the chinks in their armor are already showing." The year 2012 will prove to be extremely dangerous, disruptive, as money and wealth based in paper disappears either from criminal theft, derivative black holes, or basic value shock.

USTREASURY BOND BUBBLE

◄$$$ ASSET BUBBLES ARE INHERENTLY DESTRUCTIVE OF ENTIRE SYSTEMS. THEIR FUNDING NEEDS GROW EXPONENTIALLY, AND THUS CONSUME CAPITAL. THE ENTIRE USECONOMY HAS MORPHED INTO A PONZI SCHEME. THE DEMAND IS MET BY THE USFED AND DEBT MONETIZATION. BUT THE PUBLIC WILL BE COERCED BY LAW TO JOIN AND OFFER ITS SAVINGS. $$$

As the appetite for the asset bubbles grows exponentially, the ability to feed them with actual money encounters limits. The best and biggest current example is the USTreasury Bond itself. The system must adapt to produce more funds to feed the monster bubble. The hidden mechanisms must be put to work to deceive the public into believing the USTBond is still healthy, viable, and a good risk. See the $7 trillion in Morgan Stanley Interest Rate Swaps early in 2011 that were intended to contradict the Standard & Poor downgrade. The appetite will continue to grow, as USGovt deficits persist without remedy in the $1500 billion range annually. The problem facing the officials among the Syndicate in charge is to create sufficient demand to keep the guinea pig turning the wheel. The USTBond needs new demand to be generated. They must find a way to convert 401k private pension funds to USTBonds, and to convert bank certificates of deposit into USTBonds. The general economic recession has a powerful influence to alter investor motives. Implicitly stock accounts are migrating to USTBonds on their own volition, as the financial markets run out of AAA-rated bonds. The USTBond has rallied because the system is broken, economy languishes, banks mired in insolvency, households underwater, jobs eroding, and national spirit flagging. The 0% rate will continue since the USGovt must finance its gargantuan debts. It is a fixture, as in no Exit Strategy, better described as a monetary prison, a lubricant to ensure a slide to debt default, far worse than a mere straitjacket. The USGovt deficit grows while its revenues decline. The reliance upon the Printing Press grows, as the USFed has become the biggest bidder via debt monetization. They continue their Quantitative Easing with silent mention. What the USFed cannot cover with the debt monetization, the public must compensate with their own savings, taken by force in the form of tax law changes.

◄$$$ FAILURES TO DELIVER ON USTREASURY BONDS REPRESENTS A FORM OF FREE MONEY IN EXTREME VOLUME CASH FLOW TO WALL STREET BANKS. THEY ARE NAKED SHORTING USTBONDS, RAISING CASH, NOT DELIVERING THE BONDS, AND RELYING UPON THE USFED HYPER MONETARY INFLATION TO COVER THEIR TRAILS. THE PROBLEM EXTENDS TO THE EXCHANGE TRADED FUNDS GENERALLY. THE E.T.FUND FRAUD HAS FLOURISHED FOR NUMEROUS ASSET GROUPS, TRICKING LAZY INVESTORS. THEY ARE IMPORTANT DEVICES TO CONTROL MARKETS, AS THEY SHORT THE SHARES WITHIN THE FUNDS AND CONTROL PRICE. $$$

In 2010 the US-based primary dealers reported $128 billion of failures per day on average, almost 50% higher than their combined net capital at risk, according to the consultancy Fred Sommers of Basis Point Group. Imagine a Main Street retail business with $1 million in business equipment encountering $1.5 million in bounced checks. The bond fraud gathered attention in mid-2009, analyzed by the Hat Trick Letter at the time, but press coverage faded afterwards. It is part of the New Normal whereby Wall Street firms produce huge cash flow revenue that has replaced their vanishing Initial Public Offering and Corporate Bond offerings. This grand fraud is a plank of the Fascist Business Model. Imagine Cisco or IBM or Wal-Mart or Target or Home Depot or Staples selling USTreasury Bonds that they do not own, raking in huge cash. They would be prosecuted for multi-$billion fraud and hauled before the courts, then off to jail. But not Wall Street. When these corrupt Syndicate dons have exhausted the naked shorting potential of USTBonds, they will turn to private accounts. My expectation is for a giant US bank to be set up for failure, the insiders having removed their money, the debt insurance contracts put in place, and then the toilet flushed. Candidates are Citigroup or Bank of America. The next stage will feature Martial Law, which requires a grand fear element and chaos factor.

The entire Exchange Traded Fund movement has been a huge success for the fraud kings and market controllers on Wall Street. They appeal to the investor laziness, whereby they can own crude oil in a single click, gold in a single click, and not bother with the leverage risk and nuisance of vault fees. The ETF settlement failures should conjure up deeper suspicions since supply to cover the trade is prevalent and readily available. They are naked shorting the ETFunds. But the deliveries of these securities are especially prone to failure. The Economist journal reports that while ETFunds accounted for 9% of all trading volume in US equity markets last year, they accounted for over 65% of the value of all failures to deliver. Witness the fraud not only to cap the market prices, but fraud in plain view not to deliver the product. In a recent Hat Trick Letter report, the fraud behind the crude oil ETF vehicle was displayed, as it has lost 50% value in the last several years. The Wall Street folks use the ETFunds and their shares to short the commodity and control the price in a vast network of fraud.

◄$$$ AN IDEA. A POTENTIAL EFFECTIVE CLEVER APPROACH MIGHT BE TO BORROW 401K FUNDS, GUT THE TOTAL, AND INVEST IN PHYSICAL GOLD & SILVER BARS WITH CASH. WHEN & IF THE FUNDS MUST BE CONVERTED TO USTBONDS, THEN THEY WILL FORCE THE ISSUE ON AN EMPTY BAG WITH VERY LITTLE TAX CONSEQUENCES, WHILE THE PRECIOUS METAL BARS WILL BE SECURED. $$$

Many people feel trapped by the entire official pension 401k system. To remove funds requires a regular income tax consequence plus a 10% penalty. However, consider an alternative. People can borrow against their own personal retirement fund, no obstructions. Interest costs are low and paid to yourself. Eventually the 401k fund might be forced into USTBonds by law, using the tax deductibility as the leverage angle. The same lever might be applied to bank CDs forced into USTBonds, using the FDIC federal insurance as leverage angle. The black hole of USTBonds will extend to the entire private sector, as the system must create new demand to feed the black hole. By borrowing against your own pension fund, you can direct the investment into precious metals with the cash proceeds. But keep it separate, keep it out of the United States, and keep it out of London or Switzerland for vault services. These three locations are corrupt to the core, and work hard to convert vaulted holdings into paper redemptions, if they cannot steal it. After the MF Global event, such warnings no longer seem wild eyed and ludicrous. If the official 401k funds are ordered into a USGovt debt security conversion, the action will be but flatulence in the federal faces since your fund would be empty. Worth consideration.

The strategy reminds me of a friend whose estranged wife in Atlanta refused to sell their marital home, which he won in the divorce. The home at the time had no mortgage loan. So my friend borrowed 80% to 90% against it and invested it in gold coins several years ago when the Gold price was around $500 to $700 per ounce, as he recently boasted to me. The home lost 10% to 15% value, resulting years later in a sale with zero proceeds. My friend has an ample gold coin collection.

◄$$$ THE FARCE OF DEMOCRACY IS MORE APPARENT EACH ELECTION. THE UNITED STATES HAS SOLD ITS PROCESS. THE LARGE CORPORATIONS HAVE HUGE INFLUENCE OVER POLICY, AS THEY PURCHASE IT. $$$

A mere mortal citizen would think the main job of President Obama was to attend fund raisers, as he has done 73 in all so far this year. That comes to one fundraiser every five days, a total of 6% of the events in which Obama participated. The Washington Post estimates that if you add in the election oriented events apart from fund raising, a ripe 12% of Obama's time is consumed for this purpose. Limits are disappearing, on both time and funds. In 2000, the total federal election season cost $3 billion. In 2008, it totaled over $5 billion, of which half went into the presidential campaign. The Supreme Court has enabled outside money to pour in, thanks to its Citizens United decision. The funding for campaign 2012 is expected to pass $6 billion easily. The Obama campaign raised $760 million in 2008, and is certain to pass the $1 billion mark during the current campaign. Television advertising topped $2.1 billion in 2008, and is expected to exceed $3 billion in the next election. These are staggering sums that attest to the US political helm being for sale. Compare back in 1976. The total TV ad spending of presidential candidates Gerald Ford and Jimmy Carter was $66.9 million. In 1996, the race between Robert Dole and sitting President Bill Clinton saw the two camps spend an estimated $113 million for advertisements, almost all for television. In the 2008 election for all federal offices, $2.7 billion went into television advertising, more than a 20-fold jump. The sale of elected leaders has finances that resemble the USGovt debt, another asset bubble.

Then there are corporate donations to campaigns. An amazing statistic has been compiled, as 30 major US corporations paid more to lobby and influence the USCongress than they paid in income taxes from 2008 to 2010. By employing a vast array of tax dodging techniques, 30 multi-$million American corporations spent approximately $400k per day, including weekends, during the three year period to lobby lawmakers and influence political elections, according to a new report from the non-partisan Public Campaign. The companies in focus managed to gather profits of $164 billion between 2008 and 2010, while receiving combined tax rebates totaling almost $11 billion. Moreover, Public Campaign reports these companies spent $476 million during the same period to lobby the USCongress, as well as another $22 million on federal campaigns. Keep in mind that in too many instances the same corporations cut jobs and jacked up executive compensation. See the Intl Business Times article (CLICK HERE). Regard the corporate influence as another Fascist Business Model element.

◄$$$ UNITED STATES IS HURTLING INTO THE THIRD WORLD,  A DIRECT CONSEQUENCE OF SYSTEMIC FAILURES. THE DESCENT IS NOT STOPPABLE. THE INSOLVENCY COMBINED WITH CORRUPTION AND DEVOTION TO WAR MAKES IT A CERTAINTY. THE DOORWAY IS MARKED BY REJECTION OF THE USDOLLAR. $$$

The pathogenesis of the United States toward the Third World destination is clear. The banner of the Fascist Business Model can be waved above the Military Industrial Complex by those in the Financial Sy ndicate. The merger of big business (given license to defraud) and the state (devoted to war) has since 1992 been managed by Wall Street. The bankers have shown dedication to asset inflation and narcotics money laundering in $trillion volume. The war costs account for half of the USGovt cumulative debt. The moral decay is painfully evident.

Ron Hera delivered a powerful indictment of the United States having gathered momentum on a path to the Third World. It is not reversible. Hera listed many current maladies which include the fascist plank noted by the large corporation in union with state. He outlined the accelerated concentration of wealth, the exploding uncontrollable USGovt deficit, the dominant corporate influence from both running the USDept Treasury and enlisting lobby groups, the broad wet blanket effect of a stream of harmful legislation (most recently the Financial Regulation Bill that gave Wall Street even more power), and the destructive tax policies. His essay is actually far too optimistic in my view, since 21 more years will not be required to arrive in the Third World. The mere rejection of the USDollar in global trade settlement and in banking reserves will force the nation into the brackish backwaters known to the poorest nations in a matter of three to five years. The rampant inflation will deliver the nation to the lowest tier with lightning speed. The isolation will hasten the flight. See the Financial Sense article by Ron Hera (CLICK HERE). Below is his conclusion.

"Via Dolorosa: The United States increasingly resembles a Third World country in terms of unemployment, lack of economic opportunity, falling wages, growing poverty, concentration of wealth, government debt, corporate influence over government, and weakening rule of law. Federal Reserve monetary policies and federal government economic, regulatory and tax policies seem to favor the largest banks and corporations over the interests of small businesses or of the general population. The potential elimination of the middle class could reshape the socio-economic strata of American society in the image of a Third World country. It seems only a matter of time before the devolution of the United States becomes more visible. As the US economy continues to decline, public health, nutrition, and education, as well as the country's infrastructure, will visibly deteriorate. There is little evidence of political will or leadership for fundamental reforms. All other things being equal, the US will become a post industrial neo-third-world country by 2032." The spanish translation of Via Dolorosa is painful road.

DESTRUCTIVE DERIVATIVE FORCES

◄$$$ THE DERIVATIVE CONTRACT GROWTH SPURT IN THE LAST SIX MONTHS HAS HELPED TO PREVENT RISING BOND YIELDS IN THE UNITED STATES, AND HAS PREVENTED A COLLAPSE OF THE WESTERN BANKING SYSTEM. THEY ONLY BOUGHT A LITTLE TIME. THE AMPLE CREDIT FLOW HAS A NEW CHANNEL IN THE LAST 10 TO 15 YEARS, THE DERIVATIVES. THEY ARE HIDDEN AND THEY ARE DEADLY. THEY DETERMINE SOME BANKING POLICY AND DECISIONS TO OBSTRUCT DEFAULT DECLARATIONS. A DEFAULT WOULD OBLITERATE THE ENTIRE SYSTEM. $$$

The explosion of credit and the flood of government deficits in the 1980 and 1990 decades has been followed by the hidden avalanche of derivatives in the 2000 decade. It continues in the current new decade. The Bank for Intl Settlements reported some data that eluded the major news media networks. That makes a great paradox because it is the biggest ever reported in the financial world. A whopping $707,568,901,000,000 is the latest total amount of all notional Over The Counter outstanding derivatives reported by the world's financial institutions. That means almost $708 trillion in unregulated contracts floating around in a sea of toxicity and corruption. Compare to global GDP which is $63 trillion, if anyone can trust modern government data. Witness a synthetic credit bubble hidden from view. Even more disturbing is that in the first six months of 2011, the total outstanding notional of all derivatives rose by $107 trillion in notional value. That occurred in a mere half a year, to reach the $708 trillion mark at June 30, 2011. It is the biggest increase in history. Observe the chart showing total outstanding notional derivatives by six month period. The BIS, the bank regulators, and the Office for the Comptroller of the Currency urgently hope that the general public does not notice. The financial mavens help by brushing it under the carpet. See the Zero Hedge article (CLICK HERE). Keep in mind that monetary and banking system policy is shaped by derivatives. Rates are kept low. Bond defaults are ordered not to be declared. Swap lines are created, and much more.

The Bank for Intl Settlements has been the publicity agent for lethal derivatives. The derivatives dealers have transferred enormous credit risk to opaque and unregulated corners of the financial system. Although the BIS has minimized the risk and volume of contracts, they note how participants in the credit derivatives market had used multi-name products, based on either a basket of credits or an index, to transfer significant amounts of credit risks away from their own balance sheets. Their report described a shift of risk to the shadow banking system. In other words, the big banks have highly deceptive books to conceal their insolvency, gaping holes, toxic paper, and ruin. The BIS data provides detail on Credit Default Swap contracts linked to sovereign and financial debt. They account for less than half of all the activity reported, the data covered until June 2011. Many analysts call the derivatives ready to set off a financial nuclear explosion event.

◄$$$ GREEK CREDIT SWAP CONTRACTS WERE DISHONORED. THE DERIVATIVES BUSINESS IS NOT ONLY UNREGULATED, IT IS A VAST CONGAME SINCE NEVER ARE PAYOUTS GIVEN. IT IS A ONE-WAY WINDOW. IF DEFAULTS ARE PERMITTED, BOTH ISSUER AND COUNTER-PARTY WOULD FAIL AND GO BUST, TIED TOGETHER AROUND THE NECK AND FEET. SO BOND DEFAULTS ARE FORBIDDEN IN THE CORRUPTED SYSTEM. $$$

Imagine car insurance or home fire insurance that brings in revenue for the big corporation but never are payouts awarded for damage. That is the derivative market, or at least one portion. We saw the story in full glory when the big European and London banks were forced to take writedowns on Greek Govt Bonds, but the event was declared by fiat force not to be a default. It was an obvious default, in clear terms of the bond contracts written. The debt rating agencies lodged their objections in public. But the domino effect of bank failures resulting from the payouts to those holding Credit Default Swaps would have taken down numerous big Euro banks, and led to a powerful deadly contagion. Worse, the event would have exposed the big banks as both insolvent and dead, hardly the purported construct of each propping the other up. The financial balance sheets use a dubious practice of netting out and canceling each other out, calling them a non-event, a net zero effect. The reality is that both big banks would enter a grand failure. So the system forbids defaults formally, while it permits income to flow from the CDSwap sales. They will never pay out awards.

◄$$$ THE IMPACT OF THE USGOVT DEBT DOWNGRADE WAS OVERWHELMED BY EXTREME USAGE OF INTEREST RATE SWAPS, IN ORDER TO BRING ABOUT A LOWER BOND YIELD. THE SIGNAL OF 'ALL IS WELL' WAS PAINTED. THE NEWS MEDIA PREFERS TO DECLARE THE EMERGENCY AVERTED OR CONTRADICTED. IN FACT, THE DERIVATIVES ABUSE DID THE PAINT JOB. $$$

This story has been detailed in Hat Trick Letter reports, even public articles. The Morgan Stanley $8 trillion addition to Interest Rate Swaps in 1Q2011 was the primary factor behind the long-term USTreasury Bond yields decline. The Standard & Poors downgrade of USGovt debt had to be dealt with in a counter-measure. It was. The story had to be reported by the financial press. It was, but with deep deception. The bond market did not contradict the risk assessment given by the S&P rating agency. The corrupt derivative market overwhelmed it, using extreme leverage, while the corrupt dutiful US press added words to the swamp. The system is desperate to continue painting a false billboard with portraits. The public is not warned. In the Third World, tyrants paint huge 8-story placards of their faces, a sign of despotism where men are bigger than law. In the West, financial tyrants paint huge deceptive billboards with low interest rates and healthy banks splashed on them. It could be said the syndicate is bigger than law.

◄$$$ THE MF-GLOBAL CASE DEMONSTRATES THAT DERIVATIVES TAKE PRIORITY OVER OTHER ASSETS, THUS SUBORDINATING ALL OTHER ASSETS. THE DERIVATIVES PERMIT THE PRIVATE ACCOUNTS TO VANISH. THE 2005 REVISED BANKRUPTCY LAW ENABLED DERIVATIVES TO GO TO THE TOP OF THE LIST, THUS WIPING OUT ALL JUNIOR ASSET POSITIONS. THE MORGAN STANLEY EVENT RECENTLY DEMONSTRATED THE SUBORDINATION RISK, BUT THE STORY WAS NOT DIGESTED PROPERLY, LIKE IT CAN BE NOW. $$$

The nasty vicious dirty structural detail has come to light. To see it, one must be diligent and alert when observing the events behind the MF Global bust and the ensuing battles. The highest subordinated position for derivatives has been made clear in a financial corporation structure, manifested during the MFG events unfolding under the JPMorgan pressure tactics. The pecking order had been established in the 2005 bankruptcy law during the Bush Admin. Most people paid attention to the individual bankruptcy changes, whereby a debt wipeout against assets was eliminated essentially, replaced by a more strict rule to abide by for debt restructure, with tax obligations carried over. Chapter 13 replaced Chapter 7. The more important item was the ruling for subordinated assets in bankruptcy for financial firms. The ultimate motive could be to destroy all private accounts, as the derivative mountain results in an avalanche of debt destruction that ruins private assets. The destructive levers are installed in the actual financial engineering machinery. Derivatives are set up to be a toilet plunger device that can ruin all brokerage accounts, all pension funds, and maybe all certificates of deposit.


At issue is the safety of brokerage accounts for regular folks, like stock investors, like mutual fund investors, like 401k/IRA investors, the individuals who increasingly are treated like banker vassals. The vanishing act that befell 140 thousand MF Global account holders can happen to the rest of the people, not just farmers, energy firms, and exporters. CEO Jon Corzine was doubling down on bad European sovereign bond bets, using essentially futures contract account holders (other people) as collateral. If not used directly as collateral, then the accounts vanished when the bond bets went bad and the MFG firm went bust. Open the eyes to Clawback Risk more generally, as the ruined firm can snatch & grab all funds beneath it in the pecking order. The unaware public must be careful, or they could lose everything in bank and investment accounts, down to the last penny, even funds recently removed. Having FDIC insurance will mean nothing. The bankruptcy reform law in 2005 placed derivative claims in front of depositors in a business failure, which includes a bank failure. The colossus

JPMorgan is claiming in the MF Global case is that the derivative trade is entitled to preference over those who had cash in accounts, maintained either as a margin deposit or free cash. The actual derivative contract is the Repo to Maturity trade on the European sovereign bonds. They are the higher order derivative contract in effect. If a major bank conglomerate goes bust and enters failure, the same claim supported by the same Bankruptcy Law can be invoked to confiscate the entirety of private bank accounts, even brokerage accounts, perhaps pension fund accounts, maybe even bank certificates of deposit. Here is a worse nightmare fact. If the individual suspects a ruin in progress, detects the impending blowup shortly before it happens, the risk still applies. All funds that were removed under 90 days before the failure event are subject to confiscation and loss, as in total loss. It is called the exposed risk through clawback! But the authorities must find the money or firm or person.

MY VIEW IS THAT THE HIGHEST SUBORDINATE POSITION OF DERIVATIVES IS A DEVICE DESIGNED TO WIPE OUT THE MAJORITY OF US PRIVATE WEALTH. It is intended to create a debt slave state. One might argue that major financial firms are attempting to cover their losses, to protect themselves, and to walk away with minimal damage. The Jackass disagrees. These are post mortem events, where the giant financial firm is dead, being carved up, and analyzed in an autopsy. No survivors emerge. A black hole has been constructed with added reinforced power. The subordination rule seems clearly a device to ensure that if the corrupt firms go bust, so will the individuals. It is the Mutually Assured Destruction principle at work. This fallout goes beyond the insurance coverage of the Federal Deposit Insurance Corp. The subordination rule permits the big busted bank to wipe out the individual funds, legally, without remedy. A cascade failure of several large banks would easily result in loss claims that would reach into the $trillions with millions of vanished private accounts of all types.

The Bank of America event several months ago shed light on the practice. BOA brought over $53 trillion in derivative contracts to their balance sheet, inherited from Merrill Lynch in the takeover. That was an marriage merger arranged by the FDIC, acting as Wall Street harlot. They wished to remove bank failures and mass liquidation, to keep America strong to be sure. At risk was and still is the $1.03 trillion in client accounts under ML brokerage. If BOA goes bust, all ML private stock accounts will surely vanish. The unaware and overly trusting individuals again are fodder before the Wall Street cannons. Account holders should worry.

The Market Ticker summarized. They wrote, "A fairly cogent argument can be made that what BOA did was tantamount to intentionally placing an armed financial nuclear device in the center of the board room table and then daring anyone, including the government, to come tamper with it and risk setting it off, knowing full well that if it explodes it is utterly impossible to contain the damage to our economy and financial system. Just in case you missed it, this risk is not limited to Bank of America. Go look at any of the large banks and their derivative book of business notional value and then tell me that it makes a bit of difference which institution we are talking about at any instant in time. If this risk has not sunk into your brain by now despite my incessant table pounding, you need to go for a psychiatric examination stat. This is not to say that you are about to have the entirety of your savings accounts, CDs, and similar funds disappear, because nobody knows exactly how much risk lies where with what in the US banking system (say much less the European one) and thus the odds of such an event cannot be qualified in any meaningful way. But as we have seen since 2007, executives will lie with impunity about their exposure and level of risk in this regard and despite the Sarbanes Oxley Law, which allegedly makes such lies (when reduced to writing in a quarterly or annual report) a crime nobody has been prosecuted for doing so. It is quite clear to me that the USDept Justice is intentionally running the clock on the statute of limitations so those who did and do so get away with it. The bottom line is this: The risk is very real as customers of MF Global have now discovered the hard way. If you are sticking your head in the sand at this point, you have no right of complaint when and if it happens to you." See the utterly frightening alarming Market Ticket article (CLICK HERE) and the Zero Hedge article (CLICK HERE).

MF-GLOBAL MARKET IMPACT

◄$$$ SUPPLY CHAIN INTERRUPTIONS SHOULD BE EXPECTED. AS PRODUCERS DEAL WITH THEIR BUSINESSES WITHOUT THE RELIABLE FORM OF RISK HEDGES, THE SUPPLY CHAIN WILL BE REDUCED IN VOLUME. MANY HAVE ALREADY LOST THEIR SEED (LITERALLY) MONEY AND SEED (FIGURATIVE) CAPITAL. AT GREAT RISK IS THE SUPPLY CHAIN IN THE NEAR FUTURE. EXPECT SHORTAGES AND HIGHER FOOD PRICES. $$$

MF Global has revealed many things, among them is how the inventories dwindle and the shelves might go empty. Producers and suppliers cannot properly manage risk. They are either pulling their funds out of risk-filled accounts, or struggling to recover funds from stolen accounts. As farmers, energy suppliers, and exporters find it increasingly difficult to build in a reliable form of risk hedge strategy, the supply chain will be reduced in volume from their withdrawal. What strain has been suffered on the banking side from insolvency, seen in shortages at ATM machines, has transferred to the tangible economy. Take one Minnesota farmer named Dean Tofteland, who for the first time in 25 years has missed his deadline to buy seed for the spring corn and soybean crops. The land in the North Central states enjoys sunlight until almost 10pm in June. His MF Global account of $200,000 is missing. He cannot buy seed at discount. He and other farmers find themselves in a cash crunch that will ripple far beyond the futures market, all the way to supermarkets. At least one third of farmer accounts is missing. They have postponed purchases of seed, land, equipment, and more. Actual decisions are affected on the farm, where US crop outlook has a big black cloud extended from Wall Street, the crime syndicate location. Look for lower supply of food products. Look for more shortages and higher prices. The supply chain is at risk. See the Reuters article (CLICK HERE).

◄$$$ THE MISSING MF GLOBAL MONEY WENT INTO JPMORGAN ACCOUNTS IN LONDON. THE USCONGRESS SHOW IS A PURE CHARADE. LIKE WITH THE MADOFF MONEY, THEY KNOW WHERE IT IS. THE APPEARANCE OF AN INVESTIGATION IS THE MASKED FACADE PRESENTED AS JUSTICE. THE UNITED STATES SIDE PREFERS TO KEEP THE FACTS IN THE DARK, TO SEARCH ENDLESSLY FOR MISSING FUNDS WHEN THEIR LOCATION IS KNOWN. THE TRUSTEE JUDGE IS SHOWING HIMSELF LOYAL TO THE SYNDICATE IN THE GRAND COVERUP. $$$

The MF Global executives working in London received lavish bonuses on the day before the bankruptcy filing took place on October 31st. The same offices received $500 million of the (never) missing funds raked from the segregated MF Global client accounts. The JPM hands are dirty. The story has brought new meaning to investing other people's money, since JPMorgan used client money to put a patch over a black hole created by both precious metals and the European sovereign debt. They used client assets as collateral. They cited the latter, since overseas, ignoring the former, since glaring publicity is not desired. KPMG was hired to recover funds for MFG clients in London. Richard Heis, a partner at KPMG Ltd in London, is involved in the recovery supervision. KPMG has recovered $500 million of MF Global funds, a story refused for release in the United States, the controlled news environment. The trustee has admitted that over $1.2 billion might be missing. The court appointed trustee James Giddens serves as the US trustee, which means he will lead the cover-up and whitewash. One of their first acts and deeds was to confiscate the account receipts so that clients could not prove their account value before they were rifled. A firewall of information has been created between New York and London. My figure for total loss (theft) remains much higher, since not included in the tally are scattered missing accounts that were cleared by MFG, caught closeby and dragged into the black hole descent into the vortex. A large body of other accounts caught near the hole are also missing. See the Cafe Americain article (CLICK HERE).

The MF Administrator claims to know the location of all the missing money. The story has not been publicly aired on the US side of the Atlantic, for obvious reasons. The press is controlled by the same criminal syndicate. The British administrator of MF Global Holdings Ltd has made it known that of the British unit's segregated client funds have been found. The KPMG executive Heis is still recovering customer assets. Heis is on record reciting the allegation in the "United States is that nobody knows where the money is. We know exactly where the money is." It is hiding in London. KPMG serves to supervise the special administration of the MFG London unit, officially to unwind failed financial firms. KPMG has been overwhelmed by the urgent need to unwind a huge pile, millions of positions. See the Bloomberg article (CLICK HERE).

BobO is an astute Hat Trick Letter subscriber. He summarized the ugly situation well, when he said, "OK, let me see if I follow this. MF Global included the standard Dewey, Cheatum & Howe law firm fine print and legally transferred their client collateral to their UK subsidiary, so as to circumvent stricter US requirements. It was then legally pledged by MFG as collateral under more lax UK regulations for better rates on its own loans. The MFG creditors then allegedly legally seized it when MFG defaulted. Thus $1.2 billion is legally gone. In its place, a Congressional sub-Committee investigation." That sounds about right.

The ugliness of the story is beyond description. Several facets have emerged. Even the MF Global cash left on the morning after was scraped up by JPMorgan, claimed as its own so that the giant corrupt bank could pay the bankruptcy trustees and gain influence, like having JPM sit on the committee for disposition of the credit claims. They want to be first in line, the thief to decide on channeled funds. A ripe $25 million will go the trustees, whose early decision was to keep it from the customers whose accounts were looted. JPM was actually given a lien on all the company's assets, from which they stole. No money is missing. The trail is all clearly marked electronically. The Financial Regulatory Bill shined floodlights on the trails. Like with Madoff Funds, their locations are known but the USCongress charade is conducted to create an illusion of justice. The trustee's primary job will be to cover up the theft for JPMorgan. Nobody will go to jail, certainly not former Senator and Governor Jon Corzine. He might have a fatal accident, served up as a hit & run victim in order to create an even bigger black hole for evidence to vanish. Dead men cannot defend themselves and their burial sites usually contain a grand pile of papers that disintegrate, all figuratively speaking.

This is not a routine bankruptcy. This is a crime scene without the yellow tape. JPMorgan averted a COMEX default with a deft move of pure theft. The fate of cases like Highridge Futures Fund will be decided in the courts. They had an account with $50 million missing, even to appear on transfer lists. JPMorgan managed to snare some Italian Govt Bonds from the MFG dung heap at a ridiculously low discount price, after the bust. The move aroused the curious eye of the compromised Giddens, who as estate liquidator announced as MFG lender, JPM will be investigated by prosecutors but not prevented from continuing their criminal fraud. Whatever they find as evidence will be destroyed. US Bankruptcy Judge Martin Glenn in Manhattan overruled objections and supported MFG & JPM, demanding the victims prove their case, that recovered money (crumbs on the floor) could be part of the $1.2 billion missing from their segregated accounts. See the Bloomberg articles (CLICK HERE and HERE). Also, see the video that alleges JPMorgan averted a COMEX gold default (CLICK HERE).

◄$$$ THE CHICAGO MERCANTILE EXCHANGE SEPARATED ITSELF FROM MF-GLOBAL. EITHER THEY ARE TOSSING CORZINE UNDER THE BUS OR DEFYING THE LEGAL FORCES TO CATCH THEM, AS ATTENTION IS DRAWN TO MF-GLOBAL. IT IS A GIGANTIC CRIME SCENE, ONE TO BE REPEATED. MY BELIEF IS THAT CORZINE WILL BE SACRIFICED IN SOME MANNER FOR THE SAKE OF THE CARTEL. ALL WALLS ARE CLOSING IN ON CORZINE, THE NEW FALL GUY. $$$

The Syndicate occasionally needs to kill off one of its own to continue. Lehman Brothers was such a kill job. Their dead parts, along with the confusion, enabled several tasks to be done, thus perpetuating the criminal system. My belief is that they are protecting the cartel at the expense of what they paint as a lone operator in Corzine at MF Global, in a concerted strategy. If Corzine falls from grace and in prosecuted for felonies, then attention will turn away from the other criminals, like JPMorgan. Clearly the ex-GSax CEO was the patsy, to take the counter-party disastrous side of European sovereign debt for JPMorgan, which underwrote the derivative insurance. Also, another possibility, Max Keiser reports murder threats by Jamie Dimon of JPMorgan to Corzine personally if he did not follow explicit instructions on stealing client funds. It is more than just a matter of the money, but rather the removal of obstacles in the private camps that demanded Gold & Silver delivery. The client funds were the key to gigantic leverage within the criminal fraud. Not surprisingly, after the theft by MFG & JPM, the precious metals prices fell hard. Resistance was vacated from the premises. The only remaining problem for the JPM crime bosses is that the next victim will be the COMEX itself. It will resemble an abandoned warehouse that is better described as a whorehouse.

At the MF Global Senate hearings, in his oral testimony CME Executive Chairman Terry Duffy indicated clearly that one of the CME staff was told during their audit of MFG that the Jon Corzine was aware of large loans and disputed transfers made. The Duffy testimony directly contradicts Corzine during his earlier testimony, when he claimed to know nothing. The CME appears to have broken ranks with the banksters or cut off the patsy. Look for Corzine to be thrown to the wolves, tossed under the bus, sacrificed on the satanic altar. Pick your phrase, as all apply. An MF Global employee had advised the CME that Corzine had been aware of a $175 million loan made to Euro affiliates only days prior to the bankruptcy. The loan was from commingled customer accounts. The testimony calls Corzine a liar under oath before the USCongress. Technically, the transfers of customer funds for the benefit of the firm constitute serious violations the Commodity Exchange Act, which protects segregated accounts. The various testimony points to MF Global knowing about ransacking of client accounts and urging CME not to pursue the search for it. By the way, Duffy and the CME have made it very clear that CME will in no way cover losses (theft or vanish) suffered by MF Global clients. See the Zero Hedge article (CLICK HERE).

◄$$$ JPMORGAN INCREASED THEIR REGISTERED SILVER INVENTORY BY THE SAME AMOUNT THAT NOTICES FOR DELIVERY WOULD HAVE BEEN FORCED TO HAND OVER ON THE RAMPS. THOSE EXPECTING DELIVERY HAD THEIR POCKETS PICKED AT THE WINDOW. THE DATA IS IN FULL VIEW, NO SUCH THING AS COINCIDENCE IN WALL STREET CRIMINAL EVENTS. $$$

On its face, evidence mounts that JPMorgan simply converted 614k ounces of MF Global client silver into JPM licensed vaults. The corrupt kings tried to sneak a massive 613,738 ounce silver adjustment onto their books on November 25th, a thin pre-holiday day. It was deposited into The Morgue's eligible vaults on Friday November 18th. The giant criminal syndicate bank adjusted this amount of silver from Eligible vaults into Registered vaults on a single day! Joining them was Scotia, which followed up its 1.2 million silver ounce addition in the previous week with a hefty increase alongside JPM, theirs being a massive deposit of 2,395,835 ounces. Rather coincidental that Brinks had a nearly identical withdrawal the day before of 2,346,587 ounces. The huge question focuses on where this silver came from. This is hardly a simple client deposit at JPM vaults, since it was adjusted into Registered inventory. One should note that 1,420,916 of Registered silver was at that time currently unavailable, nowhere to be found in the aftermath of the MF Global collapse and scandal. The breakdown of storage data in the wake of the MF Global client silver theft reveals that Registered silver is missing from every single vault except JPMorgan's!!

Review the timeline. MF Global declared bankruptcy on October 31st. About a week later the CME began reporting that 1.4 million ounces of registered silver was unaccounted for and unavailable for delivery, including 627,182 ounces from non-cartel banks. About 7 to 10 days afterwards, JPMorgan suddenly reported a deposit of 613,738 ounces into eligible vaults. Exactly seven days later, JPMorgan adjusted this silver into Registered vaults. JPMorgan has not had a significant silver deposit in months prior to this bountiful day. Great work on the part of the Silver Doctors in the forensic analysis. Too bad they are not interviewed on CNN, CNBC, Bloomberg, FoxNews, or USCongress, nor mentioned in Wall Street Journal, Barrons, New York Times, London Times, Financial Times.

◄$$$ CORZINE HIMSELF IS THE MF-GLOBAL FIREWALL. THE SECONDARY FIREWALL IS HIS COZY FRIEND GENSLER FROM THE C.F.T.C. WHO RECUSED HIMSELF FROM THE CASE. CORZINE HAS HAD NO ACCESS TO DATA FOR DEFENSE, SINCE IT IS BEING DESTROYED AND CAPTURED, LIKE FUTURES ACCOUNT RECEIPTS. GENSLER CAN CLAIM NO ACCESS TO DATA ALSO, SINCE HE RECUSED HIMSELF. $$$

One friend of a colleague had his six-figure account stolen, since kept too close to the MF Global fire. He reported that the bankruptcy trustee did something very unusual. The trustee seized all account receipts, thus making it impossible for aggrieved client victims to prove the amount of their loss in the grand larceny. That is not the normal procedure and should serve to convince any reasonable observer that the coverup is well along. The JPMorgan accomplice thief absconded to London with the theft, home of John Pierpont Morgan and the site of their loyalty in service to the Queen. If this story and associated interview does not stir you the reader, then you have neither a pulse nor a conscience. Personally, the Jackass has seen the Corzine testimonies, and reaction was visceral, like it is with all Goldman Sachs scum. My attention was lost when immediately the placard was visible HONORABLE JON CORZINE before the Congressional Hearing. Somehow contempt was more apt than respect. The placard was a statement that the committee members planned to treat Corzine with kid gloves. The questions tossed at Corzine at the hearing were soft lobs. They accepted his thin excuses and shallow recollections. The respect given was out of line. One must have thought that Corzine was the wronged party! A couple of Congressmen even asked for his advice for a solution so it would never happen again.

We have seen this Madoff movie before. The money is not missing. It is tucked away safely in syndicate closets. The most pathetic display in my view was when Corzine claimed that his back office assured him that sending clients funds to the JPMorgan office in London office was alright. How absurd! The back office contains his subordinates, and they are not lawyers. He kept repeating he did not order this or that, did not instruct anyone to do this or that, when he left open how he probably did it himself. Corzine has friends in high places and will never see jail time, a Goldman Sachs directive decree. If the heat becomes too intense, my guess is Corzine might suffer an unfortunate accident or suffer a heart attack. If Poor Jon saw the Duffy testimony by CME before the USCongress, he must have very worried about his future and safety. The ensuing black hole would be very useful, kind of like Vincent Foster in the early Clinton Admin. He refused to go on orders to Switzerland to make a $250 million homage fee to the masters, as part of a gigantic fraudulent role program begun by Rubin that continues today, and also involves the Bank of England. The following photo speaks volumes.

◄$$$ LEGITIMATE HONEST FUTURES TRADERS WILL DEPART FROM A CORRUPT SYSTEM THAT CONFISCATES (STEALS, AGGREGATES) CLIENT FUNDS. MORE WILL FOLLOW THE BARNHARDT LEAD. THE INTEGRITY OF THE ENTIRE US-FINANCIAL SYSTEM IS FINALLY SEEN AS CORRUPT. ALREADY DEALERS SHY AWAY FROM PILING ON MORE RISK, REFUSING DERIVATIVE TRADES. $$$

Colleagues and followers of the Jackass knew the system has been corrupt for years. Finally the corruption is in full view, naked and bold, even desperate. The thieving JPMorgan has hidden behind their London skirts for protection, cowards to the end. The relatively young futures brokerage house called BCM Capital shut down for fear of having its clients accounts pillaged by Wall Street. The criminals in charge know no limits to their thefts. In an open letter, Ann Barnhardt made an impassioned speech, perhaps the most damning indictment the Jackass has ever read or heard in a lifetime. This is a bonafide clarion call to beware of profession syndicate thieves. See the Zero Hedge article (CLICK HERE) and the Financial Sense interview (CLICK HERE) where she urged investors to flee paper assets. Ann Barnhardt made several key points in her note and delivered interview. The following are her main points.

  • The base of a leveraged account must be kept segregated and remain sacrosanct. Client funds are no longer safe, as the backstop has been shown as flawed in the current US system. A firm failure should see the company reduced to ashes, but the client funds left intact. That is no longer the case in the United States.
  • Jon Corzine of MF Global stole client funds at his firm. But he is a Wall Street friend and crony. The regulators compounded the problem by freezing accounts and refusing their liquidation, to put into safer pastures. (My view is the regulators enabled the last penny to be stolen.) No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate client positions.
  • The MF Global asset positions are not unique regarding exposure to European sovereign junk debt. The exposure is industry wide and continues to place client accounts at risk. The MFG leverage was estimated at 100:1 ratio, much greater than other firms. The CME did not backstop the MFG implosion because they knew a backstop would have been required across all of Wall Street. The problem is a systemic problem, not merely isolated to one firm.
  • Perhaps the most ominous dynamic is the risk of potential clawback actions. Such an onerous process permits a bankruptcy trustee to legally seize assets that departed a bankrupt entity in the time period immediately preceding its collapse. Funds withdrawn from MFG client accounts less than 90 days from the collapse could be seized by the trustee, like a black hole aftermath in suction. Regardless of client detection of fraud or insolvency or recklessness, the client funds might be vulnerable. This is a possibility.
  • The futures and options markets are no longer viable. Investors should withdraw from all markets, to protect their equity. The system no longer functions with integrity, overloaded with risk. The rule of law is non-existent. It is replaced with criminals aided by political cronyism. Barnhardt will return to the brokerage business only when the USGovt has been replaced and reformed.

The distrust is spreading, as the Barnhardt shutdown is not isolated. Once more a major Goldman Sachs related gigantic fraud has contributed to a market ruin. Counter-party fears see dealers refuse trades, while banks refuse to assist in buying sovereign debt at all, not submitting to official European pressure. Stronger creditworthy banks are increasingly turning down client requests to take on trades from weaker institutions, as dealers themselves focus on handling their own exposure to vulnerable banks. The most sturdy derivatives dealers have received a stream of client demands to initiate derivatives trades from riskier bank counter-parties since early September, when bond and Credit Default Swap spreads began to widen sharply. They were refused, despite many being submitted with collateral. The stronger locations cite regulatory limits being hit. Dealers who refuse wish to keep credit lines open in the event of further financial crisis, which appears very likely. An anonymous fixed income firm executive said, "We are left with no choice but to stop accepting these novations, because there is a limit to how much exposure you can take from a regulatory perspective, and also because we want to keep bilateral credit lines free in case [the EuroZone crisis intensifies]." Trade novation involves a dealer acting as intermediary between another bank and its client, initiating a derivative contract position. While not altering the risk profile on the trade for either counter-party, the dealer would accept additional counter-party risk to both the client and the original bank. See the Intl Finance Review article (CLICK HERE).

IMPLICATIONS TO PRIVATE ACCOUNTS

◄$$$ CLIENT ALLOCATED ACCOUNTS ARE NOT SAFE. THE DISPOSITION OF THE MF-GLOBAL ASSETS WILL POSSIBLY REACH INTO CLIENT GOLD BULLION STORAGE, CAUSING A FIRESTORM OF PROTEST. THE CLASS ACTION LAWSUIT AGAINST MF-GLOBAL (AND IMPLICITLY JPMORGAN) BY THE COMMODITY CUSTOMER COALITION UNDER THE DIRECTION OF KOUTOULAS WILL REVEAL SOME EXTREMELY SCUMMY DEVELOPMENTS. THE UNITED STATES IS BEING EXPOSED FOR ITS INDESCRIBABLY DEEP CORRUPTION. $$$

The bankruptcy trustee for MF Global is attempting to seize and liquidate even the stored client Gold & Silver bullion sitting in supposedly protected Allocated accounts. Warehouses and bullion dealers are being exposed as not safe to store private gold and silver, even with clear warehouse receipts. The futures market run by CME and the regulated system overseen by CFTC and CME are defaulting on obligations. The trampling of property rights is going much farther than with big failures like Lehman and Bear Sterns, where the customer accounts were kept intact and transferred to safety before the liquidation process. Being in possession of Gold & Silver within a fractional reserve scheme is subject to much more counter-party risk than admitted or imagined. Witness the Fascist Business Model in full glory at climax of systemic failure. The lesson learned is that counter-party risk exists and persist if the bullion metal is linked in the chain to another party or under their roofs, even if a market entity, large financial firm, or a primary dealer, even the US Federal Reserve. What is happening in the MFG case is a Bankruptcy Trustee has attempted to pool private bullion holdings with the rest of the paper assets, then forcing liquidation at prices that are being front run by the Street for even more syndicate profit after thefts.

Clients are soon to be forced to accept whatever paper settlement given, or work for several months to retrieve their assets. So far their assets have been frozen for almost a month, funds unavailable, while the markets fall. The forced action seems consistent with extensive rehypothecation of client assets, meaning the failed MF Global abused those assets by posting them as collateral in a failed investment speculative scheme. Jesse calls it a  pseudo-legal fig leaf, a convenient rationalization. The customer assets were stolen. They were used by MF Global to satisfy a urgent margin call right before their bankruptcy, even as MF Global was paying bonuses to its London employees. The weak-kneed trustee is too timid to attempt a clawback into JPMorgan accounts. Incredibly, the regulators and the exchange officials are in shock and disbelief on how far the exposed game has gone out of control, as they try feverishly to resolve and control the situation. They must preserve investor confidence. At risk is a run on the system, and full exposure of the US financial markets as grotesquely corrupt. See the Cafe Americain article (CLICK HERE). Assuming extremely deep corruption has been a mainstay in Jackass forecast success.

The class action lawsuit lodged by the Commodity Customer Coalition is making headlines, led by James Koutoulas, the acting attorney for the group and CEO of Typhon Capital Mgmt. It has revealed some sordid details on the large US financial firms and their emergency practices, basic theft, confiscation, forced liquidation, and trampling of property rights. The coalition represents 8000 investors with exposure to MF Global, many of them hedge funds. Koutoulas calls his action a declaration of war. He is very bold, whose interview on Bloomberg was seen. The trustee Giddens (a certain tool for the major banks) has proposed dumping all remaining customer assets into a single pool that would pay customers only 72% of the value of their holdings. The pile includes gold, silver, cash, options, futures contracts, and commodities. He wishes to act expeditiously, which means in a manner favoring the thieves and criminals. A full liquidation is easiest, and would not expose the illicit usage of client assets as collateral. It would not expose perhaps the lease of Allocated gold, its subsequent sale, and impossibility to return it under contract. Investors are raging mad, angry, fuming, vehement in protest. They oppose the radical solution in the redistribution of property. Clients with warehouse receipts for Gold & Silver bars have claims on assets that still exist and can be readily identified, or so they think.

A quick comment, an I TOLD YOU SO by a strong reliable veteran gold trader who has been a valuable source of information to the Hat Trick Letter for 3-1/2 years. He said late last week, "Not only have I been telling friends and clients what risk they take to leave their physical with the big Boyz and or whatever institution. If your metal is not in a vault where you have instant access and lift authority, and know that the physical is held in that vault in a segregated fashion, then you are royally screwed. A beneficial owner must have unrestricted access and disposal authority over his metal at all times, and exclusively that owner. The MF Global fraud will trigger other Allocated certificate holders to demand for their physical to be delivered. Much of their precious metal bars is long gone, leased and sold illegally. The surprise will be huge once they find out that these banksters are between 40 and 60 thousand metric tons in deficit. They have illegally been leasing gold & silver, replacing them with certificates, lying to clients, assuring them of their safety, over many years. That is a massive fraud soon possibly to come to light. Watch the Swiss lawsuits, if any information can be found." The Jackass has been repeating this man's warnings. More fallout is coming, certain to pressure the existing vaulted inventory and lead to greater scrutiny, like demanded audits. Those who removed their gold from Swiss accounts last year at Jackass urging have avoided the hundreds of lawsuits pending. They total multiple $billions in claims right here right now, the same gold trader mentioned. The syndicate has obstructed the story from hitting the news.

◄$$$ JPMORGAN APPEARS TO HAVE ILLEGALLY USED THIRD-PARTY ACCOUNTS AS COLLATERAL ON A GRAND BASIS. THE TOTAL HYPOTHECATION RISK FROM SNATCH & GRABS BY JPMORGAN COULD TOTAL $41 BILLION IN PRIVATE ACCOUNTS. JPMORGAN HAS ABUSED CLIENT FUNDS TOTALING HALF A $TRILLION, PLACING IT AS COLLATEAL FOR ITS DERIVATIVE BOOK. IF THEIR HIGH LEVEL POSITIONS FAIL, THEN INNOCENT ACCOUNT HOLDERS WILL BE WIPED OUT. JPMORGAN IS THE LEADING INSTITUTION TO USE CLIENT FUNDS AS COLLATERAL FOR TOXIC ASSETS. IN THE PROCESS, POTENTIAL DUPLICATE USAGE OF COLLATERAL IS REVEALED. $$$

Re-hypothecation is using third party assets as collateral, which seems improper but might be protected by hidden fine print in contracts and careful language in legislation. Wall Street firms have exhausted their own capital, and are heavily leveraged. They require any and all available capital within reach. Check the fine print for opening and maintaining client accounts. This entire sordid concept reminds a person of Compulsory Arbitration to deal with crimes in Halliburton camps in foreign lands, like multiple rape. The crime center is too close to the Wall Street smoldering corruption. Tyler Durden has revealed that Jefferies is MF Global's own AIG albatross. It appears that Jefferies has $22.3 billion in re-hypothecated assets on total balance sheet assets of $37 billion. In the news, they deserve the scrutiny. The firm has re-used collateral posted by clients to back their own trades and borrowed funds. From the most recent annual report posted by Jefferies themselves, the firm cites re-hypothecated assets totaling $22.3 billion in 2011, used to collateralize positions in government debt, asset backed securities, derivatives, and corporate equity. Compare to the total Jefferies balance sheet assets of $37 billion.

Durden accuses ten banks and brokerage firms on re-hypothication, with the venerable JPMorgan leading the pack. The colossus crime syndicate fortress bank has $546.2 billion worth of re-hypothecated assets. That is over $1/2 trillion of collateral from client collateral backing up its $90 trillion derivatives book!! Morgan Stanley, the bucket shop on Wall Street, also owns close to $1/2 trillion in such attachments. Durden concludes in colorful tones, "Yet Jefferies is just the beginning. With weak collateral rules and a level of leverage that would make Archimedes tremble, firms have been piling into re-hypothecation activity with startling abandon. A review of filings reveals a staggering level of activity in what may be the world's largest ever credit bubble." Clearly and obviously, the big US financial firms are broke and insolvent. They have resorted to broad and illicit schemes to attack and attack client funds and accounts.

Here is a compilation of firms engaged heavily in hyper-hypothecation. Goldman Sachs ($28.17 billion re-hypothecated in 2011), Canadian Imperial Bank of Commerce (re-pledged $72 billion in client assets), Royal Bank of Canada (re-pledged $53.8 billion of $126.7 billion available for re-pledging), Oppenheimer Holdings ($15.3 million), Credit Suisse (CHF 332 billion), Knight Capital Group ($1.17 billion), Interactive Brokers ($14.5 billion), Wells Fargo ($19.6 billion), JPMorgan ($546.2 billion), and Morgan Stanley ($410 billion). See the Zero Hedge article (CLICK HERE).

◄$$$ HSBC HAS FILED A LAWSUIT AGAINST MF-GLOBAL. A FIGHT COULD ENSUE ON A GRAND STAGE OVER DUPLICATE CLAIMS ON THE SAME GOLD BARS. THE CASE COULD EXTEND INTO CHALLENGES OF THE G.L.D. VAULT WAREHOUSE, WHOSE GOLD BARS MUST BE OVER-COMMITTED ALSO. OBSERVE THE PROCESS WHEREBY BULLION BARS ARE CONVERTED TO ELECTRONIC ENTRIES FOR CORRUPT PURPOSES. $$$

Two oversized tainted powerful dogs are fighting over $850,000 in gold bars. Be sure to know that at least 40 thousand tons have been duplicate sold. The common claims theme will become a fixture later. The case unfolding is the beginning. HSBC has filed lawsuit against MF Global over bullion bars in disputed ownership. At issue is the equivalent of 15 separate 1-kg gold bars, but the MFG contracts are caught in the middle. Watch to see if the case goes behind closed doors, or works toward compulsory arbitration like with the Blanchard lawsuit in 2005, anything to keep a lid on the story. HSBC claims it is exposed to multiple liabilities with respect to the disposition of the property. Some aggrieved parties want to divide the gold bars and distribute the money. They cannot define MONEY. See the Bloomberg article (CLICK HERE).

Once again the market overseers in gold management are accused of foul play. The position of the owner is in dispute. The brokerage firm was in distress, more like broken and deeply insolvent. The system is being asked to establish the rightful owner of gold worth about $850,000 and silver bars underlying contracts between the brokerage and a client. Here is the most important point. The amount of asset in dispute is irrelevant. Whether $1 million or $500 million or $1 billion, the principle is on trial. The possible crime could have been that MF Global used client assets as collateral in its toxic positions. It is called rehypothecating, or lending even doing a repo. They also might have used the same gold bars as collateral in duplicate fashion. The physical asset should not have been transferred in ownership rights under any circumstances. This case addresses the heart of the entire commingling situation. The case must decide where MFG illegally used rehypothecated client gold to satisfy liabilities.

Owners of gold bullion placed in warehouses too close to the corrupted brokerage action should be very worried whether their gold still rests where they are told it does. Some Hat Trick Letter clients have gold stored at the Delaware warehouse, but that is where JPMorgan operates. The HSBC case could easily extend into a total nightmare, a challenge of the GLD warehouse (exchange traded fund), supervised by custodian HSBC. The next challenges if pursued beyond this case could involve charges that an infinite string of pledges for GLD gold bars has occurred in an ugly daisy chain with countless counter-parties. As Tyler Durden says, if one cockroach is spotted, expect more. The thin flimsy defense has been that each bar has a unique serial number, a single owner, and under Allocated account rules cannot be touched or committed elsewhere. But Wall Street criminals do not abide by rules. They steal whatever is not nailed down. The investment community will next observe the process by which physical gold is converted to corrupted electronic entries for abuse, duplicate usage, and theft. See the Zero Hedge article (CLICK HERE).

◄$$$ SCHWAB ACCOUNT HOLDERS HAVE BEEN SUPPLIED WITH A WARNING THAT APPEARS MORE PLAIN THAN MOST. HOWEVER, THE SAME RULES APPLY TO MOST STOCK ACCOUNT HOLDERS. THE LAW ESSENTIALLY PERMITS THE LARGE CORPORATIONS TO USE THE CLIENT ASSETS AS COLLATERAL IN HIGH RISK GAMES. THE GIANT FIRMS ARE BROKEN AND INSOLVENT, THEIR LACK OF CAPITAL AS MOTIVE FOR THE ASSET ATTACHMENTS. THE THREAT COMES TO PERHAPS ALL PRIVATE ACCOUNTS THAT DO BUSINESS IN THE INVESTMENT ARENA, TENTACLES EXTENDED FAR & WIDE. $$$

Holders of Schwab stock accounts are subject to the following. "11. Pledge of Securities and Other Property - We may pledge, re-pledge, hypothecate or re-hypothecate, either separately or together with Securities of other customers, all Securities and Other Property that you, now or in the future, carry, hold, or maintain in your Margin and Short Account. The value of the Securities and Other Property we pledge or re-pledge may be greater than the amount you owe us, and we are not obligated to retain in our possession and control for delivery the same amount of similar Securities and Other Property." They can make bets bigger than your assets being collateralized for their purposes. A friend of my colleague recently deposited several $thousand in his futures trading account, two weeks after the MF Global bankruptcy. It vanished that day. What is happening goes much farther than having margined stock shares available for others to short. The risk of losing those borrowed shares is real. The practice is to put private account assets as collateral for the conglomerate asset positions. If they go to ruin, then the cascade occurs and private accounts are wiped out.

This hypothecation threat goes even farther, in a nightmare of legally extended tentacles. Check which firm is in charge of supplying margin credit to stock or mutual fund management. That firm, often a Wall Street giant bank, might grab as collateral the diverse client funds. Check which firm is in charge of brokerage clearing functions. That firm, often a Wall Street hidden cousin entity to serve a function, might grab as collateral the client funds. Check which firm facilitates asset management in actual transactions for pension funds. That firm, often more Wall Street players, might grab as collateral the client funds. The practice of hypothecation brings new meaning to the concept of borrowing other people's money. Worse, it serves as the potential blueprint for a great vanishing act of several $trillion in private US accounts. The MF Global case is demonstrating in a grand lesson how $trillions can vanish from millions of private US accounts of various types.

◄$$$ THE GREAT UNWIND OF OVERLY LEVERAGED US-BANKS WILL RESULT IN UNSPEAKABLE LOSSES, AS WELL AS GROTESQUE RAIDS ON PRIVATE ASSETS. THEY ARE NOT SECURE. THE DE-LEVERAGE PROCESS OF THE UGLY SHADOW BANKING SYSTEM HAS PUT AT RISK $TRILLIONS IN PRIVATE ASSETS. THEY ARE ENSNARED. $$$

The Shadow Banking is defined by Tyler Durden as "the near-infinite fungibility of electronic credit money equivalents within the infinitely interconnected modern financial system." The enormity of broker capital deficiency has been revealed by the MF Global bankruptcy, whose unraveling has shed light upon the shadow banking funding pathways. The re-hypothecation is the tip of the corrupt iceberg, certain to continue in its capital destruction. Witness a run on money market funds, asset backed commercial paper (ABCP), bond repos, synthetic contracts (interwoven among different contracts), structured products (leveraged against toxic bonds), putting great strain on securities lenders and the big banks, to the point that the USFed has had to provide tens of $trillions in phony money to keep the system going.

The grand drain on viable assets continues apace. The black hole of collapsing fiat money systems will digest, ruin, and lay waste to private capital, offsetting reckless derivatives, funding evermore liabilities, in the deadly reversal process of the fractional reserve system caught in a recursive loop. The process is a veritable pathogenesis, the center of which is the shadow banking system in London, for which New York is a mere subsidiary extended from the colony under tow. The process will continue until the United States suffers a total systemic failure. Their defense is synthetic liquidity. Their cannon fodder is private assets, like your accounts. The graphic chart shows the feeding process loop that accesses private accounts. See the Zero Hedge article (CLICK HERE). The MF Global crime scene is vast, and exposes many sordid criminal angles that will be revealed over time, by analysts, investigators, and court revelations. The US financial system is due for a vivisection, a living autopsy of profoundly rancid sick cancerous financial tissue.

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.