GOLD INVESTMENT REPORT
PRECIOUS METAL & ENERGY
EURASIAN TRADE ZONE

CURRENCIES & STOCK INDEXES

* Golden Nuggets
* New US-German Trade War Brews
* Europe on Extremes
* Chronic Bank Pain in Europe
* Eurasia Grows Branches
* Gold Matters on the Cusp
* Economy on Broken Legs


HAT TRICK LETTER
Issue #159

Jim Willie CB, 
“the Golden Jackass”

24 June 2017

## GOLDEN NUGGETS

◄$$$ ROTHSCHILD PLANS TO BUY REMAINING GOLD BULLION AND TO DUMP HIS MASSIVE STOCK & CURRENCY HOLDINGS… THE END OF THE GOLD SUPPRESSION ERA MIGHT SOON COME TO AN END, WHEN HIS TEAM IS DONE BUYING… HIS STRATEGIC SHIFT INDICATES ADMISSION OF THE FAILED GLOBAL FASCIST STATE PROJECT. $$$

http://www.neonnettle.com/news/1647-rothschild-s-buy-up-remaining-gold-signalling-world-banking-collapse-

In a highly usual statement permitted to reach the unwashed public, Global Uber-Lord Jacob Rothschild admitted to throwing in the towel on the globalist strategy. He will be purchasing large amounts of gold bullion. He stated, “Since the last World War [which Rothschild’s father orchestrated], we have enjoyed some 70 years of patiently crafted international cooperation [toward global fascism], which is now threatened. [Refer to New World Order march to global fascist state which Jacob Rothschild has directed.] Against this deeply worrying geo-political situation, [during which the potential of WWIII lurks if the Ukraine and Syrian conflict continue,] one can point to a number of positive investment factors.” Uber-Lord Rothschild indicated a plan to buy all remaining gold bullion in the market, and to shed his huge stock and FOREX holdings. Usually such holdings refer to major sovereign bonds.

The Jackass chooses to splice in derogatory phrases because of the extreme and unparalleled level of evil the man represents. He is uber Elite Lord, a major league Satanist, genocide king, self-appointed master of the earth, director of global wars, architect of the global fascist state, and conspirator of the Malaysian airline crash in order to secure the Free Scale chip. The chip is the foremost in anti-hacking technology. Rejoice for the implicit admission of globalist failure. Its vestiges will stubbornly continue. May he join Rockefeller and Brzezinski in the depths of hell, and burn for eternity.

◄$$$ RUSSIA AND CHINA ARE CREATING A NEW WORLD ORDER TO CHALLENGE, IF NOT REPLACE, THE FADING FALTERING FURY OF THE OLD WORLD ORDER LED BY THE US-UK-WESTERN EUROPE… THE OLD WORLD IS BANKRUPT, BROKEN, AND HELL-BENT ON WAR TO DEFEND ITS ROTTING CORPSE. $$$

Federico Pieraccini provides a fine editorial review of the transition from old to new, from West to East, from broken to constructive. The recent developments of the Eastern consortium and their diverse platforms is part and parcel of the Global Paradigm Shift in progress. It will not stop until it is fully implemented. The fact that Western analysts ignore it means nothing as for its continued pathways. See Strategic Culture (HERE). The following is taken verbatim without any changes.

The last thirty days have shown another kind of world that is engaging in cooperation, dialogue and diplomatic efforts to resolve important issues. The meeting of the members of the Belt and Road Initiative laid the foundations for a physical and electronic connectivity among Eurasian countries, making it the backbone of sustainable and renewable trade development based on mutual cooperation. A few weeks later, the Shanghai Cooperation Organization meeting in Astana outlined the necessary conditions for the success of the Chinese project, such as securing large areas of the Eurasian block and improving dialogue and trust among member states. The following AIIB (Asian Infra-structure Investment Bank) meeting in ROK will layout the economical necessities to finance and sustain the BRI projects.

The Shanghai Cooperation Organization (SCO) and the Chinese Belt and Road Initiative (BRI) have many common features, and in many ways seem complementary. The SCO is an organization that focuses heavily on economic, political and security issues in the region, while the BRI is a collection of infrastructure projects that incorporates three-fifths of the globe and is driven by Beijing's economic might. In this context, the Eurasian block continues to develop the following initiatives to support both the BRI and SCO mega-projects. The Collective Security Treaty Organization (CTSO) is a Moscow-based organization focusing mainly on the fight against terrorism, while the Asian Infrastructure Investment Bank (AIIB) is a Beijing-based investment bank that is responsible for generating important funding for Beijing’s long-term initiatives along its maritime routes (ports and canals) and overland routes (road, bridges, railways, pipelines, industries, airports). The synergies between these initiatives find yet another point of convergence in the Eurasian Economic Union (EEU). Together, the SCO, BRI, CTSO, AIIB, and EEU provide a compelling indication of the direction in which humanity is headed, which is to say towards integration, cooperation and peaceful development through diplomacy.

On the other side we have the «old world order» made up of the IMF, the World Bank, the European Union, the UN, NATO, the WTO, with Washington being the ringmaster at the center of this vision of a world order. It is therefore not surprising that Washington should look askance at these Eurasian initiatives that threaten to deny its central and commanding role in the global order in favor of a greater say by Moscow, Beijing, New Delhi and even Tehran.

One of the most significant and noteworthy events in the last month, or even in recent years, has been the admission into the SCO of India and Pakistan, two nuclear powers with a history of tension and conflict between them. These two countries are critical to the peaceful and fruitful integration of Eurasia. The slow, two-year process of India and Pakistan’s admission into the SCO benefited greatly from China and Russia’s mediation, culminating in the historical agreement signed by Modi, Sharif, Putin and Xi.

◄$$$ NATO SPLINTERS, AS GERMANY ADMITS IT HAS NO CHOICE BUT TO PULL OUT TROOPS FROM TURKEY'S INCIRLIK AIRBASE… GERMANY PLANS TO WITHDRAW ALL AIRCRAFT AND TROOPS FROM INCIRLIK.. NO MENTION OF HEROIN WAS MADE… WITHOUT PROPER PROCEDURE, THE GERMAN AIR WING WILL RELOCATE TO JORDAN, A NON-NATO COUNTRY, WITHOUT PROPER PROCEDURES FOLLOWED. $$$

Germany will withdraw its troops and reconnaissance aircraft from the highly strategic airbase in Turkey. It is a gross understatement that relations between the two NATO member states are worsening. German Defense Minister Ursula von der Leyen announced that the troops would be pulled out of Turkey's Incirlik airbase after Ankara presented obstacles. The Turkish officials said they would continue to prevent German lawmakers from visiting the soldiers. The fresh diplomatic row broke out between the two NATO allies on May 15th, with escalation and the break ensuing. Observe fallout from the failed US-led coup attempt of Erdogan.

Germany has more than 250 troops deployed to Incirlik, using the airbase for flying Tornado jets over Syria. German tankers also make refueling flights as part of a US-led coalition. The USMilitary claims to battle the Daesh Takfiri terrorist group in Iraq and Syria, when they avoid making ISIS strikes but hit civilian targets routinely. The German soldiers will reportedly be redeployed to a base in Jordan. The full transition could take nearly two months, but Berlin acknowledges that flights will be interrupted for an indefinite time. The conflict erupted with cause. Turkey made the decision in response to the German Govt’s decision to grant asylum to Turkish Military personnel whom Ankara accused of participating in a failed coup of the Erdogan Regime in July 2016. See PressTV (HERE) and Zero Hedge (HERE).

The Voice listed numerous violations, strange anomalies, and breaches of protocol:

  1. German lawmakers were denied access to the German troops in Turkey. This is violation of international law and internal NATO protocol.
  2. Erdogan is also retaliating against Germany due to the fact that Turkish politicians are being prevented from taking their political battle to the Turks living in Germany, by staging all kind of political activities.
  3. Foolish Merkel paid EUR 3.5 billion to Erdogan in order for him to keep the refugees in his country, thus not allowing them to migrate onward to Germany.
  4. The real issue is that the German air wing will leave Turkey, only to be relocated to Jordan, a non-NATO country.
  5. The relocation decision should have gone to a vote in the Bundestag. But Merkel just had the cabinet wave the vote through, which is a blatant violation of German and EU law.
  6. Obama recently visited Berlin, where Merkel received him much like a head of state, another breach of protocol.

◄$$$ THE SAUDI CLOSEST ALLIES, MOROCCO AND PAKISTAN HAVE SIDED WITH QATAR, WHICH RAISES ANGER BY THE UNITED STATES GOVT… TURKEY AIDS QATAR WITH POSSIBLE TROOPS… IRAN HAS SENT FOOD AID, AND OFFERS AIR LANE TRAFFIC… THE WASHINGTON NEOCONS ARE FRUSTRATED AND BEING ISOLATED ALONG WITH THEIR FILTHY ALLIES IN SAUDI ARABIA. $$$

The Kingdom of Saudi Arabia and Qatar are far more than rivals, having been in broad conflict for some time. Word comes that the Saudis would like to see the current Qatari emir Sheikh Tamam bin Hamad al-Thani removed from power, along with his father the former emir. The emir’s mother, Sheikha Mouzah bint Nasser, particularly rattles the Saudis. She has led the cultural drive for Brand Qatar, building the Education City, developing the Qatar Philharmonic Orchestra, and expanding the emirate’s media center. Sheikha Mouzah has long been a target of the Saudis. A decade ago, the Saudi-backed London-based newspaper Azzaman accused her of being in contact with the Israelis. She won a libel suit against the paper. At the time, the Saudi dissident Sa’ad al-Faqih, who heads the Movement for Islamic Reform in Arabia, defended Sheikha Mouzah. Word has slipped out of Saudi Arabia that Sheikha Mouzah has funded Sa’ad al-Faqih and other movements for the overthrow of the Saudi monarchy. Hence the Saudis and Qataris are bitter enemies, hardly rivals.

Qatar has many allies. In Turkey, President Erdogan said on June 13th that the isolation of Qatar is inhumane and against Islamic values. Both nations support the Muslim Brotherhood, and both are therefore targets of Saudi anger. The Turkish Govt has taken a strong pro-Qatar position, dispatching a team to Qatar to evaluate the emirate’s defenses and to assess its own troop deployment. They hint of troop aid.

More surprising is the support to Qatar by two of Saudi Arabia’s closest allies, Morocco and Pakistan. Morocco’s King Mohammed VI has said he would send aircraft filled with food to help the Qatari citizens. Qatar had been importing 80% of its food from Saudi Arabia and other neighboring Arab states. Rumors have begun to circulate that Pakistan was going to send 20,000 troops to defend Qatar. Amidst the intensity and frenzy, this story was denied the Pakistani Foreign Ministry, which might serve as confirmation. Last week, the Pakistani Prime Minister Nawaz Sharif met with the Saudis to help mediate the crisis. Sharif would take no sides in this crisis. Just a year ago, the Pakistani Parliament refused to allow troops to fight in Saudi Arabia’s despicable Yemen War.

Iran sees a key opportunity to show goodwill. Iranian aircraft have already delivered food to Qatar. Also, commercial aircraft from Qatar Airways are using Iranian airspace rather than Saudi airspace en route to Europe. The distress in Qatar is seen as its opportunity, since the Saudi-Emirati conflict against Qatar weakens the anti-Iranian bloc of the Gulf Arab states. Furthermore, an unusual player is in the mix. The Russians are working to convince the UAE royals not to prolong the crisis. Putin met with the UAE crown prince and the Qatari emir, working to defuse the situation. It is intriguing how the Chinese and Russians are working in several hotspots to ease tensions and to reduce the risk of wider wars, a diplomatic role formerly held by the Americans and British. US Secretary of State Rex Tillerson is nowhere to be seen on this risk-filled conflict. Since 9/11 though, the Axis of Fascism is clearly centered upon the US & UK. See Salon (HERE).

◄$$$ US-SECY STATE TILLERSON CLAIMS THAT TRUMP WILL NEXT LOOK PAST POLITICAL TURMOIL AND WILL RE-ENGAGE RUSSIA… TILLERSON WILL WORK ON ASIA-PACIFIC RELATIONS. $$$

Secretary of State Rex Tillerson said that President Donald Trump has requested that he rebuild the formal US relationship with Russia, not to permit the political turmoil and fake alignment issues in Washington to impede progress. Tillerson made the comments in Wellington New Zealand, where he met with Prime Minister Bill English. Furthermore, the NZ leader was reassured by Tillerson about the intention of the US to engage more fully than in the recent past in the Asia-Pacific region. The New Zealand stopover came after he visited Australia with the defense secretary Mattis. It appears that Trump has consolidated enough power to move forward. The Megan Kelly interview was telling, a landmark. Putin says the whole fabricated Russia story is nonsense and intended to bring down POTUS (President of the United States). The Washington NeoCons are desperate, corrupt, have no sense of integrity or a moral compass. They are being outflanked and exposed. See Mail (HERE).

◄$$$ QATAR AND IRAN HAVE JOINED FORCES IN CREATED THE CORE TO THE RUSSIA-QATAR-IRAN NATGAS CARTEL… IT WILL SUPERCEDE THE DECAYING PETRO-DOLLAR DEFACTO STANDARD, WHILE PROPELLING NON-USD TRADE IN THE ENERGY SECTOR… QATAR AND IRAN SHARE THE LARGEST NATGAS FIELD IN THE WORLD (OUTSIDE RUSSIA). $$$

Check out the always excellent Engdahl essay on the subject. He covers a lot of ground and makes good logic. Emerging is a new Russian-led natgas cartel. A grand void of the defunct Petro-Dollar standard is being filled by Russia, Qatar, and Iran. The latest ploys founded in stupidity by Washington and Riyadh are bound to fail. See the New Eastern Outlook (HERE).

◄$$$ THE FORMER SYRIAN AMBASSADOR BELIEVES THE UNITED STATES WAR EFFORT IN SYRIA IS A DEFEAT… FORD OUTLINED SOME STRATEGIC ERRORS FROM THE HILLARY STATE DEPARTMENT… HE OVERLOOKED HOW THE USMILITARY IS ALLIED WITH ISIS IN HIDDEN TERMS. $$$

Robert Ford was former Ambassador to Syria under the Obama Admin. He stated defeat in clear terms. “Obama did not leave the Trump Admin many options to achieve its goal [of defeating ISIS and curbing Iran in the region.] The game was finished [for US objectives in Syria.] The Iranian position will advance, [with Iran forcing a US withdrawal from eastern Syria. In 2014 that the United States was] behind the curve, [as Russia and Iran were devoting extensive resources to defending Assad.] Assad won, I mean he is the victor, or he thinks so. Maybe in 10 years, he will retake the entire country. The US will not defend the Kurds against Assad's forces. What we are doing with the Kurds is not only politically stupid, but immoral. Syrian Kurds are making their biggest mistake in trusting the Americans.”

Ford spoke openly about what serious errors committed by the Obama State Department led by Hillary Clinton at the beginning of the crisis in Syria in 2011. They were grave strategic errors. The Washington NeoCons were late to the war front, made poor alliances, enabled Turkish and Arab support, and did not understand the competing groups. The US switched support of factions like rookies and fools. See Newsweek (HERE).

Recall most tribes who make wartime alliances with the US are abandoned and later slaughtered. Look to the Vietnam War and Hmong tribe in Cambodia. They assisted the USMilitary is securing the heroin trade, then close to 100% of them were eradicated despite pleas for help. This is typical for the US in war, to discard allied groups as expendable. In the Desert Storm War against Saddam Hussein, the USMilitary exposed thousands of US troops to toxic uranium from artillery, and even poisoned the same troops with deadly vaccines as some sort of sick experiment. The result was an outbreak of peculiar persistent soldier disease, in what was later called the Gulf War Syndrome. Also, the USMilitary left behind a few hundred POW prisoners in Vietnam, claiming none existed. Since World War II, the key characteristics of the USMilitary in the Jackass opinion are dishonor of troops, genocide of civilians,  and heroin production.

London Paul adds a related comment. History continually proves that the West will turn a blind eye to all manner of atrocities committed by nations for decades and beyond. Sometimes they do not even have to abuse their people. But the moment they decide to ditch the dollar, they are then demonised and ultimately removed from power. If you believe otherwise then look at the nations who continue to abuse their people in all manner of despicable ways and yet we never see any concern expressed for the plight of the people of those nations. Revolutions are never truly won by people going out into the streets and fighting against their oppressors. They begin when individuals overcomes their refusal to compromise their own belief systems. When that becomes a collective and then a majority, change comes about in a bloodless coup with lasting results. I do not apologise if the truth offends, but the West created Al-Qaeda, ISIS, and Daesh and continues to finance, arm, and train them as proxies for their desire to create Caliphates across the Middle East and beyond. Ironically it just happens to be Russia who has led the fight to destroy them. Any wonder then that the West despises them so much amid the endless Russophobic propaganda?

◄$$$ MORE ON THE ILLINOIS PENSION RUPTURE, BUT FOCUS ON CHICAGO… THE POLICE PENSION FUND WILL BE BROKEN IN THREE YEARS, AS IT HAS MORE RETIREES THAN ACTIVE POLICE OFFICERS… ALL THE CITY’S PENSION FUNDS HAVE DEEP SHORTFALLS… ITS TEACHER PENSION FUND AND FIREFIGHTER PENSION FUND ARE ALSO BADLY INSOLVENT… ONCE FUNDS ARE DRY, PROPERTY TAXES WOULD HAVE TO QUADRUPLE IN ORDER TO MAINTAIN THE PENSION PAYOUTS ON A CURRENT BASIS. $$$

Without a taxpayer bailout, Chicago’s police pension fund will not have enough money to pay benefits to retirees by year 2021, according to a projection by Local Government Information Services (LGIS). At the end of 2020, LGIS estimates that the Policemen’s Annuity & Benefit Fund of Chicago will have less than $150 million in assets to pay $928 million promised to 14,133 retirees the following year. Fund assets will fall from $3.2 billion at the end of 2015 to $1.4 billion at the end of 2018, then to $751 million at the end of 2019, and to $143 million at the end of 2020, all according to LGIS.

The Chicago police pension fund held $3.2 billion in assets in 2003. It dispensed $3.8 billion more in benefits to retired police officers than it generated in investment returns between 2003 and 2015. Over that 12-year span, the fund paid out $6.9 billion and earned $3.0 billion, paying an additional $134 million in fees to investment managers. As is typical among some underfunded pensions, Chicago taxpayers are currently paying more retired police officers than active ones. The police pension fund is not the only city retirement fund facing insolvency and rupture.

The Chicago's Teachers Union Pension Fund is $10.1 billion in debt. Its two municipal worker funds owe $11.2 billion. Also, its Fire Department Pension Fund owes $3.5 billion. All will require taxpayer bailouts if they are going to make retiree payouts going into the next decade. Put the tax potential as a solution into perspective. The City of Chicago's property tax levy was $1.36 billion in 2017 in aggregate. Paying for retirees on a current basis, which will prove the only option once funds run dry, will require almost quadrupling city property tax bills. Last year, funds to keep balance would have required more than $4 billion in revenue, including $1.0 billion for City of Chicago workers, $1.5 billion for teachers, and $1.5 billion for retired police officers and firefighters. See Chicago City Wire (HERE). As always, retiree payouts will be reduced, worker contributions will increase, and eligibility age will rise to collect benefits. Of course, the city budget will pitch in more, which will lead to tax hikes. The problem cuts across the entire nation, for state and big cities.

◄$$$ CRUDE OIL PRICE FELL BELOW THE $45 MARK… CAUSE COULD BE THE DISSENSION AMONG GULF ARAB NATIONS… FALLOUT WILL BE TO BANK PORTFOLIOS IN THE ENERGY SECTOR… THE CALL OF THE DEATH OF THE PETRO-DOLLAR MIGHT BE IN FULL VIEW, WITH FULL IGNOMINY… THE OIL PRICE WILL SOON BECOME FRONT-PAGE NEWS AND THE FOCUS OF GREAT ATTENTION ON THE KING DOLLAR REIGN OF TERROR. $$$

## NEW US-GERMAN TRADE WAR BREWS

$$$ GERMANY & AUSTRIA TOLD THE USGOVT NOT TO INTERFERE IN EUROPEAN UNION ENERGY MATTERS… THE US-SENATE HAS TARGETED THE NORD STREAM 2 IN EXPANDED RUSSIA SANCTIONS… THE MANEUVER GIVES EMPHASIS TO THE AMERICAN  PREFERENCE THAT EUROPE USE HIGHER COST NATGAS SOURCES IN THE UNITED STATES… GERMANY AND AUSTRIA MADE THE OBJECTION JOINTLY… RUSSIA SEES NO SERIOUS VIABLE NATGAS SUPPLY ALTERNATIVE FROM THE UNITED STATES… EXPECT EXTREME EUROPEAN BACKLASH WITH POLITICAL DAMAGE, THEN MORE ISOLATION OF THE UNITED STATES. $$$

Germany and Austria condemned a proposed expansion of US sanctions on Russia, saying the measures sought to bolster US economic interests and included an unacceptable intervention in the region’s energy sector. German Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern made a joint statement. “Europe’s energy supply is a matter for Europe, not the United States of America. Instruments for political sanctions should not be tied to economic interests.” At the center of the criticism is the planned $10 billion Nord Stream 2 gas pipeline from Russia to Germany, that bypasses the Russian Gazprom pipeline effectively blocked by the United States. It is a big stretch to say the NS2 would compete with US exports of liquefied natural gas to Europe. The 1220 kilometer (758-mile) link is designed to cut Russia’s reliance on gas transit through Ukraine, thus the USGovt objections since a direct reaction to the obscene Ukraine War. The NS2 would double the capacity of an existing route to Germany, the major industrial nation of Europe.

The US Senate is so caught up in its self-aggrandizement and arrogance, even desperate fiction. It made a statement that the Nord Stream 2 pipeline will have “detrimental impacts on the European Union’s energy security,” and on reforms in Ukraine. The reforms are non-existent in the war-torn nation, which faces gradual annihilation. Recall that NeoCon fascists kill their host and alienate all allies. Progress continues in that direction.

Germany’s BASF SE and Uniper SE, as well as Austria’s OMV are among five European Union companies that planned to join the Nord Stream 2 project run by the Gazprom PJSC subsidiary. The pipeline project had planned to pass through Poland, until the USGovt obstructed the plan. Other opposition has arisen in Eastern Europe, where the USGovt contaminates the entire political landscape. So the Germans and Russians worked around the obstacles. The project has financial backing which is also in focus for sanctions. BASF’s Wintershall unit, Uniper, and OMV together with Royal Dutch Shell and Engie agreed in April to provide loans for Nord Stream 2 in order for completion by the end of 2019. The project meanwhile is still opposed by political core groups in Poland, Ukraine, Slovakia, and the Baltic States, all of which are largely controlled by Washington as puppet states. Isabelle Kocher, the chief executive officer of Engie, France’s former gas monopoly, told reporters bluntly, “I don’t think at all that the United States can stop this project.” The more the USGovt tries, the more damage politically will be inflicted on its allies.

Gazprom supplies over 30% of the European Union’s gas. The Russian gas giant for years has dismissed the viability of any US liquefied natural gas supply in volume to Europe. Such reality does not deter the American lunatics. The rivalry is somewhat baseless, a non-starter. Only a few cargoes from North America have reached Southern Europe. The Moscow-based exporter sees no impact from US curbs on its link. Nord Stream 2 is a European project, developed in partnership with European companies that had already provided over EUR 1 billion (=US$1.1 bn) in funding, according to Alexander Medvedev, the deputy chief executive officer of Gazprom. At a conference in Berlin, Medvedev stated “If the senators believe that they can block Russian-American cooperation in energy and as a whole, then God is their judge.” He made a further astute and painful comment, that trade and political ties between the countries have already dropped to a very low level. The NS2 project is in compliance with all existing EU regulations. So the US is outside looking in. See Bloomberg (HERE) and Russia Today (HERE).

EuroRaj believes we are seeing the demise of oil cartel with OPEC and the rise of the natural gas cartel led by Russia, recently joined by Qatar and Iran. Every trick in the book will be used to delay the inevitable. The US will fail in blocking its formation.

◄$$$ GERMANY THREATENS TO SANCTION THE UNITED STATES IF IT IMPOSES NEW SANCTIONS ON RUSSIA OVER THE NORD STREAM GAS PIPELINE CONSTRUCTION… THE USGOVT HAS LOST ITS MIND, AND FACES VERY REAL ISOLATION FROM ITS OWN ALLIES… CONTINUED PRESSURE AGAINST GERMANY WILL LIKELY PUSH THE GERMANS INTO MUCH CLOSER AND MORE CONSTRUCTIVE RELATIONS WITH RUSSIA. $$$

The Euro-American alliance suddenly looks very fragile and brittle. The Washington NeoCons and the Trump (supposed) reformers represent competing interests regarding the administration of the country. In a recent important gesture, President Trump pulled the United States out of the Paris Climate Accord, which was championed largely by European nations in a gigantic scientific fraud to construct an elite tax on air. The departure has shone a light on the most fraudulent corrupt elements in the USGovt leadership crew, like the harlot Nancy Pelosi.

Here is where the hubbub centers. On June 15th, the US Senate passed a bill to impose new sanctions on Russia over its alleged interference in the US elections. The meddling is pure fiction, and a central part in NeoCon constructs. The intriguing aspect of the bill was its almost unanimous vote. Trump promised to improve the relations between the United States and Russia during the campaign, which with utter hilarity is a criminal offense to the constant endless war themes promoted by the USGovt. The Jackass maintains that the great majority of the USCongress is NeoCon fascist, cutting across both political parties. After 24 years of Clinton Admin, Bush II Admin, and Obama Admin, the fascists are very well rooted in the entire USGovt structure. Expect Trump to defy any Congressional bill which orders him to seek to deteriorate relations with Russia. The bill will affect major European companies doing business with Russia.

Germany is taking a strong measure against the bill bordering on rage and hostility. The country has threatened to impose sanctions as retaliation against the United States if the new sanctions on Russia result in penalizing German firms. The Berlin leaders see the USGovt as attempting to control their country from remote strings, and they will not permit it. Spokesman for Chancellor Angela Merkel told the news agency that the Senate bill intended to punish Russia for its alleged interference in the US elections and could also trigger penalties against European companies. They see the bill for what it is. He said this must not happen, It is likely to jeopardize relations between Germany and the United States. The German Economy Minister Brigitte Zypries also added “Berlin would have to think about counter-measures. If he does [if Trump supports the bill], we will have to consider what we are going to do against it.” A growing group of analysts are concluding, that judging by Germany’s latest response to the US legislation, if the USGovt imposes new sanctions on Russia, it will drive Europe into the Russian camp. In doing so, it will hand the Russians a decisive geopolitical victory over the United States of America. Witness more foreign policy failures by the USGovt, this time with respect to its firm allies. See Anonymous (HERE). To put it bluntly, Germany’s limited sovereignty kicks the banker cabal where it hurts. See Sputnik News (HERE). Expect German Govt to scrutinize certain treaties where the United States is in violation, like with NATO. They might tear them up in a continued gesture of defiance.

The fake Russian role in the US election has become a comedy nightmare. The Berlin-Washington relations are nearing the break point. The Jackass was certain in 2014, that the US-German relations would break down, but this is absurd. The NeoCons fascists push and push and push until they kill the host, and wreck their allied relations. No precedent exists otherwise, a lesson not well comprehended in political analyst circles. It is probably not well understood, since the US NeoCons are not perceived as fascists. In 20 respects of litmus tests, they are fascists. Begin with the Patriot Act, an outright Fascist Manifesto.

◄$$$ GERMANY ISSUED A HARSH STINGING REBUKE OF USGOVT SANCTIONS AGAINST GERMAN FIRMS DOING BUSINESS WITH RUSSIA ON THE NATGAS PIPELINE… THE GERMAN FOREIGN MINISTER GABRIEL AND AUSTRIAN CHANCELLOR KERN TOOK EXTREMELY STRONG POSITIONS AND MADE VERY CRITICAL COMMENTS… THEY OBJECT TO INTERFERENCE IN THEIR AFFAIRS, AND DO NOT SUPPORT THE VIABILITY OF US-BASED NATGAS SUPPLIES… THE GERMANS OBJECT TO THE ENTIRE US-LED POLICY IN THE GULF REGION, WITH THE NEW QATAR TENSIONS…

GERMAN FOREIGN MINISTER GABRIEL HAS ARTICULATED THE GERMAN AMBITION TO BUILD AN EUROPEAN MILITARY FORCE, AND TO DEFEND ITS ECONOMIC INTERESTS… THIS IS A DIRECT CHALLENGE OF NATO AND THE UNITED STATES PARENTAL ROLE. $$$

Germany’s Foreign Ministry published a sharply worded press release last week directed as critical of the USGovt. The joint statement came from Foreign Minister Sigmar Gabriel and Austrian Chancellor Christian Kern denouncing the United States for its foreign and economic policies. The US Senate passed almost unanimously, by 97 votes in favor to 2 against, to impose new sanctions on Russia. But the measures will  hit the large German companies. The Senate justified the legislation as a punishment for Moscow’s alleged meddling in the US presidential election, the annexation of Crimea, and its support for Syrian President Bashar al-Assad. The entire bill is a travesty and feeble attempt to stop the Russian energy locomotive which is being connected to Europe. The result will be profound US isolation and resentment of the US leaders by its own European allies.

Gabriel and Kern brusquely rejected the US Senate’s measure. The pair interpreted the US bill and its real meaning. They called it explicitly about “the sale of American liquefied gas and the sidelining of Russian gas supplies in the European market. [The goal was] to secure jobs in the American oil & gas industries. [The US and Europe had since 2014 been] side by side and in close joint consultation answering Russia’s annexation of Crimea, which is illegal under international law, and its actions in Eastern Ukraine. But the threat to impose extraterritorial sanctions which violate international law on European companies participating in the expansion of European energy supplies could not be tolerated. [Europe’s energy provision was] a European affair, and not one for the United States of America! Instruments of political sanctions should not be connected with economic interests. [Threatening European companies] in US markets with punishments [would introduce] an entirely new and extremely negative quality to European-American relations.”

Refer to companies that participate in or finance projects like the Nord Stream 2 oil pipeline with Russia. German Chancellor Angela Merkel gave firm explicit support to her Foreign Minister. Her entire office gave very strong agreement in terms of content for the joint statement made by Gabriel. They perceive the USGovt action as extremely unconventional and erratic. They will not allow the targeting of European businesses by sanctions to punish Russian behavior.

The bipartisan action by the US Senate and the sharp response from the German government make clear that the conflicts between the United States and Germany are not simply intensifying. They are growing deep conflicting roots with strong openly stated objections. The Washington NeoCons are forcing the Germans to take sides. They will support their big industrial corporations, which have huge energy needs met by Russia. Since 2014 when the Ukraine War was triggered by the same Washington NeoCons, later blamed in absurd manner on Russia, the German energy supply lines to Russian Gazprom have been sacrosanct and off limits. No more!

Following the G-7 summit three weeks ago, important tectonic rumblings have been noted. Chancellor Merkel, in a speech delivered in Munich (in a beer tent), called into question the alliance with the United States, which has formed the basis of Germany’s foreign policy in the post-war era.The times in which we could completely depend upon others are long past. We Europeans really have to take our fate into our own hands, [and must] fight for our own future.” Foreign Minister Gabriel even referred to German filling spaces vacated by America. Already last week, Gabriel criticized the US-backed action taken by Saudi Arabia against Qatar, which is aimed above all at Iran. In a statement, Gabriel defended the Qatari emirate and warned against a deep division in the region. He said, “The latest gigantic arms deals between US President Trump and the Gulf monarchies [intensified] the danger of a new arms race. [This was] a completely wrong policy, and certainly not Germany’s policy.” Gabriel also made critical comments that were backhanded slaps at Washington. He remarked that Minsk Accords had made progress, without the Americans in the room. They are seen as disruptive to all relations, without exception. Comments were made to sound that Washington crew was not mature or constructive.

The Germans seek to expand their export trade, to confirm more inroads into new markets, even to secure a piece of the numerous Eurasian Trade Zone projects, newly called the One Belt One Road initiative. While the USGovt seeks more war lines to defend, the German Govt strives for a further opening up of the country’s economy to secure new markets for German corporations in the Middle East and new investment opportunities for German capital formation. It wishes also to preserve its current business relations with Russia, essential for energy supply to its massive industrial sector. Germany wants to respond to economic recession by building commercial relations, at a time when the USGovt is hellbent on destruction, obstructions, sanctions, and war. The United States has lost its way, and Germany recognizes this tragic fact.

Increasingly, the German Govt is defining its interests and independence. They wish to put more distance between themselves and the United States, even to work toward  the construction of a European army under German leadership. Gabriel wrote in a published book, “Europe’s security is Europe’s own responsibility. We must become capable of acting strategically in foreign and security policy, because we do not do so enough. That includes us defining our European interests and articulating them independently of the US. This obstinacy requires to some extent an emancipation from the direction adopted in Washington. Whoever has their own goals also should develop their capabilities to achieve them. The EU needs to see itself as a greater security policy power. Our defence budgets must be adjusted accordingly. The armaments of the European armies need to be modernised, made operationally deployable and reoriented to military tasks.” Trump actually works toward this German goal, by urging the major EU nations to contribute more funds toward NATO. They wish to build their own military force.

The declared goal by Gabriel is the building of a veritable European military combat force capable of enforcing its global imperialist interests independently of NATO and the US. More intrigue, as he stated if necessary, the German force would potentially be used against the US. The issue is not “just to buy new weapons. It is about integrating the arms industry more in Europe and pooling forces. It is about creating a joint European security identity, which opens the way to a European army through ever more closely integrated structures.” The movement toward self-determination and independence requires heavy support from the industrial captains of Germany. When imperial interests are cited, interpret to mean expansion of economic export trade interests in a mutually constructive manner. Think economic empire via industry and export trade. He does not mean empire building like the United States does in terms of hegemony.

One must note that this policy is supported by all of Germany’s parties. Refer to the CDU/CSU to the SPD, Greens, and Left Party, has an irresistible logic. As in the first half of the 20th Century, the deepening rivalries between the imperialist powers over raw materials, markets, and geopolitical influence are leading once again to strategic conflicts between the great powers. Germany is moving outside the US vassal state shadow created after World War II. The old empires of Russia, China, and Persia (Iran) are joining to form the Eurasian Trade Zone. See Global Research (HERE).

◄$$$ FRANCE IS SHIFTING TOWARDS MOSCOW, AS PRESIDENT MACRON MOVES AWAY FROM ANTI-RUSSIAN POLICIES LED BY WASHINGTON… THE FRENCH PRESS REJOICES OVER MORE INDEPENDENT STANCE FOR THE NATION… MACRON IS REPUDIATING THE IMPERIALIST WAYS OF FRANCE WHEN FOLLOWING THE UNITED STATES LEAD… MACRON WILL WORK TOWARD GREATER RUSSIAN COOPERATION, EVEN SO FAR AS TO REMOVE THE UNITED STATE FROM MINSK AGREEMENT PEACE TALKS WITH RESPECT TO UKRAINE. $$$

At the close of May, newly elected President Emmanuel Macron conducted a successful summit at the Versailles Palace with Russian President Vladimir Putin. The French press offered an unusual level of enthusiasm for the event. The press made little effort to hide the fact that Macron was shifting towards Moscow despite Washington’s open hostility to Russia. Le Monde wrote, “In the finery of the castle of Versailles. France wanted on Monday, May 29, to start a new, better course in its relations with Russia. And that was a good thing. At NATO, with Donald Trump and Turkish President Recep Tayyip Erdogan, like with Vladimir Putin in Versailles, Mr Macron set the tone. France will to seize a European moment. Between BREXIT [British Exit from EU] and the mercantilist isolationism of Donald Trump, highlighted this week by Angela Merkel, the EU must close ranks and reinforce its own identity on the great issues of the day: Ukraine, Syria, global warming.” Observe French defiance.

It was a significant editorial statement from the French flagship publication. The editorial pointed to the close links between Macron’s overtures to Russia and the growing tensions between the United States and the European Union (EU), and in particular with Germany. These took the most overt form in German Chancellor Angela Merkel’s statement this weekend that, after Britain’s exit from the EU and the election of Donald Trump as US president, continental Europe would have to fight for its future alone, without relying on Washington and London. So France joins and continues in the European defiance.

Another major French publication made praise of Macron with the revival of Russian relations. Le Figaro reminded of a new chapter with BREXIT having occurred, the new US President being unpredictable, and more. Another publication Liberation, however, recalled the close relations between Germany and Macron, who was Berlin’s favored presidential candidate, and applauded Macron’s rapprochement with Putin. “The diplomatic collaboration [Macron] has developed with Angela Merkel shows undeniable skill. By inviting the Russian president to follow the footsteps of the brutal and visionary Czar Peter the Great, of whom Putin styles himself the descendant, Macron is offering Putin assurances.”

The emergence of such a consensus in the French media reflects a profound shift taking place in the politics of the capitalist class in France and across Europe. The NATO military alliance between the United States, Canada, and the Western European powers is in an advanced state of collapse. This is extremely significant, and confirms progress toward a major Jackass forecast from 2014, for the deep decay of NATO and the flip eastward by Germany. Whatever direction the Germans move, expect the French poodle to follow in lockstep.

At Versailles, the new French President, fresh from his fraudulent stolen election, made some extremely significant headway toward defiance of Washington, and toward more independent directions. Macron broached policies that would repudiate most of the initiatives that French and US imperialism developed together over the last decade. When right-wing President Nicolas Sarkozy was elected in 2007, he took France back into the NATO military command in order to repair the damage done to relations with Washington by German and French opposition to the USMilitary invasion of Iraq in 2003, widely regarded as an illegal action. The following years were filled with more wars, called the Arab Spring and Color Revolutions. They were the core legacy to the violent Obama Admin, replete with foreign policy failures. France and other European imperialist powers worked with Washington to launch a war rampage across the Middle East and Eastern Europe, often targeting pro-Russian regimes. Suddenly, Macron is signaling that he is considering a vast reorientation of French foreign policy away from the United States and towards Russia.

Consider Syria, where more opposition to US policy is to be expected. France backed the NATO war to topple the Russian-backed regime in Damascus since the war began in 2011. The French Govt even recognized US-backed opposition militias as aligned to the Syrian Govt, like dutiful corrupted lapdogs on the Washington NeoCon leash. Macron floated the possibility of reopening the French embassy in the capital of Damascus. He also proposed developing closer counter-terrorism cooperation with Russia. In a true kick in the groin, Macron reminded of his endorsement of the Normandy Format for the Ukraine resolution. It consists of four-way talks among Germany, Russia, France, and Ukraine. This negotiating format pointedly leaves out the United States, since not a constructive player. See Global Research (HERE). The loser in the European arena is the United States.

## EUROPE ON EXTREMES

◄$$$ THE EURO CENTRAL BANK BALANCE SHEET ROSE BY ANOTHER EUR 8.9 BILLION TO A FRESH HIGH OF EUR 4.204 TRILLION ON MORE QE PROGRAM ACTIVITY… THE BALANCE SHEET EQUATES TO 39% OF EUROZONE GROSS DOMESTIC PRODUCT, A MAGNIFICENT BLOAT. $$$

The laughable propaganda of accelerating economic growth in Europe continues apace, just like the false stories on accounting in the United States. The reported economic growth in no way shows up in European banking data. If for real that the European Economy is growing, then it would show up in bank assets and deposits. Notice the ploys and gimmicks like the LTRO and the negative rates. Notice the strange anomaly where bank deposits rise when bond yields go down, a safe haven effect. The part not well recognized is that central bank hyper monetary inflation causes widespread capital destruction. No amount of budget austerity can repair the severe damage. See Wall Street Examiner (HERE). Both the US and EU economies are Ponzi Schemes in their foundations.

◄$$$ EURO CB SWITCHED HALF A BILLION WORTH OF USTBOND RESERVES TO CHINESE RMB… A NEW TREND HAS BEGUN… BANKS FROM EUROPE TO ASIA WILL ALSO CONVERT USTBONDS INTO RMB INSTRUMENTS. $$$

The Euro Central Bank confirmed on June 13th that for the first time, the institution exchanged approximately half $1 billion from USDollar reserves to the Chinese RMB, as reported by the Financial Times. The move is said to reflect the increased usage of the Chinese currency and the importance of China as one of the largest trading partners among European nations. Last year, the RMB was included in the International Monetary Fund basket. Refer to the official currencies within the Special Drawing Rights. The ECB’s recent reserve conversion marks another milestone in the RMB internationalization. See Chinese Peoples Daily (HERE). If done at the Euro Central Bank, then the same conversions are taking place in other large European banks. Moreover, the same conversions surely on a much bigger scale are taking place in Asian banks. Let it be known that half $1 billion is peanuts, but it is the start of a trend. It is in fact a very dangerous new trend to liquidate USTBonds. Usually the USGovt regard such sales as an act of defiance, if not terrorism.

◄$$$ THE NEXT FINANCIAL CRISIS HAS ALREADY ARRIVED IN EUROPE, AND PEOPLE ARE STARTING TO PANIC… THE BANCO POPULAR ERUPTION IN SPAIN HAS CAUSED A NEW ROUND OF TREMENDOUS UNEASE AND DEEP ALARM ALL OVER AGAIN… THIS IS THE STUFF OF BANK RUNS AND PUBLIC PANIC… RECALL THAT NOTHING IS EVER FIXED, NEVER A REMEDY, THUS A REPEAT EPISODE COMES. $$$

Many are comparing the sudden implosion of Banco Popular to the collapse of Lehman Brothers in 2008. While EU regulators hastily arranged a sale of the failed bank to Santander in order to avoid a financial panic, the next shoes to drop will come soon enough, maybe also in Spain since its accounting violations and delays have been egregious ever since 2010. Now that a Too Big to Fail bank like Banco Popular has failed, investors are immediately trying to figure out which major Spanish banks may be the next to collapse. Share price plunges are a great indicator, since insiders play the game. Bank runs from depositor withdrawals are certain to occur in several countries. According to Wolf Richter, many have identified the Spanish Liberbank as a firm likely next to fail. On a single day recently, shares of Liberbank dropped by an astounding 20%, followed by another 19% decline the next day. Spanish authorities responded by banning short sales of Liberbank shares, a flimsy gesture indeed.

Eastward on the Italian banking front, Nick Giambruno sounded the alarm for Italian banking system insolvency in general. He points out that over $1 trillion worth of Italian Govt Bonds have negative yields. The Euro Central Bank has been pulling back, as have the big German banks, buying much lower volume in Italian Govt Bonds, in a move called by many as throwing in the towel, quitting the game. It is highly unclear what is keeping the Italian financial system from a powerful crash heard around the world. Their banking system is horrendously insolvent, their economy in deep recession, and investor trust long gone. The nightmare continues. Such an atmosphere has not been observed since 2008 and 2009. Everything points to an acceleration of the crisis as the second half of this year is entered. The Jackass refers to a Systemic Lehman Event. See Economic Collapse Blog (HERE).

Two more Spanish banks are hit by contagion, with bank runs and share plunges. They are Liberbank and Unicaja. Certain riskier Liberbank bonds fell suddenly by 60% in value. Another deflationary bust coming up. This is the stuff of panics. See MishTalk (HERE) and CityAM (HERE).

## CHRONIC BANK PAIN IN EUROPE

◄$$$ CREDIT IS DUE TO THE BANKER CABAL… THEY HAVE AVOIDED A RAGING EPISODE OF PRICE INFLATION, BY ENFORCING THE FIREWALL… ALL BENEFIT TO THE CENTRAL BANK Q.E. PROGRAMS HAS GONE TO THE BIG BANKS AND THEIR BOND AND SHAREHOLDERS… NOTHING REACHED THE MAIN STREET BUSINESSES, NOT EVEN A DRIP. $$$

The last seven years has seen no economic growth, rather vicious ongoing recession. These years have seen a grand deterioration of the labor market. Credit flow for small business creation and big business expansion has been near nill within the confines of the USEconomy. No bank contagion has occurred, since all insolvent holes have been patched with free CB funny money. To say that no contagion can occur, since big banks are the government, is extremely accurate. Not the Deustche Bank mess in Germany, not the RBS mess in Britain, not the Banco de Paschi mess in Italy, not the Banco Popular mess in Spain, nothing can prevent the paper mache equipment from applying patches to stem the losses. Not even the wreckage of the entire Greek banking system. There is no limit to paper patch volumes. Yet despite the success of eliminating contagion, the banker cabal in charge of Western Govts has failed. They preside over economic recession, insolvent banking systems, dead labor markets, ruptured sovereign bond, and permanently propped stock and bond markets. No recovery is possible, only continued grandiose life support with a constant war background. Next comes the Eastern rebellion to ignore, isolate, and interrupt the King Dollar Court.

◄$$$ SPAIN'S BANCO POPULAR WAS BAILED IN, ACQUIRED BY SANTANDER FOR A MERE ONE EURO… SANTANDER WILL RAISE EUR 7 BILLION IN NEW CAPITAL… STOCK AND BOND INVESTORS WERE ALMOST COMPLETELY WIPED OUT, IN THE FIRST NEW EU-REGULATION ACTION… THE APPLICATION FORCED LOSSES… A BANK RUN HELPED TO BRING THE FAILURE TO CLIMAX. $$$

Bank executives are such profound liars. Just four days after Banco Popular chairman Emilio Saracho told his employees not to panic during a massive stock plunge, the Euro Central Bank confirmed that the sixth largest Spanish bank was indeed on the verge of collapse. The EuroCB actually ordered it to be sold. The sequence of events was complex and indeed ugly. Santander acquired the ruptured bank for a token one Euro, but only after Santander's equity and riskiest debt instruments were bailed-in. In other words investors were largely wiped out, the losses imposed to Santander investors amounting to EUR 3.3 billion. Under new EU regulations, holders of contingent convertible AT1 and AT2 holders were wrecked. They had the distinction of holding the first major bank capital bonds to be bailed-in (wiped out) under the regulations. The market had not seen crashes like that since 2008.

The EuroCB forced the transaction, blaming what it called a “significant deterioration of the liquidity situation of the bank in recent days.” The central bank concluded that it “would have, in the near future, been unable to pay its debts or other liabilities.” Elke Konig, Chair of the Single Resolution Board, an EU agency that winds down stricken banks, remarked that intervention had been urgently needed overnight. Banco Popular is Spain’s sixth largest bank. There are more just like it in the country.

Consider the mechanics. In the first use of the newly adopted EU bail-in mechanism, Banco Popular saw equity shares resulting from the conversion of its riskiest debt and Tier-2 instruments completely wiped out, imposing losses of about EUR 3.3 billion on the bank’s securities holders. Concurrently, Popular would be acquired by Santander, Spain's biggest bank. The acquisition price was a nominal one Euro. To facilitate the deal, and render the bank with adequate capital, Santander will raise EUR 7 billion through a rights offer. The BP balance sheet would be bolstered.

The rescue and restructure of Banco Popular marks the first usage of an EU regime to deal with failing banks adopted after the financial crisis almost a decade ago. Absolutely nothing has been fixed in the ten years, just mountains of paper spew adding to the debt and $trillions of impaired bonds being locked in the EuroCB balance sheet, virtually worthless. The difference here, is that the maneuver breaks the mould of using taxpayer money, instead imposing steep losses on shareholders and some creditors of the bank. The wipeouts have taken some bondholders by surprise.

The bleeding has been chronic. Banco Popular has long struggled, having repeatedly asked shareholders for fresh money. Popular has contended with EUR 37 billion of non-performing assets, a grand millstone around its neck, most linked to the legacy of real estate lending before Spain’s property crash. The new Chairman Saracho had admitted in April that the bank would need to sell new shares for capital infusion, or else find a buyer. The situation had deteriorated in the last couple weeks, with its market capitalization falling by about half in a single week to EUR 1.3 billion. It had been the victim of a bank run, which compounded its funding problems. It is unclear if the Santander rescue will stem the rash of withdrawals.

Unlike Italy, which has been grappling for years with the problems of its lenders and using endless delays to resolution of any kind, the Spanish reaction to the problem lender was prompt. Italy has not taken any decisive action in any recognized form, just further bailouts and ongoing bank runs, in the midst of some wipeouts. In clear terms, no restructuring has been seen in the Italian banking system. Laurent Frings is Aberdeen Asset Mgmt Head of Credit Research. He stated, “This should not pose any real problems for other banks. But it does show that there is real risk in investing in these second-tier names.” A true vacant comment, since bank runs will likely ensue with other troubled banks, whose stock prices will also plunge in similar manner. The level of denial is thick. The Spanish Economy Minister Luis de Guindos attempted to sooth nerves, calling the acquisition a good outcome. Santander Chairman Ana Botin made other vapid comments of no value. She called it a good opportunity within the cycle, without identifying which collapse cycle in particular. It should be noted that adding BP’s business clients will create the biggest banking business in Spain for Santander, with 17 million customers. See Zero Hedge (HERE) and Reuters (HERE) and Bloomberg (HERE) and UK Express (HERE).

◄$$$ IN SPAIN, THE BANCO POPULAR’S CO-CO BONDS PLUNGED AS BALANCE SHEET CHAOS WAS REVEALED IN A POTENTIAL FORCED SALE… THE BANK IS IN BIG UNRESOLVABLE TROUBLE… CONTAGION COULD OCCUR IF THE PUBLIC SUSPECTS OTHER BAIL-IN WIPEOUTS ARE COMING, THEIR REACTION TO BE BANK RUNS… THE CO-CO BONDS AT BANCO POPULAR INDICATE A POSSIBLE EVENT OF DEFAULT, WHICH HAS NEVER HAPPENED IN RECENT YEARS SINCE THE SPECIAL BOND INSTRUMENT WAS FORMED… MORE BANK SHUTDOWNS WILL COME TO SPAIN, ALONG WITH BANK RUNS. $$$

The Banco Popular books are being thoroughly scrutinized, the results to affect many other crippled banks in the country. Nothing has been resolved in Spain for several years, with silly fraudulent accounting to keep the game going ever since year 2010. Their property market has never been properly reflected in the bank accounting. The slowest nation to re-work the accounting has been Spain among all EU member nations. Banco Popular sold out of necessity, in the face of failure. The sad reality (big ugly joke) is that the entire bank is worth far less than one Euro. The bigger problem is that the sales process is not typical. In this case, the seller could not make a rough calculation of what the value of the entity was worth. Neither can analysts on watch.

The intensified uncertainty has exacerbated the run on the bank’s deposits as well as triggering further declines in Popular’s contingent convertible bonds. They are known as the infamous Co-Co bonds. Co-Cos have no maturity date and are designed (in line by intention) to be bailed in before taxpayers must foot the bill. They are designed losing instruments. Thus, they serve as an excellent measure of how likely investors think a bail-in might be. Popular has two batches of Co-Cos. Those issued in October 2013 were recently trading at 78 cents on the Euro. That is below the previous lowest level registered in February last year, when the Deutsche Bank troubles sparked a broad but hasty selloff of Co-Cos across Europe’s financial markets. The second BP Co-Co issuance is dated from 2015, which is in even worse shape, trading at 68 cents on the Euro.

The difference between the two positions is mainly due to the fact that the bank chose to raise the capital threshold at which the bonds would be bailed-in from 5.125% (for the first issuance) to 7.0% (for the second issuance). In other words, if Popular’s capital ratio falls below the 7.0% level, the bank will not make the coupon payment on the second batch of bonds. According to its latest data, the Co-Co Bond is now trading just above the ECB’s minimal threshold. In such an event, investors would end up being stuck with bonds that have plunged in value and pay no coupon. Later, if regulators deem that the bank is failing, the Co-Cos would suffer a bail-in event, either by being converted into increasingly worthless shares or by being wiped out altogether. They are first in line for catastrophic losses.

Until June, no bank has defaulted on their Co-Co bonds, but such an event could soon occur, according to Expansion. The current levels of the Banco Popular Co-Co’s imply that investors believe there is a very real possibility that Popular will end up converting the bonds into shares. At the height of the D-Bank Co-Co crisis, when investors feared that the capital threshold would be breached, the Banco Popular bonds fell to 69 cents on the Euro. At the time, it was the lowest point for any major financial institution. The BP second batch of Co-Co’s just crossed that critical line. See Wolf Street (HERE & HERE).

◄$$$ THE EURO CENTRAL BANK SHUT DOWN TWO ITALIAN BANKS, VENETO BANCA AND BANCA POPOLARE DI VICENZA… THEY FAILED TO MEET CAPITAL REQUIREMENTS… NO REMEDY WAS IN THE WORKS AFTER REAL EFFORTS WERE MADE… MORE BANK SHUTDOWNS WILL COME TO ITALY, ALONG WITH BANK RUNS. $$$

Once again a bank liquidation occurred on a Friday. They gave themselves the entire weekend to clean up the mess. Two banks in Italy were shut down. Two chronic zombies within the Italian banking crisis were shuttered, Veneto Banca and Banca Popolare di Vicenza. The banks have combined assets of EUR 60 billion, mostly held in toxic bonds and other impaired portfolios. No third party wanted to touch them. They already received a bailout but more would have been required. Given the uncertainty and the deep impairment of their books, nothing was forthcoming. Therefore the Euro Central Bank pulled the plug, as the regulator lost its patience.

In a tersely worded statement, the ECB’s office of Banking Supervision ordered the banks to be wound up because they “were failing or likely to fail as the two banks repeatedly breached supervisory capital requirements.” Failing or likely to fail is the key phrase that banking supervisors use for banks that “should be put in resolution or wound up under normal insolvency proceedings.” The event is significant for another reason. This is the first Italian bank liquidation and shutdown under Europe’s new Single Resolution Mechanism Regulation. The ECB explained in a public statement. “The ECB had given the banks time to present capital plans, but the banks had been unable to offer credible solutions going forward. Consequently, the ECB deemed that both banks were failing or likely to fail and duly informed the Single Resolution Board (SRB), which concluded that the conditions for a resolution action in relation to the two banks had not been met. The banks will be wound up under Italian insolvency procedures.” To the point and abrupt. Note the rapid tumble in the Veneto Banca CoCo bond.

The EuroCB has some recent past history of its failed efforts to put these banks on the right track. In these two cases, no attempt at remedy worked. Private sector money stayed away. JPMorgan, which had been recruited to save the Italian banks, quit the scene. These banks had been zombies for too long. Everybody knew it, but the government kept denying it. Just weeks ago, Italian Economics Minister Pier Carlo Padoan insisted that the two banks would not be wound down. The government in Rome loses more credibility. In early June, the two banks were instructed by the European Commission to raise an additional EUR 1.25 billion in private capital. No one came to the table. The Italian Govt then tried to persuade the European Commission and the ECB to reduce the requirement to EUR 600-800 million, while at the same time urging the Italian banks to contribute toward the bank rescue fund. Again, the efforts failed and no one came to the table. See Wolf Street (HERE).

◄$$$ FEAR OF CONTAGION FEEDS THE ITALIAN BANKING CRISIS… THE MORAL HAZARD GROWS DEEPER, DEPENDENT UPON A CONTINUED UNSTABLE BANKING SYSTEM. $$$

At first, deny, and then deny again. Later, taxpayers must bail out bondholders. Italy financial stability concerns are off the charts. So chronic and widespread are the banking sector’s structural problems, that there is a very real risk that bailing in one or two mid-sized banks could prompt depositors and investors to move funds from weak banks to stronger ones. They might divert funds to banks outside the country. In the process, the accelerated liquidity stress combined with bank runs could result in very real contagion. The effect could result in increased financial destabilization of Italy’s already terminally ill banking system.

In Italy, the contagion from a banking crisis would be a lot more difficult to contain. That is the main reason why Monte Dei Paschi Di Siena was given such a generous stay of execution. If Banca Popolare di Vicenza and Veneto Banca are also bailed out with public funds, the message from the Euro Central Bank will be resoundingly clear. The message being, as seen in the last three years, banks will not be wound down if the banking system they operate in is deeply unstable. The moral hazard is a new variant and highly dangerous. As long as the banking system is in terrible shape, the bank investors will be bailed out with public money. In the process the continental banking system risk rises. This is exactly how the Systemic Lehman event is coming close to pass. See Wolf Street (HERE).

◄$$$ ROME HAS BAILED OUT THE CRIPPLED FLAGSHIP BANK AND SEEKS A BREAK FROM RIGID BRUSSELS RULES IN AUSTERITY… ITALY HAS BEGUN A PATH OF DEFIANCE… ITALY POSES THE GREATEST POLITICAL RISK TO EUROPE, FOR ITS URGENT DESIRE TO LEAVE THE UNION. $$$

Desperate ministers within the beleaguered Italian Govt have pleaded with Brussels for leeway from the harsh European Union budget rules, as the Roman officials follow through on bailing out the country's oldest bank. Italy wanting to leave the Euro is the biggest current risk to Brussels. Economics minister Pier Carlo Padoan has once more pleaded with Brussels to break EU rules.

Italy has been given approval to side-step rules and thereby to inject EUR billions into Monte dei Paschi to help the bank avoid a devastating collapse with fallout. They will attempt to do so without inflicting losses on ordinary savers. Europe's rigid rules forbid taxpayer money to be used to rescue lenders without investors also suffering losses. But Italy has been allowed to bend the rules in the face of fears that deep investor losses could stir already deeply negative anti-Brussels sentiment among Italians. Now Rome wants further concessions from Europe's rules to drum up support for the government ahead of possible early elections.

The Italian Govt wants to appeal to voters with costly measures that would mean breaking targets to reduce the country's deficit. The challenge next is to EU austerity budget rules. Italy is challenging all EU rules, and with frustration, might depart the European Union completely. In a letter to EU officials, Minister Padoan indicated strict austerity spending cuts risk a dangerous buildup in support for anti-Euro parties. Polls show around 30% of Italians would currently vote for the Five-star Movement, which positions itself directly against Brussels. Their momentum could grow further, ahead of a possible election. Padoan proposed a minor budget deficit reduction by just 0.3% of Gross Domestic Product next year. Official EU rules dictate deficit reduction by 0.5% of GDP until the budget is balanced. Of course, the morons creating such rules ignore the fact that budget austerity always increases the deficit, never reduces it. Not a single precedent exists, yet the rule continues. Greece is only one example. France is another.

Italy has already been granted permission, a time extension, to make deficit reduction progress. Warns Padoan, “A tighter fiscal consolidation would jeopardize the recovery and put at risk social cohesion.” He refers to rioting and social disorder. Next the European Commission will consider the minister's proposals. Italy's four main parties agreed earlier this week on a new electoral system which raised the chance of an election before next spring. Italy has more national elections than any other country. They change governing bodies more often than most storefronts change mannequin clothing outfits. See UK Express (HERE).

## EURASIA GROWS BRANCHES

◄$$$ CHINESE PRESIDENT XI JINPING ADDRESSED 17TH S.C.O. SUMMIT IN KAZAKHSTAN… HE THREW A DAGGER AT WASHINGTON AND THE BANKER CABAL… THE EASTERN ALTERNATIVE TO N.A.T.O. HAS FORMED IN A SECURITY ALLIANCE AND HAS CRITICAL MASS. $$$

The usual fanfare occurred with the SCO Summit. The main focus for attention was an element in the keynote speech. Xi said, “We need to prevent the interference, and penetration, of external forces.” The quote is from the 11-minute speech by China’s president Xi Jinping, regarding the bloc and nations within the expanding Shanghai Cooperative Organization. It was formed in June 2001 to bolster regional security and to foster cultural exchange. It has evolved into a counter-balancing group against the ever-encroaching NATO. See CGTN News (HERE). Only an idiot will not know who and what Chinese President Xi was referring to. His words were directed at the United States and its uber-lords in London towers and Western European castles, who are failing at the execution of the globalist agenda and the containment of Russia.

◄$$$ INDIA AND PAKISTAN HAVE OFFICIALLY JOINED THE SHANGHAI COOPERATION ORGANIZATION FOR SECURITY AND CULTURAL EXCHANGE…. RUSSIA AND CHINA HOPE TO WEAKEN US-INDIA LINKS… S.C.O. DEVELOPMENT IS GRADUALLY INTEGRATING TRADE. $$$

Despite continuous (seemingly endless) hostilities and friction between India and its neighbor Pakistan, the two countries were granted full membership of the Shanghai Cooperation Organization (SCO) during its two-day annual summit in Kazakhstan last week. The Eurasian security group SCO gains critical mass, power, and credibility. Indian Prime Minister Narendra Modi said, “I thank the SCO for making India a part of this esteemed organization, which now represents 40 percent of humanity and nearly 20 percent of global GDP. Connectivity with SCO countries is our priority. We fully support it. And we want connectivity which should pave the way for cooperation and trust among our future generations and society.” These are very significant numbers and form a growing critical mass to contend with. Pakistani Prime Minister Nawaz Sharif said, “I congratulate India on joining the Shanghai Cooperation Organization. We must leave a legacy of peace for future generations; not toxic harvest of conflict and animosity. Let’s create shared spaces for all.” It seems clear that China is working to promote more peaceful relations in hot spots like with the Hindu-Moslem bitter rivals.

For the two West Asian nations, their fear of the US-UK hegemony is greater than their mutual hatred as neighbors. Or else they both see the future as not being run by the corrupt warmongering Anglo-Americans, and neither country wants to be left behind. They want to hitch their wagons to the Eurasian Trade Zone, and SCO is its future police force. The SCO group has eight members as of now. See Russia Insider (HERE) and Russia Today (HERE). In the near future, expect China to foster with full support the move for Iran’s full membership in SCO.

◄$$$ TURKEY GRANTS APPROVAL FOR RUSSIAN CONSTRUCTION OF THE NUCLEAR POWER PLANT… TURKEY IMPORTS $50 BILLION IN ENERGY PER YEAR… TURKEY STRIVES TO REDUCE ITS OVER 90% ENERGY IMPORT DEPENDENCE, MOSTLY FROM RUSSIAN NATGAS. $$$

Russia's State Atomic Energy Corporation (Rosatom) has won final approval from Turkey's energy market regulator to go ahead with building its $20 billion Akkuyu nuclear power plant in the south of the country. The project to construct four nuclear reactors has repeatedly run into delays, including the highly provocative military incident in November 2015 when Turkey shot down a Russian jet fighter. Ties have since normalized between the two countries and work on the plant has resumed. The project is expected to be completed by 2023 and should meet close to 7% of total Turkish electricity demand. Regulator EPDK said it had given Akkuyu Nukleer AS a 49-year production license. Dependent on imports for almost all of its energy, Turkey has embarked on an ambitious nuclear program, commissioning Rosatom in 2013 to build the four 1200 megawatt reactors. With Turkey's energy imports costing about $50 billion annually, Ankara has a goal to have electricity generation at least 5% to come from nuclear energy in less than a decade, cutting dependency on natural gas largely bought from Russia. EPDK announced that Akkuyu Nukleer had agreed to accelerate construction so that all four reactors would be completed by 2023, the centennial of the foundation of the Turkish Republic, rather than 2025 as previously agreed by Russia and Turkey. See PressTV (HERE).

◄$$$ SOUTH KOREA IS TO BUILD MINI-LNG PLANTS IN IRAN… THE US ALLIES CONTINUE TO MOVE TOWARDS THE IRAN-CHINA-RUSSIA AXIS. $$$

Iran disclosed a working plan to develop with South Korea sophisticated small-sized gas liquefaction units, called Mini-LNG plants. They will meet energy needs in remote areas of the Islamic Republic. An agreement had been signed with South Korea’s Busan in early June. Work for the construction of the first Mini-LNG plants could begin within the next four years. Saeed Pakseresht is director for R&D at the National Iranian Oil Company (NIGC). He described a consortium from Iran and another from South Korea to manage the projects. He stated, “We do not have the technology to develop mini-LNG plants, but joining hands with companies like Oceanus consortium and KOGAS is an important first step to develop our LNG sector. In case of acquiring the know-how, it will become possible to transfer LNG to remote areas.” KOGAS is South Korean's public natural gas company. Maybe the Washington NeoCon morons will slap sanctions against South Korea.

The project plans for a production capacity of 15 tons LNG per day, adding that this could rise to as high as 300 tons per day at a later stage. Iran was impressed that South Korea had already been able to meet all its needs through LNG gas supplies, seen as a clear sign that the country had the required technical capability to transfer the related expertise to Iran. The South Korean companies involved in the project are Oceanus, Kitech Institute of Industrial Technology, and Korea Gas Technology Company. The Iranian parties involved are the NIGC, the LNG Institute of Tehran University, and the Research Institute of Petroleum Industry. See PressTV (HERE).

◄$$$ SHANGHAI GOLD EXCHANGE TO OFFER RMB-BACKED CONTRACTS IN BUDAPEST FOR GOLD PURCHASES IN EASTERN EUROPE… THE MOVE HAS TWO GOALS:  TO SPREAD THE EASTERN PRICE MECHANISM FOR GOLD, AND TO SPREAD THE INTERNATIONALIZATION OF THE CHINESE CURRENCY. $$$

A gold futures contract based on China’s RMB-backed gold benchmark price could be listed on the Budapest Stock Exchange in Hungary as soon as the second half of this year. The move was announced by Jiao Jinpu, chairman of the Shanghai Gold Exchange (SGE) at the Lujiazui Forum held in Shanghai. The SGE is considered the world’s largest physical bullion exchange, since the COMEX deals in corrupt price mechanisms and golden toilet paper with seemingly infinite volume. The RMB-backed benchmark gold fix was launched by the SGE in April 2016, in direct defiance for profound Western corruption in the gold market. The move to Hungary reflects Beijing’s latest step to push ahead its plan to make the Chinese Yuan a global currency, analysts added.

The SGE and the Dubai Gold and Commodities Exchange (DGCX) have just signed an agreement which makes the DGCX the first foreign exchange to use the SGE’s RMB-denominated gold benchmark. Jiao stated, “The Shanghai pricing has now stepped out of the domestic market and is spearheading the global arena. On top of the listing in Dubai, the upcoming launch in Budapest underlines the Shanghai pricing’s ongoing foray into overseas market.” The COMEX is toast, operating on borrowed time, in fact stolen time, exposed for massive fraud. See South China Morning Post (HERE).

◄$$$ SHANGHAI WORKS WITH KAZAKHSTAN ON NEW CENTRAL ASIA TRADING HUB… IT COULD BE USED FOR FINANCING ONE BELT ONE ROAD PROJECTS, AS WELL AS SOON OFFERING PANDA BONDS… THE SHANGHAI STOCK EXCHANGE WILL OWN A ONE QUARTER STAKE, AND FOSTER ITS GROWTH AND DEVELOPMENT… THE KAZAKH GOVT WISHES TO SPIN OFF SOME STATE-OWNED COMPANIES. $$$

The Shanghai Stock Exchange (SSE) has made a formal agreement with Kazakhstan's Astana International Financial Center (AISE) to launch a new stock exchange in the Kazakh capital of Astana. The deal was confirmed during President Xi Jinping's visit to Kazakhstan in early June. The exchange is expected to develop into a major trading hub in Central Asia and an important platform for financing projects linked to China's Belt & Road Initiative. The SSE will hold a 25.1% stake in the AISE, and will also provide technological, planning, product designing, and marketing support during the creation of the new exchange. The Shanghai side will provide integrated financial services such as listing, trading, and clearing. Investors will be able to trade a wide range of products including stocks, bonds, funds, commodities, and derivatives. The former Soviet Republic has astute plans. Kazakhstan plans to use the AISE to privatize a large number of its state-owned companies, a key economic priority for the country.

The exchange will also provide a number of strategic benefits for China. It is expected to boost the internationalization of the Chinese Yuan currency (RMB = renminbi), by becoming a trading center for the renminbi in Central Asia. The AISE will also play an important role in China's Belt & Road Initiative on numerous projects, another site to raise capital. The nation along with its other large neighbors are located on the New Silk Road and its entire economic corridor. These Former Soviet Republics are very large land masses, and have strong gold mining sectors, thus more gold trading on the AISE to be expected. A notable slice of the significant $600 billion for projects could pass through the new exchange. China has ambitious plans to invest in the abundant projects by 2020. The deal is a further sign of the strengthening financial ties between China and countries involved in the Belt & Road Initiative. The wake of projects and financial backing is extensive, tremendous activity for construction and technology companies.

Three Chinese securities firms, including SSE, have set up subsidiaries in countries involved in the initiative, while 64 institutions from those countries now have QFII or RQFII certification in China, allowing them to trade on China's capital and securities markets, according to the China Securities Regulatory Commission. A total of 963 companies listed on Shanghai A-share market are currently involved in projects linked to the Belt & Road Initiative. The CSRC commission vice-chairman Jiang Yang believes that it is only a matter of time before countries and companies in Central Asia begin to issue Panda Bonds, the RMB-denominated bonds issued by a non-Chinese entity. Doing so will push further the RMB internationalization, a key goal by President Xi. See China Lujiazui (HERE).

◄$$$ UZBEKISTAN INTENDS TO INCREASE GAS EXPORTS TO CHINA… THEY PLAN TO INCREASE THE ANNUAL VOLUME OF GAS SUPPLIES TO CHINA UP TO 10 BILLION CUBIC METERS… ENERGY IS THE BLOOD FLOW FOR THE EURASIAN TRADE ZONE. $$$

The Tashkent leaders are linking their energy wagons to China, embracing the Eurasian Trade Zone. The Uzbeks plans to increase the annual volume of gas supplies to China up to 10 billion cubic meters, chairman of the board of Uzbekneftegaz Alisher Sultanov confirmed. It is their national gas company. An interim agreement had been signed within the framework of the visit by President Shavkat Mirziyoyev to China in May. The contract runs for three years, which calls for Uzbekistan to begin at lower volume, but increase the volume of the gas supplies to 10 billion cubic meters a year in 2018-2020. A pipeline is active. Uzbekistan and Turkmenistan supply to China gas through the Central Asia-China gas pipeline, which is currently active and has the capacity of 50 billion cubic meters a year. The pipeline is running three lines currently. See UZ Daily (HERE).

The Jackass gives special thanks to several clients and colleagues for continued sharing of somewhat obscure but important stories such as these from West Asia and Former Soviet Republics. Their assistance is critical in providing a comprehensive flow of information for the Hat Trick Letter. The Eurasian Trade Zone receives almost no Western press coverage, yet it will serve as a key factor in the eclipse of the USDollar. The USD must first be challenged, then have a rival, before it can be unseated.

◄$$$ RUSSIA HAS GAINED ACCESS TO THE OIL PIPELINE IN IRAQ UNDER A DEAL WITH KURDISTAN… RUSSIA IS ADEPT AT MAKING DEALS, EVEN IN A WAR ZONE… BESIDES THE ABILITY TO CONTROL THESE OIL & GAS RESOURCES (HENCE SUPPLY & PRICE), OVER THE LONG TERM THE DEAL WILL FACILITATE THE IRAN-IRAQ-SYRIA GAS PIPELINES… THE HEAVY WEIGHT BY RUSSIA MAKES THE IRAN PIPELINE MORE LIKELY TO WIN THE INTENSE REGIONAL BATTLE. $$$

Russian energy giant Rosneft and the Kurdistan Regional Govt in northern Iraq signed a set of oil exploration and production agreements. It continues the deal made at the St Petersburg International Economic Forum (SPIEF 2017) last year. It was the biggest deal made by a Russian company at the wildly successful forum. As per the deal, Rosneft will gain access to a major regional transportation system with the capacity of 700,000 barrels per day (bpd). It is planned to expand capacity to more than 1 million bpd by the end of 2017. The contracts were signed by their respective heads of state, as well as by Rosneft CEO Igor Sechin and Minister of Natural Resources for the Kurdistan Regional Govt Ashti Hawrami.

The Russian company will work to bring to market the energy supplies from a region historically abundant with estimated recoverable reserves around 45 billion barrels of oil and 5.66 trillion cubic meters of gas. The estimates are according to the Kurdish Ministry. The agreement includes five Production Sharing Agreements, and a commitment to fortify additional infra-structure. The Russian energy giant will participate in the creation of a new joint company. Rosneft can access a large pipeline that goes from Kurdistan to Turkey, over a 20-year span. See Russia Today (HERE).

◄$$$ THE ONLY RARE EARTH MINE IN THE UNITED STATES WAS JUST WON BY A CHINESE CONSORTIUM IN AN AUCTION… THE US-HELM IS FAST ASLEEP… THE METALS ARE CRUCIAL TO ELECTRONIC APPLICATIONS. $$$

The Mountain Pass Mine auction has been completed. A rival bidder says he will challenge the $20.5 million sale, which is subject to court and regulatory approvals. The outcome went as follows. A Chinese buyout group has been declared the winner at a bankruptcy auction for the Mountain Pass rare earth mineral deposit and mine asset. It is the only source in the United States for such elements essential to electronic devices. With a winning bid, the investment firms JHL Capital Group and QVT Financial were selected to take control of the Mountain Pass property, along with Leshan Shenghe Rare Earth Shareholding Co. The priorities of the USGovt with fabricated Russian news, Hillary emails, investigations within investigations, all after profound vote fraud and political murders at the Democratic National Committee, is so incredibly askew that it defies description. The rare earth metals are critical to many applications, and the US just dropped a big ball.

## GOLD MATTERS ON THE CUSP

◄$$$ GOLD SHOWS A BULLISH CROSSOVER ON THE VERY LONG-TERM CHART… IT BODES WELL… THE TRIGGER IS NEEDED TO ALTER INERTIA OF ENTRENCHED CORRUPTION… GREAT RESISTANCE LIES AROUND THE $1300 LEVEL, BUT IN TIME THE RISE WILL OCCUR… THE FUNDAMENTALS FOR ALL FIAT CURRENCIES LED BY THE KING DOLLAR ARE PUTRID, HORRIBLE, TOXIC, AND INDICATE A PARADIGM SHIFT. $$$

Timing on historical charts is extremely difficult, if not impossible. The Gold price is completing the multi-year correction which began in 2012, off the $1900 peak. With the Petro-Dollar hanging by Arab threads, with QE ravaging economies for the seventh year, with sovereign bonds and their attendant banking systems in a total wreck, with a new US-led war every two years in defense of the toxic USDollar, the prospects for Gold are extremely bright. The future breakout for gold will be led by the East, which is busy building their non-USD platforms and channels. They have begun to achieve critical mass. The chart shows the crossovers when they have occurred, offering excellent signals of new multi-year trend in the making.

For the last several months, the more volatile 50-week moving average has been struggling to rise above the 200-week moving average. It is called a golden cross when the cross is upward. The last upward cross occurred in 2002. It might not seem like much of an event on the chart, but reduce the scale to (0-400) and 15 years ago it would look extremely telling and indicative. The Elliott Wave crowd is pointing to the imminent end of the large wave-4 correction, and the start of a powerful positive wave-5 to grab global attention. Timing is near. When the Gold price makes a move toward the $1400 level, the game is truly on and the breakout will be on course. The clarity of the Gold Standard return will be clear. The fate of the USDollar will be known more widely, even in the West. They will be talking about the New Scheiss Dollar, and lying through their teeth about its viability. It has a great risk of becoming a Third World currency. During the transition, and after the adjustment to the new US currency, the Gold price will not look back. It will go past $2000 like a hot knife through butter. Silver will follow the path laid by Gold. Its gains will be double those of gold, in percentage terms.

◄$$$ ANDREW MAGUIRE CLAIMS A MAJOR EVENT TO CREATE A MASSIVE GOLD PRICE SURGE WITH 26 DAYS, IN A BIG PUBLICIZED WARNING… THE EVENT OF BUSTING THE COMEX HE CLAIMS WILL BE JULY 8TH... WE WILL SEE… DOUBTS LINGER SINCE THE PAPER GAME IS CONTROLLED BY PAPER KINGS IN CHARGE OF FINANCIAL MARKETS BY FORCE. $$$

London gold trader Andrew Maguire has made a very bold comment, pointing to July 8th as a day when a massive gold price surge will begin to occur. He believes sovereigns will not accept cash to settle, and will break the COMEX. By sovereigns is meant government or official entities, even royal monarchies. Maguire says overwhelming physical volume of a magnitude not seem before has lined up for delivery, and this month will be different. See King World News (HERE).

The Jackass is dubious. Nothing can stop the COMEX and LBMA to just force more cash settlement upon those parties seeking delivery, like in the past, every month in the past, ad nauseum in a criminal chain of events. The same forecast was made a few weeks ago, but over 60% of the contracts standing for delivery were settled in cash. To be sure, the turnover was unusual last month in May. The COMEX handed out a special request during an emergency situation, appealing for cash settlement. Something is breaking, but my opinion is firm that the paper markets will not serve as the breaking point. It will be foreign rejection of the USTreasury Bill in trade payment to break the system. London Paul has an opinion that coincides with the Jackass. He said “It does not change anything. Until the COMEX and LBMA are taken down, the paper trading corrupt game will continue ad infinitum. That is coming.”

Harvey Organ made some comments about Maguire's 26-day advanced notice for dire prediction. Maguire said in clear terms that the markets are going to see some fireworks. Refer to an insurgent phase between exchange for physical transactions and gold. Organ said, “That is correct. Andrew is going to talk about this issue. By the way, it is July 8th [for the big event]. That is the day that supposedly when all of these contracts have been written, and maybe one sovereign has been taking all these [EFT contracts] and going to settle them. That would be exciting. We do not know yet. But it is interesting. Andrew is a trader. He is an LBMA trader. If there is anybody that knows, it is him. He knows. I will put my money on him anytime. He knows.” The USFed and Bank for Intl Settlements are spoofing but sovereigns who lie in wait at $1260. This could be exciting. The EFT contracts stipulate that fiat money is used and a London forward contract is exchanged for a gold delivery notice on the COMEX. See Silver Doctors (HERE). Also, Maguire claims that illegal trading activity in gold continues as the bullion banks are finally trapped. He accuses the Commodity Futures Trading Commission (CFTC) of doing nothing. But that is nothing new. See King World News (HERE).

An additional comment, one that came from the TFMetals threads under the aegis of the indefatigable Turd Ferguson. It came from a TFMR follower. It could be that the complex of Asian platforms is surrounding the corrupt COMEX market. Mr Ferguson thought it was perhaps the most plausible guess that he had come across to date. It goes like this. The Chinese, who are the world's largest refiner of crude oil, might announce the launch of their long awaited RMB-based oil futures market on that date. On its own that should not have warranted Maguire's very bullish stance on physical gold demand swamping the cartel's ability to print paper gold. However, if the Chinese do make such an announcement, but with the added twist of enabling sales proceeds of crude oil in RMB currency to be used to buy gold through the SGE, then that would be a very serious game changer. The power of the comment is redoubled with the combination of the RMB contracts in crude oil working together with gold in futures contract settlement. Look also for Russia, the world's largest oil producer, would probably soon announce the launch of their own crude oil futures market in Ruble terms under the auspices of SPIMEX (St Petersburg Intl Mercantile Exchange). Then the same ability for the seller of oil in Rubles would be presented to buy gold.

The above would be sensible and logical steps in the development of China and Russia's respective financial markets. Remember that China and Russia are coordinating many efforts in the non-USD development of platforms. It would however be the death knell of the Petro-Dollar, which would be the start of a wild ride in the precious metals and FOREX currency sectors. From a geopolitical viewpoint, these steps would very significantly ratchet up the Second Cold War tensions. Perhaps finally the Chinese-Russian bloc can, in extremis, use their recently constructed parallel international financial system, independent of the USDollar, to ensure continuity of international trade. They could sense the time is right to give Washington some serious pushback where it hurts, in the financial structures behind the King Dollar. The financial upside in the value of their accumulated gold holdings will more than offset any losses incurred through a devaluation of the Chinese and Russian holdings of USD-based reserves. The above was taken almost verbatim, with a couple extra comments.

◄$$$ STEPHEN LEEB WONDERS IF CHINA IS KEEPING GOLD PRICE DOWN (FOR NOW), WHILE IT ACCUMULATES MORE PHYSICAL GOLD… JACKASS HAS BEEN SAYING THE SAME FOR TWO YEARS. $$$

China has been in an aggressive purchase mode from Western gold marts for over a decade. They relish the opportunity to buy gold bullion at suppressed discount prices. Why not exploit the corruption and stupidity of Western bankers!? It has seemed apparent that China hired JPMorgan as lackeys to source silver for the last year. The Jackass has been saying for the longest time that the Gold & Silver prices will lurch higher when China is finished buying precious metal, and when Beijing officials are willing to take USTBond losses in default sales. See YouTube video (HERE).

◄$$$ GOLD RESERVES MERRY GO-ROUND AND DECEPTION GAME. $$$

The true gold reserves are astounding in the East. Russia & China command at least 50 to 60 thousand tons gold. At least 20 thousand tons more from Indian are found in their households and temples. The Voice claims Iran has 15,000 metric tons or more gold reserves. This fact was new to the Jackass.

The Voice made a more detailed statement. According to the World Gold Council, China and Russia are ranked sixth and seventh on the list of country with the largest gold reserves, with 1843 tons and 1655 tons respectively. The first on the ranking is the US with 8134 tons. It is followed by Germany (3380 tons) and the IMF (2814 tons). Very funny how they keep misleading the public. Count the German metal in with Russia and China in the not too distant future, for coordinated usage like with establishing the Gold Standard. Switch quickly to reality. Russia and China have in excess of between 20,000 and 30,000 MT each.

For amusement, see the official reference to gold reserves. It is a pure propaganda ploy played by all parties in a grand stupid game. See Sputnik News (HERE). It is equivalent to several organized motor gangs putting forward beaten up Chevy Novas and old Rambler Javelins to the nitwit press before a big car race, with the Ferrari and Porsche hidden in the garage. Almost anybody with an IQ over 100 knows the official gold reserves data is phony. Sadly, only a small shrinking portion of the population sports such meters over 100. The Jackass registers at a modest 130 points, but no genius here like the King Pedophile Bill Clinton.

◄$$$ THE BANKER CABAL DUMPED 40 TONS PAPER GOLD DUMP IN FOUR MINUTES ON JUNE 8TH, A MAJOR BOLD GRAND CRIME SCENE STILL… THE CRIMINAL ACTIVITY CONTINUES UNABATED AND WITH NO LEGAL ENFORCEMENT… THE CRIMINAL ACTIVITY WILL CONTINUE UNTIL THE EASTERN CONSORTIUM PULLS THE PLUG, BUT ON THE TRADE PAYMENT SIDE. $$$

The gold market activity on June 8th was as criminal as it could possibly be, yet not a word from the regulators. More of the same old same old. But it warrants comment. They Boyz dumped 40 tons of paper gold in a mere four minutes, an amount of gold metal which does not exist in formal supply. If only a powerful sovereign were to call this bet and force delivery, it will be impossible and cause a default. If only!

A group of corrupt entities decided at 9:38 am on this day to dump 14,315 contracts of paper gold. It occurred just within the August contract. In total a lot more was unloaded when considering other month contracts. This volume represents 1.43 million ozs of gold. The COMEX is shows only 900,000 oz of gold as Registered, which means available for delivery in June, July, and August. This of course assumes all said volume of gold actually physically resides in the COMEX vaults as reported. The Wall Street banks shift metal around to enable double counting, and to avoid suspicion for other illegal activity. If that generous assumption is made, then 531,000 oz of paper gold was naked shorted since it is nowhere ready for delivery. No delivery will be done, only a price decline. Same old same old. See Investment Research Dynamics (HERE).

A Jackass editorial comment on default risk and USDollar system being overturned. The COMEX is corrupt to the core, and part of the rigged financial market system under Western control, with all its powerful computer machinery and derivative contraptions. The King Dollar will never be victim of default or revolt from the internal side. The controls are too prevalent and longstanding. The risk to the King Dollar reign of financial terror lies on the Eastern hemisphere and the trade side of the equation. A grand celebration cometh when the Chinese decide to totally wreck their paper game with the new Hong Kong Exchange, working together with Shanghai Exchange. The development of the RMB-settled oil and gold contracts could alter the balance of power in these corrupt financial markets finally. The potential grows with each plank constructed by the Eastern players, who suffer more directly the corrupt price mechanisms. They own tens of thousands of gold tons.

The Jackass maintains that the COMEX gold market will not undergo a failure until the Eastern consortium rejects the USDollar in trade payments, since the West controls the financial markets with all their glorious corruption. The decision to challenge the King Dollar is very near, since the Eastern core of non-USD advocates is gathering a critical mass. They will step by step install the gold instruments to overturn the USDollar system. At first it might be a dual universe at work with the USD and RMB operating within the global financial system. The USD will not be able to compete with the RMB when it combines with the Russian Ruble and the Gold Standard, piece by piece. The day is near for the dual universe, which will carry some real excitement.

◄$$$ BANKS ARE STRUGGLING TO SETTLE GOLD CONTRACTS STANDING FOR DELIVERY IN BACKROOM TRANSACTIONS OUT OF VIEW. $$$

It appears currently that the Western Central Banks are having a difficult time keep a lid on the price of gold. The elevated level of Privately Negotiated Transactions and Exchange for Physical transactions is an indicator flashing red. The banks are struggling to settle gold contracts with deliveries from the amount of gold available on the deeply and irretrievably corrupted market. This occurs both with facilitated settlement of COMEX gold contracts off-exchange, privately and out of sight. See Silver Doctors (HERE).

◄$$$ CHINA'S GOLD IMPORTS JUMPED 50% AS SAFE HAVEN DEMAND BOOMS… CHINA IS SET TO IMPORT 1000 TONS FROM HONG KONG THIS YEAR… RECALL THE SUPPOSED SHUTDOWN OF MARGINAL DOMESTIC GOLD MINES, OR MORE LIKELY THE HALT OF GOLD OUTPUT TO MARKET. $$$

Mainland China is set to import about 1000 metric tons from the HK territory in 2017, said Haywood Cheung. He is president of the 100-year old exchange in Hong Kong which trades physical gold and silver. It serves as a primary conduit to China. The volume compares with net purchases of 647 tons last year. If completed at a robust 1000 tons, it would be the biggest since 2013. Sales of bars for investment have climbed more than 60 percent, as China deals with bank troubles, unstable property market, and jittery stock market. The Chinese Gold & Silver Exchange Society is planning to build a bonded warehouse in Qianhai, with a storage capacity of 1500 tons of gold, whose completion is expected in two to three years. The society has an offshore gold product, denominated and settled in RMB. They boast current transactions of about CHY 20 billion to 30 billion daily. See Bloomberg (HERE).

Recall that last month the Chinese Govt shut down a few marginal gold mines. It was either a brilliant tactical ploy, or a standard business decision. Imports have zoomed, while China relaxes its gold domestic output. The Jackass and Voice suspect that China did not close marginal mines, only to halt their gold output delivery to the market. The gold output went to official government warehouses. The Beijing officials wish to see much higher gold imports, and engineered exactly that.

◄$$$ ANOTHER SYSTEM WONK PLIES HIS MORONIC STUPIFIED TRADE IN SEARCH OF SECURE JOB POST AND INCOME… LEDBETTER CLAIMS THE GOLD STANDARD DOES NOT MAKE ANY SENSE TODAY… MORE LIKE THE FIAT PAPER SYSTEM IS IMPLODING, AND THE GOLD STANDARD IS URGENTLY NEEDED… DESPITE THE EXTREME DISRUPTION IT WILL CAUSE, THE REMEDY IS RIGHT BEFORE OUR EYES… IT CALLS FOR A MINIMUM $10,000 GOLD PRICE AND MINIMUM $400 SILVER PRICE. $$$

Many are the shills in the financial community. Another has surfaced with his vacant analysis, moronic to the core, stupid in its planks. The only burning question is whether the Inc editor was paid for the wretched heretical analysis, much like the global warming corrupted scientists are paid for their heretical work.

The Inc publication editor James Ledbetter thinks the Gold Standard just does not work today. Speaking with Kitco News days before the release of his latest book entitled “One Nation Under Gold,” he shared his strong views against returning to a Gold Standard. His interest was peaked on the subject during the US Presidential campaign. He stated, “I do not see a return to a Gold Standard making any sense either for the United States or the world economy. It would be tremendously disruptive to the financial system. I just do not see it as practical in any way. Nowhere else in the world is that discussion happening at that high a political level in a major political party. I think gold has a place in the monetary system both in the US, and globally, but it is just not at the center of the system.” He is an educated idiot, and ignorant of the precise conversations in Asia. Ledbetter still sees the importance of the metal in the economy. These are very shallow comments from a low intellectual function. He fails to address the problem of unchecked credit, strangulation from impaired debt, and endless volumes of money creation for the benefit of the banking sector. He also fails to address the grotesque imbalances with sovereign debt, the broken banking systems, and the USEconomy operating under a credit card with woefully inadequate industry. He surely does not address defense of the USDollar financial system with endless war. Again, a C minus grade and very unimpressive. See Kitco (HERE). The Kitco publication reverted into a substandard medium about ten years ago. It touted Jon Nadler on a regular basis, a complete buffoon and horrendous pump analyst against gold with no merit. They continue on their low road.

Obviously the Gold Standard would be very disruptive. The imbalances, corruption, and broken systems would have to be razed then repaired. The process is always disruptive. Consider the same apt Jackass reply, directed as rebuttal to a Charles Hugh Smith dumbass essay from a month ago. The content still applies, this time in rebuttal to the inept and shallow Ledbetter applies.

The Gold Standard is the ultimate arbiter. After 40 years of no rules of enforcement on money and credit, a grand monster has been created. Numerous important points are included on the installation of the standard and its consequences. A difficult adjustment period will be required, with very high risk. The critical aspects include the gold cover clause, more controlled credit creation, the extreme debt accumulation, the forfeiture of gold, the corrective systems to fix imbalances, the correction economically toward re-industrialization, and the current asset bubbles. The gold price should be five times higher in accordance with 5x greater monetary base. It will be in due time. Some disorder should be expected. See the public Jackass article entitled ”Gold Standard Challenges” on GoldSeek from May (HERE). As the Gold Standard installation comes closer and closer to reality, rooted in the Eastern consortium of powerful players and their extensive developing non-USD platforms, the denials from official circles in the West will continue and amplify. It is a sign of the New York and London desperation. The Western elite stand to lose colossal sums of money as the USDollar fades away.

## ECONOMY ON BROKEN LEGS

◄$$$ BANKS REPORT A STEEP RISE IN CHARGE-OFFS ON THEIR CREDIT CARD BUSINESSES… AMERICANS ARE SUDDENLY DEFAULTING ON THEIR REVOLVING CREDIT… CREDIT CARD CHARGE-OFFS SUFFERED THE LARGEST RISE SINCE 2009, BUT STILL BELOW THE LONG-TERM 4.8% AVERAGE… THE TREND IS ACROSS THE BOARD. $$$

The mavens who claim the USEconomy has been more vigorous remain clueless. The fly in the ointment is that Americans have suddenly stopped paying off their credit card bills at a rising pace. In the past two fiscal quarters, banks reported a steep rise in credit card charge-offs. The chart from the report shows how each bank has fared on charge-offs, with Capital One, First National of Nebraska, and Synchrony showing the worst performance over the period.

The sharp increase is the largest since 2009, and contradicts the stupid narrative of any recovery. Banks loosened standards, and issued credit cards aggressively in the last couple years. They continue in their serial recklessness and a decade of mortgages approved without income. All this has occurred despite how card issuers have been much stricter since the financial crisis, like with the passing of the Card Act in 2009 for consumer protection. Those with subprime credit have had a harder time obtaining a credit card. Further bank analyses are truly mindless and lacking integrity. They relate charge-offs to the unemployment claims. Claims are down hard since the labor market is deeply depressed and already depleted badly. However, in the bigger picture, charge-offs still remain at pretty low levels, the historical average rate at around 4.8% only. See Business Insider (HERE).

◄$$$ CREDIT CARD DEBT CONCERNS HAVE MOVED TO THE TOP OF USFED’S BANK LIST OF WORRIES, NEXT TO COMMERCIAL & INDUSTRIAL LOANS… HALF OF PROJECTED BIG BANK LOSSES ARE SET TO COME FROM CREDIT CARD DEBT, WHOSE DELINQUENCY RATE IS RISING QUICKLY… THE CONSUMER IS IN GREAT DISTRESS. $$$

The USFed conducted yet another Stress Test, which built in several absurd rosy assumptions like near full employment. The disturbing news with the test was that credit card debt has moved to the top of the central bank’s worry list in what they call the severely adverse scenario of the Stress Test. They projected cumulative losses for the 34 largest US banks. Not included in the formal test was the losses at the 4997 smaller banks. The bigger banks came in with an estimated $100 billion losses, up nearly 9% from the other vapid Stress Test a year ago. Double these figures if the desire is to enter reality. The credit card total balance exceeds $1 trillion, soon to surpass the Lehman bust peak. All US-based financial debt problems repeat, since never addressed or remedied. They just shift around.

The projected losses have several relevant factors. The credit card balances have grown by 5.6% from a year ago to over $1 trillion. The USFed is blaming looser lending standards, but never a fierce recession. Recall that nothing is ever fixed or given remedy, simply to repeat after a rinse with the same loose credit applied uniformly across the USEconomy. In other test results, the severely adverse scenario had $493 billion in total losses for these 34 banks. Note that projected losses from all consumer categories total $185 billion, equal to 37% of total losses. They include credit cards, first lien mortgages, junior liens, home equity line of credit (HELOC), and other consumer loans. The highly disturbing element was that among all consumer loans, credit card losses are projected to account for 54% of all losses. The consumer and households are in a great deal in distress, which makes lies of recovery claims.

Credit card debt is the most expensive debt for consumers, but the most profitable for banks, with attendant risk of heavy losses. The cost of funds for banks is still very low. But for credit cards, the interest rate borders on usury law violations. They lend out at least with 15%, sometimes at 25% interest rates. Credit card delinquencies started ticking up a year ago and have reached 2.4% in 1Q2017. This is still low by historical standards, but these are the best of times with sturdy but sluggish economic recovery, and the unemployment rate is very low. Try not to vomit for the bold repeated lies. IN the Fascist Business Model, it is illegal to identify an economic recession. If a bank analyst calls a recession, the job is lost. See Wolf Street (HERE).

◄$$$ WELLS FARGO IS ACCUSED OF MAKING IMPROPER CHANGES TO MORTGAGES, SURELY NOT THE FIRST TIME IN THE PAST COUPLE YEARS… THEY OPERATE AS WALL STREET CRIME CENTER ON THE WEST COAST. $$$

Even as Wells Fargo was reacting from a major scandal in its consumer bank last year, the firm’s mortgage business was involved in yet another criminal initiative. They put through unauthorized changes to home loans held by customers in bankruptcy, a new class action and other lawsuits contend. The changes, which surprised the customers, typically lowered their monthly loan payments, which would seem to benefit borrowers, like those in bankruptcy. Thus their initial lack of harsh reaction. However, buried in the details was an ugly feature. Wells Fargo’s changes would extend the terms of borrower loans by decades, meaning they would have monthly payments for far longer and would ultimately owe the bank much more. All this was done without approval. Any change to a payment plan for a person in bankruptcy is subject to approval by the court, and of course the other parties involved. But Wells Fargo made the extreme changes to the home loans without such approval, according to the lawsuits. The changes are part of a trial loan modification process from Wells Fargo. See New York Times (HERE).

Allow the Jackass to describe some other details about Wells Fargo, which has a distinction. It is often called a Wall Street bank, but their HQ is located in California. They have earned anger by the USGovt and major Wall Street banks. They cooperate with China, whereby China puts down a big block of USTreasury Bonds as collateral, then borrows 10 times the amount to purchase commercial property in the US urban centers. The collateral cannot be denied since it is pristine in the banking system viewpoint. It is a grand insult by China done in the USGovt face, using their ample USTreasury Bond hoard. The Wall Street banks hate the practice but cannot stop it. Thus Wells is a renegade, enabling Chinese commercial property acquisitions on a large scale in the Western states. Wells is subject to scrutiny not otherwise given to the New York banks. For a couple years, it has been expected for the Wall Street banks to piss on Wells pantlegs somehow. The legal challenges are one way, although all the New York banks have their own bond investor lawsuits.

◄$$$ THE PENSION CRISIS CONTINUES UNABATED, AS UNFUNDED LIABILITIES AMOUNT TO AROUND $3.85 TRILLION NATIONWIDE… THE SHORTFALL GROWS ANNUALLY, SINCE THE STANDARD 7.5% NUT FUND GROWTH ASSUMPTION IS UTTERLY ABSURD… PENSION MANAGERS CANNOT ADMIT THE DISASTER IN THEIR ROOMS. $$$

Despite the known very inadequate returns and the absurd unattainable goals that remain in place, state and local governments continue to underestimate the crisis at hand. According to a detailed extensive 2017 study of US pension systems by Hoover Institution Senior Fellow Joshua Rauh, almost every state or local government has an unbalanced budget, in large part due to runaway pension fund costs. In almost all cases, the budgets are inadequate. Last year Rauh stated, “While state and local governments across the United States largely claimed they ran balanced budgets, in fact they ran deficits through their pension systems of $167 billion.” That amounts to 18.2% of state and local government total tax revenue. According to the recent Hoover report, total unfunded pension liabilities have reached $3.85 trillion, an amount $434 billion above last year. Amazingly, and an insult to management integrity, of that $3.85 trillion running shortfall, only $1.38 trillion was recognized by state and local governments. They operate in a fantasy land.

The unfunded liabilities have two root causes:  poor investment returns from QE central bank policy and low budgets from the fierce recession. Under GASB metrics, public pension systems assume they will see annual returns of 7.5% like a rigid rule without basis. They state it without laughter, holding straight faces. This assumption ignores the increased risks associated with stocks, hedge funds, real estate, and private equity to realize these returns. In 2006 to 2008, they took on big losses from mortgage bonds, chasing higher yield with its associated risks. They lost.

Using the norm of 7.5% annual returns, the pension system unfunded liabilities for city and state plans are $1.38 trillion. Move to a more conservative return of 2.8% based on the USTreasury yield curve, and the unfunded liabilities balloon to $3.85 trillion. Reality lies somewhere between these two numbers, closer to the larger figure. Gains from riskier bonds that produce higher yields have eventual losses from eventual accidents. See Hard Assets Alliance (HERE). This too will explode, as no solution is sought. Favoring the Wall Street banks with 0%, and monetizing nearly the entire USGovt deficit has killed both pension system and insurance sector.

The Jackass reasons that the banker cabal has not lifted a finger to aid either the pension system or insurance sector for a simple reason. The pension distress forces lower worker payouts, thus keeping the public in poverty. The insurance distress forces higher premiums to individuals, thus keeping the public in poverty. The squeeze on the masses is incredibly powerful, part of the cabal plan. Universal vassal poverty is a key goal to the global fascist state.

◄$$$ THE GENERAL ELECTRIC $31 BILLION PENSION SHORTFALL IS THE BIGGEST AMONG S&P500 COMPANIES AND 50% LARGER THAN ANY OTHER US COMPANY. $$$

Outgoing CEO Jeffrey Immelt will punt. He will depart as an icon superstar, but leaving behind a big turd in the corner of his office. He has spent years ignoring the pension shortfall when addressing the General Electric shareholders. On the table immediately is the costly challenge for John Flannery to find a solution, GE’s newly appointed CEO. At $31 billion, the GE pension shortfall is the biggest among S&P500 companies and 50% larger than the shortfall for any other corporation in the United States. That is a very big statement to make. The deficit swelled in recent years as Immelt spent more than $45 billion on share buybacks to win over Wall Street, to lift the stock price, and to satisfy critics. All during his long tenure, the pension hole grew magnificently amidst neglect. Like many other firms, a big factor is the puny returns that plague pensions across the US corporate landscape. USTreasurys return much less than in the last few decades. Other criticism is directed at the corporate mindset for quick returns, with little focus on the future. Immelt blew a fortune on stock buybacks. Maybe it is time for a gigantic second stock issuance to properly fund their pension, as in a major dilution. Be sure to check the lavish multi-$million golden parachute given to Immelt for his retirement, on the way out the door. See Bloomberg (HERE).

◄$$$ NASTY TOXIC TRIFECTA FOR CAR LOANS IS FUELING A GRAND CARMAGEDDON… ALL THE OLD SUBPRIME HOME LOAN SYMPTOMS ARE PRESENT WITH THE CAR LOAN SECTOR… THE IMPAIRMENT FACTORS ARE WELL KNOWN, AS DEALERS STRIVE TO MOVE INVENTORY… THE BAD PAPER CYCLE CONTINUES IN PARALLEL TO THE SUBPRIME HOME LOAN DISASTER OF A DECADE AGO… A REPEAT EPISODE IS COMING. $$$

Subprime auto-loan backed securities from 2015 are on track to be worst in history. Once more, investors grabbed high yield, ignored risk, and next face big losses. Like the 2000 decade fraud with home loans, these car loan bonds are stamped with high credit ratings. But those issued in 2015 might end up the worst performing ever in the history of auto-loan securitizations, so Fitch has warned. The 2016 vintage of the same ilk will bring more deeply impaired losses. The 2015 vintage that Fitch rates is experiencing cumulative net losses projected to reach 15%, exceeding the peak loss rates during the Financial Crisis for home loans. But the car bond volume is less. Fitch analysts Hylton Heard and John Bella Jr wrote in the report, “The 2015 vintage has been prone to high loss severity from a weaker wholesale market and little-to-no equity in loan contracts at default due to extended-term lending, a trend which was not as apparent in the recessionary vintages.” The Hat Trick Letter has cited these exact same flaws.

Negative equity has hit an all-time record. The average negative equity in vehicles that were traded in for new vehicles during 1Q2017 has reached $5195 per trade, the highest ever, according to Edmunds data. The percentage of trade-ins with negative equity has surged to 32.8%, also the highest ever. Average negative equity exceeded $4000 in 3Q2013 and has grown worse each quarter. This negative equity in the trade is typically rolled into the new loan, thus increasing the negative equity in the new loan and assuring its deeper impairment. Witness insanity in credit underwriting.

Lengthening loan terms assures rapid impairment. The average new vehicle loan term in 1Q2017 reached a record of 69 months, up from 64 months in 2011, according to Edmunds data. Terms between 73 and 84 months accounted for a record of 32.1% of all new vehicle loans in 4Q2016, up from 29% a year earlier. Among used vehicle loans, the lengthy terms accounted for 18% of long-term loans, up from 16% last year. Witness insanity in credit underwriting.

Rising transaction prices are the new normal. Vehicle prices have surged in general, which does not inhibit buyers since lending terms are so liberal and silly. Falling used vehicle values are the new normal, aggravated by flood of car volume from the leasing business. The seasonally adjusted Used Vehicle Price Index by JD Power Valuation Services (formerly NADA Used Car Guide) in May has declined for the 10th month in a row, down over 13% from its peak in mid-2014. It is at the lowest level since September 2010.

These factors with aggressive lending have worked to move dealer inventory, even against the channel stuffing by the major carmaker, have propelled new vehicle sales to new records in 2015. However, the crisis builds as the blowback has started on the impaired credit side. The net effect going forward translates into greater losses for lenders and investors in case of default after the car is repossessed and sold at distress prices. The bond losses are coming next. Fitch is not alone in warning about soaring defaults and net losses of subprime auto-loan backed securities. Moodys also warned, and furthermore S&P Global Ratings pointed out recently that net losses even on prime auto-loan backed securities have risen at the fastest pace since 2008. The downgrades of subprime auto-loan backed securities are still modest, but their storm is coming. The auto lenders that sold the subprime securities are starting to face losses. Watch Santander Consumer USA, the top subprime auto lender in the United States. They verify income on only 8% of the loans, according to Moodys. The cycle of subprime home loans from the 2000 decade has repeated in the car loan sector with the same lending insanity entrenched across the entire sector. Nothing is ever resolved remedied or fixed in the US credit markets. It just repeats, often in a nearby location. See Wolf Street (HERE).

◄$$$ RETAIL WRECKING ZONE AS OVER 1000 STORES CLOSE IN A SINGLE WEEK AT THE START OF JUNE… THE RETAIL SECTOR IS DEVASTATED, BUT SURELY TURNED UPSIDE DOWN BY E-COMMERCE. $$$

The first week of June was devastating for the retail sector in the United States. More than 1000 stores closed their doors permanently. Luxury retailer Michael Kors announced it would be closing over 100 locations, and electronics giant Radio Shack closed 1000 locations across America. Even little Rue-21 closed 100 stores. The retail industry, which represents $5 trillion in economic impact, has changed significantly over the past several years. More than 100,000 retail workers have lost their jobs since October 2016. Industry analysts have been sounding the retail apocalypse alarm for the past few months, but there are some who disagree in order to remain employed in analyst posts. The Amazon effect, along with countless e-commerce business segments, have altered the retail industry. The result is one third of malls being empty, with the look of Detroit. Department store corporate death events lie ahead for Sears, JCPenney, and Macys, whose higher overhead cannot be sustained. Some opportunities exist for outlet malls offering discounts in liquidation, but liquidation arenas have never provided an economic cylinder. See NBC News (HERE).

◄$$$ THE US-LABOR MARKET STANDS IN TATTERS… FULL-TIME JOBS ARE DOWN SIGNIFICANTLY… THE REAL UNEMPLOYMENT NUMBER INCLUDES 102 MILLION WORKING AGE AMERICANS WHO DO NOT HAVE A JOB, WHICH IS 9 MILLION MORE THAN IN 2009… THE MAJORITY OF REPORTED NEW JOBS CREATED STILL COME FROM THE FICTION KNOWN AS THE BIRTH-DEATH MODEL… THE JOBLESS RATE IS OVER 22%, NOT THE 4.3% SWEET FIGURE POSTED… THE PARTICIPATION RATE IS STILL FALLING. $$$

As preface, consider the fictional tool used by the USGovt stat rats. It was a favorite topic in the Hat Trick Letter ten years ago. The analysts at Morningside Hill calculate that a full 93% of the new jobs reported since 2008, as in 6.3 million out of 6.7 million, were added through the business Birth & Death Model. That comes to 40% of the jobs created in 2016 alone. It is a highly controversial model which is not supported by the data. It is a fiction based upon an 11th order auto-regression integrated moving average model (ARIMA), a nifty time series forecasting tool. Unfortunately, it has garbage in, garbage out for its purposes. It purports that the small business sector is not adequately measured in the surveys, hence an estimate is produced that seems from an impressive time series model. It is bullshit to the root and core! On the contrary, all data on establishment births and deaths point to an ongoing decrease in entrepreneurship. ObamaCare wrecked the small business sector, simply put, from its tax and obstructive rules. See Morningside Hill (HERE).

The number of working age Americans currently without a job is far higher than it was during the height of the last recession. Some data. In January 2009, fully 92.6 million working age Americans did not have a job. In May 2017, the same count without a job increased to just under 102 million. The official USGovt jobless rate is posted at 4.3%, the lowest they say in 16 years. But it is actually the percentage of Americans collecting jobless insurance, quite a different concept and statistic. John Williams of Shadow Govt Statistics tracks what our real economic numbers would look like if honest numbers were being used. According to his calculations, the unemployment rate is currently over 22 percent.

Lies abound. In May, the USGovt stat rats reported that the USEconomy added 138,000 jobs, but that is not even enough to keep pace with population growth. The opposite direction is the reality. Red flags quickly emerge. A more accurate measure would report that the USEconomy actually lost 367,000 full-time jobs, like when the Birth-Death Model fictional jobs are removed. That is an absolute nightmare figure, and it confirms the fact that economic activity is starting to dramatically slow down. The official statistics prefer to toss long-term unemployed into a trash basket, thus not considered in the labor force. It is a travesty in statistical reporting, and does not involve any complex calculus or wrongful regression or warped projections or kooky gyrations to uncover. The USGovt uses the simple garbage can method to discard workers it finds unsavory for its economic narrative.

The Labor Participation Rate is falling, as people become discouraged and drop out, falling into society’s cracks. In May, the government added a staggering 608,000 Americans into the Not in Labor Force category. That total has reached 94.98 million.  When you add the 6.86 million Americans that are officially unemployed, the grand total of 101.84 million is reached. Go back to January 2009, when 81.02 million Americans that were not considered in the labor force. The number of working age Americans without a job has risen by 9.21 million since January 2009. These are simple methods that a kid could do. See Economic Collapse Blog (HERE) and Market Watch (HERE).

The count of full-time jobs tumbled by 367,000 in May, the biggest drop in three years. The number of people not in labor force soared by 608,000 human units. The USEconomy is not just in a recession, but rather in an aggravated recession which is gathering impressive momentum. See Zero Hedge (HERE & HERE).

◄$$$ IN ALL, 43 MILLION AMERICANS HAVE STUDENT LOANS… THEY ARE 11.6% IN DEFAULT, RACKING UP $2726 IN NEW DEBT PER SECOND… THE STUDENT LOAN DEBT IS SET TO EXPLODE IN DEFAULTS AND A NATIONAL CONTROVERSY. $$$

The average monthly debt payment of college graduates in the United States is $350 per month. Their average debt load is $25,560 per student. The loans in default total a massive $63.2 billion. There are 3.9 million students currently in default status. The debt from students who attended private colleges is higher. Over 2% of the US population (7+ million) have defaulted on student loans. See Debt Clock (HERE).

## THANKS

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

 

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