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

* Intro Monetary Fragments
* Collapse Orchestrated
* Disorder Prevails
* Big Bank Death Watch
* Central Bankers Without Options
* USTBond Live Stress Test
* USTreasury Bonds Dumped


HAT TRICK LETTER
Issue #111
Jim Willie CB, 
“the Golden Jackass”
19 June 2013

QUOTES ON MONEY

"Bad government drives out good business." ~ Mark Skousen (the fascist corrollary to Gresham's Law concerning bad money driving out good money)

"One of the saddest lessons of history is this: If we have been bamboozled long enough, we tend to reject any evidence of the bamboozle. The bamboozle has captured us. Once you give a charlatan power over you, you almost never get it back." ~ Carl Sagan (astronomer)

"All you need to look at are two markets right now, the Japanese and USTreasury markets. They have crossed two round numbers, 1% and 2% respectively. This cannot continue, and rates cannot go up, or else the entire system will collapse in a heap into one giant black hole of insolvency. Forget about banks and insurance companies. Forget about housing. Forget about equity values. Forget about the economic ramifications. Think derivatives. The few $trillion of these USTreasury securities have a leech market attached to them. This market is at a minimum 100 times the size of the paper market itself and is where the banks trade amongst themselves. Someone, somewhere is going to lose, lose big and go broke, which of course will break the daisy chain of false values and solvency." ~ Bill Holter

"The largest holders of Japanese Govt Bonds are indeed vulnerable. The reason is straightforward. The Japanese have been issuing debt like the United States recently. They do not have a Yen OTC Swap complex to create the artificial demand for their government securities which could muscle rates like the Exchange Stabilization Fund does for the USTreasury via USDollar. Refer to the denominated Interest Rate Swap contract and the Forward Rate Agreement. The Japanese therefore rely much more on naked purchases by the central bank (Bank of Japan) for their securities to keep rates low. In my opinion, the practice is like putting blood in a shark tank regularly." ~ Rob Kirby

"A year ago my missionary friends CS and his son G were visiting my house. G has an Italian friend who worked in Washington state. On the job, the friend wandered in to a huge warehouse full of guillotines. A co-worker saw him and told him he was off limits. The Italian worker told GS, and got scared, then quit the job. He re turned to Italy. I now read your Hat Trick Letter and you mentioned FEMA camps with these guillotines. G is reliable. Wow!" ~ a new Hat Trick Letter subscriber (consider the camps a modern upgrade to the Auschwitz and Dachau types from WW2)

CORRECTION: The Arizona Governor vetoed the bill that would have made Gold & Silver money. The veto occurred on May 3rd, but the Jackass did not notice. The trend toward sound money has regular and powerful interference. One can be sure that Governor Jan Brewer was given extraordinary pressure by the federal government ministries, maybe the White House. The claim of lost revenue is bogus, since transactions could have been tagged for taxes. Yes governor, honest sound money does have an advantage, that being avoidance of swindles. In Virginia and Indiana, similar bills for sound money were also killed, or tabled to death. The entire system is very devoted to its continuation, whether by inertia or coercion. See the Reuters article (CLICK HERE) or the Yahoo article (CLICK HERE ).

## INTRO MONETARY FRAGMENTS

◄$$$ A PLAN IS AFOOT FOR AUTUMN CONVERSION OF THE USDOLLAR, WHICH WILL INVOLVE A DEVALUATION. AT LEAST THREE COMPETING PLANS ARE ON THE TABLE. THE ONLY CERTAINTY IS SOME RESOLUTION WITH A LOWER VALUED USDOLLAR FOR DOMESTIC USECONOMY USAGE. IMPORTED PRICE INFLATION WILL RESULT. INSTITUTIONS WITH FOREIGN USDOLLARS WILL SURELY NOT COMPLY, WHICH WILL FORCE AN INTERNATIONAL USDOLLAR WITH INDEPENDENT VALUE. THE SPLIT AND SCHISM IS NEAR. AS FOOTNOTE, THE USGOVT SECURITY AGENCIES ARE BETTING ON A BIG UPWARD MOVE IN THE SWISS FRANC, STUFFING BILLS IN LARGE SWISS HOMES. $$$

An October conversion to new Republic Dollar is being argued, as a tenative proposed plan. Something must be done, and the competing powers have been in discussions that resemble summit talks and surrender meetings, all conducted in secrecy. The only certainty is the imposition of at least a 20% devaluation. My firm belief is that it will be repeated. Like seen in Venezuela, the devaluation has been delayed so long, that it will come in vicious waves. My source is a fellow with White Dragon contacts for over a year, several meetings done in Costa Rica. They are interested in acquiring farm land in CR, while they have seen fit to firm up the CR central bank with a $5 billion donation last summer so as to establish good will. When verification was sought, The Voice claimed of being aware of at least three plans floating for USD conversion, in competition.

The plan includes calling all USDollars home, including from foreign accounts. The foreign banks will be urged to cooperate in the conversion, but without authority over them. This is precisely where the conflict will arise. Foreign banks and their major USD account holders will be relucant to permit the USGovt any dictated devaluation. Instead, expect defiance that results in a split, a major schism in the USDollar regime. The entire program has a secondary motive, in addition to the deserved USD devaluation, which is to target narcotics competitors. The USGovt security agencies have a veritable monopoly on global narcotics, possibly 75% to 80% control. Colombia, Russia & Chechnya, and Hong Kong are other competitive areas. Regard the move as an attempt to trap narco cash hidden in the world. Other centers of dirty USD money are Mexico, Panama, Tokyo, Singapore, Switzerland, and Cyprus. Expect no success whatsoever in calling foreign USD funds home to the United States for processing, devaluation, and redistribution, absolutely none! The result, regardless of which plan is executed, will eventually form the split into a domestic devalued USDollar and a foreign independent USDollar. The spread will be 20% initially, the domestic USD lower. Later after more devaluation steps, the spread will be closer to 50%. After all, the USDollar on its fundamental merits is a Third World currency.

Consider the forces at work in foreign nations. The refusal by dark centers of criminal organizations could lead the USD split, almost a guarantee. Human nature will dictate for continued control and dismissed domestic price hikes for goods. The refusal by foreigners will be motivated by a desire to avoid a nasty commodity inflation jump will all the social disorder side effects. They would rather the United States suffer that impact alone, since they regard the USFed central bank, the Wall Street bankers, and the USGovt with its vast military machine to be the responsible agent for the tumultuous ongoing crisis, unending disruptions, and intractable problems. Expect retaliation against US banks in foreign nations, like open violence. The narco syndicates outside the United States are powerfully entrenched. The narco banks and their powerful friends in political leadership posts will push for the split. It will come from defiance and disobedience against the US authorities. This will cause a split into two USDollars. The devalued version will be managed inside the United States, while the foreign international USDollar will be upheld in value outside. It will be full of intrigue how the international USD is valued on the FOREX, independent from the domestic slammed USD. The domestic USD will be vulnerable to repeated slams as it seeks its true value, based upon the fundamentals of huge deficits and almost no buyers of its debt securities (the USTreasury Bond). Expect the USFed to be rendered toothless, as it operates its Weimar machinery in the newest Third World nation, the de-industrialized United States of Amerrka. It is a land of the most uninformed and misinformed in modern history, according to Paul Craig Roberts.

The impact will be a big price inflation hit to the USEconomy. The initial hit will be an immediate 20% inflation hit from the import channels alone. Whatever the USEconomy imports in paid USD form, will cost 20% more as a result. If for instance, half of the USEconomy supply lines are imported, then the final impact will be a sudden 10% splash to US-based price inflation. The Canadian Economy should expect a bigger total net impact, more like 20% since its supply lines are almost totally in USD terms. The social impact will be some introduced disorder. The authorities who are making decisions on the plans expect civil disorder and lost control on the streets. The Jackass completely agrees, but with an added point that violence will arrive with the second devaluation, as debate and criticism will arrive with the first devaluation accepted with stunned reaction.

The White Dragon plan includes two highly dangerous additional elements for cleansing. They have identified the vile element in global banking, and target it for some degree of ruin. Their plan rumors for shutting down all but two unidentified Rothschild banks, intended as a message to what they regard as the problem niche within world banks. Their plan also includes the arrest of 6000 bankers of various rank, the arrests to be kept as secretive as possible. The location is unclear, but the undersea Caribbean location was mentioned again. By April 2012, an estimated 450 bankers had been arrested. The current count was not cited, but assurance was that at least double the last reported figure a year ago. When pressed to explain the enforcement of arrests, the source mentioned Interpol and US marshalls, under contract on hire. They even have solicited the USMilitary high brass, which stand apart from the narcotics element.

A different source with USGovt security agency contacts was solicited for opinion. He is not connected either to The Voice or to the White Dragons. He was not aware of any specific plans, but had heard frequent stirring about competing high level USDollar devaluations in the offing. He pitched in a gem of information. Several large houses in Switzerland owned by the US security agencies are being loaded with cash to the gills. Every room has blocks of shrink wrapped Swiss Franc bills. These are the American drug lords operating under USGovt protection by the syndicate. The Swiss Francs are not held in Swiss banks. They anticipate a grand upward move in the Swiss Franc, totally in synch with the Jackass analysis and forecast over the last two years. The Swiss-Euro 120 peg will fail eventually, and produce a massive 20% to 30% rise in the Swiss Franc, which will emerge as the surviving European currency. Current pressures in the Swiss Parliament to force disclosure of US citizen bank accounts appears to be motivated as an obstruction toward realizing a safe haven with a gain. Note that Liechtenstein has no border, and shares usage of the Swiss Franc in its economy and banks. One is left to wonder in what form the collection of containers stuffed with older USDollar $100 bills will be modified, held in Greek ports owned by the USGovt agencies. These are narco funds, but are small volume really. Each container contains perhaps a few $billion when one calculates that 10 million such US$100 bills equals a mere $1 billion in value. Much US narco funds were converted a few years ago to ownership of the Vatican gold hoard, worth over $1 trillion.

The US security agencies are making a gigantic bet that the Swiss Franc will rise in a big quantum move up. Another implication is that the Swiss Franc could serve as refuge as the Euro currency is wrecked, amidst the dismantled Euro Monetary Union. In the grand revaluation plan, the global reserve currency will temporarily be the Swiss Franc, during the chaos. The grand victim will be the Swiss National Bank, since it has been enforcing the disastrous Swiss-Euro peg with diversified purchases of British Pounds and Japanese Yen. Everything the Swiss central bank has done so far has lost huge amounts of money. Despite the Swiss Franc being a high valued item, the Swiss banking system is a total and complete wreck. Big money, important money, powerful money, has already left the Swiss hills. As a savvy contact once stated, "Switzerland is a wonderful great place, populated by the wrong people." Do not confuse the new US Republic Dollar with the new Franklin US$100 bills with higher security features.

◄$$$ THE FATE OF CANADA FROM ANY USDOLLAR DEVALUATION WILL INCLUDE TREMENDOUS STRESS. THE CHINESE FACTOR ALREADY WORKS LIKE A CARVING KNIFE TO CREATE TWO CANADAS. $$$

It is certainly hard enough to figure how the USDollar will be devaluated, which is the tremendous huge quintessential question of all, since the global reserve currency. The impending USDollar devaluation should result in price inflation on all imports in a shock wave. Incomes will not rise in offset. A grand struggle will occur to disconnect commodity prices from their USD pricing system. The entire barter system is designed to render a bilateral driving force to pricing, which will avoid the monolithic and hegemonist USD pricing system. With 12% of the Hat Trick Letter client base being Canadians, a concern is steadily conveyed over the fate of Canada. Some key Canadian colleagues have always disagreed on whether the Canucks are any different. On all matters of great importance, they follow the US down the rat hole with diligent devotion in deep criminal pursuits. They are the same on leadership roles, fully coopted, but vastly different on cultural and awareness issues. Their accent remains charming to the Jackass.

Cases in point for Canadians serving as US Big Brother devoted squires include gold sale, bank derivative buildup, war commitment, compliance with virus vaccination, and acceptance of terrorism propaganda. Permission of genetic food modification remains in the balance. In my view, Canadian leadership is an extension, an appendage of the USGovt. They are either dedicated or intimidated into subservience. The Canadian Govt relinquished their gold (like total idiots) in order to follow the USGovt game led by the corrupt Wall Street bankers. When the entire system was on the verge of collapse in the 1990 decade, the big Canadian banks followed the Wall Street lead again, with giant slices of derivatives placed in key foundation beams among major Toronto banks to support the national banking system. My full expectation is that any devaluation for the USDollar would render very similar net effects to the Canadian Economy. The conclusion, better described as punitive solution, should result in national systemic failure for both nations. A lesson can be learned from the 2004 to 2010 period. As the USD fell in value, the price inflation effect was stark across the entire supply chain to the Canadian Economy. Upon further examination, the Jackass learned that for stability reasons, Canadian suppliers prefer to form contracts in USD terms. The widespread practice leaves their economy vulnerable to currency based inflation, even when originating with the USDollar. One more piece of evidence that the Canadian nation is an extension of the United States. The simplest example is to realize that from orange juice to tobacco, Canada imports from the US.

No fate of Canada can be properly discussed without inclusion of China. It is the biggest single factor in the evolution of the great nation to the north. In my view, the influence of China will act like a great carving knife. The Western provinces gradually have become Chinese colonies, vis-a-vis minerals & resources. The Chinese already own every major Canadian seaport facility on the Pacific Ocean, and own an increasing commitment of energy and agricultural output. My full expectation is for Canada to split into East versus West, two governed nations that emerge from crisis. The West will be rich in natural resources, will operate with large surpluses, but will be unwilling to pull along the damaged Eastern provinces. The East will be racked by debt and destroyed economic structures, whose industries will be in disarray. Labor problems will be common. The Eastern provinces gradually will falter from the industrial side. As whiplash, any rising Can$ (from falling USD) will cripple the Ontario manufacturing sector. The effect has been very clear for the last several years, as efforts to maintain parity at 100 have been fierce.

The grand-daddy conclusion from the USDollar devaluation is unavoidable. It will work to dissolve the US union. It could (should) split into 5 to 6 territories, as the federal side enters debt default receivership, and collapses from insolvent internal rot and pervasive corruption. Being a US patriot, the Jackass wishes for honest leadership for the nation of 300 million people. They deserve competent leadership with their interests held close to the heart, not corporations, not defense contractors, and certainly not bankers. The corporations have betrayed the nation of workers, somewhat in response to labor unions and environmental laws. The defense contracts work side by side with the fascists who took control starting with the Vietnam War. The Wall Street bankers have been closely aligned with fascist forces for a long time, having made large bank loans to the Nazis before World War II. My best forecast is that Canada could as a result split into two nations, East versus West, the East ruled under crisis management, the West managed by China like a colony. But the maritime provinces will remain fishing villages, without much change, still suffering from a lack of men and surplus of women. Extraordinarily difficult forces are at work.

◄$$$ THE QUESTION OF ?WHEN? ARISES SO FREQUENTLY THAT IT DESERVES TO BE ADDRESSED. WHEN THE SYSTEM COMPLETELY BREAKS DOWN, WHEN THE USDOLLAR REGIME FALLS APART IRREPARABLY, WHEN THE GOLD PRICE IS FINALLY RELEASED, WHEN THE BIG BANKS SUFFER A CONTAGION OF FAILURE, THESE ARE KEY QUESTIONS FOR OUR AGE. ALTHOUGH NO ANSWER CAN ADEQUATELY BE GIVEN, ONE CAN BE ASSURED THAT WITH EACH PASSING MONTH, THE PLATFORMS ARE MORE BROKEN, THE DEVICES MORE ELUSIVE IN CONTROL ROOM ACTION, AND THE PLAYERS MORE ISOLATED WITH UNSPEAKABLE STRAIN. THE TIME BETWEEN MAJOR EVENTS IS SHORTER EACH SEASON AND EACH MONTH. $$$

By the end of year 2013, the game will be much more visibly over, but the remnants of old power machinery will be still there. The table will be more round (equitable) and less hierarchical. Some enormous jockeying and bargaining is going on. Expect some possible staggering events. This is an event driven scenario that continues apace in its destructive element. The Boyz in the criminal syndicate are losing their control, running scared, trying to cut deals. They know they are finished.

The Jackass does not have magic answers. Sending emails asking when this or when that will happen accomplishes little. We do not know. But with each season, enormous additional damage is done to the control rooms as the major tyrant players lose yet more control. In five years, no way can the system be like today. In two years, no way. In one year, highly doubtful. In a few months, possibly they will keep the game going and the tables spinning. But very soon, the game will be altered forever in unmistakable ways, with new Knights sitting at the Round Table. This is key, since the current table is not round. It is rather hierarchical today, with a vertical power structure. What comes is more flat, more fair, more equitable, more decentralized, more diversified. The hierarchical systems cannot defend against flat relational attack. Barter and Gold are great arbiters. The system will change radically and noticeably when it is ready, when conditions are ready, when players are agreed, when high powers feel the time is right. When the USDollar and USTBond are more totally broken, to the extent that they can no longer stand on their own structural integrity. When the US financial derivative support mechanisms are more visible and broken, even under attack. When the Eastern forces refuse to play the USD/USTB game any longer. When the USD/USTB continuation results in much greater ruin that becomes unacceptable and intolerable. When foreign nations refuse to see their stored wealth played with, preyed upon, altered in value, and stolen.

This is an event driven schedule, requiring completion of events to proceed to the next dangerous stages. It could be a few months, could be another year, could be ad nauseum. Why ask? Obviously, curiosity overcomes reason. In my opinion, those who ask when do not comprehend the event driven schedule and its iron rule. Too much doubt swirls in misdirection. Few comprehend the events that must occur in sequence. Some basic questions back at you folks. If there are at least three major plans to retire the USDollar, forcing the domestic version into devaluation, why has the implementation of the best plan not happened yet? Who are deciding the fate of the corrupt USD/USTB regime? With what penalty for decades of criminal activity? Who is in charge? How much Gold do the deciders have in possession? How are they using the Gold? What legal enforcement is involved? What leverage do they have in enforcement? What deals are being struck on the next chapter and castle rulers? What further destruction (eugenic genocide) has been agreed upon? Which players have been decided to kill off as part of the solution? Are all the powerful players involved human? Do you sense the extraordinary complexity? When? The Jackass does not know, and neither do my best sources, nor do other very well informed people. The only certainty is that the system cannot continue without breakdown and collapse. The only certainty is that those with significant Gold & Silver holdings will survive, even possibly thrive.

However, know this. The time between big disruptive events is shorter with each season. The damage to the structural systems is much greater with each season. The system cannot continue like this for too many more months, as the entire platforms are falling down, unable to function like in the recent past. Eric Sprott thinks the official Gold price goes way past $2000 this year, but methinks that is a careless comment that harms his scintillating superb reputation. One might ask $2000/oz but where? what market? what country? By the end of 2013, it would be entirely likely to see the COMEX in a position where it is more ignored by the multitudes, where its price is mocked, where its market executives are in defense of lawsuits for contract fraud. In my view, the attitude taken by the masses toward COMEX & LBMA generally would be a great indicator of freedom for Gold to run and rise, and for the powerful cabal to splinter. The exchange with inventory appendage is under seige by some colossal world powers who seek to toss them out, to remove them, to eliminate them, to put them away, to assure of no return. The details might not be fully known 15 to 20 years into the future. The details might not be any better known than the Pearl Harbor attack, the JFKennedy assassination, the Vietnam War motives, the Oklahoma City attack, or the World Trade Center attack. The important requirement is that the banker cabal has its teeth, arms, and testicles excised and burned at the nefarious altar they worship with fire.

To be sure, Russia & China are to be much more involved in the future global control rooms. Depending upon the sincerity and good faith displayed by Western bank leaders, the fate of the criminal cabal will be determined. If not careful, they will find themselves to be headless horseman with little prospect of continued pleasures above ground. My sources indicate clearly that every few weeks, the Kremlin and the Beijing leaders reject the next flimsy Western proposal that grants the new Eastern elite simple scraps at the head table. The London & New York dons insist with delusion to be kept on as global kings knights. The Russians & Chinese want some significant change, a complete overhaul of the USD/USTB regime that has corrupted wealth and power for over four decades. They want certain changes that forever remove the devices for control that has prevailed for a century. They want the bank control around their necks to be eliminated, and the skimming for the bank cartel to end. They want a legitimate Gold trade system founded in fair barter. They want a value based system centered upon Gold, and they will get it!! The Eastern powers will install a Gold Standard outside the banking and currency system, decentralized across the world, and force the West to adapt to it. The adaptation will be centered on decisions to avoid desolation in the new Industrialized Third World.

◄$$$ TURKEY FACES TUMULTUOUS CHANGE. THE NATION IS A TIPPING ELEMENT IN THE GLOBAL EQUATION. IT HAS MADE AN IMPORTANT DECISION IN JOINING THE SHANGHAI COOP ORGANIZATION. ITS ROLE OF GOLD INTERMEDIARY BANKER WILL BE VITAL IN THE NEW GOLD TRADE STANDARD. THE WILD CARD IS THE USMILITARY NARCOTICS ABUSE AT THE INCIRLIK AIRBASE IN TURKEY FOR HEROIN DISTRIBUTION ACROSS EUROPE. VIOLENCE HAS SPREAD ACROSS TURKEY, AS THEIR PEOPLE REJECT THE FASCIST REGIME TIED TO THE WEST. $$$

Street violence has erupted in the Greek neighbor nation to the east. The last few years of Erdogan have resulted in severe revulsion by the people. They are not docile like in the United States. They are vocal, emotional, and active in defiance. They do not organize into anti-banker groups (e.g. Occupy Wall Street) or into political reform factions (e.g. Tea Party) or embark on public demonstrations with sit-down movements. They hit the streets and bust things up. The nation of Turkey is frustrated at the top with refusal to join the European Union. Turkey recently showed defiance by signing with the Shanghai Cooperation Organization (SCO), the security bloc dominated by China & Russia that includes the Central Asian states and isolated other states. In many critical ways, Turkey has turned eastward.

Turkey is the first NATO state to establish such a relationship with the SCO. More disruption on the global balance is to come. Turkish Foreign Minister Ahmet Davutoglu described the signing of the SCO cooperation agreement. Referring to NATO and SCO, he said "If we look from a Cold War perspective, these may seem like mutually exclusive institutions. However, the Cold War has ended. Turkey will not be a slave of the Cold War logic." Turkey is the tipping point nation. The USGovt has pressed the issue, arguing that NATO and SCO are incompatible security organizations. But Ankara skillfully argued in rebuttal that neither Russia or China are considered enemies of NATO on the other side of the Cold War. While many scholars believe the SCO pact was meant to send a political message to the European Union commissars, the Jackass believes the event is more a tipping point toward commerce and Gold Trade settlement. The establishment of a Gold Trade Standard will emerge from the East, with Turkey playing its typical role over centuries, that of gold trade intermediary. It has been a huge gold banker for the entire Middle East for decades. The breakdown of Europe has left Turkey seeking alliances to the East, where it can become a banking power potentially, in gold provision toward trade settlement, even to rival London.

Turkey is the great swing state. Watch its NATO membership come under fire, and maybe the US-led narcotics abuse of its air force bases come under great scrutiny. One is left to wonder if they will permit future Incirlik AirForce Base abuse with its gigantic heroin distribution across Europe to other NATO bases run by the USMilitary. The United States thus violates the integrity of almost every European nation. Turkey is the major hub for narcotics distribution across all of Europe, the gateway to the West for American narcotics. It is the nasty giant secret that leaders and bankers never discuss. In 1990, a mere 7% of US heroin came from Afghanistan. Nowadays, over 70% of heroin consumed in the United States comes from the Afghan nation.

Other tipping points are France on European sovereign integrity, LIBOR on London banking criminality, Cyprus on energy & banking, Swiss Allocated Gold Accounts on the gold market, and MF-Global on futures contract fraud. The Turkish leaders and people are fast realizing that their Islamic heritage is shared more by the Eastern nations already within the SCO fold, especially the former Soviet Republics. Refer to Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, which joined with China and Russia in 2001 to form the SCO as a regional security bloc to defend against threats posed by radical Islam and drug trafficking from neighboring Afghanistan. The SCO charter also addresses cultural issues. Watch the narcotics issue surface gradually, and the finger pointed at the USGovt and its USMilitary machine that earns over $800 billion in narcotics related profits per year from Afghan sources, where a vertically integrated business has been created, complete with chemical processing plants, a Baghdad bank clearing house managed by JPMorgan, and NATO distribution of narcotics product through the Turkish gateway.

Ankara still has major differences with China and Russia, but the overarching motives are beginning to show as prevailing. The differences will be worked out regarding Syria with Russia and regarding the Uighur Turks in the Xinjiang province of China. The trump card is trade, and always has been trade. Turkey's dreams of EU membership are shattered, not to be revived. The deluded expert analysts believe Turkey can still court EU membership. To join a sinking divided derelict vessel seems pure folly. Such stupid reasoning is only explained by the paycheck sources for the errant analysts. Ankara will turn toward Russia & China, mend fences, and forge a new role in compromise in its gold intermediary banking role. The role is a major missing piece to the Russian & Chinese plan. See the Voice of America article (CLICK HERE).

At the ground level, Turkey and its citizens are sickened without further patience toward the growing fascism imposed by Erdogan, complete with all the small creeping infusions in their society. Their economy is growing rapidly despite the disruptions caused by the Anglo-American bankers in the last five years. A consultant with ties to China and Turkey pitched in. He wrote, "The Turks are an imperial people with a very long history. The Turkish middle class is fed up with Erdogan fascism and being harassed by semi-fundamentalists. Expect a disruptive event to occur soon in their country. Turks have a very strong and deep rooted honor system. Erdogan made some very bad mistakes, operating as an arrogant US puppet. People are fed up with all his chicanery and deception."

Another solicited comment came from EuroRaj, with deep connections to India and the Turkish region. He wrote, "Logic dictates the USMilitary abuse of the Incirlik Air Base in Turkey used toward narcotics distribution across Europe will be confronted and shut down. Putin surely sees it as a means for funding and feeding the serpent called Al Qaeda (aka Al-CIAda). But then again, geo-polictics is a funny game. This could be a major casualty of the current struggle, worth watching."

◄$$$ A CONTRAST IS WORTHWHILE BETWEEN THE UNITED STATES VERSUS CHINA, AND THE UNITED STATES UNDER SOCIALISM. THE PASSAGE OF TIME REVEALS THE DISINTEGRATION OF THE UNITED STATES AND ITS DEPENDENCE UPON SOCIALIST PROGRAMS, NOT WORK DONE. THE TRENDS DIRECT TOWARD SYSTEMIC FAILURE. $$$

Back in 1985, the US trade deficit with China was a mere $6 million (m as in mommy) for the entire year. China had not awakened from the communist grip and slumber. By year 2012, the US trade deficit with China had grown enormously to $315 billion. It stands as the largest trade deficit that one nation has had with another nation in the history of the world, a remarkable factoid. Conditions for serfdom are in place. Overall, the United States has run a trade deficit in excess of $8 trillion with the rest of the world since 1975. According to the Economic Policy Institute, the United States is losing half a million jobs to China every single year. The Most Favored Nation granted status in 1999 marked in the Jackass view a decision for national ruin, probably intentional. The US as a nation had served as a beacon for liberty and capitalism, both of which are enemies of fascist warlords who reside in castles and use banks are control devices.

Back in 1965, only of every 50 Americans was on Medicaid. Today, one of every six American citizens is on Medicaid. The trend is on a steep trajectory toward becoming a lot worse. In 2011, the elderly father of a dear family friend had a urinary infection and kidney failure problem. The cost for a mere two weeks in the hospital, with a certain death watch, was over $30,000, all covered by Medicare. The projected estimate is that Obamacare will add 16 million more Americans to the Medicaid rolls. The estimate is for Americans on Medicare to grow from 50.7 million in 2012 to 73.2 million in 2025. The nation is aging on the demographic side, just like Japan. The current count has 56 million Americans collecting Social Security benefits. By year 2035, that number is projected to soar to an astounding 91 million. By year 2025, the count will be in the neighborhood of 70 to 75 million. More alarming, the number of Americans on Social Security Disability exceeds the entire population of Greece. The number of Americans on Food Stamps programs exceeds the entire population of Spain. Shockingly, more than one million public school students in the United States today are homeless. The US is facing a systemic failure that overwhems the social aspects.

◄$$$ A EUROPEAN UNION MEMBER OF PARLIAMENT STATED THAT THE MALI WAR WAS OVER RESOURCES, NOT TERRORISM CLAPTRAPP. THE WAR IS OVER GOLD AND URANIUM. $$$

A Member of Parliament in the European Union has confirmed the creeping perception that the Mali War is a staged conjured event, in pursuit of resources. Louis Laurent from Belgium has come forward to state very clearly that the media is manipulating the public to believe the outbreak of war in Mali is to confront yet more Islamic terrorists. The same phony card is played again and again to dimwitted audiences. The war to take control over materials, in particular gold and uranium. The Western bankers urgently need the gold to cover the German gold repatriation demand. The volumes involve and timetable disclosed fit like a glove to reveal a sick handshake on a golden table. See the RT News article (CLICK HERE).

◄$$$ THE ALABAMA DEBACLE IS SET TO COST JPMORGAN A COOL $1.56 BILLION. THE BIGGEST US-BANK HAS TAIL BETWEEN LEGS, FORGIVING A DERIVATIVE DEBT OBLIGATION, ATOP A PAST COURT SETTLEMENT FOR FRAUD. $$$

A powerful reigning bank king of JPMorgan would never settle with a small client on a minor case, let alone forgive debt, if still powerful. JPMorguen is heading to the zombie pits. The largest US bank agreed to forgive $842 million of debt owed by Jefferson County in Alabama, over a contract hedge on the sewer business. The corrupt bank took the lead in arranging risky securities deals that pushed the county into the largest US municipal bankruptcy. JPMorguen reaped substantial fees arranging the set of deals, surely tainted by deep corruption, which all went bad and turned costly during the credit crisis. Think bad press, bad publicity, harm to image. The debt forgiveness came after a $722 million settlement in 2009 with the Securities & Exchange Commission, also linked to Jefferson County deals. The stage spanned several years with the largest county in Alabama, where haggling might be coming to an end. See the Bloomberg article (CLICK HERE). JPMorguen has serious problems on twenty fronts, attacked from all flanks.

◄$$$ DOUBLE AGENT JIM RICKARDS LAYS OUT THE GOLD GAME. THE STRAIN HAS BEGUN TO SHOW FROM HIS CLEVER DOUBLE ROLE. $$$

The first interview revealed a confident and effusively knowledgable Jim Rickards. Much was discussed on the failing fiat currencies and the Gold rescue horse. See the Cafe Americain article (CLICK HERE) with video interview by Max Keiser. By the second interview, shown on YouTube (CLICK HERE), the strain comes through. The past role by Rickards is too difficult to escape. He is not an independent analyst. He served as the gold advisor to Long-Term Capital Mgmt, the failed elite hedge fund run by John Meriwether which tapped and drained the Bank of Italy for its gold reserves. Just a Jackass perspective, but it seems Rickards despises his old masters

and wants to see them brought down. He might wish for events to unfold in a manner without any direct role by him, or without any photo opps where he is cheering along the way. Rickards has been a useful instructor in the past, always to provide some keen insight. But he always tells important lies on the USGovt official gold reserves accounting, when he clearly knows the truth. He is the old cog permitted to ply his trade, to sell books, to conduct interviews, and to appear brilliant and well-spoken. He is a double agent. Permit the Jackass to state that Rickards should step aside in favor of daytime naps and iced tea beside the pool, served by unwashed swarthy who seek to gather gold coins as savings.

## COLLAPSE ORCHESTRATED

◄$$$ HUSSMAN HAS IDENTIFIED NO BENEFIT TO THE USECONOMY FROM THE FOUR YEARS OF ACCOMMODATIVE USFED MONETARY POLICY THAT INCLUDES OVER TWO YEARS OF DEBT MONETIZATION. THE INDICATORS ARE ALMOST ALL POINTING DOWN. $$$

John Hussman is a very solid analyst. Apart from being a fund manager, he has consistently been full of wisdom and keen perspectives. The USEconomy is stubbornly hanging on, if the observer is to believe the overall Gross Domestic Product data released in twisted form. If bent toward the Jackass perspective, the USEconomy is stuck in a powerful recession of minus 3% to minus 5% annual growth for five consecutive years. My preference is to remove the hedonics, and to correct the price inflation adjustments that grotesquely misrepresent inflation realized on the streets and businesses. Each official fiscal (USGovt) program or monetary (USFed) initiative has resulted in a small bounce in activity, then by fresh rapid deterioration, followed by yet another round of fiscal and monetary reactions of the same non-solutions. The most aggressive monetary easing in US history, far from the normal path and steeped with heretic dangerous initiatives, has yielded tepid economic progress even after the exaggerated positive distortions. In reality, the aggressive policy has prevented a full blown collapse, when instead a nasty persistent deterioration has occurred in an endless recession that begs for collapse to put it out of its own misery.

Observe the Hussman chart, wherein he averages numerous official economic activity measures produced by the various national outpost agencies and satellite USFed offices. A strong downtrend is evident over the last two years or more. Systems broke in the bond and housing world in 2008. They are due to break again, despite all the best corrupt efforts to manage and intervene in every single important financial market. The props are everywhere, yet they do not engender growth. They merely enable continuation like zombie systems. See the Hussman Funds article (CLICK HERE).

◄$$$ NOTE THE HINDENBURG OMEN AS IT APPLIES TO US-STOCKS. THE SIGNAL DIRECTS ATTENTION TO NARROW LEADERSHIP. NUMEROUS DIRE SIGNALS ARE BEING NOTICED ON THE MANAGED US-STOCK MARKET. $$$

The US stock market is the playground of Plunge Protection Team wonks, Wall Street manipulators, algorithm perverts, hedge fund craftsmen, and more. The scattered data is dizzying on daily highs & lows, various oscillators, volume upside versus volume downside, price-earnings projections, Fed Value Model based upon prevailing bond yields, and Dow Theory based upon S&P index watch with Transporation confirming and Utilities serving up background. It is all wondrous science, except for the corruption that abounds from offices assigned to the Working Group for Financial Markets. The stock market and mutual funds are not permitted to fall badly, or else the public might object and demand some actual policy changes toward healthy substantive reform. The dispersion and market internals might warn of problems ahead, especially the narrow favored sectors. Welcome to Reich Finance. To the Jackass, the rocket to new S&P500 highs does not jibe well with the consistent economic recession that plagues the nation. The new stock highs are a product of the USFed easy monetary policy, free money, which find distorted markets as ample prey.

The recent sighting of the Hindenburg Omen bears careful watch and study. A nasty powerful stock decline is so overdue that it is almost forgotten. Recent spectacular successes to foretell of market declines were seen in September 1987, in March 2000, and in October 2007. A weak signal was registered in April 2006, followed only by a brief 7.6% correction. A possibly false ominous signal was recorded in December 2010, after which the market advanced by 9% to its April 2011 high. However, the weight of the negative indicators pulled the market down, producing a nearly 18% correction over the next 10 weeks. Notice the numerous stock market declines following the registered Hindenburg Omen signals. The signal seen in 2011 did not see a major decline to follow, which means the current signal might forebode a bigger resulting decline. Again see the Hussman Funds article (CLICK HERE).

The market science has seen fit to give a slight modification of the definition offered first by Peter Eliaides. The extra criteria are designed to capture growing internal dispersion of leadership and breadth, the tell-tale signs for the syndrome. In other words, dangerously narrow leadership. Hussman has produced the following chart, where the bars indicate points in the past 20 years where the following conditions were true, called the Hindenburg Omen.

1)      NYSE 52-week highs and lows both greater than 2.5% of total issues traded.

2)      New highs in stocks no greater than twice the number of new lows.

3)      S&P 500 greater than its level of 10-weeks earlier.

4)      McClellan Oscillator below zero, which is another indication of dispersion. It is defined loosely as the 19-day moving average minus the 39-day MA, a smoothing of daily advances minus declines on the NYSE.

5)      Two signals recorded within 36 straight trading sessions, often deemed useful toward reducing noise and spurious false signals.

For another similar perspective, see the Financial Sense article by Carl Swenlin (CLICK HERE) on market tops. He examines the Percent Buy Index that focuses on the medium-term buy signals. It is extraordinarily high these weeks. Also see the Beyond Neanderthal article (CLICK HERE). To be honest, the Jackass has considered the US stock market a wasteland for over five years. The market reports and commentaries go in one ear and out the other, since it is not a market that seeks proper value through an equilibrium process. It is controlled to the hilt, another chapter of Reich Finance exercised by nazi bankers. The game is ten times worse than a rigged casino in Las Vegas. To rely upon USFed easy money to support valuations that contradict the economic downtrends seems lunatic. Clearly the USFed devotes some of its free money to buy the S&P stock index, via the USTreasury offices. To chase the uptrend in stocks seems like a deadly game of musical chairs. Clearly the fund managers doing so are braindead but committed.

Almost all the justifications for stock market investment are vapid vacant vacuous, like money on the sidelines, foreign subsidiary cash coming home, the sluggish promising USEconomic recovery, the bounce in the housing market, and my favorite, the low stock price-earnings ratios based upon optimistic forward earnings projections that never arrive. They are all false stories, just like the Green Shoots nonsense and Exit Strategy ruse which followed the dopey Second Half Recoveries offered up annually. The stock market is designed for junkies, morons, and fund manager hacks.

◄$$$ FORMER USFED CHAIRMAN VOLCKER IS NOT IMPRESSED WITH THE SO-CALLED BENEFITS OF THE CURRENT OVERDONE OVER-STRETCHED MONETARY POLICY FOR EASING ON RATES AND CONDUCTING HUGE BOND PURCHASES. THE GAINS ARE ALMOST NONEXISTENT, IF NOT IN THE MAIN NEGATIVE. VOLCKER JOINS THE GROWING CHORUS INSIDE THE USFED, WHICH WARNS OF NOT JUST DISTORTIONS, BUT DAMAGE TO THE STRUCTURAL INTEGRITY TO THE FINANCIAL SYSTEM. VOLCKER SEES NO EXIT PATH FROM EASY MONEY. $$$

All that remains is for Sir Alan Greenspan to join the chorus of USFed critics. The Greenspasm himself built the gigantic unresolvable mess, then left town after being bestowed knighthood. Without a horse in the race, Paul Volcker gave an insightful summary of the present situation that has grown a deep dependence upon both free money and covered debt by inflation machinery. He spoke at the New York Economic Club recently, where his critical assessment echoed the FOMC minutes released from the May 17th meeting. The USFed has become a den of crackpot tinkerers committed irreversibly to heretical methods that are destroying the global economy through its financial structures. Their work guarantees a new non-USDollar system to emerge from the other side of the world where industry is brisk (not scoffed), where savings accumulate (not debt), and where the sun does not rise and set according to the corrupt diabolical pedofile bankers. Volcker focused on deep distortions being created and sustained, if not extended. He sees few benefits anymore. He advocates a return to normalcy. He dismisses the Dual Mandate altogether as already refuted. He notes that financial firms have adopted the moral hazard in chasing yield while embracing risk. He does not foresee any stable end to policy accommodation. Volcker said the following.

"Beneficial effects of the actual and potential monetization of public and private debt, the essence of the QE program, appear limited and diminishing over time. The old Pushing on a String analogy is relevant. The risks of encouraging speculative distortions and the inflationary potential of the current approach plainly deserve attention. All of this has given rise to debate within the Federal Reserve itself. In that debate, I trust sight is not lost of the merits, both economically and politically, of an ultimate return to a more orthodox central banking approach. [Volcker wants a return to normalcy!]

It is fashionable to talk about a Dual Mandate, that policy should be directed toward the two objectives of price stability and full employment. Fashionable or not, I find that mandate both operationally confusing and ultimately illusory. It is operationally confusing in breeding incessant debate in the Fed and the markets about which way should policy lean month-to-month or quarter-to-quarter with minute inspection of every passing statistic. It is illusory in the sense it implies a trade-off between economic growth and price stability, a concept that I thought had long ago been refuted not just by Nobel prize winners but by experience. [Volcker regards the driving USFed objectives to be phony!]

There is also concern about the possibility of a breakout of inflation, although current inflation risk is not considered unmanageable, and of an unsustainable bubble in equity and fixed income markets, given current prices. Net interest margins are very compressed, making favorable earnings trends difficult and encouraging banks to take on more risk. The Fed's aggressive purchases of 15-year and 30-year Mortgage Backed Securities have depressed yields for the bread & butter investment in most bank portfolios. Banks seeking additional yield have had to turn to investment options with longer durations, lower liquidity, and/or higher credit risk. Uncertainty exists about how markets will reestablish normal valuations when the Fed withdraws from the market. It will likely be difficult to unwind policy accommodation, and the end of monetary easing may be painful for consumers and businesses. [Volcker sees the danger from paltry carry profit!]"

Hussman offered his comments on Volcker as rejoinder. The massive Quantitative Easing rounds already have significant costs, particularly in terms of broad distortions. With constant talk of a handoff to a more real economy, the delusion is stark ugly. The shrill Wall Street call for a USFed handoff is a mirage, a delusion, evidence of a break from reality. Hussman said, "There is little question that the dominant view on Wall Street is that the Fed will sustain QE until there is some Handoff to the real economy. But there is no ball to hand off, and this is becoming increasingly evident even to the Fed. Though I do not expect that the Fed will slow the pace of QE at its June meeting, it appears likely that the Fed's statement will shift toward comments that recognize the diminishing benefits and increasing costs of further Fed action." In essence, the USFed will describe in acute detail how they are stuck with No Exit Strategy available, except of course an option to collapse the USEconomy. Tragically, that might have been the plan all along, a Jackass viewpoint since Greenspan advocated the housing market built on loose bubbly sand to serve as the USEconomy pillar, the industry substitute of a legitimate power pack. It was the ultimate in heresy, the final asset bubble for economic dependence. It was too big to fail, but it failed in spectacular fashion. Thus the unresolvable mess that paves the way to a systemic failure, forecasted by the Jackass in the last months of 2008.

Hussman made an unusual apology on his shortcoming in 2007 and 2008. He deserves credit for doing so, rarely seen. He did not foresee the calamity that befell the US landscape, both financially and economically. He did not foresee the depression concerns as relevant. He expected a recession with heavy debt writeoffs and no more, no worse. He anticipated the USEconomy to emerge unaffected. Credit to Hussman for his honesty. These warnings in 2007 and 2008 were not missed by the Jackass, since they were cornerstones to the Hat Trick Letter messages based upon a gradual systemic failure from mortgage bond obscenity, from debt saturation, from banker corruption, from asset bubble dependence, and from commitment to endless war. Hussman wrote an especially damning and comprehensive conclusion in criticism which should stand the test of time, and be read years from today. He wrote the following harsh criticism.

"I could not believe that policy makers would choose to violate the Federal Reserve Act (particularly Section 13, which has now been rewritten to ensure it never happens again). I could not believe that they would do everything possible to avoid restructuring bad debt, protecting bank bondholders while trapping millions of homeowners in underwater mortgages, changing accounting rules to obscure balance sheet transparency, imposing financial repression to recapitalize banks at the expense of savers and the elderly on fixed incomes, and creating a long-term structural unemployment problem due to an economic house of cards that offers perpetual fiscal, monetary, and regulatory uncertainty. The bad policy choices were inconceivable. They still are."

Smart capable analysts are awakening to the national calamity. They have yet to attach motive to method by the bank cabal, the crime syndicate of protected bankers, the security merchants of narcotics, the propaganda press network machine, and the outstreched arms of warped justice. These are the pillars of the Fascist Business Model which the Jackass has outlined and cited with detail for over nine years. Hussman does not perceive the fascist element and signature. Welcome to the national pilferage and orchestrated destruction, sure to result in systemic collapse followed by USGovt debt default. Again see the Hussman Funds article (CLICK HERE).

◄$$$ BASEL-III IS DESIGNED TO BRING DOWN THE GLOBAL ECONOMY BY CRUSHING THE BANKING SYSTEM. THE SAME ARCHITECTS IN THE BASEL SWISS CASTLES WILL ATTEMPT TO IMPOSE GLOBAL FASCISM, AFTER THE SYSTEM IS CRASHED, WITH FULL MOTIVE OF SAME. A GREAT DIVIDE IS SOON TO BECOME EVIDENT, A WEST WITH DEAD ECONOMIES UNDER FASCIST RULE, VERSUS AN EAST UNDER GOLDEN RULE WITH THRIVING FAIR TRADE AND THE ASSOCIATED LIBERTIES. $$$

The air of legitimacy is thick with suspicion. The motive to tighten banking regulations when the entire banking system is fragile should be viewed with deep suspicion. A new set of regulations has been developed by a powerful central banking organization will have a dramatic effect on the global financial system over the next few years. Most people do not even know the unique bank exists, but it actually gives marching orders to 58 major central banks. The new set of regulations is known as Basel III, developed by the Bank for Intl Settlements. It is the central bank clearing house for central banks, headquartered in Basel Switzerland. Much of its gold bullion held as treasury wealth was stolen from various central banks during World War II, like in Czechoslavakia. The Soviet Bloc was poor, partly due to the nazi banker raids under the clouds of war. Just before the 1900 turn, a global Zionist Conference took place in Basel. No publicity has since been given this secretive bank cabal since, although conferences continue. It is a syndicate fortress, often the cite of gold futures contract slams, perpetrated with no consequence to law enforcement toward contract fraud. The first death threat delivered to the Jackass in 2006 was originated from Swiss bankers, in all likelihood from the Basel location.

The decisions made in Basel surely have more impact on the global economy due to credit engines than anything imposed by parliaments or tax authorit ies. A brief walk down the lanes of recent history will reveal how Basel II and Basel II.5 rules changes played a major role in precipitating the subprime mortgage meltdown in 2007. Now a new set of regulations known as Basel III is being rolled out, without any popular representation or concern for life savings and private wealth. The implementation of new regulations will begin this year, to be completely phased in by year 2019. These new regulations dramatically increase capital requirements and significantly restrict the use of leverage used by individual banks the world over. While the rules appear to be loaded with wisdom and good judgment, they are more assuredly loaded with plans to collapse the world economy for securing complete control of power, no longer hidden. Only with a wrecked system, the economies dragged down by the bank structures, can the castle dwellers impose their next global fascist plans. If they have their wish, private citizens can achieve wealth, even maintain wealth, only with Basel permission.

The entire global financial system is deeply dependent upon credit. The new regulations are going to substantially reduce the flow of credit from capital requirements and leverage restrictions. The giant debt bubbles known as the global economy, a vast Ponzi scheme since the departure from the Gold Standard, can only be sustained if credit continues to expand. By restricting the flow of credit, these new regulations threaten to burst the debt bubble and bring down the entire global economy. The current global financial system is not sustainable by any stretch of the imagination. The current pyramid debt scheme is destined to collapse. In my view, and the view of many analysts, the Basel III rules are designed to cause the collapse in a controlled fashion, much more quickly than otherwise would be the case. The legislated Bail-In plans to collapse banks and force the vanishing of private accounts is timed with the Basel III rules kicking into phase. In truth, the Bail-In plans were written by the BIS commandants in Basel, to assure the vanishing of private wealth, a key piece to their debt slavery objectives.

Banks will be required to have higher reserve ratios. They will be permitted the usage of less leverage, with reduced dependence upon derivative phony planks. Banks will be more careful with their money, on loan approvals, which will result in credit flowing much more slowly. Given the fragility of the current system, any new restrictions to credit flow threatens to burst the debt bubble and cause a fresh global crisis. That is their plan, part two to the Lehman episode. These new regulations will be phased in between 2013 and 2019. Expect many more bank failures, in full contradiction to the formal sham stress tests conducted. My personal Jackass belief is that the Swiss bankers have been counter-party to the one-sided futures contract short positions. My Jackass belief is that the Swiss bankers have seized most of the Allocated Gold Accounts. My Jackass belief is that the Swiss bankers have plans to control governments and banking systems in the open very soon, no more deep secrecy, thus imposing a harsh draconian debt slave system.

The Eastern nations are not subject to the Basel dictators in the castle enclaves. They are not accountable to anyone. The over-arching dark Basel cabal is the ultimate in imperial overlords, often steeped in satanic mist. Ironically, the hope of the West is for the Russian & Chinese leaders to hasten their projects to set into place a fair equitable broad extensive global trade settlement system based upon Gold that renders the Western banks as empty rooms with toxic paper and gutless old men in rickety thrones. The Eastern communist roots are largely gone, seeking capitalism. The Western nations have fully embraced fascism. Let the Western banks transform into lending utilities offices, with as much power as the electrical generation facilities. See the excellent Economic Collapse article (CLICK HERE). For a corroborating testimony from a financial insider, see the Before Its News article (CLICK HERE). He offers information on how the movement is toward the final stages of a full scale collapse.

May the Basel castle lords burn in hell, where they direct most of their attention for rituals and sacrifices. Let it be known that four powerful groups are in competition for global power: bankers of a certain ethnic type, satanic bankers, narcotics barons, and the ancient Chinese families that have awakened after communist slumber. Unless the Eastern Alliance led by Russia & China, with key roles played by India, Turkey, and Iran, come to provide a global leadership on trade settlement that eclipses the Western banking system, the world will enter a dark fascist era. A very drak fascist global era! The collapse desired in my view by Basel is an essential step for creating the European-centric police state that offers zero liberties. The co-existence with a flourishing equitable system emerging from the East centered on Gold trade seems unlikely. My Jackass expectation is for a great divide, much like the Iron Curtain between the Capitalist Free West versus the Communist Captive East prevailed from 1950 to 1990. The new Golden World Wall is likely to emerge that divides East and West.

The swing nations are Germany and Turkey. These two key nations are beginning to depart from the cocoon of banker loyalty to the Anglo-Americans. The Germans must hasten their open support for the Eurasian Trade Zone, the Gold Trade Standard, and the great barter system. Some movements are in progress within Germany, all kept rather hidden for their own security. As they say on the battlefield, no need to rush out of the trenches too early. The Turks must hasten their role as gold intermediary bankers, which will force a sunset of sorts on the great London City bank function. The United States, United Kingdom, Switzerland, and a tiny Mideast ally on the SouthEast Mediterranean form the Axis of Fascism. On the other end, Russia, China, and an emerging set of nations are in the process of forming the Alliance of Gold Trade and freedom from monetary hegemony. While Europe will be the prize, the United States will be isolated like in the 19th century. The American watch words to come into vogue will be price inflation, supply shortages, vanished wealth, debt slavery, and civil disorder as the castle lords attempt to impose fascism.

## DISORDER PREVAILS

◄$$$ MASSIVE ECONOMIC PROBLEMS ARE ERUPTING EVERYWHERE. THE SIGNALS ARE DIVERSE AND DEEP. SOMETHING UGLY THIS WAY COMES. $$$

Signals include economic depression across Southern Europe, economic recession in Central Europe, stiff slowndown in China, chronic depression called slow growth in the United Fascist States, recession in Australia, reduced industrial output in every nation, youth unemployment in the entire West, persistent outflow of deposits from Western banks, global cash flow in decline for multi-national companies, Japan spinning out of control, high margin debt in the US stock market, smart money leaving stocks altogether, and narrow market breadth giving off the Hindenburg Omen. Something ugly this way comes, sure to be exploited by Wall Street firms. See the Zero Hedge article (CLICK HERE).

◄$$$ FOR THOSE NOVICES TO CRIME AND FRAUD, AN EDUCATION IS IN ORDER, WAY OVERDUE. ALMOST ALL FINANCIAL MARKETS ARE RIGGED, THE PROOF HAVING FLOWED IN HEAVY NEWS VOLUME IN THE LAST TWELVE MONTHS. LAWSUITS ARE STACKING UP, HAVING BEGUN OVER TWO YEARS AGO. BIG BANK INTEGRITY IS LONG GONE. THE SECURITY AGENCIES HAVE JOINED THE FRACAS, FINALLY REVEALED AS BIG BROTHER. THE AMERICAN FABRIC OF INTEGRITY IS RIPPED TORN SHREDDED. $$$

The casual observer requires a summary of known market manipulation scandals in a memory refreshment. To be sure, they are difficult to keep track of, since they involve almost every known financial market, with new fresh scandals almost every month. Law enforcement is nowhere, since the justice ministries are too busy covering up the massive frauds. Fortunately the incredibly astute capable and intrepid Tyler Durden of Zero Hedge provides the handy scorebook to keep track.

  • LIBOR on interest rates (CLICK HERE from a year ago). Barclays in London is the big ringleader in the criminal rate fixing. They have been busy for the last year defending in court cases, since the adjustable rate mortgage world has logged countless lawsuits. Sadly for Barclays, they left an obscenely long trail of evidence in multi-way communications like emails.
  • ISDAfix on swaps (CLICK HERE from two months ago). Banks are leaving the panel that sets ISDAFix, the benchmark for the $379 trillion swaps market, as regulators probe suspected manipulation of the rate.
  • Platts on oil prices (CLICK HERE from eight months ago). A Swiss trading office of Total Oil Trading set off a firestorm when they submitted a letter to an international commission with evidence offered on price fixing in the energy market that pertains to oil, gas, coal, power, and more.
  • WM/Reuters on FX currencies (CLICK HERE from this June). The loosely regulated $4.7 trillion FOREX market is the largest among all financial markets. The WM/Reuters exchange rates have been front-run by employees, as well as having trades pushed through before and during 60-second windows when the benchmarks are set, with dealer collusion.
  • High-Frequency Trading on stocks (CLICK HERE from this June). The flash trading can be observed in action on June 11th, with highly detailed NANEX bids and asks guiding the after-hours stock market with relative ease, and full exposure by their algorithms.

Then not to forget, the USFed and major central banks like the Bank of England, the Euro Central Bank, and the Bank of Japan are engaged in a comprehensive and unprecedented USTreasury curve modeling exercise. It is done under the guise of both ZIRP (short-end) and QE (long-end), with flying buttress aid done by the heavy lifting Interest Rate Swap derivative contracts. The US stock market is a certain beneficiary, courtesy of $12 trillion in extra liquidity in the past five years. To hell with value investing. The Fed Valuation Model dictates that with rates so low, the major stock indexes should be valued near infinity. Pass the Bollinger bottle, and have some unwashed native serve it up. To claim that the Gold & Silver markets are the only markets not manipulated is pure bold folly, worthy of thorazine treatment. See the Zero Hedge article (CLICK HERE). Couple the above evidence with the IRS target scandal, the press spying scandal, and the NSA eavesdropping scandal, and conclude that the infrastructure of the present financial, legal, and societal structure is falling apart one brick at a time. Be safe to believe the last phase is in progress. Welcome to Reich Finance, a bizarre combination of crime-ridden financial markets, culpable finance ministries, press propaganda mills, and justice departments attacking those who attempt to expose the frauds. At least the whistle blowers are not painted at child pornography perps like in 2004 and 2005.

◄$$$ GENSLER HAS BEEN FIRED AT C.F.T.C. FOR UNWANTED REGULATORY PRESSURE WIELDED AGAINST WALL STREET BANKS. THEY WISH FOR TOTAL FREEDOM IN CRIMINAL FRAUD RELATED TO DERIVATIVES THAT CROSS GLOBAL BOUNDARIES. HE WILL BE REPLACED BY A NOBODY WITH NO EXPERIENCE, INSIGHT, ABILITY, OR TEETH. THE BIG-US BANKS WANT NO REGULATORY PURVIEW. BUT THEY MIGHT HAVE FALLEN INTO A DEADLY TRAP BY INTERPOL FORCES. $$$

With little fanfare and no detectable pressure, President Obama quietly fired Gary Gensler as chairman of the Commodity Futures Trading Commission. A big story brews behind the scenes, one of basic domestic pressure, the other of global intrigue. The wormy Gensler, a certain agent of Goldman Sachs pedigree, has served the syndicate well in permitting Gold & Silver market fraud by the big US banks. But Gensler has turned troublesome by crossing Wall Street. He had been too aggressive in pressuring the big US banks, accusing them of extensive antics, the usual fare of derivative abuses and market rigging, which have seeped to the surface in recent months. Foreign nations have objected vigorously in the last few years, especially since the fall of Lehman. The focus of attention has been the OTC swaps and derivatives activity conducted offshore, out of view to most observers. Some dim misguided souls believe the Gensler dismissal is prelude ot a major breaking scandal on the precious metals exchanges. Most likely not so. It is all about the Wall Street banks preferring to have nobody at the CFTC front office in oversight. By nobody is meant a greenhorn rookie who could not see an oncoming truck approach a pack of old ladies crossing the street in South Manhattan.

The replacement referee is reported to be Amanda Renteria, the former chief of staff to the very marginal Senate Agriculture Committee. She attended Harvard Business School, and spent most of her career in public service. Yet another Obama appointee with no business experience, his custom. She was briefly under the Goldman Sachs roof, not long enough to win pedigree. Clownish observers talk of her potentially turning out to be a highly effective regulator despite her lack of practical experience in financial regulation. Earth to public: Miracles do not occur on Wall Street. The Obama Admin truly has an abysmal track record in financial reform. No change is detectable. Expect the same result at the replacement referees in the National Football League in 2012. Missed calls and numerous blunders.

The ouster of Gensler is a gain for big bankers who advocate lax oversight. The Wall Street banks will do what they want in foreign offices with no oversight. But they might do well to watch over their shoulders. The churning of derivatives, which the banking system depends heavily upon, demand no oversight be done, not more. Gensler's removal comes in the midst of controversy over a proposed CFTC rule, strongly supported by Gensler, that would extend US regulation to swaps contracts involving foreign firms founded or doing business in the United States. Wall Street firms are expert at using offshore subsidiary firms, some of them dummy shells. The swaps operate as a kind of derivative exchange unto itself. The regulatory enforcement would have subjected foreign banks and hedge funds to the same regulations as US firms, when trading in swaps with US parties. The big US banks also have a tendency to hide (operate) in European financial firms to wreck the system, to exploit their advantage, to carve out profits, and to sabotage national integrity. See the Cafe Americain article (CLICK HERE).

Catherine Austin Fitts pitched in. She said, "The banks want to be free to do whatever they wish to do and have to do with derivatives. Obama needs an engineered attack [a phony reform action taken] on his Administration to turn down the volume. Obama needs the bond market to keep financing the Administration. That is easier to do with nobody at home. One thing for sure. The overt and covert side of the house are squabbling over reengineering and financing sovereign budgets. The push to attack the tax havens is increasing the pressure."

The Voice offered a much more intriguing interpretation. He sees the Gensler removal and the free rein in derivative usage as a trap that the Wall Street banks accepted. They took the bait. Next comes the clamps from the trap, the damage, cutting their legs off at the knees. He implied that the US bankers made a serious error and will be ensnared in a giant trap from their own extended derivative abuses. As in game over, with some important events to unfold. No additional details are known on exactly which party stands to gain from the trap catching its Anglo banker prey, or where the party stands, or how the trap will close. It will be revealed over time, like the London Whale being exposed and beached with heavy JPMorguen losses.

◄$$$ NOT ONLY IS THE SOVEREIGN BOND MARKET WEAK AND VULNERABLE, BUT SOME MAJOR BANKS ARE ON THE VERGE OF SUDDEN COLLAPSE. THIS IS A NEW DEVELOPMENT, AN EXTENSION OF THE DEMANDS FOR ALLOCATED  GOLD ACCOUNT TO BE REDEEMED. THE WEALTHY ARE PULLING OUT BILLION$ IN CASH AND GOLD FROM BIG BANKS. THEY ARE TEETERING. $$$

Efforts to make the global financial system safer through tighter bank regulations could be making them more vulnerable to credit market shocks. On a widespread basis, bond traders are concerned that a sharp USTreasury Bond selloff since late May could turn into a rout. From Japan to Singapore, the Asian bond markets with their lesser liquidity are at great risk of selloffs, where investors seek redemptions. The region's debt-to-GDP ratio rose to 155% in mid-2012 from 133% in 2008, according to the McKinsey Global Institute. The ratio is currently higher than during the Asian Meltdown that occurred in 1997, when several economies in Asia folded as capital fled the region. The market for selling the new so-called G3 Bonds is drying up, bonds issued by Asian borrowers but denominated in USDollars, JapYen, and Euros. Witness a collapse at the periphery of the Western banking system. See the Reuters article (CLICK HERE).

The Voice pitched in with a perspective on vulnerable banks generally across Central Europe. He wrote, "Spot on with regard to vulnerability. It is more fragile than most people realize. I received last week very disturbing news in regards to a couple of big banks going bust. The pressure is due to people demanding their physical metal to be handed to them, while at the same people pulling their funds out of those banks. We are talking about $billions from very wealthy influential angry depositors. Furthermore, there is the witch hunt to clamp down on tax havens. So rich people are pulling money out for fear of their Gold bullion being improperly used, and other rich people are moving their funds out of havens. Several banks are left vulnerable, if not hollowed out. A great many people holding a lot of cash are currently finding out that they have no power." The Jackass believes he is referring to Swiss bullion banks.

◄$$$ UPSIDE DOWN HYPER-INFLATION HAS BEGUN TO SHOW ITSELF. WHILE THE BANKERS STRUGGLE TO ASSURE THAT INFLATION DOES NOT ENTER THE MAINSTREAM, THEY CANNOT HALT THE PROCESS OF REVERSE INFLATION. THE VANISHING OF WEALTH COMES FROM ITS NATURE OF BEING DEBT IN DISGUISE. THE SYSTEM IS EXPERIENCING A WEALTH WRITEDOWN FROM A FAULTY FOUNDATION FOR MONEY ITSELF. WITNESS THE HYPER-DEFLATION EFFECT. THE ASSET VALUE DECLINES OCCUR IN LOCKSTEP WITH THE RISE IN MONEY SUPPLY. NO ESCAPE FROM INFLATION, ONLY A DIFFERENT FORM. $$$          

If prices cannot be permitted to rise, then wealth must be forced to decline. The Jackass calls it the Law of Finite Wealth. The decline will happen sharply, in order to compensate for prolonged monetary illness. The exercise is simple from a basic enlightened perspective. Flip over the assets and wealth forms. As they are revalued downward (like in debt writedown), or as they are confiscated (as in bank bail-ins), one can then see the hyper-inflation at work. Except it arrives in reverse. For several years, the bankers and politician under puppet control have refused to permit rising prices on Main Street and the business sector. To be sure, costs have risen and assorted materials have risen in price. But wages and end products have not in any general sense. Mother Economic Nature is brutal and unforgiving. The end result has been not higher prices in huge jumps, but rather much lower wealth in huge quantum declines. Think home equity. Think mortgage bonds. Think pension funds. Even at times, think money market funds.

The bizarre upside-down hyper-inflations have begun to strike hard. Asset devaluations and account confiscations (even thefts) have become commonplace. It is not just the 40% haircut on Cyprus bank accounts or MF-Global 60% account seizures or the 40% mortgage bond losses on the family Trust Fund or complete loss on home equity that largely vanished. It is instead the collective wealth of entire nations. Next consider the corrosive effect of price inflation that actually does reach the street. That $200k fund from the successful business venture, or the $2 million nest egg for retirement, which was left alone in year 2000, is now worth 50% less in purchase power, perhaps 70%. Refer to a folder filled with US bank certificates of deposit, losing value from the steady scourge of price inflation. The subtle erosion is hidden, but in the same sense upside-down nasty inflation.

The loss of wealth corresponds to the same addition to the national money supply, all in proportion. The USFed has overseen a vast expansion in the monetary aggregate, which sounds more sophisticated and less heretical, far more impressive to be sure. The central bank has taken great steps to keep the infusions within the banking sector, but impacts have hit certain asset types. The hidden loss of wealth matches the inflation in money supply expansion, step for step. What is different is the asset base has shrunk. What has not changed is the reduced purchase power of the assets held. Flipping things upside down helps to understand the hyper-inflation and its nasty effects. See the YouTube video (CLICK HERE).

Chronic double digit price inflation has the same end result as confiscation and asset revaluation. They are simply given different labels, or seen as different procedures. As footnote, a colleague pointed out that Antal Fekete called the above phenomenon Hyper-Deflation, while the Jackass Jim Willie has called it Disintegration. The recognition of kissing cousins to hyper inflation is happening to purchase power. People must be careful, as money confiscation is fast becoming legal, and the norm, written in law by bankers and their proxies. Money should be taken out of banks and kept out. Money should be converted into Gold & Silver, which is real money. When in precious metal form, it will rise in value with the corresponding increase in money supply, the great currency debasement.

◄$$$ OUR SYSTEM IS SO FLAWED THAT FRAUD IS GUARANTEED. AN IMPENDING FINANCIAL COLLAPSE IS ASSURED, SINCE NO SOLUTION IS SOUGHT, AND BANK REGULATIONS ARE TO BE TIGHTENED. FRAUD IS ENCOURAGED AND PROTECTED, AN INTEGRAL PART OF THE SYNDICATE BUSINESS PLAN. THE RECENT TUMULTUOUS EVENTS ARE A PRELUDE TO THE COLLAPSE IN A GRAND FINALE. $$$

Bill Black discussed the element of fraud laced within the system. Although he does not directly cite the Fascist Business Model, a regular theme in the Hat Trick Letter for over nine years, it is implied and deadly in his essay. Fraud is not just tolerated in the US and West, but rather encouraged and protected. See the Before Its News article (CLICK HERE). A more detailed prospective account of the unfolding disaster is given. It attempts to describe a wrecking ball sequence that will engulf the world, the effects to be felt by individuals, families, and businesses. See the From the Trenches World Report article (CLICK HERE).

## BIG BANK DEATH WATCH

◄$$$ THREE BIG WESTERN BANKS ARE ON DEATH WATCH, STARTING WITIH DEUTSCHE BANK. THEIR CRIME IS F.O.R.E.X. CONTRACT FRAUD. THESE THREE BANKS DOMINATE IN THE CURRENCY MARKET. ANY FAILURE WOULD ROCK THE FINANCIAL WORLD. SINGAPORE CENSURED 20 BANKS FOR RIGGING BENCHMARK RATES (LIKE LIBOR). $$$

With a tone of urgency in a new development, the Voice shared some information on three big banks that are ripe for failure. They are Citigroup, Barclays, and Deutsche Bank, which cover New York, London, and Germany. Two weeks ago, he first mentioned them but not by name, stressing the imminent shoe to drop on the next bank failures like Lehman Brothers. After a certain degree of Jackass begging, accompanied by some harmonized begging by colleagues, he relented. He wrote, "Deutsche Bank, Citigroup, and Barclays are under the gun bigtime for massive, multi-$billion FOREX manipulations. Investigations at the highest level are well along, which no politician or judge can interrupt. As usual the location of the crime scene is London. Deutsche Bank will not survive their current legal problems, despite cooperation with the Interpol Fraud Division."Add to the list a couple weakened Japanese banks, but for different causes.

While hundreds of firms participate in the FOREX currency market, four banks dominate. Their combined share is over 50%, according to a May survey by Euromoney Institutional Investor. Deutsche Bank (based in Frankfurt) is #1 with a 15.2% share, followed by Citigroup (based in New York) with 14.9%, then Barclays (based in London) with 10.2%, and UBS (based in Zurich) with 10.1%. If any one of these banks enters failure with a grand bust, the financial foundation will be rocked far more than during the Lehman bust. The event will be much more global in impact.

Pressures on the big banks will not end. The Singapore Monetary Authority censured banks for trying to rig benchmark interest rates. The banks were ordered to set aside $9.6 billion at zero interest. Internal controls will be reviewed in formal steps. ING Groep NV, Royal Bank of Scotland, and UBS were among twenty banks censured, where 133 traders were cited for manipulation of the Singapore Interbank Offered Rate. More LIBOR extended fraud, seen globally. The decision came after review of the period from 2007 to 2011. See the Bloomberg article (CLICK HERE).

◄$$$ DEUTSCHE BANK IS HORRIBLY LACKING IN CAPITAL, IN OTHER WORDS FAR PAST INSOLVENT. IT IS IN THE PROCESS OF GOING BUST. IT CANNOT SURVIVE THE SCRUTINY OF RECENT DERIVATIVE ACCOUNTING. ITS FAILURE WILL BE A SIGNIFICANT TURNING POINT FOR THE NATION. $$$

In Germany, the flagship Deutsche Bank is in big trouble, extending from its role in LIBOR and corrupt FOREX swap contracts. An insider revealed that the once venerable D-Bank is in great danger of entering failure. Its long harlot role in service to London banker dons is coming to a disgusting end. The Jackass expects that once D-Bank goes bust, Germany will turn on a dime to greet its Eastern trade partners Russia & China to join the Eurasian Trade Zone. It will be a seminal event, a critical geopolitical turning point. There are two Germanys, 1) the hacks aligned with Merkel and the European Union who have squandered a decade of national savings (estimated at US$3.5 trillion) on welfare for inefficient reckless neighbors to the South, and 2) the intrepid new commercial titans who have forged significant commercial and supply deals with Russia to be more fully revealed and soon exploited.

Tom Hoenig has an interesting past job record. As former Kansas City Fed Governor and constant FOMC dissenter gadfly, he was at times the sole voice of reason at the US Federal Reserve. He currently serves as FDIC Vice Chairman. In a recent Reuters interview, Hoenig admitted that Deutsche Bank is very seriously under-capitalized as a bank. Translate to mean they are grossly insolvent and at risk of failure with any push. While he said the flagship German bank had no margin for error, a more accurate statement would be they are dead meat to be served up soon as a giant bank failure. A grand global disruption is very near, far more widespread in impact than the Lehman Brothers bust. A year ago, Tyler Durden highlighted the plight of Deutsche Bank following the sham stress tests. D-Bank was not even listed, a hint of its pathetic status. At the time, its true capital ratio was under 2%, with an implied leverage of 60 times. See the Zero Hedge article (CLICK HERE).

◄$$$ THE BRITISH COURT RULING ON JUNE 19TH COULD BE A POTENTIAL SIGNAL OF TREMENDOUS CHANGES COMING TO THE WESTERN BANKING SYSTEM. THE END OF IRAN SANCTIONS IS OCCURRING. EXPECT SOME MAJOR CHANGES THAT INDICATE A SHIFT IN THE GEOPOLITICAL WINDS. THE EAST IS MAKING ITS VOICE HEARD. $$$

The Supreme Court in Great Britain has overturned a ruling against Bank Mellat of Iran over its alleged links to Tehran's nuclear energy program. Witness the end of the Iran sanctions led by the USGovt, in which the Americans shot themselves in the face, legs, and gonads. The court ruled that the UKGovt acted improperly when it imposed sanctions on the Iranian bank in 2009. It formally called the directive irrational and disproportionate, even unlawful. The decision came after the European Union General Court decided in January to quash sanctions imposed against Bank Mellat in July 2010. The Iranian Bank has promised to explore legal channels and file lawsuit against individual governments for the damages it has suffered as a result of sanctions. A claim was mentioned in excess of GBP 500 million, roughly US$750 million. At the beginning of 2012, the US and the EU imposed sanctions against Iranian banks and energy firms. The goal was to prevent other countries from purchasing Iranian oil and conducting transactions with the Central Bank of Iran. The sanctions entered into force in the summer of 2012. They have been an unmitigated disaster, as they encouraged development of a non-USDollar global alternative. The real sin was in Iran's usage of non-USD settlement for energy trade. See the PressTV article (CLICK HERE). Great shifts in global winds are coming, this only the beginning.

## CENTRAL BANKERS WITHOUT OPTIONS

◄$$$ USFED CANNOT TAKE OFF THE BOND MONETIZATION. THEY HAVE NO EXIT STRATEGY. THEY ARE DEEPLY COMMITTED NOT ONLY TO KEEPING THE ZERO BOUND RATE AND MONETIZED BOND PURCHASE, BUT ALSO TO EXPAND THEIR ALREADY WRECKED BALANCE SHEET. THE ENTIRE FINANCIAL SYSTEM AND USECONOMY HAS GROWN TOTALLY DEPENDENT UPON THE USFED HYPER MONETARY INFLATION. NO MARKETS ARE SPARED, ALL RUINED. FREE MONEY IS USED TO PROP THE IMPORTANT BAROMETERS AND TO RIG THE SUPPLY MECHANISMS. $$$

The live stress tests are compelling. The mere thought (whiff) of reduced USFed pressures on accommodative monetary policy sends shock waves through financial markets and shivers through investor hearts. Not just in the United States, but across the entire world, Asia included. The speeches offered by the USFed Chairman Bernanke do not reassure. His words recently have given great emphasis to the prospect of accommodation being reduced, underscoring the substantial risks of ending stimulus. The problem, as recognized by a growing list of critics, is that the ZIRP & QE are not stimulus at all. They distort the asset prices and lift the cost structure, both of which wreck the USEconomy, as well as the global economy. Thus the Eastern Alliance has responded with heightened motive to replace the USDollar in trade settlement, which would render the USTBond as a banking system relic to be discarded, an item for the toxic Third World trash receptacle.

The end of the USFed monetary easing policy requires a new buyer for over $1 trillion in USTBonds each year, plus more to cover rollover refundings. No buyer is apparent, thus no end to the easy policy. To attract buyers of USGovt debt securities, the interest rate would have to be at the level of Spain or Italy, possibly the level of Greece. A normal interest rate would be so high as to bring about a huge rise in borrowing costs, resulting in even grander deficits. The USFed has no Exit Strategy, has no exit doorway at all even to consider. No party would buy the USTBonds and the required interest rate would be exorbitant.

Ben Bernanke testified recently before the USCongress (a den of compromised Wall Street bagmen) and spoke about the tapering of QE. This is the new watch word, Tapered QE. The Bernanke Fed has no credibility left. Some trial balloons over the last few weeks regarding cutting back on QE have been floated. The results are not promising or encouraging. Rates are rising. The stock markets could be the first victim, unless the USFed and USDept Treasury work overtime to amplify their already substantial stock support machinery. The other victim is already the Japanese stock market. On a recent day, the Nikkei stock index suffered a massive 7% decline after opening up 3%, for a magnificent reversal that painted a billboard of hazard and risk. Stock markets all over the globe are down over 2%, except the the better controlled US market. But the S&P500 stock index is clearly next. Many are the dislocations that will take place strictly on the prospect of lesser Quantitative Easing.

People should be aware that QE is code for outright monetization, a euphemism for hyper monetary inflation of the most virulent dangerous variety. It means printing money to purchase USTreasury Bonds that have no buyers. It means permission given to the USGovt to continue its reckless ways domestically with social programs and bank welfare. It means permission given to the USGovt war machine patrons to continue the endless predatory wars, complete with massive fraud and skimming. Be sure to know that unaccounted for newly printed money is used to purchase the very instruments that paint the tape on billboards that offer the ALL IS WELL message, much like altering the thermostats and barometers. Be sure to know that unaccounted for newly printed money is used to finance complex contract chicanery that suppresses prices for all the things the USEconomy requires. Remove them and the public alarm signals red flags. Remove them and price inflation zooms higher to trigger public disorder. Pure and unadulterated printing is used to paint the pretty (false) pictures so the populace will continue to sleep in oblivion, said a harsh critic. See the Yahoo Finance article (CLICK HERE).

◄$$$ THE SHADOW BANKING SYSTEM MUST CONTINUE, OR ELSE ALL GOES DARK IMMEDIATELY. THE USFED IS TRAPPED IN ITS OWN MACHINERY. A PONZI SCHEME IS BEING REVEALED THAT ENCOMPASSES THE ENTIRE USECONOMY AND ITS FINANCIAL STRUCTURE. THE SYSTEM COLLATERAL IS INADEQUATE. THE ACCOUNTING IS FALSIFIED. THE COMPLIANCE PROCESS IS GIMMICKED. THE INTERLACED COUNTER-PARTY RISK IS GLOBAL. THE REGULATIONS ARE WRITTEN BY THE BANKERS. BANK FAILURES ARE FORBIDDEN, AS FUNDS ARE PROVIDED FROM THE BOTTOMLESS CENTRAL BANK WELLSPRING. THE MORAL HAZARD IS EMBRACED THROUGHOUT. THE SYSTEM IS GUARANTEED TO COLLAPSE. $$$

A brilliant concise narrative has been provided by Bill Frezza from the Menckenism blog. The fractional reserve banking system relies upon the grand sprinkler device to disseminate money, but also to fabricate money from thin air via credit extension. Loans are created through pyramid systems of new money creation. Banks in recent years have not feared the risk of failure. They dreaded the thought of not participating in the next Ponzi chapter (see housing & mortgage bubbles). Dodgy borrowers tended to be protected and concealed, not avoided and shown the door. If depositors were more aware and less numb in the cerebral cortex, the landscape and news networks would be dominated by bank runs from removal of funds from corrupted casinos and toxic sprinklers.

The risk & reward model has been co-opted and replaced with the Fascist Business Model. The moral hazard is systemic and deeply entrenched; evidence abounds. Reliable depositors and creditworthy borrowers resulted in strong banks and a stable financial foundation. That is gone. Ultra-low rates today stand in effect side by side with insolvent dead banks, following an era of indirect USGovt funding and corrupt regulatory oversight. Periodic bank failures used to remind depositors of the connection between risk and reward, in reality checks. They have been forbidden, as the big corrupt US banks are deemed too big to fail, when instead they are the syndicate power centers of control. The officially provided deposit insurance and other financed backstops have shielded most depositors from the risk of loss. Bank premiums toward insurance are inadequate. Conservative bankers who want to remain in business must take on more risk. Banks learn that competitive advantage can be obtained by either gaming the regulations or having stooges write them. Banks have been permitted via altered FASB accounting rules to mark their own balance sheets. The moral hazard is systemic and deeply entrenched; evidence abounds.

The financial firms in general are chasing yield in risky minefields, as they pursue the best among least bad options. The competitive advantage for banks is no longer from prudent management, but rather from federal connections through the Wall Street marbled offices in Manhattan. The plethora of government bailouts allowed an underlying shadow banking system not only to survive but to flourish and to grow much larger. Like most large tall structures with poor foundation lacking integrity, the system will falter, fail, and fall.

The big US banks have amassed almost $2 trillion in excess reserves which they store at the USFed, upon which the central bank relies in order to appear solvent. The central bank controller is more insolvent than its subjects. The profit from the shadow banking system is not used to make commercial loans. Rather, they use the money to fund proprietary trading operations in repos and derivatives. Securities held as collateral by counter-parties in a repo contract can be rehypothecated by the lender to obtain additional loans. Such was the unfortunate discovery by MF-Global hapless clients, who saw their assets dispatched to London. In other words, the big financial firms are using private accounts as collateral to fund their giant reckless games, in repeated fashion. Assets are used as collateral multiple times, since the insolvency is pervasive and viable assets are scarce. The result is a bewildering array of complex synthetic derivatives, otherwise known as a circular check kiting scheme. Add in the issuance of commercial paper required to grease the wheels. The biggest difference is that an embezzler kiting checks does not have the support of a central bank providing steady injections of liquidity, beefing up balance sheets, and covering the corrupted tracks. The big banks also provide themselves an important backstop with narco money laundering, a practice so deep that gold bars sit side by side with packaged heroin bricks on bank shelves in overnight operations.

The top 25 US banks have piled up over $200 trillion  in leveraged bets atop a gradually reduced wedge of collateral. The claims are spread across an opaque and complex chain of counter-parties residing in multiple legal jurisdictions. Hence the systemic risk is global. These collateral claims are interlaced with hundreds of $billions in notional outstanding derivatives made by other banks around the world, altogether amounting to over 20 times global GDP. The estimates on the total global derivatives at work range between $400 trillion to $1.3 quadrillion. The global banking system has a vaporous foundation that invites scattered important bank failures. A mockery is made of Value at Risk accounting, as the systemic risk threatens to bring down the global banking system.

Private citizen and taxpayer risk exposure to the banking system has been seen in account confiscations, thoroughly forewarned to the American public. The people have ignored the warnings. No bank runs have yet occurred. The Ponzi Scheme will go bust, and the bubbles will pop, someday in the near future. The lack of adequate collateral guarantees the day. Frezza concluded, "A donnybrook is going to break out over that thin wedge of collateral, whose ownership is spread across counter-parties around the world, each looking for relief from their own judges, politicians, bureaucrats, and taxpayers. When that happens and the clamor for regulation, nationalization, confiscation, and demonization arises, there is only one thing we can be sure of. The disaster will once again be blamed on a free market capitalism that has not existed in this country for over 100 years." Welcome fascism, the door opened and entered, the celebration on 911. See the guest article by Bill Frezza via Menckenism blog on Zero Hedge (CLICK HERE).

◄$$$ THE BANK OF JAPAN IS HEAPING GREAT DESTRUCTION FROM ITS BADLY RUN EXPERIMENT. THE NATION OF JAPAN COULD BE THE FIRST FAILED FINANCIAL STATE IN THE WEST, ALWAYS THE ADJUNCT LACKEY FROM THE UNITED STATES. THE COMBINATION OF FISCAL (GOVT) AND MONETARY (CENTRAL BANK) AGGRESSION HAS PROVED DEEPLY DAMAGING  TO MARKETS AND TO WEALTH. NOLAND DECRIES THE INSANE RISK AND EXPECTS THE OUTCOME TO BE NASTY UGLY AND NEGATIVE. $$$

The Japanese central bank is without options. Therefore, it will attempt to spin wealth off the printing press. Despite stock and bond market extreme volatility, the Japanese central bank remains steady in its destructive hand. It aims to stoke 2% price inflation. The new Kuroda BOJ had been on an official campaign to push the JapYen currency from 128 versus the USDollar since October 2012, down to a 97 handle in May, before the correction occurred that lifted the Yen currency to the 105 level. Whether profit-taking or sensible hand, it is unclear. The proximal cause for financial market losses was the spike in the 10-year JapGovtBond yield (and the USTreasury Bond 10-year yield), which pulled the rug from the Nikkei stock index. The investor jitters focused on the dangerous dependence built by the BOJ to keep afloat the funding and servicing of its colossal public debt. The most aggressive competitive devaluation in recent history, conducted in Japan, has not produced much beneficial fruit. The gains from export trade were offset by higher domestic price inflation. The solution is toxic in nature, illusory in practice. The most recent USFed talking points of tapered stimulus might have had the most brutal effect in Japan, where the carry trade was invented two decades ago.

 

In a unanimous vote, the Bank of Japan decided to hold steady on a policy to grow its base money supply (cash plus bank deposits) by between JPY 60 trillion and JPY 70 trillion per year (=US $600 to $700 billion). The delusion is of stimulus, when the reality is price inflation and shrinking profits, which serve as a severe damper. Revised Japanese Govt data indicated a 1.0% GDP growth rate in 1Q2013, but the Jackass believes the growth was improperly gauged price inflation (a US trick learned by the Japanese dog). The central banks are all justifying hyper monetary inflation with deceptive growth rationales. The aggression was ordered in unprecedented manner by new Prime Minister Shinzo Abe, who crossed the line on central bank independence. The goal since April has been to jolt the Japanese Economy out of 15 years of deflation, a key initiative intended to produce wider growth. The insanity is laced within fiscal and monetary policy. A better bolder solution would be to liquidate some dead limbs in the big conglomerates, to write down some Japanese Govt debt, to bring home some outsourced industry from China, to dump a giant truckload of USTBonds, and to cut the phone lines to the US Federal Reserve from the Bank of Japan.

Under Haruhiko Kuroda, its new governor, the Bank of Japan pledged to double the national money supply in two years through aggressive purchases of government bonds and other assets, with a 2% price inflation banner on display. Kuroda seems equally amateurish as Abe. The BOJ head Kuroda actually stated that the recent rise in long-term interest rates is a healthy reflection of inflation expectations, and does not pose an immediate threat to the Japanese economy. Wrong on both counts for the rank amateur nitwit, as rising price inflation will have a dire profit impact, sure to render damage to the vaunted export industry at a time when cheaper Chinese labor has invited extensive outsourcing. The bond yield rise signals severe funding problems (from low carry trade income and from vanished trade surplus) against a backdrop of fear, causing capital flight. Any central bank that cites inflation levels as target is heretic and destructive in ways not visible until the charred ruins and ashes are examined more closely in future years. Kuroda and Abe are a tag team of wreckage from the monetary and fiscal whiplash of the headache wrecking ball located at the Tokyo demolition site, often confused with construction. The clowns in the room focus on volatility, when the real focus should be on undermine to wealth, currency debasement, and income deprivation. See the New York Times article (CLICK HERE).

Doug Noland is usually mild-mannered, choosing to soften his words when he decides to issue harsh criticism. The recent months of insanity by the Bank of Japan have motivated Noland to direct a surprisingly harsh essay. He wrote the following in late May. Strong words, not minced words. See the Prudent Bear article (CLICK HERE).

"When a fledgling central bank chief, in the midst of a radical and untested experiment in monetary inflation, promises to stabilize a nearly $14 trillion bond market, well, it is time to begin worrying. My guess is that is exactly what some of the hedge funds and sophisticated leveraged players began to do this week. Time to begin taking some chips off the table. The Kuroda Gambit was seen unleashing enormous amounts of liquidity upon global markets. At least this perception was spurring a collapse of sovereign yields and risk premiums around the globe. Those caught short in the melt-up in risk markets were forced to run for cover, virtually everywhere. Those hedging various risks were forced to throw in the towel, while those cautiously under-invested in rapidly rising markets had little choice but to throw caution to the wind (capitulate). Radical BOJ measures pushed already over-liquefied, speculation rife, and highly unsettled markets over the edge into speculative blow-off type dislocations." Wow!

◄$$$ JAPANESE INVESTORS ON A YIELD HUNT IS NOT MATERIALIZING, TO THE FRUSTRATION OF THE JAPANESE GOVT AMATEURS. THE ENTIRE NATION SUFFERS A MASSIVE CASH FLOW PROBLEM. $$$

In Tokyo, the Ministry of Finance published data that Japanese investors were net sellers of foreign securities for a fourth consecutive week. In the period from June 2nd to June 8th, Japanese investors sold a net JPY 386.9 billion (=US$4.1 bn) of foreign bonds & notes and a net JPY 221.8 billion of foreign stocks in the week ending June 8th. No rotation is evident in moving from fixed income assets in favor of stocks, no such Great Rotation bandied about. See the Market Watch article (CLICK HERE).

◄$$$ THE NEW BANK OF ENGLAND CHIEF CARNEY WILL DEVALUE THE BRITISH STERLING CURRENCY, P.I.M.C.O. WARNED. THE SPECTACULAR FAILURE IN JAPAN MIGHT BE REPEATED BY LONDON. BANKERS NEVER LEARN FROM ERRORS. THE CLIMAX IN COMPETITIVE DEVALUATION AS A SOLUTION AND TOOL WILL BE PUT ON STAGE FOR VIEWING ITS SPECTACULAR FAILURE. NEVER IS WEALTH PRODUCED THE NEW-FANGLED WAY, BY CENTRAL BANK ORDER. IT IS PRODUCED BY INDUSTRY AND WORK, THE OLDFASHIONED WAY. $$$

The British central bank is without options. Therefore, it will attempt to spin wealth off the printing press. PIMCO has released a research paper with a warning. The bond king house, the Bill Gross perch, expects the newly anointed Mark Carney to try to devalue the British Pound by as much as 15%. He will wear the London monetary robe with scepter after he takes over as Bank of England Governor in July. The desperation is thick. The British realm followed the American insanity by dispatching its industry to Asia. They replaced it with dependence upon asset inflation. Next they followed the American insanity again by building a housing bubble with supporting bond bubble. In the wake of the magnificent busts, fully forecasted in 2005 and 2006 by the Jackass in the Hat Trick Letter, the British fortress must resort to a last ditch attempt to spur a UKEconomic recovery. It is doomed to fail. Systemic failure in Britain awaits on the other side, to occur with its US colony.

Britain has selected the Canadian Carney, the fall guy. His selection reflects their miniscule confidence in a solution. Never does a monetary solution compensate for a generation of economic folly. The benefits from the competitive devaluation will be met with equally disastrous consequences as seen in Japan. The illusory benefits will be overwhelmed by introduction of price inflation, lost corporate profitability, and financial market turmoil. These are the common Western economist blind spots. A new round of money printing (not wealth output) begins in July. See the UK Telegraph article (CLICK HERE). The debasement of major currencies soon will have all global cylinders working in unison. Gold will go up in all currencies, not yet shown on the COMEX & LBMA marquee billboards. These official exchanges must first shut down.

## USTREASURY LIVE STRESS TEST

◄$$$ NUMEROUS REASONS WHY THE USTREASURY LONG-TERM BOND YIELD WILL NOT BE PERMITTED TO RISE. DIVERSE RISKS APPLY. EXPECT THE USFED TO BE OVERWHELMED. THEY WILL ULTIMATELY FAIL. $$$

The TNX (10-yr USTreasury yield) cannot be permitted to rise:

1)      big US banks would reverse their carry trade and accelerate the bond rout

2)      derivative accidents would hit on the Interest Rate Swap with huge fallout

3)      USGovt deficit would go back to $1.5 trillion with huge borrowing costs

4)      US housing market would crash again in full view

5)      USEconomy would turn for the worse in obvious fashion

6)      catastrophe to occur if TNX goes under 1% (success) or over 3% (failure).

The Bernanke Fed has been without options for a long time. They were forced into ZIRP at the zero bound when the system crashed. They were forced into QE when foreign buyers disappeared. They have been stuck in the ZIRP/QE corner for over two years. The USFed might be conducting an insane Live Stress Test on its own volition. The cornered central bank might also be ordered to conduct a stress test by higher powers, like at the BIS to obtain a better sense of the global collapse assured. They might be conducting a test to calibrate the derivatives required to do extremely heavy lifting. They might be conducting the test to sabotage Japan, as it moves closer into the Chinese fold. It might NOT be conducting a test at all, as foreign creditors unload the USTBonds in greater volume in the various channels. It could be some Eastern forces have learned how to interfere with the Anglo derivative levers, to weaken their function as the US financial system is brought down on its own crippled toxic USDollar and its own ponzi toxic USTBond.

◄$$$ USTREASURY BOND SELLOFF HAS BEGUN. IT MIGHT HAVE A HIGHER GEAR IN THE SELLOFF. PRESSURE IS ON THE USFED AS LONE BUYER. THE EFFECT OF NEAR ZERO BOND YIELDS IS COMING HOME TO ROOST. A RETURN TO NORMALCY IS NOT POSSIBLE, BUT RATHER AN EXPLOSIVE OUTCOME WITH DERIVATIVE FAILURES AND BANK FAILURES. $$$

When Goldman Sachs warns that a USTreasury Bond selloff has begun, then it is time to worry. Either the venerable crime tower has put shorts in place to capitalize on the decline, or they might actually see the decline as inevitable. Wall Street should prepare for a much bigger wrecking ball than the Lehman Brothers failure if the present path continues. An intermediate reversal of the TNX has been confirmed with rising bond yield on the 10-year USTreasury Bond. A deadly dangerous game has unfolded, with several viable possibilities in explanation. It is possible that a global rejection has begun in force. It is also possible that the lunatics at the USFed actually believe they have an exit door available to call a strategy indeed. Regardless, Goldman Sachs has warned, and asset managers are warning. The exodus is being tested, and might blossom into a stampede. The level of risk is not measurable, surely grand, since the USTBond asset bubble is the largest in the history of mankind. The recent auctions have been unimpressive, with strange action at the tails, while bid/cover ratios have been falling. Let's watch the USFed balance sheet expansion, because global buyers are noooowwwhere! The primary bond dealers are lined up for a slaughter, compelled to buy that which is not purchased at auction. See the CNBC article (CLICK HERE) and the Business Insider article (CLICK HERE).

◄$$$ TREASURY SALES BY FOREIGNERS HIT AN HISTORICAL HIGH IN APRIL. A GATHERING STORM HAS COME TO THE DOORSTEP OF THE USGOVT AND ITS MASTER AT THE USFED. JAPAN AND ENGLAND ARE SELLERS, BOTH BEING ALLIES. PLENTY OF MORTGAGE BONDS AND US-STOCKS WERE BOUGHT, EVIDENCE OF FOREIGNERS DOING A ROTATION TOWARD EQUITIES. DESPITE THE GLOBAL SELL-OFF IN EQUITIES, NO REAL BID FOR USTBONDS WAS SEEN, EVEN AT THE SHORT END. $$$

The monthly TIC Report data on foreign capital flows is chock full of data, although in two month delay. In April, official and private foreign investors together sold $54.5 billion of USTreasurys. The disgorge was the biggest monthly sale of USTreasurys by foreigners in the history of the data series, like at least in over twenty-five years. The global rejection is in full swing. In distraction to the core theme, foreigners increased purchases of mortgage bonds by a hefty $23 billion, while corporate bonds were sold by $4.5 billion net. Strangely, foreigners lined up for $11.2 billion in US stock purchases, displaying a lack of insight and a bucket load of gullibility. The rotation is evident for foreign investors. See the Zero Hedge article (CLICK HERE). Clearly, Japan has a cash flow problem and and must sell USTreasurys. However, strangely, a trap might be laid of unclear origin. Some USTBond selling has come out of the Caribbean banking center under UKGovt cover. Wall Street banks employ the Caribbean centers in slush fund management, as does the Bank of England along with London banks, and hidden offshore special entities like they used with Enron.

The June 11th bond auction to sell $32 billion in 3-year bonds went very badly. The bond yield spiked to 0.581%, a relatively dramatic move up from last month's 0.354% and the highest yield since July 2011. At the surface, plenty of turbulence. Beneath the surface, more instability with the Bid/Cover ratio plunging from 3.38 to only 2.95, the lowest since December 2010. The Direct Bid was only 8.4%, down from 14.6% and the lowest Direct interest since August. Primary Dealers had to absorb the remainder, equal to 58.4% of the auction. They are the victims in the bond game, compelled to buy up overpriced bubbly USTBill assets, likely to die in the crossfire crush. The only good news is the interpretation that with a mere 0.5% yield offered to hold short-term USTBill debt, the implied fear of an imminent USFed rate hike is still far away. See the Zero Hedge article (CLICK HERE) and the Business Insider article (CLICK HERE).

◄$$$ SECULAR END TO THE USTREASURY BOND MARKET IS POSSIBLY HERE OR NEAR. A SCARY COUPLE WEEKS FOR THE USTBOND. THE MAIN PLAYERS ARE JUMPING OFF. $$$

Money is moving out of the USDollar, out of USTreasurys, while it threatens to depart US equities. One is left to wonder if big firms, big institutions, and big players anticipate a significant event coming soon. It could be geopolitical or monetary. The Dallas Fed Governor Richard Fisher told reporters, "This is the end of a 30-year rally" in bonds. He spoke about poor compensation for risk, with non-existent spreads to keep banks running. He implied that the managed bond market could not be managed anymore. He is not alone. Bill Gross of PIMCO manages the world's biggest bond fund with $293 billion in assets. He was caught writing a tweet that said, "the secular 30-year market likely ended on April 29th". Even the popular but corruptly myopic Warren Buffet said in May that bonds are a terrible investment these days. Negative real yiels are the bane of USTreasury Bonds, and signal their demise, if only yet a busted asset bubble.

The other side of the table is worth hashing out. With the powerful Interest Rate Swap tool at the ready, it is very difficult to see the USTBond secular rally over. To be sure, sitting at the high valuation and low bond yield for two to three years takes a toll, and leads to a teetering tower. But with the IRSwap always ready to have its lever pulled, it seems like a Stress Test with some hidden agenda at work. To be sure, the USFed is petrified and frustrated and desperate. They might permit a step function rise, to see the reaction, like every several weeks permit the TNX to rise another 20 to 40 basis points. Time will tell, but this will not end well.

◄$$$ THE CRITICAL FAULT LINE LIES IN JAPAN. A NEW PHASE IS UNDERWAY (HARDLY JUST BEGUN) THAT EXPOSES JAPAN AS THE WEAK LINK IN THE SOVEREIGN BOND MARKET. THE LATEST Q.E. PROGRAM AND PUMMELING OF THE JAP-YEN CURRENCY IS CAUSING GIGANTIC PROBLEMS. NEW DYNAMICS WORK TO RIP JAPAN APART, LIKE HIGHER NATIVE COSTS, LOWER USTBOND INCOME, AND REDEMPTIONS OF J.G.BONDS. INCOME IS NEEDED TO SUPPORT AN AGING POPULATION WITHOUT BENEFIT OF TRADE SURPLUS ANYMORE, OR CARRY INCOME. SOME EXPERT ANALYSTS BELIEVE JAPAN WILL BE THE FIRST FAILED STATE ON THE FINANCIAL FRONT, AS NUMEROUS GRAND FORCES ARE AT WORK IN THE NEXUS. $$$

Japan for the past two decades has survived the deflationary impact on zero bound rates and debt overload with nasty implications. Its 1990 decade collapse of the stock and housing markets were tremendous in their impact, yet Japan continued. It had the powerful advantage of a giant trade surplus (and current account surplus) with which to fund the deficits, swapping into USTBonds and building a huge FOREX reserve account. Their exports provided a significant support for the USTBond market and provided Japan with massive cash flow. The reversal of dynamics began to turn in the 1990 decade with the official Chinese devaluation, later followed by the Asian meltdown. The dynamics went critical when China was handed the outsourcing business by many Japanese conglomerates for building consumer products for the Japanese in the last decade. CHANGE HAS COME. The steady devaluation of the USDollar and the lowering of rates constantly has worked to reduce the cash flow to Japan with double barrel impact. By year 2012, Japan had lost its famed trade surplus. It could no longer fund its competitive currency devaluation, thus exposing its own JapGovtBond market as vulnerable.

A terminal state has recently arrived to Japan. New dynamics have become wrecking balls. Consumer demand globally is weak for Japanese products at a time when the Chinese outsource has undercut the nation's previous dominance. The Fukushima nuke plant impact has forced higher input costs from higher priced electricity, even high insurance premiums. Hence income from USTBonds has dropped dramatically. Japan faces the prospect of trade deficits, with the attendant risks it is not accustomed to dealing with. The Japanese pension system has been compelled to sell JGBonds in order to meet obligations, since it cannot survive just on coupon cash flow. The aging native population aggravates the situation. The sales of USTBonds and redemptions of JGBonds work with negative synergy to wreck the financial foundation of Japanese banks, killer blows. As horrendous as the fundamentals and newest trends are in Japan, they are much worse in the United States. Together, the central bank policies of ZIRP & QE will work to kill the system. But Japan appears to be the fault line on the crackup. Thanks to EuroRaj for some excellent analysis points.

◄$$$ G7 BONDS ARE CRASHING ACROSS THE DEVELOPED WESTERN SPECTRUM OF NATIONS. ALARM BELLS ARE RINGING. LIGHTS ARE FLASHING. $$$

More than $2.5 trillion has been erased from the value of global stock market since May 22nd when USFed Chairman Bernanke warned that the USFed could scale back stimulus efforts under certain circumstances. The good chairman's threat of Tapered QE has hit financial markets (stocks & bonds) like a cyclone. His condition was stated as the labor market showing sustainable improvement, which will never happen under the ZIRP & QE double negative condition. Bernanke is conducting a Live Stress Test. It is not going well. Havoc is seen on almost every continent, since the world has grown addicted to the USFed easy money spigot. They are printing wealth in a mockery session extended over three years. See the Bloomberg article (CLICK HERE).

## USTBOND DUMPED

◄$$$ USTREASURY BONDS ARE BEING GATHERED, READY TO BE RETURNED TO SENDER. THE NEW YORK AND LONDON BANKS WILL CHOKE ON THEM. THEY CANNOT REFUSE THE BONDS, REJECTED BY EASTERN ENTITIES AND WISE WESTERNERS ALIKE. AS THE EURASIAN TRADE ZONE DEVELOPS, AS THE PETRO-DOLLAR FADES AWAY, AS THE AFRICANS ENJOY A CONTINUED BUILDOUT, EVEN AS THE BIG US-BANKS BEGIN TO PANIC, THE USTBONDS WILL BE REJECTED ALONG WITH THE USDOLLAR. PANIC WILL ENTER THE USFED HALLOWED HALLS, AS THEIR MACHINERY WILL FAIL TO HOLD BACK THE STUFFED CHANNELS AND THIER NASTY IMPACT. $$$

The public Jackass article entitled "USTBonds: Return to Sender" was posted in early June. It laid out the new vast channels for USTreasury Bond redemption by angry disappointed deceived and betrayed USGovt creditors. They will convert them rapidly into Gold bullion, as they reject fiat paper wealth and pursue valid wealth. The USFed is stuck without an exit doorway, but foreigner creditors have begun executing on an Exit Strategy from the USDollar entirely. The main commercial pillar in the Petro-Dollar defacto standard is to see sunset with the imminent death of King Abdullah. Watch the Natural Gas Coop led by Gazprom next wrest control. Very significant main channels have already begun to form, with the BRICS Development Fund to convert to a Gold Trade Central Bank, with the Rosneft acquisition of British Petroleum with unusual buyout terms, and with payment by China for Russian pipeline energy supply. Look also to the rapid conversion of Russian and Chinese FOREX reserves, with African resource deals paid by China, and with Saudi conversion of recycled oil surpluses during the Fall of the House of Saud.

The domestic wild card could very well be the calamity of the big US bank carry trade put in reverse gear in a great unwind. They are highly leveraged, fully committed to both free money on the short end and falling bond yields on the long end. A convexity event is in the making. The next several months might see the beginning of a truly fierce rejection of USTreasury Bonds, returned with visceral disgust to the sender, the USGovt, in very large torrential volume. The process will surely overwhelm the Weimar press operated by a desperate Bernanke. They will ramp up their Interest Rate Swap machinery, and their basic bond monetization schemes. Their actions will go directly against all claims of a return to normalcy. No tapering of QE will be the case, only empty words. The USFed balance sheet is not only a disaster zone, but it is not recoverable. See the Gold Seek article (CLICK HERE).

It is very tough to foresee it all, but the Jackass expects with near certainty a vast channel stuffing flow of USTBonds in return routes to New York and London destinations. The process will force the USFed to greatly amplify their bond monetization and derivative backstops in order to avoid fast rising bond yields. Once more their marquee policy billboard will be dismantled as propaganda, like in 2009. Then the entire platform stage will fall down when Eastern trade kicks in with Gold Trade settlement. Its introduction will represent the long awaited USDollar rejection, led by Russia & China. It is truly a mystery why 95% of analysts and smart observers miss totally the gold trade settlement card and fail to comprehend its imminent shock wave impact. It is to be a colossal disruption, which will enable trade to settle outside banks and the FOREX. When it happens, the West will find themselves managing markets with both hands on the printing press and futility filling the air.

◄$$$ CHINA WILL START UP A FINANCIAL UNIT TO DIVERSIFY RESERVES HELD AS USGOVT DEBT SECURITIES. THEY WILL CONVERT USTBONDS INTO PROPERTIES AND INDUSTRIES, RIGHT IN NEW YORK CITY. $$$

The USDollars are indeed coming back home. The big Chinese sovereign wealth fund has made an important decision. The State Admin of Foreign Exchange (SAFE) has set up an business office in New York City, which will make alternative investments in the United States. The obvious targets are to be commercial property and midsized industries. The major US, Australian, Mexican, and Brazilian port facilities are already secured Chinese assets in possession. See the Bloomberg article (CLICK HERE) that cites the Wall Street Journal.

The Chinese property office will join with numerous other toxic paper processing plants to offload USTreasury Bonds. Combine with the BRICS Development Fund for processing USTBonds. Combine with the Eurasian Trade Zone energy pipeline payments in USTBonds back to London banks. Combine with Russian and Chinese conversion of FOREX reserves. Combine with Saudi and other Emirate redemption of USTBonds. Conclude the SAFE Fund processor will be yet another grand garbage can for toxic paper sewage treatment. The ironic twist will be the Wall Street banks selling USTBonds in demos of lethal convexity, escaping their leverage, turned antagonistic with the central bank maestro.

◄$$$ BILL GROSS MAKES OBSERVATIONS ON THE BIZARRE BOND MARKET. THE TINY BOND SPREADS TRANSLATE TO INADEQUATE CARRY IN THE BANKING SYSTEM THAT CARRIES BONDS AND EARNS A PROFIT (SUSPECT TO BE SURE). THE USECONOMY IS STRAINING AND AT GREAT RISK FROM A VERY SMALL CARRY PROFIT IN THE ENTIRE FINANCIAL SECTOR. THE USECONOMY AND ITS FINANCIAL ARTERIES ARE SUFFERING FROM OXYGEN DEPRIVATION. HE ADVISES STRUCTURAL SOLUTIONS, NOT MONETARY SOLUTIONS. $$$

Last month the Jackass cited the insurance industry as being at great risk from inadequate profit in order to finance its costs and payouts. Bill Gross of PIMCO makes a more sweeping argument that financial markets require carry (the spread from long-term bonds to short-term bonds) in order to pump sufficient oxygen to the real economy. The current carry is compressed, as yields, spreads, and volatility are at historical lows. The cockeyed USFed monetary strategy assumes that higher asset prices will revigorate growth. But it is not working. The oxygen flow happens to be more focused on carry profit from financial firms. Not just insurance firms but retirees on fixed income from their bonds and bank certificates of deposit have turned to poverty, victims of their own savings portfolio. Corporate finance groups cannot extract enough carry profit from commercial paper either. The end result of four years of absurdly low interest rates is not stimulus, but rather reduction of risk and smaller carry profits. In other words, suffocation.

By the end of the 1990 decade, many analysts concluded that the Decade of (Stolen) Prosperity under the Clinton Admin was built upon rising stock prices. It was not. Instead, it was actually built upon falling interest rates and massive carry trade profit. The most important element to the USEconomy profit structure is favorable borrowing costs and the carry profits in finance. Of course, the stolen aspect was from theft of Fort Knox to finance the falling interest rates. Carry profit is like the ocean currents. While the nation was ensconced with the irrationally exuberant stock gains, Clinton and Papa Bush stole $1.5 trillion from Fannie Mae. It is well documented by CAFitts, auditor to the Govt Sponsored Enterprises. Bush tried to murder her for the discovery, just like he succeeded in murdering mother to Fitts in the 1970 decade, for her work in tracking the nascent CIA narcotics business. The mother worked as economist in the Arthur Burns Fed. The Oklahoma City federal building bombing in 1995 was done to eliminate the data records, and to cover up the Fannie Mae thefts, centered upon the Texas, Oklahoma, and Arkansas districts of management.

Just as profits are critical to the longevity of the capitalistic real economy, bond returns known as carry trade are critical to the financial markets. Lacking the carry profit, due to suppressed interest rates, investors are unwilling to risk financial capital. Hence a slow death from lack of oxygen. The carry most commonly arrives as a risk premium, a potential amount of gain to investor principal. Corporate and high yield bonds, stocks, private equity and emerging market investments are financial assets that apply for earning a carry profit. When under 25 basis points offered by the current USFed official rate, investors shun the opportunity. Gross describes a reduced beta for the financial markets from the tiny carry profit laced through the sick system. He called carry the beating heart of the financial markets and ultimately the real economy also. Profits derived from paper assets are inextricably linked to profits in the real economy, which are inextricably linked to investment and employment, in his words. When these profits are meager, the heart is wounded and slowly dies, taking down the real economy. Bill Gross said the following.

"Low yields, low carry, future low expected returns have increasingly negative effects on the real economy. Granted, Chairman Bernanke has frequently admitted as much but cites the hopeful conclusion that once real growth has been restored to old normal, then the financial markets can return to those historical levels of yields, carry, volatility, and liquidity premiums that investors yearn for. Sacrifice now, he lectures investors, in order to prosper later. Well it has been five years and the real economy has not once over a 12-month period of time grown faster than 2.5% [after phony GDP adjustment lifts]. Perhaps, in addition to a fiscally confused Washington, it is your policies that may be now part of the problem rather than the solution. Perhaps the beating heart is pumping anemic, even destructively leukemic blood through the system. Perhaps zero-bound interest rates and quantitative easing programs are becoming as much of the problem as the solution. Perhaps when yields, carry, and expected returns on financial and real assets become so low, the risk-taking investors turn inward and more conservative as opposed to outward and more risk seeking. Perhaps financial markets and real economic growth are more at risk than your calm demeanor would convey." This is a complete slam against Bernanke and his failure.

The Jackass work has called this a grand deterioration of the entire USEconomy. It is finally being recognized by the elite analysts. Gross believes that the US heart is pumping more blood through the system, but the zero-based policy rates and global quantitative easing programs assure the blood has become anemic and oxygen starved. The point made by Gross runs parallel to the Jackass argument of ZIRP & QE resulting in destroyed capital and retired capital from a higher cost structure. He calls the global financial system at the zero-bound similar to a leukemia patient with New Age chemotherapy. He admonishes the USFed for its failed desperate attempts to cure an economy that requires structural as opposed to monetary solutions. The Jackass has claimed that liquidity cannot cure an insolvency problem. We weave a coordinated critical argument. See the PIMCO research article (CLICK HERE).

◄$$$ NEGATIVE T.I.P.S. BOND YIELDS ARE A DISRUPTIVE PART OF THE GLOBAL FINANCIAL SYSTEM, A PHONY METER. TIED TO THE GLOBAL RESERVE CURRENCY, THE USGOVT DEBT HAS TURNED UPSIDE DOWN. RISING DEBT BY FORCE RESULTS IN LOWER RATES IN ORDER TO ACCOMMODATE THE BORROWING COSTS. THE RISK RETURN IS NON-EXISTENT. THE BOND MARKET IS A WRECK. HIGHER DEBT LEVELS TRANSLATE TO LOWER INTEREST RATES IN THE CORRUPT BOND MARKET. $$$

Debt saturation kills the host, leading to USTBond investment and the 0% bound, rather than to business investment. However, the full story is worse. The two years of monetizing the Treasury Investment Protection Security (TIPS) has become a travesty, a perversion, a wreck, a joke. No protection from inflation can come if monetary inflation is directed at the same instrument designed for its protection. The USFed purchases as part of QE monetary easing serve as a vast undermine to integrity, a grotesque insult to the security, a falsifcation of the inflation protection. Finally, the farcical TIPS bear a negative yield, at minus 0.244% from a recent sale. Try not to laugh so hard that you pee your pants. The late May auction to sell $13 billion in 10-year inflation indexed notes drew a negative yield, according to a Bloomberg survey of eight primary dealers who operate as part of the USFed system. The aberrant phenomenon is not new. The last offering of 10-year TIPS, a $13 billion sale on March 21st, drew a yield of negative 0.602%, the eighth consecutive time an auction of the securities yielded less than zero. The record auction low of negative 0.75% was reached on September 20th. The TIPS bond is as skewed as the Consumer Price Index.

The travesty known as TIPS has for months paid less than the official USGovt price inflation index, which itself is suppressed. So the TIPS offer no protection, even versus the tilted CPI. The insult to the integrity of TIPS is compounded by the moronic sheeple response. The March sale realized a bid-to-cover ratio of 2.74, which gauges demand by comparing the amount bid with the amount offered. The ratio is steady, having seen an average of 2.69 for the past 10 sales. Morons are at the bid. Witness an outrageously corrupted TIPS bond market. Price inflation is everywhere. Protection is nowhere, except in Gold & Silver, surely not the rubbish sold as TIPS. Bank of Ameria estimated that TIPS securities gained 7.3% in year 2012, compared to 2.2% in the overall USTreasury Bond market. However, this year TIPS securities have lost 2.8% in value. The inflation linked debt securities have fared better than the TIPS generally as well. Recent TIPS losses have marked their worst monthly performance since October 2008. The QE programs have destroyed the TIPS completely, with no publicity.

A much more perverse phenomenon is easily revealed. As USGovt debt has risen, the US bond yields have fallen. The opposite should be the case, if risk is rewarded, if profligacy is punished, if fundamentals are reflected, if the market has integrity. Risk is not rewarded with USTreasury Bonds. Their Third World debt and income fundamentals are not reflected in higher yields. The USTBond market has no integrity. Since 1983, USTreasury Bond yields have been declining while USGovt debt spirals upward out of control. The USGovt debt is over $16 trillion. Even a minor rise in interest rates would result in a crushing rise in borrowing costs. Expedience dictates by sheer force that USTBond yields remain low. Rather than wrecking the bond market, the bankers at the helm in the control room have slowly wrecked the USEconomy, by kill ing capital slowly and inexorably. Lower rates are linked in tight fashion to the total federal debt, which forces the continual cycle of slowing the USEconomy further with a grand damper. They have no relation to price inflation or debt risk, not anymore, not in Reich Finance. Higher debt means lower interest rates, the equation of the new world!

◄$$$ MAY BECAME THE 4TH LARGEST SPENDING MONTH EVER FOR THE USGOVT, WHICH HAS NO DISCIPLINE, DESPITE THE SEQUESTERED SPENDING CUTS MANDATED (BUT IGNORED). ALMOST EVERYTHING, IT SEEMS, IS EXEMPT. THE USGOVT IS TOTALLY OUT OF CONTROL. DEFICITS MEAN MOVEMENT AND PROGRESS. THE CHARADE CONTINUES UNTIL THE USGOVT DEBT DEFAULT. $$$

The USGovt celebrated the phony spending austerity movement in May with the fourth largest month of spending in US history. Every April records a surplus on the month, due to tax collections, along with remittances from the USFed and Govt Sponsored Enterprises (the Fannie Mae criminal project). The April surplus was over $112.9 billion, which led some clueless fools to wonder if the federal profligacy was coming to an end finally. They forgot that war, security, and administration was almost all exempt. The US austerity was not to happen. The Jackass expected some exemptions, and maybe slightly less spending, but not so. A deficit of $138.7 billion was posted for the May month, the largest May deficit since 2009. The USGovt budget deficit in May was aggravated by a 10% increase in spending. There were some shifts in the timing of payments compared with May 2012. An important distinction did occur. The USGovt spending for May at $335.9 billion was the largest May outlay in history. It was the fourth greatest spending month ever. The dysfunction of WashingtonDC is structural, unfixable, and permanent, certain to end only with a debt default. More cheers than tears are certain when the default event occurs. Refer to the great debt restructure in future years, not so far into the future.

The USGovt funding challenge will remain spurious and murky. The debt level is currently at the debt ceiling limit with only fuzzy legislation enabling critical functions to push deficit spending higher. The federal federal pension funds are actively being raided in order to pave additional spending, the usual tactic. My contacts referred only to one particular agency with directly witnessed experience. A subscriber noted that the Transportation Safety Admin attempted to cut back on air traffic controllers and related functions. The result was a grand snafu that resulted in even greater deficit spending to bring the systems back to full staff power, as massive problems had to be resolved. They pursued and were granted an exemption, which permitted the spending. See the Zero Hedge article (CLICK HERE).

◄$$$ USDOLLAR IS IN IMMINENT DANGER OF LOSING ITS WORLD RESERVE STATUS. IT IS FAST LOSING CREDIBILITY. ITS CUSTODIANS ARE UNDER SCURRILOUS CRITICISM. ITS CENTRAL BANK HAS TURNED COMPLETELY WEIMAR IN GROWING RECOGNITION. FOREIGNERS HAVE TURNED HOSTILE. MYRIAD REASONS LEAD TO CONCLUDE THE UNFIXABLE DEFICITS WILL CONTINUE TO GROW, DUE TO POLITICS AND STRUCTURE. THE CHINESE YUAN WILL SUPPLANT THE USDOLLAR AS GLOBAL FLAGSHIP, AS THE SWAP FACILITIES ENABLE TRADE PAYMENTS AND THE YUAN CONVERTIBILITY ENABLE CHINESE GOVT BOND INVESTMENT FOR BANKING SYSTEMS. $$$

Although the USDollar continues to reign as the foreign reserve currency, a new Intl Monetary Fund review has revealed that the Greenback has fallen in central bank usage. Global usage is at a 15-year low. The USDollar is in the process of losing its exalted status. Dick Bove at Rafferty Capital Markets commented that the USD constitutes 62% of the $6 trillion in foreign holdings by the world's central banks. However, the actual percentage of total USD in the money supply worldwide has gone from 90% in 1952 to 15% today. Most of the decline has occurred in the last several years. Bove has joined a chorus of other analysts who believe that the rise of the Chinese Yuan has come at the expense of the USDollar for safe haven service. A decade ago it was the rise of the Euro as a co-reserve currency. Bove said, "Generally speaking, it is not believed by the vast majority that the American dollar will be overthrown. But it will be. This defrocking may occur in as short a period as five to 10 years. The ratings agencies are already arguing that the government's debt may be too highly rated. Plus, the United States Congress, in both its houses, as well as the president are demonstrating a total lack of fiscal credibility." The path of gradual decline will eventually be interrupted by a near total rejection, when the Gold Trade Settlement kicks in. That prospect has the Western bankers pissing their pants and soiling their boxers. Evidence was ample in the G-20 Meeting interrupted in Ankara in May.

The impact will be the US falling into the Third World, as a result of price inflation, supply shortage, and increased isolation. The shock would be driven by the USGovt having to finance its own deficits, which have been stubbornly over the $1 trillion mark in successive years, a correct Jackass forecast made in 2009. The demands to roll over and pay back debt will result in a debt default through restructure. A global summit will be held for the restructure in a future year. The domestic US players will agree, so as to halt the economic disorder and social chaos. The foreign players will agree, so as to put the USDollar to death. The entire budget battle and failed sequestered cuts have eroded seriously the confidence in the US fiscal state. Since the 2011 debt downgrade by Standard & Poors, no progress has been made on budget balance, the stated requirement to return to a stable official outlook by the rating agency. The movements to watch are the Chinese Yuan Swap Facility and the convertible Yuan currency. More nations are joining the swap list for Chinese trade, which avoids USDollar settlement. The list has critical global mass. The kicker is clearly the Yuan convertibility, which will permit quick exchange into all major currencies in their capital account. Progress has been made on this important account.

Beijing leaders have made the convertibility a high priority in recent months. Any solid progress will open the door toward foreign investment in Chinese Govt Bonds, yet another undercut to the USTBond stronghold in global bank reserves that serve in foreign banking systems as foundation. The security issue for the United States should not be foreign terrorism (a total ruse), not nuclear threats from North Korea (pure proxy diversion), or eavesdropping (a valid Big Brother issue), but rather the restoration of fiscal responsibility and the elimination of the deficit (internal rot & decay). That goal is impossible under the current regime with their favored banks and predatory endless wars. These people are after all nazis in power, out of uniform, speaking the native English language, but showing off the flag they captured at press conferences.

Michael Pento of Pento Portfolio Strategies said, "The #1 security issue we have as a nation is the preservation of the USdollar as the world's reserve currency. It is a thousand times more important than a nuclear bomb being tested by North Korea. It is a thousand times more important that we keep the dollar as the world's reserve currency. Yet we are doing everything to abuse that status." Fully agreed by the Jackass, but Pento seems not to attach the risk of lost global reserve currency stewardship with the advent of Third World Amerrka as consequence. The abuse comes as a direct consequence to having unsound money (debt foundation), massive overt and covert big bank welfare aid (instead of liquidation), devotion to predatory wars (narcotics, oil), a bloated socialist network (SS, Medicare, welfare, disability), profound corruption ($trillion thefts like within Fannie Mae, JPMorgan counterfeit of USTBonds), and colossal pork projects (bridges to nowhere). See the RT News article (CLICK HERE). The most important abuses are refusal to liquidate the insolvent big US banks, since they possess the political power and control room offices, and the endless wars which enable vast defense contractor profits and thefts, along with national gold vault raids (see Libya and Iraq). Over 95% of the US populace is unaware of these listed abuses, which can be expanded easily in a longer list that fills a full page.

◄$$$ THE USTREASURY BOND MARKET IS A PONZI SCHEME. $$$

Scott Minerd is global chief investment officer at Guggenheim Partners. He openly calls the USTBonds a Ponzi market. Colorful descriptions by others have recently included allusions to mad scientists, the Weimar Gauge, even heroin treatment programs with methadone. Minerd says the central bank has effectively turned the USTreasurys market into a Ponzi market, since fraud is perpetuated by repaying one investor with the principal of another investor, as the price rises. The principal bond value has peaked in the past few months, as the Live Stress Test continues. The crux of his argument is that the USFed's bond purchase program (Quantitative Easing) has introduced false confidence into the market, because investors believe USTreasury investments will continue to increase in price and be sustained by the USFed itself. Perception of value is no longer a part of investor thought. The value of the USGovt sovereign bond assets has become disconnected from its underlying value, a basic Third World bond security. Someday in the future, the USFed will curtail its purchases and the entire scheme will unravel, just like the Madoff Fund fraud. An intriguing disconnect has occurred. Minerd identified a breakdown in a longstanding relationship between the inflation-adjusted USTreasury 10-year Note and the Univ Michigan consumer confidence index. The two have historically moved in tandem, but that relationship broke down at the end of 2011 when the QE initiative entered a higher gear. Minerd wrote, "The yield on 10-year Treasurys would be roughly 150 basis points higher than it is today, if the market was not being distorted by Ponzi (uneconomic) buying." He has sounded the Ponzi alarm in the past regularly. See the Market Watch article (CLICK HERE).

## THANKS

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