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

* Preface: Danger Zone
* Intro Monetary Fragments
* Central Bank Franchise Failure
* Gold Fractional System Collapse
* Dollar De-throne Displacement Demise
* European House Divided
* Five Years of USEconomic Recession


HAT TRICK LETTER
Issue #110
Jim Willie CB, 
“the Golden Jackass”
19 May 2013

As in the Jackass custom, the classic American horse races are featured. Along with the full pallette of sports, they are part of the American culture that are still cherished far from home. See the Kentucky Derby won by Orb, who came from back in the pack amidst mud (CLICK HERE). Also, see the Preakness, where Oxbow spoiled the bid by Orb for any triple crown, in a competitive race (CLICK HERE). Good clean fun, and true marvels of nature these thoroughbred horses are.

QUOTES ON MONEY

"A common use of the too-big-to-fail shorthand is the notion that the government will bail a company out if it is in danger of collapse because its failure would otherwise have too great a negative impact. With respect to this understanding of too-big-to-fail, let me be very clear. It is wrong. No financial institution, regardless of its size, will be bailed out by taxpayers again. Shareholders of failed companies will be wiped out; creditors will absorb losses; culpable management will not be retained and may have their compensation clawed back." ~ Mary Miller (USDept Treasury)

"Problems cannot be solved at the same level of awareness that created them." ~ Albert Einstein

"I never would have agreed to the formulation of the Central Intelligence Agency back in 1947, if I had known it would become the American Gestapo." ~ President Harry S Truman (the lesson is that if an agency is above the law, it transforms into a crime syndicate, whose cancer later takes control of the entire host, as the Jackass claims the CIA controls both political parties at the top with their power and narcotics money, while over four decades the permission to secure the narcotics business has assured not Liberty, but rather Slavery)

"There is no such thing, at this date of the world's history, in America, as an independent press. If I allowed my honest opinions to appear in one issue of my paper, before 24 hours my occupation would be gone. The business of the journalists is to destroy the truth, to lie outright, to pervert, to vilify, to fawn at the feet of mammon, and to sell his country and his race for his daily bread. What folly is this toasting an independent press! We are the tools and vassals of rich men behind the scenes. We are the jumping jacks. They pull the strings and we dance. Our talents, our possibilities, and our lives are all the property of other men. We are intellectual prostitutes." ~ John Swinton (former New York Times Chief of Staff)

"More work is needed to better prepare investors and other market participants to deal with the potential consequences of a default by a large participant in the Repo market." ~ Benjamin Shalom Bernanke (fears expressed for a bank run on money market funds)

"We see bubbles everywhere, and that is not to be dramatic and not to suggest they will pop immediately. I just suggested in the bond market with a bubble in Treasurys and bubble in narrow credit spreads and high yield [junk bond] prices, that perhaps there is a significant distortion there. As long as the Fed and Bank of Japan and other central banks keep writing checks and do not withdraw, then the bubble can be supported as in blowing bubbles. They are blowing bubbles. When that stops there will be repercussions. It does not mean something like 2008, but the potential end of the bull markets everywhere. Not just in the bond market but in the stock market as well, and a developing one in the housing market as well." ~ Bill Gross (PIMCO, but the Jackass sees dead banks, and that kid in the movie sees dead people)

"The whole market is assuming that money printing will continue to keep things moving upwards. This is a dangerous assumption and the economic situation continues to be worrisome." ~ Mohamed El-Erian (CEO and Co-Chief Investment Officer at PIMCO)

"We still forecast 450 for S&P500 stock index, sub-1% for USTreasury 10-year yields, and Gold above $10,000 per ounce. My working experience of the last 30 years has convinced me that policymaker efforts to manage the economic cycle have actually made things far more volatile. Their repeated interventions have, much to their surprise, blown up in their faces a few years later. The current round of QE will be no different. We have written previously, [of widespread destruction] through their money printing. Rapid inflation surely beckons. But that will not occur without firstly a Japanese-style loss of confidence in policymakers as we dive back into recession and produce dislocative market moves." ~ Albert Edwards (from Societe General Bank)

"The system is breaking in more visible fashion. I would love for the bank elite reprobates and miscreants to execute another Gold market ambush. It would not feature them slitting their throats on stage, but rather a celebrated castration in full view. Some cleanup could finally happen with Chinese mops and Russian buckets, severe damage to sure occur. But the bankers would be powerless on the other side." ~ the Jackass

## PREFACE: DANGER ZONE

◄$$$ NAZIS RUN THE CAPTURED UNITED STATES AS A NATION, ITS GOVERNMENT, DIVERSE BANKS, EXPANDING SECURITY AGENCIES, BIG PHARMACEUTICALS, AND PRESS NETWORKS. PEOPLE SHOULD BE AWARE THAT NAZI BANKERS CONTROL THE USGOVT WITH ROOTS TO THE THIRD REICH FROM 70 YEARS AGO, NOT FROM THE MILITARY BUT RATHER THE FINANCIAL COVENS. THE WALL STREET BANKERS ACTUALLY PROVIDED FUNDING TO THE NAZI REGIME DURING WORLD WAR II. $$$

The following is full speculation without proof, from a gut reaction and intellectual processing of bizarre events. Just a crazy Jackass venting thoughts in digust. Their army was defeated in World War II, but the bankers slipped into Switzerland, London, and New York. A key figure was the father of George HW Bush. The source of the bad seed, Prescott Bush led a failed attempted coup d'etat of Franklin Roosevelt. He was not excecuted for sedition or treason, but rather permitted to set up offices in the fledgling intelligence agency. My rule has been to avoid politics, but many clients have requested an explanation of my frequent reference to nazi bankers. They have vast connections to the press for propaganda (phony war on terrorism), the military for aggressive predatory actions (Iraq, Afghany, Libya), the bio-weapons laboratories (swine flu, SARS killer vaccines), and the chemical research (Monsanto genetic modification). Let me begin by revealing my concrete belief that killing JFKennedy was the birth of Nazi America. Papa Bush was probably a key organizer, with the CIA and Wall Street bankers in hidden roles. He was in charge of the Secret Service protection of JFK in Dallas. The entourage of protection was lifted when the motorcade turned the corner toward the book depository, on Bush's orders. The JFK event had many important open door effects.

Numerous highly fascist regimes became allies and chummy friends to the USGovt in the two decades that followed with the Nixon Admin, many meetings held in secrecy like with Kissinger and Videla of Argentina. The US always opposed the communists, since the US was rooted nazi at the helm. A deal was struck for Nixon to succeed Kennedy, who wanted to abolish the Federal Reserve, and who attempted to introduce the Silver Certificate for the USDollar standard. JFKennedy also made open comments about the wisdom of disbanding the CIA. As part of the murder contract pact, Nixon broke the Gold Standard, which ruined money, converting it to denominated debt. The nazi bankers gained control of the USDollar printing press, the grand prize. My belief is that Nixon was involved in the planned assassination, and agreed to nix the standard and to introduce a key insidious figure. Nixon brought Kissinger onto the scene at the USDept State from his academic post. They solidified the nazi linkage to create the Axis of Fascism among the US, UK, and Israel, which routinely engages in $100 billion thefts using defense contractor complicity and bogus scrap metal accounting to value entire weapon systems. The Nazis captured the Cambodian Triangle, then Yugoslavia, then Afghanistan to win a 90% global narcotics monopoly. They have significant $trillion savings and investment accounts with which to enrich Wall Street bankers, and to bribe and command the USCongress and most USMilitary. In 2008 and 2009, the Nazis purchased the bulk of the Vatican gold wealth with a $trillion in cash.

It is my firm belief that the 911 events served as the Nazi coup d'etat of the USGovt, with numerous agencies and offices as accomplices. The Patriot Act was the Nazi Manifesto. They launched the endless wars immediately, with motive of Iraqi gold theft and Afghan heroin capture. No nation building in either land. Their sport of torture and leisure activity of eavesdropping have been embedded into law, which most citizens do not find offensive. Kissinger stole $2.3 billion from the Iraqi Reconstruction Fund (a client holds documented proof of the cash wire transaction). War is just a business extension, which enabled stealing the gold at the Iraqi central bank and the gold from Qaddafi in Libya. JPMorgan Chase has been managing the Iraqi Export Bank in Baghdad since 2003, having created the narcotics clearing house, linking payment for Afghan shipments to Wall Street banks. NATO bases are the distribution points, starting with Turkey. The surviving Wall Street banks are fascist enclaves of theft, fraud, and counterfeit. The Nazi concentration camps are built in the US, over 500 of them, called FEMA Camps, including many converted military bases. They are equipped with guillotines and gas chamber incinerators (two stories high). All camps are connected to railway facilities. Expect human organ trafficking, since no limits.

The last chapter is coming, to include a wave of viruses, most developed in Fort Dietrich Maryland, the USMilitary bio-weapons base. Josef Mengele would be proud. The press has been reduced to a propaganda machine and supporter of state terrorism, replete with thought leaders. Joseph Goebbels would be proud. Americans must keep in mind that fascism is the natural final outcome of a depleted washed out democracy, laced with corruption and burdened by excessive debt. The principal byproduct in the steady flowing winds from the Nazis is fear. With it they control the masses, while they dismantle the liberties of the republic. Benjamin Franklin warned that a nation that gives away its liberties to obtain security finds neither. The Americans are largely dumb sheep who never study history and cannot even manage geography. They struggle to master a second language, except for the Latinos. Too many fall victim to the false flag stories, including the 911 crime scene. Military veterans never comprehend the false flag attacks, eager to avenge the fallen.

The Jackass saw it all coming in December 2006, hastening a decision to depart following the two threats made against me by the Swiss Nazi bankers. Be careful up in North America, as almost nothing is foreseen by the sleepy self-deceived masses. The press networks will not help the people. They will not wake up until their bank accounts are stolen (appearing vanished), and people are killed on the streets. Stripped wealth is a pre-requisite for an enslaved nation. Home equity is largely gone, and private financial firm accounts are next to go away. Riots will come over food and gasoline.

The Nazis will try to make it a race war, and not a class war, but my expectation is for basic chaos. A discussion on this topic has alienated both family and friends, but it is worth the friction. The American masses suffer from the Warsaw Syndrome (denial of local domestic threat) and the Stockholm Syndrome (compassion for captors), having fallen victim to the basic human urges toward violence and control. The terrorism theme is a vast smokescreen for covering narcotics activity, for justifying foreign wars, and for stripping liberty at home. Airports have been rendered a deterrent to travel, even a radiation zone. The rules against water bottles are to prevent the movement of diamonds, the most concentrated form of wealth. The Jackass hope is for the highest Pentagon leaders to restore order to the republic. The Nazi bankers should take their vile games to Paraguay again, and hide while being hunted. They are pure psychopaths, many of whom worship the Prince of Darkness. [PLEASE DO NOT PASS ON THIS EDITORIAL ON THE NATION, WHICH COULD PUT ME AT RISK]

◄$$$ EYE OF THE ILLUMINATI IS AMONG US IN THE UPPER SHADOWS. THE ELITE ARE IN CONTROL OF MANY ASPECTS OF WESTERN LIFE. $$$

"Eye of the Illuminati" is an in-depth look at the state of the world, and the agenda of secret societies and the ruling class of the developed one world government system. The documentary was created in order to explain the origin and methods of control over the human population, various studies and practices of the occult and secret societies, and the effects on the daily basis of the masses. It also explains the history of human development, psychology, and religion, even how sacred knowledge has been hidden and passed on for centuries. It attempts to explain the role of the secret society and discusses some key members of these groups and the history of the ruling elite.

Much research went into this project. So the information is highly compressed in order to form the comprehensive picture where many diverse topic are discussed. See the YouTube video (CLICK HERE).

## INTRO MONETARY FRAGMENTS

◄$$$ THE USDOLLAR WILL RISE AND RISE, THEN SUDDENLY DIE FROM A GLOBAL SHUN AND FORCED DEVALUATION. AS THE CENTRAL BANKS OF THE WORLD CONTINUE THEIR UNPRECEDENTED COORDINATED MONETARY INFLATION, FULLY JUSTIFIED, THE USDOLLAR WILL RISE SURPRISINGLY. THE DEBT SATISFACTION WILL ALSO CREATE FINAL DEMAND FOR THE USDOLLAR. WHEN THE EASTERN TRADE MECHANISMS GO ONLINE, THE USDOLLAR WILL BE RELEGATED TO THE CURRENCY FOR THE UNITED STATES, AND BE FORCED TO STAND ON ITS OWN MERIT. IT HAS NONE, SINCE IT BEARS ALL THE TRAITS OF A THIRD WORLD CURRENCY. $$$

During the final phase underway, by all appearances being seen currently, the major central banks will have a firm grip on their own native currencies. Those foreign currencies will be forced down in their exchange rates within the increasingly hostile Competing Currency War, thus lifting the USDollar. As debt is retired, including some parts of massive bank derivative mountains, more USDollar demand will be created. The USDollar will rise by these important big flow factors. However, soon it lose its cherished privilege as global reserve currency. Then it reverts to being a United States currency, with all its indescribably horrendous fundamentals, far worse than Greece. It will at that time face a USGovt officially managed devaluation in order to guarantee supply to the USEconomy, after significant portions are trapped inside the United States. It will suffer a death incident. The patterns are evident in both the USDollar chart, and its nemesis the Gold chart. See the excellent charts by Tom Fitzpatrick and his team at Citigroup (CLICK HERE) on the King World News article.

◄$$$ BASIC ECONOMICS LESSON. THE GOLD PRICE STATED BY THE C.O.M.E.X. IS NOT A PRICE BEGOTTEN FROM AN EQUILIBRIUM WHERE DEMAND MEETS METAL SUPPLY. THE USTREASURY BOND YIELD IS NOT BEGOTTEN FROM AN EQUILIBRIUM WHERE SUPPLY IS CLEARED BY INVESTOR DEMAND. BOTH MARKETS ARE WRECKED ARENAS WITH FALSE PRICES POSTED. $$$

A simple lesson in basic economics is necessary after the gold market ambush in April. Too many within the gold community talk about a price without fully understanding the concept, as strange as it sounds. If extremely inadequate supply exists at the stated gold price, THEN IT IS NOT THE PRICE SINCE OUT OF BALANCE. The actual price should be much higher if an equilibrium is to be reached. An equilibrium with calm is the result of proper price being set by result of market activity. A converse equivalent market is seen in the gold nemesis. If no buyers exist at the stated USTBond price, THEN IT IS NOT THE PRICE SINCE OUT OF BALANCE. The actual bond principal value (price) should be much lower if an equilibrium is to be reached by market activity. A lower USTBond price and higher bond yield would result if the artificial props like the Interest Rate Swap derivative were removed. Notice that foreign bond buyers have largely vanished, on a buyer strike since the USFed began the bond purchase program known as QE. Recall that bond price and bond yield run in opposite directions.

Therefore conclude that the gold arena is a rigged market with phony posted price, and the bond arena is a rigged market with phony posted price. They are instead control centers and hollow foundation pillars, a point missed by economists and financial analysts. Fundamental economics: price is determined at point that Supply meets Demand. The true gold price is higher, in order to attract supply and bring it to market. The true USTBond price is lower, in order to attract buyers. The entire US land contains far too many financial morons, economic dupes, and political fools. Ethics has also disappeared, the backwash from the adopted central bank moral hazard, the permitted big bank crimes, and the savage immoral wars.

◄$$$ THE SEEMINGLY UNINTENTIONAL REMOVAL OF THE OFFICIAL DEBT CEILING BY THE USCONGRESS TOOK PLACE WITH HOUSE RESOLUTION 807. THE GESTURE WAS SOMEWHERE BETWEEN DEVIOUS AND SLIPPERY VERSUS BLATANT AND OBVIOUS. $$$

The legal authority for added debt upon debt, including interest on the debt, and debt for imposing the police state, plus debt for endless wars, has been granted. The unlimited rapid-fire debt pile-up has just been granted to the USDept Treasury with the passage of the new House Resolution 807. No more debt ceiling problems should stand in the way of the lethal tragic progression, as the high priority behind USGovt obligations will hold the door open for any desired federal spending. The Full Faith & Credit Act was designed to avoid default, to prevent the event from debt ceiling considerations. It instead simply removed the limit, by rendering it legal to be exceeded. The key wording of the bill had inscribed, "A bill to require that the Government prioritize all obligations on the debt held by the public in the event that the debt limit is reached." That aint progress, as the world is watching. Trespassing will be permitted beyond the fence. The foreigners hold a lot of USGovt debt, and are not impressed. The will be dumping USTreasury Bonds in favor of Gold bars. See the Naked Capitalism article (CLICK HERE).

◄$$$ INSURANCE FIRMS ARE RUNNING A LOSER'S GAME. THE PROPERTY & CASUALTY INSURERS MUST OPERATE ON A RECORD LOW NET YIELD ON INVESTED ASSETS AND A RECORD HIGH LEVEL OF ASSETS DEEMED TO BE JUNK BONDS. AN IMPORTANT SECTOR IS IN THE PROCESS OF IMPLOSION, THE INSURANCE FINANCE SECTOR. $$$

The Property and Casualty (P&C) insurers face a crisis, the last shoe to fall on the financial sector. Record low net yield on invested assets and a record high level of junk bonds attest to the sector's vulnerability, certain to cause a collapse. The 2012 data from the Natl Assn of Insurance Commissioners (NAIC) posts a net yield on their invested assets of 3.68%, a record low. The proportion of bonds under investment considered junk rose to 4.07%, a record high. In layman terms, the industy has become a check cashing store which lends money out for less than a bank would charge on a secured loan. No successful business model buys risky assets and receives less in return on the investments. Witness the next major casuality of ZIRP, the embedded 0% interest rate model which acts like a plague. P&C insurers are off most analyst's radar screens, but the sector is ripe for a failure. Do not expect a USFed bailout. ObamaCare only impacts health insurance companies, but not property & causality insurers. The P&C sector has not attracted sufficient attention, but it is in failure mode.

The systemic failure in the P&C sector could bring the entire real economy to an abrupt halt, since companies are required contractually to have general liability insurances as well as other P&C lines. The embattled insurers join the strapped US pension funds. So ZIRP is smothering insurance companies, along with pension funds and individual retirees. Compare ZIRP to a slow water spigot on a big farm, which eventually leads to dried out fields. See the Weiss article (CLICK HERE). The risk from the entire ZIRP null benefit was reiterated by Bernanke two weeks ago, without citing his own role. He addressed the risk and potential consequences of a default by a large participant in the Repo market. He actually stated a possibility of a run on money market funds. See the Bloomberg article (CLICK HERE).

◄$$$ THE CHINESE ALTERNATIVE TO FITCH AND MOODYS IS TO CHALLENGE CREDIT RATING SYSTEM. A BALANCE OF DEBT RATING POWER IS BEING FORGED AMONG CHINA, RUSSIA, AND THE UNITED STATES. A NEW AGENCY WILL HAVE THE CHAIRMAN COME FROM THE CHINESE DAGONG. THE NEW INSTITUTE WILL DEVELOP OVER SIX YEARS, BASED IN HONG KONG. $$$

China wishes to establish a legitimate alternative to the corrupted compromised US credit rating agencies of Moodys, Fitch, and Standard & Poors. The Universal Credit Rating Group (UCRG) is due to launch next month in Hong Kong, a joint venture put forth by the Chinese, Russian, and Americans. The Wall Street tools are forced to make concessions after the disaster occurred last decade under their guidance on debt quality. The small US ratings agency Egan-Jones Ratings Co and Russian RusRating will become partners with Dagong Global Credit Rating in the new venture. The new UCRG agency will start with around 20 analysts. Plans are to grow to more than 100 in the future. UCRG will be the second such venture based in Hong Kong. The group China Chengxin established an office in Hong Kong in August 2012. The project is aimed at providing China a contribution toward influence on the global ratings system which direct investment traffic. The big American debt ratings agencies were not asleep on the watch in the last decade, but rather comprised, bribed, and undermined. Their flawed business model and pervasive bias remains a hot topic, a deeply controversial issue since the global financial crisis in 2008. For instance, the USGovt should have a junk debt rating worse than Spain or Italy, closer to the abysmal rating that saddles woe begotten Greece. Yet the USGovt rating remains investment grade, from fierce political pressure and probably violent threat.

Many experts say the ratings agencies are largely to blame for fuelling the crisis with their inaccurate and excessively high ratings for problematic mortgage backed securities and leveraged bond derivatives, which led to the credit collapse. The hand of rising Asian power is evident. The current Dagong chairman will become the new UCRG chairman, namely Guan Jianzhong. The current system is badly disposed toward favoring developed economies. The goal is to create a global debt ratings system with more regional balance. The new institution will not happen soon. The new chairman added that UCRG plans to create a new credit ratings system that will accurately disclose credit risks between creditors and debtors before the year 2020. A comment from the West came from Sean Egan, the president of Egan-Jones. He said the UCRG aim is to provide an alternative ratings system with voices from new partners whose perspectives come from different countries. Egan said, "The current system is New York centered. UCRG will bring the perspective of China and Russia to the table. That means UCRG will get a different rating results from the big three." See the RT News article (CLICK HERE).

Note that the big three US rating agencies once again are loosening their standards, exactly like they did in 2004-2006 preceding the massive credit market crash. They prefer not to alarm the investment community (warn them) and prefer to keep the flow of fees from their corporate clients (deep vested interest and bias). Same pattern, same corruption, same ineffectiveness, same lost warning device. The big banks work hard to maintain their investment grade rating for corporate bonds, buy bribery, collusion, and coercion, just like the USGovt does for its toxic USTreasury Bonds. See the Huffington Post article (CLICK HERE).

## CENTRAL BANK FRANCHISE FAILURE

◄$$$ FORMER FED GOVERNOR WARSH ADMITTED NO 'PLAN B' IS ON THE TABLE. THE CENTRAL BANK, LIKE THOSE OF OTHER MAJOR NATIONS, IS STUCK IN A DESTRUCTIVE CYCLE. THEY HAVE NO VIABLE WORKABLE EXIT STRATEGY. THEY CANNOT EXIT THEIR POSITION. THEY PRESIDE OVER FAILURE. THEIR FRANCHISE MODEL HAS CAUSED GREAT DESTRUCTION. THEY HAVE SOLD A MORAL HAZARD TO THE ENTIRE NATION LIKE A GOBLET OF HEMLOCK. THEY PRESIDE OVER COLLAPSE WHILE SITTING IN THEIR OWN THRONES WITHIN THE MATRIX. $$$

At the Milken Institute, ironically where junk bond king founded the site, former Fed Governor Kevin Warsh has spoken out in chilling terms that should awaken the masses if only they paid attention. The investment community is too busy celebrating the free money holding up markets. Warsh described the USFed as being trapped without any potential exit, with no alternative plan while conditions deteriorate. He regards the experimental extreme monetary policy to have once had the right perceived risk reward, but no longer. The following are his thoughts. The financial crisis began more than four years ago, but still lingers in powerful form. The politicians presiding over the morass that cannot free itself from the crisis factors have run out of excuses, he offers in condemnation. His criticism is centered however on the central bank, which he claims has over-promised and under-delivered. The central bank's credibility is under attack and vulnerable.

The USFed has enabled the USGovt, both executive and Congress, to do nothing since the debts are covered, the deficits are not addressed, and some queer notion that miracles are the common order of the day. Hence no growth strategies will find traction, since like the Jackass has claimed for four years, no solution is even pursued. The USFed is fast being diminished of options, policy choices, and weapons to deploy. The USGovt on the fiscal side is not taking up the mantle of responsibility. The current grand monetary experiment is untested, and will not prove to be successful. He hones in on the failed USFed high priority of focusing on monetary aggregate (money supply) and monetary demand, which is compensated by massive bond purchases. It is not sufficient, but Warsh misses that the key problem is insolvency for banks, households, and government functions which cannot be addressed by more plentiful liquidity. This has been a major Jackass theme.

The USFed focuses on the labor market, which Warsh sees as disconnected from monetary policy alone. Meanwhile the politicians as usual focus on the next election, never seriously addressing structural problems. Doing so would result in lost office. He does comprehend that the Competing Currency War nullifies the USFed efforts, preventing a USEconomic recovery. His conclusion is ugly stark, "It is not bad luck that is creating this medicority; it is bad policy." Warsh lays out hidden warnings, that the USFed balance sheet imbalances require a solution, a remedy, which will have a lasting destructive impact. He implies a depression. Translate to say no exit strategy exists, and if reduction is attempted of their balance sheet loaded with toxic bonds and unwanted expensive USTreasury Bonds, a depression will arrive in force. See the Zero Hedge article (CLICK HERE).

A counter-culture comparison is due. The USFed and the Wall Street bankers have created an environment of alternative universe. The financial markets are rigged. The USDollar currency and USTBond are propped. The bankers are given free license for $trillion fraud. The big banks are dependent upon narcotics funds. The politicians are syndicate puppets, include the leader of the land. The debts are covered by hyper monetary inflation. Jobs are being shed rapidly. The USEconomy is stuck in quicksand, as it deteriorates, while the blaring music sings about recovery. The fascist United States is the embodiment of the MATRIX, the multi-sequel hit movie series from the 1990s. Notice the similarity between the cold controlling deceptive alternative world Matrix architect and USFed Chairman Bernanke. The contrast is scary. No offense to Helmut Bakaitis, the Austrian actor and director who played the architect who fought the rogue Oracle and Neo and Keymaker. They symbolize the Gold community working toward freedom from the Matrix itself, doing battle against a corrupt controlled fiat currency Matrix centered upon the USDollar, defended by the USTBond software. The rogue programs loose within the Matrix are the Gold investors, messing up the their layouts and screens. The aspect Bernanke and his gang of Wall Street bankers cannot anticipate or successfully keep at bay is the attack from the East, the workaround giant subroutine KEY being fashioned by the East. It is gold trade settlement, the New Gold Trade Standard which renders the Matrix with obsolete software. It opens the door to freedom from the Matrix.

    

◄$$$ P.I.M.C.O. CO-CHIEF EL-ERIAN EXPECTS USFED MONETARY EASING FOR A LONG TIME, SINCE THE USECONOMY IS WEAKENING. ALTHOUGH WITH ONE FOOT IN THE SYSTEM, AND SPEAKING WITH A GENTEEL MANNER, HE IS A HARSH CRITIC IF MESSAGE IS HEARD AND SMILE REMOVED. THE BERNANKE FED IS STUCK WITHOUT OPTIONS OR EXIT. THEY WILL CONTINUE TO PROMISE AN ESCAPE WITH MONEY VELOCITY NEXT YEAR. THEY ARE LIARS AND MERCHANTS OF ECONOMIC DEATH. $$$

Mohamed El-Erian serves as CEO and Co-Chief Investment Officer at PIMCO, the giant bond fund. His comments have reverberated around the financial community for several years. He is a wise man with experience. He believes the prospect of any USFed ending the heavy volume bond purchase programs is not realistic, since the USEconomy is not sturdy enough to walk without the huge props. Again, the interview of El-Erian took place at the Milken Global Conference. The USEconomy is going into reverse, which guarantees the USFed will continue the bond purchase program. But continued QE whisky with a ZIRP chaser will not help. The effect to date of QE & ZIRP has been to encourage no fiscal action, to bail out the big dead banks, to raise the cost structure, to kill capital slowly, and to undermine the labor market. See the Bloomberg article with interview (CLICK HERE). The British are well aware how the USFed is stuck with QE & ZIRP. Ambrose Evans-Pritchard is not easily fooled. He fully anticipates the heavy bond purchase programs will never be reversed, nor the free money 0% offering. It is becoming obvious to any person with an active brain stem, but that includes at most three quarters of the population. See the Ambrose article on UK Telegraph (CLICK HERE).

Headline, breaking news alert! No need to stop sipping coffee or iced tea, or working in the garden. At the most recent FOMC meeting, the USFed hinted that an exit strategy could be taken next year. What a relief! Maybe the USEconomy will emerge from the quicksand and grappling hooks of monetary policy. The plan will always be Next Year, kind of like the nonsensical bland Second Half Recovery to expect years ago, each year, every year, for the recovery that never arrived. Like the Green Shoots from the scorched earth, after their actions caused the broad scorched earth landscape. The USFed has been talking about an Exit Strategy since the early months of 2009. They are frustrated liars, and agents of destruction. The Jackass called them liars since the summer months of 2009. They are still liars, as they preside over failure and a USEconomy in prolonged severe deterioration from broad insolvency, heavy debt burden, and pressure to kill capital. If they recite truth, the USTBond will break down and the USDollar will be summarily rejected. See the Cafe Americain article (CLICK HERE).

◄$$$ FED GOVERNOR PLOSSER ADMITS BENEFITS FROM THE USFED Q.E. BOND PURCHASE PROGRAM ARE MINOR COMPARED TO THE COSTS. HE SEES NO CONNECTION BETWEEN THE LABOR MARKET AND MONETARY ACTIONS. DOUBT IS RINGING THROUGH THE USFED HALLS. THE CENTRAL BANK IS STUCK WITH NO EXIT IN SIGHT DESPITE THEIR GIBBERISH. $$$

Philadelphia Fed Governor Charles Plosser has given an admission of dubious benefit from the highly destructive Quantitative Easing that has continued for two years, amidst a Zero Interest Rate Policy in its fourth year. He complained about much being expected of the central bankers to provide solutions, especially since the fiscal authorities (government officials) are not doing a very good job in any country. Plosser noted a very important disconnect between monetary policy and the labor market, a point the Jackass has stressed as working in reverse. He calls the ailing labor market the biggest problem facing the USEconomy, when that is a symptom of the greatest problem, namely systemic insolvency starting with banks and households and extending to the USGovt finances.

The QE & ZIRP wreck the USEconomy and result in job cuts. Plosser said, "I have never felt that our asset purchases have been that effective in addressing what is the biggest problem we face in this country, which is the employment market and labor market. [QE] has its impacts in the financial sector. We have seen a lot of restructuring of financial deals and debt restructuring and so forth. But its transition and transmission into the labor market has been much more dubious. I have argued for some time now that I thought there are great risks with this policy, and that those risks are high. When I have weighed the costs and benefits of this policy, I have decided that the costs outweigh the benefits. We have already been breaking new ground in many ways. So no, there is not much historical evidence for us to go on or even academic theory for us to go on in this instance. It is really uncharted territory."

Plosser went on to mention that factors at work in the labor market relate to demographics, technology, and trade, none of which are connected to monetary policy. He dodged the issue of whether the US is caught in a cyclical or structural cycle. Clearly, the nation is reeling at the end of a debt super-cycle that Plosser cannot openly admit. The solution so far is cowardly, and not a solution. He concluded the great unwinding will be the true reckoning, since it is easier to print money than to raise taxes or to cut spending. He expects the great unwinding of the accommodative monetary policy with easy money and bloated central bank balance sheets to lead to a very strange ugly place. He refers to a depression. He is concerned about the USFed credibility with failed solutions, clearly at risk. He identifies the big hole the USFed has dug itself into. He does not mention the starting point to a bonafide solution, the liquidation of the big US banks. See the Investment Watch article (CLICK HERE).

◄$$$ THE EURO CENTRAL BANK CUT THE OFFICIAL RATE TO 50 BASIS POINTS. PEOPLE SHOULD FEAR THE PROMISE TO ACT IF NEEDED, SINCE THEIR ACTIONS LATELY HAVE INCLUDED CONFISCATION. DRAGHI HAS THREATENED NEGATIVE INTEREST RATES. ANY ACTION TAKEN IS TO BE DESTRUCTIVE, LIKE ALL IN THE PAST. THE GERMANS WERE IN DISSENT. THEY SEE THE DAMPENING EFFECT OF LOW RATES. THEIR FINANCIAL SECTOR HAS FORMED A COALITION ON BEHALF OF SAVERS. $$$

On May 2nd, the European Central Bank lowered its key interest rate to a record low 50 basis points (0.50%) and vowed to take more action if necessary. A strong consensus among the ragtag EuroCB team was seen, even though clueless to the destructive effects of their policies. It is the first time in 10 months the key interest rate has been slashed, from 0.75 percent to a historic low of 0.5 percent. The stimulus will accomplish nothing, even as it is not stimulus at all. Draghi threatened to impose negative interest rates on money parked overnight at the ECB. It is currently zero percent. The banks would have to pay if they hold the money under the secure tent instead of lending it to other banks or to companies. He continued the deceptive message, that the central banks contribute to support prospects for an economic recovery across the EuroZone, and vowed to keep an accommodative monetary policy for as long as needed. The message of being ready to act should cause fear, since every deed by the ECB has been highly destructive, disruptive, and directly causal to greater bank insolvency.

Draghi urged governments not to abandon structural reforms and to continue shrinking their budget deficits. The continental monetary king remains ignorant that austerity programs to reduce spending cause greater deficits, since the ripple effect throughout the economies is deeply damaging. No solutions exist except to liquidate the big broken banks, where the power lies. Draghi continues like a moron to push for the banking union. To his credit, he advocates lower taxes alongside reduced government spending, but such directives fall way short. He warned that the ECB as a central bank does not have the role to supplement the many governments for their lack of reforms, or to clean up the balance sheets of troubled banks. However, that is exactly what the Draghi ECB has done for two years. The dissenting votes came from Germany, wise as usual and watching from above the fray.

The German ECB board member Joerg Asmussen voted against the move. The consensus in the nation is that a rate increase might be essential to prevent the dampening effect, since savings are currently losing value. The German banks and insurance companies have formed a general coalition for savers to take defensive measures against the ECB for its low interest rates. The Germans have reached their limit in subsidizing the failed economies of Southern Europe. The new consensus is that German depositors should not be permanently drawn into payments to reinforce European solidarity. They are given no vote, which is implicit tyranny. See the EU Observer article (CLICK HERE). Be sure to know that tyranny is the norm in the Western nations, as fascism has taken deep root and the economies have encountered deep rot.

◄$$$ USDEPT TREASURY CHIEF JACOB LEW WARNED OF NEW WORLD IF THE USGOVT DEFAULTS ON ANY BILLS. THE CONSEQUENCES WOULD BE SEVERE. PLANS SHOULD BE MADE FOR EVEN GREATER ACCELERATED BOND MONETIZATION BY THE USFED. NOT ONLY WILL THE USGOVT FACE OBSTACLES TO ACCESS THE CREDIT MARKET, BUT THE CENTRAL BANK WILL BE FORCED TO REACT TO A GLOBAL DUMPING CAMPAIGN OF THE USTBONDS FROM ANGRY BETRAYED CREDITORS. EXTENSION GIMMICKS CONTINUE, BUT THE FOREIGN CREDITORS ARE CLOSE TO TAKING RETALIATORY ACTION. $$$

Treasury Secretary Jacob Lew has warned the USCongress that the nation might run into trouble accessing debt markets if it defaults on any of its financial obligations. Keeping up with payments on government bonds might not be sufficient. The USCongress is deeply committed to fiddling, with USDept Treasury taking the lead, shifting accounts, borrowing trust funds, playing games to avert the debt default that is inevitable. Tough decisions have been regularly avoided to reduce spending. Word is floating around that some gimmicked Fannie Mae payments to the USGovt might buy three months time. Lew spoke the following words, "The thing I would urge you to consider is, you enter a world we have never been in once the United States is not meeting its obligations. We cannot assume markets will function in an orderly way if that happens."

The current suspension of the debt limit expires on May 19th, the date of this May newsletter report posting. The usual games that deploy emergency cash management measures can push off the day of reckoning into August. The newly appointed bank syndicate fund manager who made his bones with massive fund fraud at Citigroup (Treasury Secy Lew) is not certain when the many emergency maneuvers would be exhausted. The sequestered spending cut effects are not fully known. Even the typically obedient Intl Monetary Fund warned that failure to smoothly raise the USGovt debt ceiling could render serious damage to the global economy. Regard the IMF statement as implicitly warning that foreign creditors might begin to dump the USTreasury Bonds, a highly disruptive vengeful wild card to play. Refusal to raise the debt limit could result in a debt downgrade to junk status. See the Money News article (CLICK HERE).

## GOLD FRACTIONAL SYSTEM COLLAPSE

◄$$$ THE GLOBAL FRACTIONAL RESERVE BULLION SYSTEM IS IN FULL SWING TOWARD COLLAPSE WITH MOMENTUM. ALL PONZI SCHEMES COLLAPSE, ALWAYS WITH NO EXCEPTION, JUST A VARIATION IN TIMING. GOLD DEMAND IN EUROPE COUPLES WITH GREAT DISTRUST OF GOLD VAULT MERCHANTS. SIZEABLE AMOUNTS OF GOLD ARE BEING REQUESTED AND REMOVED FROM JPMORGUEN VAULTS. THEIR FRACTIONAL SYSTEM IS BEING STRAINED TO THE LIMIT. OTHER BIG BANKS HAD ALSO BEEN PROMOTING GOLD ACCOUNTS THAT WERE DELIVERABLE UPON REQUEST. TREMENDOUS GOLD DEMAND HAS FOLLOWED THE APRIL GOLD MARKET AMBUSH, A VAST CRIME SCENE. GREAT SHORTAGES ARE REPORTED GLOBALLY. $$$

All the nasty rumors over the last 10 to 15 years about gold leasing by governments, about improper gold leasing from Allocated Gold Accounts, it is all true and turning obvious to those with vested interests. Not only is it true, but the upper echelons of society are realizing it, talking among themselves, and taking action. Theirs is not coordinated action, except that they talk often to each other in the same high circles with rarified airs. The conclusion is serious, stark, and enough to alter the balance of global banking. The global fractional reserve system for managing bullion has broken down, with trust its latest victim. In the ordinary world of banking, every new Dollar or Pound or Euro or Yen or Franc that enters the banking system is lent out 10-fold to 20-fold, depending upon the bank's risk guidelines. The fractional banking system has operated for decades, only recently revealed as causing momentum in the banking system breakdown. Yet the other fractional banking system has a reflected image of much deeper scum on the bullion side, where Gold & Silver bars are stored. The same genius criminals who run the banks decided long ago to maintain only a fraction of the bullion bars in the bank vaults, and to lease out the rest as they saw fit. The banker cartel essentially borrowed depositor gold, and sold it into the market without permission, in order to keep the Gold price down, in defense of the corrupted fiat currency system. That rotten currency system rests atop a vast sovereign bond structure that either is breaking down or supported as asset bubbles. The European bonds are breaking while the USTBonds are the new endorsed sanctioned asset bubble supported by the Interest Rate Swap derivative devices, which the Jackass prefers to call the flying buttresses to support the USTBond Tower of Babel. You see, the USTreasurys speak many languages, all gibberish.

The fractional bullion bank system is coming unraveled at a frigthening rapid rate which should encourage the gold community. Unfortunately, the gold crowd is not very bright, still fixated on the corrupted controlled Gold price from phony price discovery contract mechanisms perverted within the COMEX and backed up by the corrupted LBMA warehouses. The gold community has legions that focus on the wrong stories, and remain transfixed by the mainstream press. A scramble has begun on a global basis as wealthy investors seek to take physical possession of the gold for which they hold a legal claim. The great Allocated Gold Account scandal is beginning finally. The majority of the gold bullion is sitting either in alleged allocated big bank bullion vaults or in alleged allocated accounts in COMEX custodial warehouse vaults. Both locations are at deep risk of foul play, malfeasance, and criminal activity. The major Western Govts protect the criminal deeds. The amount of gold represented by COMEX futures open interest far exceeds the amount of deliverable gold on the COMEX. The same calculation for silver is far more distorted and criminal. Some adept analysts believe that if only 10% of the buyers of June gold contracts demand delivery, the COMEX would be unable to produce the gold bars to cover the legal claims. For July silver contracts, the situation is even more extreme. The Commitment of Traders data is encouraging, another story.

The problem is global in nature, extending far beyond the COMEX crime center arena. On a global basis, the legal claim of ownership on physical gold far exceeds the amount of gold represented by paper futures contracts, LMBA forward contracts, leased gold, and other vault receipts. The problem of vault receipts in London is precisely where the big banks must contend with the most severe problem. In London, the gold that under contract is supposed to reside in Allocated Accounts under the name of the legal owner who bought and paid for the bars has been largely leased out. If the same practice were done in luxury car parking lots, the arrests by police would be quick. Keep in mind that the OTC derivative arena is an even bigger paper market than the COMEX. Strain exists in every gold instrument, since corrupted. Everything is breaking simultaneously. Another gold market ambush might occur soon, but the damage will be enormous.

John Brimelow passed along a report update from Gerhard Schubert, head of Precious Metals at Emirates NBD, the largest banking group in the Middle East. The Middle Eastern buyers demand physical delivery of their gold, not prone to nonsense, in no way gullible to criminal bankers. The Brimelow report included, "I have not seen in my 35 years in precious metals such a determined and strong global physical demand for Gold. The UAE physical markets have been cleared out by buyers from all walks of life. The premiums, which have been asked for and which have been paid, have been the cornerstone of the Gold price recovery. It is very rare that physical markets can have a serious impact on market prices, which are normally driven solely by derivatives and futures contracts. I did speak during the week with several refineries in the world, of course including the UAE refineries. The waiting period for '0.995' kilo bars is easily 2 to 3 weeks and goes into June in some cases. A large portion of the 995 kilo bars in the UAE goes normally into the Indian market, but a lot of the available 995 kilo bars are destined for Turkey, at this time. We heard that premiums paid in Turkey have reached anything between US$ 20 and US$ 35 per ounce." A 995 kilo bar is a one kilogram gold bar with 99.5% gold purity. Demand is very strong, and premiums are rising, easily paid, while waiting periods have become normal. My gold trader source reports higher premiums, in some cases multiples higher premiums. He also reports great dislocations.

The mid-April gold market criminal ambush triggered a grand scramble for physical Gold & Silver. Reports similar to the Persian Gulf have been flooding from Europe. The COMEX has had over 30% of its gold bars quickly drained from COMEX vaults under customer accounts custody. The USMint is scrambling to meet demand for Gold Eagles and Silver Eagles, with waiting periods and rationing the new norm. The same is true of the Royal Canadian Mint. The problem is that the Gold & Silver prices are phony, rigged, and criminally influenced. Thus great shortage has come, and great demand has arrived.

◄$$$ THE REFUSAL BY BULLION BANK CUSTODIAL MANAGERS FOR GOLD DELIVERY REQUESTS ON ALLOCATED ACCOUNTS HAS COME INTO THE OPEN, A MAJOR JACKASS CLIMAX THEME. A BANK RUN IS OCCURRING, BUT IT IS HAPPENING IN THE BULLION BANKS. THEY HAVE LEASED THE GOLD ILLICITLY. THEY HAVE VERY LITTLE GOLD TO MEET THE CLIENT DEMANDS. A GOLD BULLION BANK RUN HAS STARTED, FAR MORE DEADLY THAN A PUBLIC CONVENTIONAL BANK RUN. $$$

The chat lines among bankers has turned high volume. Consider a New York banker once in charge of private wealth management at a Wall Street bank. He passed word along from a banker contact at a giant untouchable European based bullion bank. The contact used to be at JPMorguen until about six months ago. The fellow in the European hotbed reported a mad scramble underway by many extremely wealthy European families and concentrated institutions. The angry clients are urgently pressing to remove their 400-oz gold bars out of the big bank vaults. Each bar is worth north of half $million. He personally witnessed the demand from the elite clientele. Apparently, the private banker community is small in certain pockets of Europe. The big wealthy families all talk to each other and tend to take action on the same rumors and highly charged sentiment. The combination of actions and events recently taken by the Bundesbank, the USFed, as well as ABN Amro, triggered the move to recall their Gold, for fear of losing it to the leasing schemes. The fellow was privy to a formal policy action taken by JPMorguen early in 2013 to calm fears by sending a letter to their very wealthy clients. The letter assured that their bars were safely located in Allocated Gold Accounts. The letter surely had the exact opposite reaction as intended, sparking great concern, worry, and distrust.

The same elite families are walking into the big banks like JPM and demanding redemption of their bars immediately, under threat to take their hundreds of $millions in investment portfolios elsewhere. Some elite institutions are involved in the demand, not just individuals. The fellow in Europe actually said, "These people are putting a gun to the heads of private banks and demanding their Gold." The chain in this grapevine is assured as reliable.

Once more the same fellow passed along by phone information about wealthy clients in Europe taking delivery of their gold from JPMorguen. The topic was on the what kind of size was being demanded. The source said, "I do not know, but there were a lot 5's, 10's, 15's, and 20's being demanded." Translate the lingo, which meant a lot of bullion demands between $5 million and $20 million per visit by angry elite, who know people who twist arms and fracture necks. He went on to inform that JPMorguen is not the only big bank that is selling investment accounts with the promise that the account is backed by gold that can be delivered via redemption. He said they all do it. He postulated that several $billions worth of gold bullion supposedly represented to be allocated to these investment accounts, which is not really there. That explains the revocation on delivery of the gold in accounts. The industry whistle blowers like Andrew Maguire have openly stated that the LBMA has 100 times the amount of paper claims on gold than actual gold that exists. Therefore, $billions in gold investment accounts are not really backed by actual allocated gold.

The plague extends far beyond just COMEX futures and LBMA forward contracts. A massive problem and scandal is to emerge in the next 12 months, the process having begun, forewarned by the Jackass in this newsletter. The Allocated Gold Account scandal has come into view finally. The Cyprus March events to confiscate bank accounts, combined with the COMEX April gold ambush, have worked to cause a bank run, not the usual kind, BUT A BULLION BANK RUN IN GOLD ACCOUNTS. The entire monetary and banking system is vulnerable to collapse, right here, right now. The Voice mentioned in mid-2011 that a huge scandal is coming, which will take a couple years to crop up, the great Allocated Gold Account scandal. His comment centered upon the Swiss bullion bankers, with whom he has had numerous professional confrontations. Late last year, he reminded that the upcoming allocated account scandal would be much bigger than the LIBOR scandal. The scandal is finally here!

The Bundesbank is not implicated in criminal activity. They demanded the repatriation of a large portion of its Gold for return to Germany from the New York Fed vaults. The total amount is 1800 tonnes. Much bargaining has occurred behind the scenes in negotiations. A timetable has been agreed upon. A new war in Mali has been ordered, to recover Gold (and uranium). It seems Islamic insurgents appear wherever there is Gold that London desires and lusts for. See Libya. The ABN Amro event in late March started the process. ABN Amro offered a gold investment account product that offered physical delivery of the gold from the account upon investor demand. The Dutch giant bank reneged on its contract one week before the gold price smash, actually motivating the illicit ambush. They told clients that the physical delivery of the bullion was no longer available and that all accounts would be settled with cash at redemption. The London gold inventory went to near zero immediately before the gold market ambush with deep criminal overtones. The German demand and the ABN Amro contract violation triggered the big scramble for physical gold by wealthy families and entities in Europe. They remain suspicious of the integrity of their bank vault custodial holdings. Conclude that the Western world is witnessing the final stages of the paper Gold & Silver bullion market, glued together by criminal leasing, account thefts, contract fraud, vault fee fraud, over-extended derivative supports, and propaganda by the subservient financial press.

Soon in the future, expect an even bigger run on the bullion bank, conducted by the powerful families and institutions of Western society, that results in a financial firm grand failure and spectacle. They will not tolerate theft and shell games by the criminal bankers. They no longer harbor trust for their custodian vault accounts. The level of distrust directed at JPMorguen and the other giant banks is peaking in a very encouraging trend. The distrust corresponds to the deep problems with sovereign bonds in Europe with fading value, and the deep problems with USTreasury Bonds in the WashingtonDC with phony propped value. At some point expect a complete collapse of trust in the paper monetary system, sooner than even the gold community anticipates. The price of Gold & Silver will go parabolic, probably timed with the launch of new alternative trade settlement systems from the East tied to Gold. The key is trade outside the USDollar, and the function of gold intermediaries such as Turkey. See the Truth in Gold article (CLICK HERE) and the Economic Collapse article (CLICK HERE).

◄$$$ THE BIG BULLION BANKS HAVE GOLD, BUT THEY SOLD THE GOLD BARS REGISTERED IN PRIVATE ALLOCATED ACCOUNTS. AN ESTIMATED 60 THOUSAND METRIC TONS OF GOLD WORLDWIDE IS NOT IN THE ALLOCATED ACCOUNTS AS CUSTODIANS CLAIM. THE BULLION BANKS HAVE A NEW PROBLEM, FOR INSURANCE TO THEIR BUSINESS. THE JIG IS UP FINALLY. $$$

My excellent gold trader source The Voice must be mentioned in this context. He has been banging the drums and filling my inbox for over two years about the precise topic of betrayed Allocated Gold Accounts. He has related stories of the multi-$billion class action lawsuits against Swiss bankers for this exact contract violation and deep fraud. He believes that the major Western nations have finally awakened to the hard cold facts that all the bullion banks have defrauded them. Finally the primary web journals are catching up to his lodged profound accusations, providing the diverse anecdotes that fill the indictment. He estimates, based upon his years of experience, his numerous contacts, and his extensive dealings with the banks themselves, that the fraud is far worse than most enlightened analysts imagine. He estimates that the bullion banks have sold from customer accounts to the tune of 60,000 metric tons of allocated gold. The amount is staggering, equal to 25 years of global production volumes.

The Voice pitched in comments that went beyond the banking foundation. He said, "The entire banking system is about to crater, triggered by this mega metals fraud they have been engineering for decades. Events always come full circle. The last idiots finally woke up now and are moving their metal to private vaults. The elite are on the move, worried about very large money they thought was in storage. It is already becoming an insurance problem for the vault managers, not a space problem. Furthermore, the USDollar is in the process of being replaced, as well as the former USGovt political emissaries. [Refer to former state dignitaries, ambassadors, trade representatives, ex-senators, and so on.] No one takes the United States seriously any longer. The resentment felt towards anything US is enormous, even beyond finance. The USGovt has not only betrayed its own people, but the entire Western world. Nothing to be happy about. In the last month tremendous structural damage has occurred. Physical demand cannot be met, and the result a total disconnect. What is stunning is that the physical brokers use the reference the paper/screen price to negotiate their base price and then haggle over the premiums. The requirement for premium over the official Gold price has turned into an understood new normal practice, the spot price regarded as a reference point, not a final price. The system is stressed to the limit."

It was only two years ago that The Voice mentioned how European business marbled offices were not returning phone calls to American counterparts. Echoing that rotten sentiment and American financial plague is a report by Columbia Univ professor Jeffrey Sachs. He has explained in a 36-minute video how the one hundred ambassadors he has been visiting despise the United Socialist States of Amerrka. The professor is very discouraged about developments. Professor Sachs is NOT happy. One must wonder if he is aware that nazis run the USGovt. See the YouTube video (CLICK HERE).

◄$$$ THE SWISS GOLD BANKERS ARE SHOWING THEIR CRIMINAL STRIPES. THEIR REFUSAL TO REDEEM ALLOCATED GOLD ACCOUNTS HAS TURNED ABSURD. THE USUAL HARP OF MONEY LAUNDERING AND ANTI-TERRORISM IS BEING CITED. THEIR CREDIBILITY IS BEYOND STRAINED. IT IS GONE. $$$

Jim Sinclair shared the story of a longtime friend who was denied his gold on account by a Swiss bank. His friend is very wealthy. He demanded redemption and delivery of gold bars from his Allocated Gold Account. They refused his requested, based on bank high level directives from the Swiss central bank itself. The problem extends from New York (where the German Govt was refused its gold), to London (where several governments like Venezuela demanded return of their gold), to the Netherlands (where ABN Amro reneged on gold contracts), to Switzerland. As preface, Andrew Maguire recently told King World News that his clients are among those who went to the LBMA to receive the gold metal on account, only to be told they would not be given anything, except for cash settlement. The physical markets are in total failure mode. The financial press totally refuses to tell the story.

Sinclair went on to describe the details. He said, "A person that I know with significant deposits in one of the primary Swiss banks, in Allocated Gold, wanted to take out his gold and was just refused on the basis of directives from the central bank. They told him the amount was in excess of 200,000 Swiss Francs and the central bank had instructed them not to do it because it has to do with anti-terrorism and anti-money laundering precautions. I really wonder whether those are precautions or whether the gold simply is not there. Now you tell me that a London delivery has basically failed. It has to raise our suspicions that the lack of physical gold behind the paper gold is literally so severe that we are coming to understand that it is in fact not there. The gold that people think is stored is not stored, and the inventory of the warehouses for exchanges may not be holding deliverable gold. There has always been speculation about whether or not the physical gold the US claims to store is in fact in those vaults. The greatest train robbery in history might be all of the gold, and it would only be something like we have described above that would happen right before gold makes historic highs. There simply is no gold behind the paper. One example is AMRO, a second is your example with Maguire, and a third is my dear friend who was refused his gold on the basis that its value was too high. Remember this friend of mine had his gold in an Allocated Account in storage at a major Swiss bank. I REPEAT, THERE IS NO GOLD."

The Western world is at the endgame in terms of the paper market. The gold market is collapsing in front of our eyes, in full view. The monetary system is built on a foundation of debt. The big banks are insolvent. Their derivative reinforcement cable lines are valued in the hundreds of $trillions. The gold bullion banks are empty. Sinclair concluded that the blatant suppression of the gold price via paper futures contracts in mid-April could very well be the biggest mistake that the banking cartel ever committed. Their actions revealed that the price of gold has nothing to do with gold metal itself. Worse, as the physical demand increases, Sinclair anticipates that the warehouses for the major metals exchanges will be so significantly drawn down, to the point they will force cash settlement. In his words, he believes the paper gold market just lit itself on fire at their fortress, and served to burn the manipulator houses to the ground. The paper market for gold, he emphatically states, has no gold. See the King World News interview (CLICK HERE).

◄$$$ JPMORGUEN HANDLED 99% OF THE GOLD SALES IN THE LAST THREE MONTHS. THEIR GOLD VAULTS SUDDENLY ARE GOING EMPTY, AGAIN. THE NET GAIN IN METAL FROM THE MID-APRIL AMBUSH RESULTED IN ALMOST NOTHING. ANOTHER GOLD AMBUSH IS PROBABLY BEING SCHEDULED. $$$

COMEX gold vaults were recently drained of a ripe two million ounces of gold bars in one quarter. It was the largest withdrawal of physical gold bullion from COMEX vaults in one quarter since the bull market began in 2001. Curiously, the gold bull market began approximately at the same time that the World Trade Center was robbed of $100 billion in gold bars from its basement vaults. The event was a bank heist robbery that raked in gold, bonds, and diamonds. Plenty of witnesses observing the stream of armored trucks leaving the scene of the crime. There has been speculation about the reasons that spurred these massive withdrawals of gold from COMEX vaults this year. The most valid speculation is that almost no professional parties trust the bankers to hold their physical gold anymore, plainly stated. Furthermore, JPMorguen has completed and satisfied an astonishing 99.3% of physical gold sales at the COMEX in the last three months. That is NOT normal. It reeks of a dire desperate situation not just looming, but unfolding, in progress.

The talking toots, empty anchors, and kool-aid victim guests on CNBC report on the gold market like an ongoing din to disrupt the intelligent brain wave activity. They intrepret simplistically that broad based gold selling has dragged down the gold price, even rampant GLD fund selling. The loaded topics of empty COMEX gold inventory and Big Four Bank naked gold sales are off limits. The major financial media has wandered so far down the rabbit hole that the concept of rising physical gold demand has them total baffled and perplexed. They are trapped in the perceptions of their paper world, hardly a natural habitat. They are players within the Matrix. Imagine the heresy of not only demanding gold from registered allocated accounts, but the gold price determined by supply versus demand in equilibrium. The big story is that JPMorguen has forfeited almost 99% of its gold metal in the last 90 days. They will have to replenish their gold held in inventory, which means they must steal it. Notice as footnote, that despite Goldman Sachs negative call for Gold in recent weeks, the great vampire squid has not parted with any yellow metal whatsoever in 2013. See the dense, coded, and difficult to decifer data in the Across The Street article (CLICK HERE).

◄$$$ DURING THE AFTERMATH OF THE MID-APRIL GOLD AMBUSH ATTACK, THE JPMORGUEN ELIGIBLE GOLD PLUNGED 65% IN A MERE 24 HOURS. CLEARLY THE MORGUE IS HOLDING DOWN THE FORT ALONE. ANOTHER EXPLANATION IS GAINING TRACTION, THAT REGISTERED ACCOUNT HOLDERS NO LONGER TRUST THE BIG BANK, AS IT IS BEING EXPOSED TO BE A CRIMINAL FIRM. $$$

JPMorguen seems alone in defending the criminal gold market based upon paper gold futures contracts. Their Eligible Gold plummeted by 65% in volume during a mere 24 hours to an all-time low. To be sure, the rapid plunge did not make the major financial news, too pre-occupied by the billboard Reich Finance gold price story and the wondrous stock market advances during an ecomomic depression. Between April 24th and April 25th, something remarkable occurred. The JPMorguen vaults showed the absolute devastation of Eligible gold (aka commercial) stored in warehouses under the JPM name in Manhattan. Its official address is 1 Chase Manhattan Place. According to the COMEX data, in the flipping of a single day on the calendar, the JPMorguen eligible gold plunged from 402,400 ounces to just 141,600 ounces, a drop of 65% in 24 hours. It stood then at the lowest amount of eligible gold held at the vault on record, since its reopening in October 2010. That is news! See the Zero Hedge article (CLICK HERE).

To be sure, coin demand has exploded. To be sure, demand is so strong across the world that price premiums are the lead story, rather than the gold price. To be sure, the price on the official billboard at the COMEX den of thieves went down, while demand skyrocketed for the metal. To be sure, the COMEX mart is but a paper mill and chamber of corruption, dishonesty, and sleazy commerce where paper is traded, not metal. Evidence has come forth that the COMEX inventories have been drawn down, but not as low as in the recent past. Rather than being to satisfy rabid gold sales, another reason is more likely, actually painfully apparent. The owners of gold bars no longer trust the custodians where it usually has been kept on location at the metals exchange. However, one must put the registered inventory into perspective. In early 2010 and early 2011, the gold held in COMEX inventory was at a lower level than today. But it is worth watching, since trust toward JPMorguen is fast evaporating. Their associates distrust them. The trust is gone. The news stories are frequent. They are on the defensive in 20 criminal cases.

◄$$$ THE GREAT GOLD DRAINAGE BEHIND THE CORRUPT EXCHANGE TRADED FUND CONTINUES APACE. IN A FEW MONTHS TIME, THE DRAINAGE HAS TURNED CONSTANT ACUTE IN A GRAND ACCELERATION THAT HAS ATTRACTED ATTENTION. $$$

The Jackass enjoyed physics when it met calculus on half-life matters. It was interesting and enjoyable. Move to the SPDR Gold Trust, where the GLD vaulted gold is disappearing rapidly. The time necessary to ship out 100 more tons of the gold bars is accelerating in an alarming manner. Witness the depletion of the GLD inventory, the stock share shorting province, the sport of banker kings. Jokingly, an analyst quipped that China is loading the GLD gold onto trucks, headed straight to ships going to China. As of April 22nd (admitted a bit dated), the Total Gold in Trust was 1,104.71 tons, equal to 35.517 million ounces, worth in the neighborhood of $50 billion. The more important story is the accelerated removal of gold bars in the vanishing act. Whether carted off by the Big Banks to dump on the gold market, or sold by investors disenchanted by the falling gold price, it does not matter. Most likely it was removed by business associates to keep it safely out of JPMorguen reach. Obviously, for every one bar sold by GLD shareholders, 50 to 100 shares are shorted by the big banks and corresponding pallettes of gold bars taken overnight on the loading dock ramps.

Next consider not exactly half-life concept, but time to deplete tonnage. The FOFOA website reports the fast falling gold inventory of the GLD fund. It was 1353 tons as of December 7th, then 1299 tons as of February 20th, then 1200 tons as of April 9th, and 1104 tons as of April 22nd. But another view reveals the acceleration in more stark plain terms. It took 75 days to remove the first 50 tons. Then it took 48 days to remove the next 100 tons. Then it took 13 days to remove the next 100 tons. Then it took a mere 7 days to remove the next 100 tons. That is rapid nasty deadly acceleration. If the current pace of accelerated removal is maintained, the GLD fund could be vacant empty dry before the dog days of summer are upon us.

The story is told that Goldman Sachs used the GLD fund to trigger the grand ambush of the gold market in mid-April. The truth about the SPDR Gold Trust (symbol=GLD) is that the big banks are draining it like a private silo for price suppression and delivery demands. It is the bullion central bank, ready for abuse. Consider that GLD has been drained of 21% of its inventory in four short months and the market has more than absorbed all of it. The bank cartel has ignited a global demand of unprecdented proportions in the last month. They have unleashed a grand discount for Eastern buyers, who already had the pedal firmly pressed on demand in the last two to three years. Only if stupid, will the bank cartel repeat the drill of another gold market ambush. But they might be cornered quickly again, as inventories are drained to the same dangerously low levels. One must wonder if they will dare use the remaining 1000 tonnes to continue this operation. Recall that just eight years ago, the IMF created a lot of noise when they sold 400 tonnes of its gold. They caused a feeding frenzy of buyers, as China and India sent a joint letter to the IMF offering to buy the remaining 2800 tonnes if the IMF insisted on selling it. Add to the drainage a backdraft of slower replenishment from the mining firms, as their giant projects are stalled or submerged. The bank cartel truly faces a perfect storm centered upon Gold.

◄$$$ QUICKIE ON GHOST INVENTORY DATA. THE ABUSIVE HEDGE FUNDS CONTINUE TO SHORT GOLD BUT ARE COVERING THEIR SHORTS IN SILVER. FUNDS ARE SHOWING A RISE IN SILVER INVENTORY, BUT A GOLD WITHDRAWAL. THE INTERPRETATION IS THAT THE BOTTOM HAS BEEN SET FOR THE CORRUPTED C.O.M.E.X. SILVER PAPER PRICE WHILE GAMES CONTINUE IN THE BIGGER GOLD MARKET, THE STANDARD BEARER. $$$

As primer, when the GLD or SLV exchange traded fund shows lower inventory, it is from big US bank shorting, not investor selling. In a string of eight calendar days in late April, a total of 4.3 million ounces of Silver was added to the SLV inventory. But during the same period, a ripe 600,000 troy ounces of Gold were withdrawn from GLD inventory. The story about investor liquidation from GLD shares in a big sellout is tiresome and deeply deceptive. The big US banks short the stock shares, them unload inventory overnight from the warehouse docks. A similar phenomenon is seen in Switzerland, where the Zurcher Kantonalbank reported that for a full week late in April, a substantial 33,111 troy ounces of Gold were withdrawn from their gold ETF. However, for the second week in a row, more Silver was added to their silver ETF, the second week showing a hefty 169,402 troy ounces incoming to inventory. The naive among the gold community inquire with confused faces, where is all the silver coming from that is being placed in all these silver funds. The answer is simple, nowhere! The silver is from accounting shifts, not metal movement. The result is from covering short positions on shorted shares to drive the price down. No net change from before, as metal was replaced into inventory that had been removed by the same party during the dastardly permitted shorting exercise. Conclude that the congame artisans do not believe the Silver price can be pushed down any further.

## DOLLAR DE-THRONE DISPLACEMENT DEMISE

◄$$$ SOMETHING IS GOING ON, WITH G-20 NATIONS LOSING PATIENCE, READY TO TAKE DRASTIC ACTION. IN RESPONSE THE G-7 NATIONS CALLED AN UNPRECEDENTED EMERGENCY MEETING TO DISCUSS REGULATIONS. TRANSLATED, THE RUSSIANS & CHINESE DEMANDED THE WESTERN NATIONS TO CLEAN HOUSE AND QUIT THE TOXIC PAPER SPRAY MECHANISMS. THE RE-WORKING OF BRETTON WOODS BY THE EAST IS NEARING A CLIMAX, AS DESPERATION IS EXPRESSED BY THE ANGLO BANKERS WHO SERVE AS LORD OF THE FLIES (TOXIC BONDS, RUINED MONEY). TIME IS RUNNING OUT FOR THE ANGLO BANKERS AND THEIR PAPER PLATFORMS WITH TOXIC FLOW. $$$

Very little news emerged from the G-20 conference in Turkey about Reinventing Bretton Woods. Some analysts regard it as a news blackout in effect. The original agenda called for numerous nuts & bolts to be discussed on tables toward the mechanics of Gold Trade Settlement. The G-7 called a special meeting to discuss serious bank reform in a rare comeback. Poppycock! Bullocks! They were scared witless of the Eastern nations abandoning the USDollar altogether. The G-7 tried to spin their hastily arranged meeting as a late reaction to Cyprus. Inside word indicated it was a response to a request from China and Russia and a few associate nations for the G-7 to put their dirty financial house in order. Cyprus was the last straw in a series of outrages, followed by the mid-April gold market ambush. Recall that Russia & China combine to own perhaps 30,000 tons of Gold bullion. Furthermore, Europe is angry with having been sold all those toxic bonds and derivatives in the last bubble.

Jeffrey Sachs revealed last month the deep global resentment, sufficient to talk of coordinated action, when he spoke to the Philly Fed. A general displeasure has heated up concerning the currency games being played by London, New York, Washington, and Tokyo. The Anglo bankers, their government puppets, and their Japanese lackeys are playing fast and loose with global commodity prices which greatly disrupt other national economies. There was apparently some behind the scenes high stakes bargaining going on at the G-20 currency conference, as the agenda was sidetracked. The pushback by the Anglo Americans attempted to defer any action or announcement until later this year, other than the usual bilateral and multi-lateral currency agreements. Events may culminate in September. See the sketchy Cafe Americain article (CLICK HERE).

◄$$$ CHINA HAS NAMED THE YUAN CONVERTIBILITY PLAN AS A PRIMARY GOAL THIS YEAR. THE PLAN INCLUDES THE ALL IMPORTANT CAPITAL ACCOUNT, THE MAIN REQUISITE STEP. THE YUAN WILL SOON BE TRADABLE IN OTHER CURRENCIES. THE USDOLLAR WILL BE PUSHED OFF ITS PEDESTAL, FIRST IN TRADE SETTLEMENT, THEN IN BANKING RESERVES MANAGEMENT. $$$

This year, Beijing officials from the State Council will permit more free Yuan currency flows in and out of the nation. Measures to loosen control over the Yuan and interest rates are in the works. The plan on Yuan capital account convertibility will also include methods for individuals to make overseas investments. No currency can advance in status globally without convertible mechanisms to all major currencies. Premier Li Keqiang led the meeting on economic reforms in 2013. Other measures include improving controls on risks from local government debt, and expanding test cases of value added taxes on companies. Future changes are expected to include raising or removing quotas on foreign investment in the Chinese bond and stock markets, and giving Chinese companies more freedom to borrow overseas. Premier Li emphasized efforts to restructure toward greater growth. The official statement did not provide additional details on the capital account plan except for broadly accessible windows. See the Business Week article (CLICK HERE).

Recall that the Chinese Yuan has long been dismissed as a potential global reserve currency to rival the USDollar, or even to displace it. The Euro currency was seen as a co-standard in reserve management in the last decade, its inherent weakness not recognized fully by the Jackass (a learning experience). In recent years the European continent has converted into a paper cesspool. With the convertibility of the Yuan coming this year, a shortcoming will be eliminated, often cited in the Hat Trick Letter. With easy trading, and ample Chinese Govt Bonds with an attractive non-zero yield, the USDollar faces extinction. The vast Chinese export trade from expanded industry, combined with the mature industrial outsourcing trend in the United States, guarantees a change of the guard in global reserve currency status.

◄$$$ THE PETRO-DOLLAR IS UNDER SIEGE FROM A NEW POTENTIAL ANGLE, UNEASY LINKAGES WITHIN THE ENERGY MARKET. $$$

A nasty acrid dire footnote was added by EuroRaj, always on the scene, here sharing a strong rumor out of London. The Anglo-American bankers are trying to bring about a convergence of the spread between the West Texas and Brent crude oil prices. Afterwards, the WTexas posted price will be removed permanently. Regard any such initiative for convergence as a loud signal for the expected sunset for the Petro-Dollar defacto standard itself. The pillars that support the USDollar are crumbling at a time when the USTBond core pillars are fashioned from interest rate derivatives, a phony paper shell, and empty gold vaults, finally being exposed. Meanwhile, the Petro-Dollar faces a major energy brother threat from the Gazprom-led natural gas cartel that is forming.

◄$$$ WORLD BANK WHISTLE-BLOWER CLAIMS THAT PRECIOUS METALS WILL SERVE AS AN UNDERPINNING FOR PAPER CURRENCIES. BETTER DESCRIBED, GOLD IS SET TO REIGN OVER PAPER CURRENCIES. THE BANKING SYSTEMS WILL HAVE GOLD AND BONDS TO CO-EXIST ON SHELVES. THE DUALITY WILL REVEAL THE STRENGTH OF GOLD, SINCE NOT IN DEVALUATION MODE. THE EMERGING NATIONS KNOWN AS B.R.I.C.S. HAVE DEALT A DEADLY BLOW TO THE POWERFUL GLOBAL BANKING ELITE, BY WORKING TO CREATE THEIR OWN DEVELOPMENT BANK. THE WORLD BANK HAS BEEN CANNED. INFORMATION FLOW IS SET TO BLOSSOM. $$$

Karen Hudes is former senior counsel (attorney and economist) to the World Bank, a courageous outspoken woman. She has turned whistle-blower. After spending 20 years at the corrupt tool bank, she was furloughed, likely in direct response to making public the internal fraud and corruption at the hardly venerable institution. In an interview with Tekoa da Silva at Bull Market Thinking, the bold Hudes indicated that a paradigm shift is at work, changing the world rapidly, with key Western power structures breaking down. She observes the economic and political influence as gravitating eastward to BRICs nations. Most important, she described a pending currency transition which will place precious metals in a dominant currency position. The Gold Standard is returning to the FOREX market and the banking systems, which are incapable of reform or repair without the strong foundation and sinew of Gold. Hudes expects Gold & Silver to underpin the teetering paper currencies.

Hudes provided additional information on the deeply disturbing centralized power structure she witnessed while at the World Bank. She explained, "A study done by three Swiss systems analysts who used mathematical modeling showed how the world's 43,000 transnational corporations were being controlled through interlocking corporate directorates. There is a group of 147 companies. Most of them are financial institutions. What they have done, through the interlocking directorates, they control 40% of the net worth of these 43,000 companies, and 60% of their earnings. So that group has been using the presidency of the World Bank as kind of a puppet to dominate the world. But that is now finished. As the BRICS nation economic power grows, they are not going to be strangled anymore through the grabbing their resources. So their decision to start their own development bank was their way of letting world governments know, that it is time to end this corruption." A tremendous shift is underway globally, led by trade. A major shock to the central power base, according to Hudes, was the recent move by BRICS nations to bypass the World Bank for their financing needs, when they established their own development bank. The puppet strings have been cut. They will fund themselves quite independently, and thus not continue to forfeit power. The central artery has been severed. The Western banking overlord structures will move to irrelevance and grow weeds. She went on to mention the various US state movements, whereby legislation has been introduced to recognize Gold & Silver as legal currency. She believes the message is an urgent call to end the corruption in the financial system. The Jackass has been all over the BRICS Development Fund, citing its importance as a death knell for the toxic USDollar. The US State movements represent the home living room table shaking.

Hudes believes an orderly transition is being pursued to reform and restructure the world monetary system. Rational decisions will be made in a transformation from the current system that lacks transparency and is badly marred by profound imbalances and unsustainable deficits. The present power structures will be reworked, the USDollar discarded after isolation. The new system will see a magnificent change in transparency, as each nation makes its preferences and trade patterns known. The transparency could be found through a gold-backed currency system, she noted. "All of the countries of the world are going to allow precious metals to serve as currency, and this will be an underpinning for paper currency. We will have both systems at the same time. This is my guess, as I mentioned, I am an economist." The banks will recognize Gold as a critical bank asset, and will pursue more gold if they wish to become solvent financial structures. Peaceful co-existence within banking systems between a solid gold bar and a rancid paper mound with sovereign debt ink that features raised embossing will favor the gold entity. The emergence of the Gold Standard is near.

Hudes finished by explaining how for several months her message has been squelched by the cabal, which controls the Western press. She has turned to the alternative press, the internet, and the gold community. She stated emphatically that she fully believes the stranglehold on financial information is going to end in very short order, in her words. Believe that when seen, not before, since the press networks in the West are firmly under security agency control, with murder a precedent. Hats off to Tekoa da Silva, whose Bull Market Thinking featured several Jackass interviews in 2010 and in 2011. But more so, big praise goes to Karen Hudes, a brave American citizen working for a more honorable world. See the Bull Market Thinking interview (CLICK HERE). Keep in mind that a $7000 gold price is required if it is to play an important legitimate role in banking, so as to cover properly all the rotten paper currency spewed in the last decade, all the accelerated spew churn in the last several years, and all the naked short futures contracts still in existence.

◄$$$ THE CURRENCY WARS HAVE HEATED UP, BUT THE GAME IS CHANGING FAST, IT IS MOVES HEADLONG TO THE GOLD FINANCE TABLE FOR TRADE SETTLEMENT. MANY FORMERLY SOLID ANALYSTS ARE MISSING THE SHIFT, STUCK ON OLD CONCEPTS. $$$

Review a recent article by the usually excellent Axel Merk. His analysis is shallow this time around, and thus exposes the blind eye put to the financial field, even though he is sympathetic toward Gold. He touches on the major currencies and Gold, offering only dim light and conventional hokem in viewpoints. He did present a wonderful graphic though. The United States is tossing its prized gold bar assets over the wall in the trade war with China, which tosses back its paper rubbish packets packaged as USTBonds. Merk acknowledges the big warts from the massive USFed monetary expansion under the lofty guise of QE, despite its heresy. The stock market is correlated to more QE, but he misses the general deterioration and rot in the USEconomy, the capital destruction by monetary policy, the retail decline, and the GDP statistic aided by a 5% lie on growth. The junk bond yield is no measure of health, since the bond monetization alters the danger meter. Similarly in the past three years, the monetized TIPS bond has altered the alarm bell by direct purchases. While he admits the USDollar is vulnerable, it is not the slow USEconomy that puts it at risk. The big USGovt deficits are not at risk of becoming gaping, when they have been gaping for five years running. They are a grand risk factor. However, the greatest risk factors are the USFed's unending monetary expansion, the official debasement of the USDollar with free money, the corruption in US banks, and the rebellion by foreign nations that have banded together under the BRICS, G-20, and SCO flags. Their new BRICS Development Fund is a direct assault on the integrity of the USDollar, a formidable bypass which Merk seems oblivious to. Not much wisdom on the USDollar.

The Japanese Yen discussion brought more shallow prose. Although we agree that the Yen is indeed more toxic than the USDollar, he seems unable to properly assess why his short Yen position will be increasingly profitable. The JapGovtBond yield is puny, while the nation has learned nothing of 23 past QE chapters. No past easing chapters have relieved the nation of deep deficits, at a time when the present threat to Japan is the industrial expansion of China, which has taken business from Japan on the industrial side. The offshore trend has hit Japan, precisely when the demographics look miserable. Haggling over the budget and workarounds to military spending is really not the main point, as Merk has the wrong emphasis. Merk is also dead wrong about the Yen devaluation helping to halt the current account deficit. The gain in lower export prices will be offset by higher domestic costs for production, a basic economic science fact. If the entire Asian region is devaluating the currencies, no gain will come competitively. Not much wisdom on the JapYen either.


The Euro is rising in exchange rate, not from innate strength. The Draghi Euro Central Bank has indeed been guilty of hyper monetary inflation, a sharp disagreement. The Euro is being rigged to rise so that wealthy Europeans can exit their trapped assets tied to Euro denomination. The Euro Central Bank has indirectly been printing money, to contradict Merk, by accepting the Dollar Swap Facility funds made available by the USFed. Merk misses the importance of over $3 trillion in indirect European monetary expansion from the swap in the last two years. The EuroCB rate cut was a non-event, which he acknowledged. The Euro might rise more, to keep the exit window open wide, but also to prevent the USDollar from falling toward zero, where it belongs. Merk does not mention the widespread bank insolvency in Europe, nor the capital flight in Southern Europe (notably France), nor the bank run threat from the entire Cyprus incident. Not much wisdom on the Euro currency either.

Gold suffered from $20 billion sales in naked shorting by the big Anglo banks. The COMEX & LMBA were on the doorstep of suffering a gold default, which motivated the grand ambush assault on gold. Merk seems oblivious to the important wartime winds, focusing on minor flatullence instead. Margin calls forced selling, but without much of ANY gold bars produced in the planned upchuck. Merk seemed not to notice. He does not mention the growing gold premiums paid in locations that actually trade gold bars, like Dubai and Hong Kong, unlike New York and London where paper changes hands, not metal. Merk either sidesteps or remains ignorant of the deep desire by the Anglo bankers to create a Force Majeure in order to wiggle out legally from countless thousands of gold short futures contracts, a veritable motive for the financial frauds that accelerate. Bet donuts to silver eagle coins that Merk is not aware of the drainage of gold from London last summer by the angry Eastern entities for improper usage of their Allocated Gold Accounts. Fully agreed that the Gold price will be buoyed by continued printing press activity, but that is quite basic. The main impetus will definitely be seen from the East, where a new trade settlement system based on gold finance is slowly emerging. He misses entirely the return of the Gold Trade Standard. Merk seems oblivious. Not much wisdom on Gold either. See the 24-Hr Gold article (CLICK HERE).

An interesting Forbes article was published with a discussion of the Gold Standard. The topic of a return to the Gold Standard is becoming more mainstream, shown more respect. No more are the vacant pronouncements by clowns such as Warren Buffet on no yield offered, when bank assets are rotting rapidly in place. Capital gains offset a yield that can indeed be grabbed by selling option calls, which he did on Silver contracts, his big lie. No solutions are being pursued, and expert analysts realize no solutions have come. They look at the tried & true Gold Standard as required for any serious project and mission globally to restore stability and bring financial markets back to reflecting proper value. To be sure, other clowns are featured and quoted. They want a flexible USDollar. But in the Jackass view, flexible means abused, either by colossal unsubstantiated debt or from profound bond fraud or from criminal counterfeit of bonds and bills. The Keynesians cling to their disastrous record with deep denial and suffocating arrogance. Honest weights and measures has not been a priority for 42 years since the Bretton Woods Accord was broken. Abandoning the Gold Standard has reaped four decades of crisis, wrecked economies, vanished wealth, and flourished crime syndicates operating under bank roofs, even captured government operating in open view. See the Forbes article (CLICK HERE).

◄$$$ JOHN WILLIAMS OF SHADOW GOVT STATISTICS GAVE WARNING ON THE USGOVT BUDGET AND DEFICIT. $$$

"Both Houses of Congress recently put forth outlines of ten-year budget proposals that are shy on detail. The ten year plan by the Republican controlled House proposes to balance the cash-based deficit as well as to address issues related to unfunded liabilities. The plan put forth by the Democrat controlled Senate does not look to balance the cash-based deficit. Given continued political contentiousness and the use of unrealistically positive economic assumptions to help the budget projections along, little but gimmicked numbers and further smoke-and-mirrors are likely to come out of upcoming negotiations. With the Administration's budget for fiscal-year 2014 released, these issues should be coming to a head very soon. The temporary suspension of the statutory federal debt limit expires May 18th, and Congressional action to raise the debt ceiling is mandatory before then, with the current (May 7th) debt more than $350 billion above that debt limit. There still appears to be no chance of a forthcoming substantive agreement on balancing the federal deficit. Indeed, ongoing and deepening economic woes assure that the usual budget forecasts, based on overly optimistic economic projections, will fall far short of fiscal balance and propriety." More of the same!

## EUROPEAN HOUSE DIVIDED

◄$$$ EURO ZONE ECONOMIC GROWTH IN THE THE FIRST QUARTER OF 2013 FELL 1.0% FROM THE SAME PERIOD A YEAR EARLIER, DOWN FROM A 0.9% CONTRACTION IN 4Q OF 2012. THE WORRISOME TREND INCLUDES GERMANY, WHICH IS ON THE EDGE OF RECESSION. WHEN ALL THREE ECONOMIES ARE CLEARLY IN DECLINE, ALL SYSTEMS WILL BREAK DOWN, AS IN BANKS, BONDS, AND POLITICS. GREAT CHANGE COMES, CERTAIN TO SPREAD IN CONTAGION TO LONDON AND NEW YORK. $$$

The smaller nations, from Portugal to Belgium and Ireland are all running aground into the recession. When the leading nations go into reverse, the entire system enters much more dangerous territory. The result will be fuses lit, fireworks going off, and chain reactions triggered in unavoidable manner.

◄$$$ DEUTSCHE BANK WILL RAISE UP TO $6.3 BILLION IN AN EFFORT TO RECAPITALIZE THE BIG BROKEN BANK. REGARD THE RAISED CAPITAL TO BE EATEN BY RECENT DERIVATIVE LOSSES, WELL CONCEALED. $$$

The embattled Deutsche Bank, the largest European continental biggest bank, plans to raise up to EUR 4.8 billion (=US$6.3 bn) in capital, about half from new stock issuance. Desperation is clear, since three months ago the co-CEO Anshu Jain claimed a share sale was not in investor interests. The investor and observer can hardly defend by arguing that new shares are offset by capital that will generate earnings and profit, even though announcements cite organic opportunities. Without a doubt in the Jackass mind, the new issuance is to manage derivative losses with no capital to be put in place. The accounting is all a joke, riddled with niceties, as they posted a supposed profit in the first quarter. Jain still maintains the big bank is well capitalized, better than rivals. He is delusional. See the Bloomberg article (CLICK HERE).

◄$$$ THE FINANCE MINISTER OF LUXEMBOURG HAS THROWN HIS WEIGHT BEHIND BRITAIN'S LEGAL CHALLENGE OF EUROPE'S CONTROVERSIAL FINANCIAL TRANSACTIONS TAX. ALL THE WRONG SOLUTIONS ARE BEING PURSUED IN EUROPE. THE FINANCIAL TRANSACTION TAX SHOULD ADD TO EUROZONE'S DEBT WOES WITH MORE WEIGHT ON THE BROKEN WAGON THAT HAS FEWER WORKERS TOWING IN THE HARNESS AS TAXPAYERS. $$$

The only governmental financial initiative more stupid and suicidal than the austerity measures (aka poison pills) would be the financial transaction tax. The result will be both a heavier tax burden on the system, and a further inducement for businesses to exit it and enter the black market where no tax is paid. The largest banks have weighed in. They have warned the European finance ministers that plans to impose a Financial Transactions Tax (FTT) could deepen the continent's sovereign debt crisis, not relieve it. The Intl Banking Federation (IBF) submitted a formal letter, describing a potential harmful cascade effect from the proposed levy. It will not aid public finances, but result in a negative impact like most taxes. The mindless commissars rub their hands in glee, suffering from delusions on an expected EUR 35 billion gain in tax revenue. Strange differences will also crop up and alter the landscape where the tax is not in effect. The IBF letter read, "In the end, we believe that the costs of reduced economic activity in the FTT jurisdictions will far outweigh the perceived benefits of the tax revenues that will be collected under the FTT regime." Britain is generally concerned about the extra-territorial aspects of the proposal. See the UK Telegraph article (CLICK HERE).

Luxembourg supports Britain's legal challenge to the Financial Transaction Tax. In all, eleven EU states have agreed to impose the tax, ignorant of its harmful effect at a highly vulnerable time. The Luxembourg finance minister Luc Frieden foresees a negative impact on global growth as well as on his nation's crucial financial services industry. Frieden also serves as a governor of the World Bank. He has pledged to support the bid to block the FTT. The US Chamber of Commerce will not permit the FTT to happen, putting its full weight to obstruct its implementation. Britain has already launched legal proceedings against the FTT. The Brussels commissars are clueless, powerless, and on the defensive, too busy with their hidden megalomania and pedofilia. Furthermore, five global market associations wrote to the G-20 finance ministers in a direct appeal for them to block the FTT on the grounds that it would have unprecedented impacts. Bad ideas are being exported, but blocked so far, under important challenges. The measures are seen as punitive and obstructionary. Watch the attempts to put widely opposed limits on bank executive compensations, for the real pushback with fireworks. See the UK Telegraph article (CLICK HERE).

◄$$$ THE BUNDESBANK HAS DECLARED WAR ON MARIO DRAGHI FOR THE BOND BAILOUT AT GERMANY'S TOP COURT. THE CHALLENGE TO THE HERETIC EUROPEAN CENTRAL BANK HAS INTENSIFIED. $$$

The Bundebank (aka Buba, affectionately) is a central bank known as the temple of monetary orthodoxy. The Buba has informed the High Court of Germany that the Euro Central Bank's pledge to shore up Italian and Spanish debt involves huge risks and violates fundamental principles. Germany is finally drawing the line, in direct formal opposition to the Black Knight Draghi, the Italian prince from the Goldman Sachs fortress extending from the Italian tribe. Formally Germany claims rescues of states in crisis are not the duty of the ECB under its formal charter. The 29-page document was leaked to Handelsblatt. In it the Bundesbank unleashed a point by point assault on every claim made by ECB chief Mario Draghi to justify emergency rescue policies. The Outright Monetary Transactions (OMT) is under direct assault and might be doomed. It was unveiled last summer to halt the debt crisis in Spain from spiralling out of control. The credibility of the OMT supposed solution rests on German consent. So far it has reduced borrowing costs significantly.

The Greek events revealed how conditions to the state loans cannot be enforced. The document cited risks of heavy losses if a debtor state leaves the common Euro union. Germany has had enough, no longer willing to support its broken Southern neighbors. The constitutional court of Germany will rule on the legality of the bond rescue plan on June 12th. Although last September the court gave provisional support for other parts of the EMU rescue machinery, it imposed a limit on Germany's bail-out share to EUR 190 billion. More importantly, the court warned that the Bundestag may not alienate its tax and spending powers to any supra-national body or be exposed to unlimited liabilities. They are drawing the legal line. See the UK Telegraph article (CLICK HERE).

◄$$$ FRANCE AND GERMANY MUST LEAVE THE EURO MONETARY UNION. FRANCE NEEDS THE DEVALUATION AND DEBT WRITEDOWN. GERMANY NEEDS THE LIBERTY FROM COSTLY SUPPORT, SURE TO RESULT IN A PAINFUL HIT TO ITS BANKS WHICH HOLD SIGNIFICANT FRENCH GOVT DEBT. THE SOLUTIONS TO DATE ARE NOTHING BUT BANKER BAILOUTS AND EGREGIOUS TAX LEVIES ON A GRAND SINKING SHIP THAT MUST CUT THE LINK TO THE OVERSIZED EURO CURRENCY MILLSTONE. $$$

While Germany is clearly the lead sled dog in Europe, the second largest economy on the continent is France. The Gaullist nation is sinking into a grave economic slump, made worse by the moronic socialists voted into office. Capital flight aggravates the problem. Higher taxes compound the aggravation. The nation of France can break the vicious cycle bound toward preserving the European Union. The entire South with the pigs in the pen require a steep currency devaluation relative to the German currency, likely to be a restored Deutsche Mark, returning to the field on a golden horse perhaps. The Nordic Euro, aka New D-Mark, could be such a currency. France and Germany must leave the Euro Monetary Union. The pain from debt default in France will be matched by the pain from German bank failures and disruptions from a new D-Mark currency with strong upward revaluation. The debt writedowns will ravage France generally, while the stronger new currency will hinder the stout German industrial sector. The improved French balance sheet would help the nation recover and begin anew. The Germans would turn Eastward in search of a less restricted future and new export trade. The departure from the EMU must be done.

It is time to move on and quit the clumsy ineffective patches by Draghi, the arrogant self-ordained prince of paper. The bailouts are egregious taxes on the people to aid the banker elite and redeem their bonds gone bad, mere dead ends toward any viable solution. Enough is enough. The hidden wrinkle is that Germany owns a huge slice of French Govt debt, and would suffer some severe bank writedowns in kind, with certain bank failures. The odd footnote is that departure from the common Euro would possibly end a longstanding relationship, whereby Paris has carried Berlin's bags as squires. The decision to break the union would surely be seen as an abandonment of the weak politically. In reality it would be a release of the weak from the Euro currency yoke and freedom from the Brussels commissar whip. The Germans must share the lead step, and overcome any historical hurdles. See the Bloomberg articles (CLICK HERE and HERE).

◄$$$ THE JOBLESS RANKS IN FRANCE ARE REACHING A CRISIS LEVEL. A RECORD 3.22 MILLION JOBSEEKERS ROAM THE NATION. HALF THE YOUNG CITIZENS WISH TO LEAVE THE COUNTRY, RATHER THAN TO SUPPORT A SOCIALIST SYSTEM CLEARLY BROKEN. THE YOUTH ARE CRITICAL TO ANY NATION, AS THEY REPRESENT THE FUTURE. $$$

The number of French unemployed workers surged by 36,900 in March to hit 3.22 million, surpassing the 1997 record set. March was the 23rd consecutive month of rising unemployment. The new President Francois Hollande is in an impossible situation. His socialist methods assure much worse economic response, much greater deficits, and a powerful continued wave of unemployment. His promises mean nothing, secured guarantees to undermine his credibility and leadership. In one more year, he will look like a buffoon who carries the wrong toolbag and boots to the work site. The current jobless rate is stated as 10.2%, but the figure is not to be believed. The long-term unemployed out of work for over a year hit an historic high of 1.89 million in March. See the France24 article (CLICK HERE). An exodus is underway, not just of capital in flight, but of the nation's youth. A recent ViaVoice poll focused on the attitudes of the nation. A ripe 50% of those questioned between ages 18 and 34 wish to leave the nation. They do not want to support the socialist system, the early retirement beneficiaries, and the national debt. See the Zero Hedge article (CLICK HERE).

Germany will think twice before saving France next time. The Franco-German axis has driven EU affairs ever since the 1950 decade. It is collapsing. The damage dealt by the common Euro must end, a higher priority. The current relations between Europe's two great land states has never been so low since World War II. The grenades tossed back and forth signal an end to cooperative ties. The criticism has gone personal by Paris directed at Merkel for selfish intransigence with loyal devotion to the nation's savers, while in the other direction by Berlin the criticism has gone directed at the heart of the failed statist welfare model. Attention to conditions in France with high tax wedge, low work hours, high labor costs, overly regulated professionals, excessive job protection, absurdly high minimum wage, and lost competitiveness make for brutal labels of France having become Europe's biggest problem child. It drags on with a broken business model. See the UK Telegraph article (CLICK HERE).

◄$$$ THE GREAT SPANISH NATION CAN END ITS CRUCIFIXION AT WILL BY LEAVING THE EUROPEAN MONETARY UNION (COMMON EURO CURRENCY SYSTEM). CALLS TO LEAVE THE EURO HAVE COME FROM A LEADING ECONOMIST AND THE ENTIRE CATALAN GROUP OF RENEGADES. $$$

The jobless rate in Spain rose by another 237,000 people in 1Q2013 to reach 6.2 million, equal to 27.2% of the population. Italy might be losing 1000 companies per week, but Spain is losing 3581 jobs per day. Against a backdrop of extreme pain from the austerity dealt by budget cuts and union cries of national emergency, the ultimate problem is the structure of monetary union itself. Spain cannot write down its debt, constantly on the edge of default, and it cannot devalue its currency, since it is the Euro. The human pain matches the corporate ruin. A lone voice willing to utter heresy is Ilusion Monetaria, a discussion board by ex-Bank of Spain economist Miguel Navascues, who has monetary experience. He boldly exhorts Spain to break free of EMU oppression immediately. The renegades in Catalan accuse the common Euro of doing more harm than good and therefore should be dismantled. See the UK Telegraph article (CLICK HERE).

◄$$$ ITALY SHOULD USE ITS GOLD RESERVES TO FORCE A CHANGE IN EMU POLICY. ITS 2000 TONS OF GOLD BULLION COULD EXTRICATE THE NATION FROM THE THROES OF THE UNION COLLAPSE. SOME STABILITY, FLEXIBILITY, AND INTEGRITY COULD BE RESTORED TO ITALY. BUT ITALY MUST DISCARD THE EURO CURRENCY AND REVERT TO THE LIRA. A CONTINUED PATH PUTS THE STORED NATIONAL GOLD WEALTH AT RISK OF LOSS TO THE ELITE RESIDENTS OF CASTLES AND UBER-BARONS UP NORTH. $$$

From an unlikely corner, the World Gold Council advised Italy to deploy its 2000 tons of gold to break free of European Monetary Union. Italy is urged to cast off the currency shackles, to rid itself of ill-advised austerity measure dictates, and to move on anew. Italy supposedly is in possession of the world's fourth largest gold reserves, but the Jackass doubts the 2000 ton figure. The Long-Term Capital Mgmt fiasco at the turn of the millenium resulted in hidden gold losses to the Bank of Italy, a duped player. To collateralize the first round of bondholder losses, Italy could raise EUR 400 billion in the capital markets. Italy could determine its own future path. Precedent exists, like when Italy took a similar route in 1974 with a Bundesbank loan, as did Portugal did the same in 1977 with the Bank For Intl Settlements. India also did it in 1991 with a Japanese loan. A joint WGC-Ipsos survey found that 61% of Italian business leaders, and 52% of the general public supported the maneuver.

Greater confidence, lower funding costs, more flexibility, and bought time would be the benefits. Some fractional devices could actually produce in funds between four and five times the value of their gold reserves, in order to manage their debts and to lower sovereign bond yields without an inherent inflation risk. What a novel concept for financing Italy's refinancing needs at least for the next couple years!! Finally some good ideas are floating about, unlike the rancid floating currencies, and poison pill austerity plans being swallowed. Ambrose Evans-Pritchard concluded, "This is exactly the sort of thinking that is needed in the occupied EMU states, and Italy has been under occupation since the Euro Central Bank effectively toppled the elected the government in the coup d'etat of November 2011, with the active collusion of President Napolitano, a former Stalinist who later transferred his ideological mania to the EU Project." Harsh words!

◄$$$ A MUCH DEEPER HOUSE SLUMP IS TO HIT SPAIN, FRANCE, AND THE NETHERLANDS. THE LONG AWAITED FULL FLEDGED DISASTER HAS FINALLY BEGUN IN SPAIN, AFTER YEARS OF DELAY AND DENIAL TO DUMP EXCESS SUPPLY ON THE MARKET FOR CLEARANCE. GIGANTIC ADDITIONAL HOME PRICE DECLINES ARE EXPECTED TO SMACK THE BIG CITIES, LIKE 30% IN MADRID. THE BANK WRECKAGE WILL BE EXTENSIVE AND CONTINUED IN A NIGHTMARE, THE RIPPLE TO CUT THE COMMON EURO CORD. CONT RAST GERMANY, WHICH WILL SEE ITS SECOND YEAR OF HOUSING MARKET RECOVERY. $$$

Standard & Poors has warned that the housing decline is deepening across large sections of the EuroZone. Spanish house prices are expected to fall an additional 13% by the end of next year. Spanish prices have already dropped by 28% from their peak in March 2008. The banks and financial firms must flood the market with a backlog of repossessed properties, after several years of holding back the reality of a failed market, the reckoning having arrived. The delay to bank accounting and market clearance has been a Hat Trick Letter topic for six years. The French housing price declines are gaining momentum, with prices expected to fall 5% this year and a further 5% in 2014. French property faces a protracted correction as the economy reacts adversely to fiscal tightening, higher taxes, capital flight, and a jobless surge. The French consultancy PrimeView has warned that property values could collapse as much as 40% before excesses are purged. The Netherlands will likely face home price declines of another 6.5% by late next year, bringing the accumulated decline to more than 23%. Over 25% of Dutch mortgages are now underwater with negative equity, an unfortunate parallel to the nation with vast land tracts below the sea level.

Standard & Poors also identified Italy, Portugal, and Ireland as vulnerable to further home price declines this year. However, the agency's chief concern is Spain, where a vast glut of unsold property has yet to hit the market from years of buildup and denial. Experts say the Spanish prices held up well from 2006 to 2011 because the big banks held onto foreclosed properties from bankrupt developers, rather than to take losses and clear the market. Their rigid position began to change in 2012 as Santander, BBVA, and other banks rushed to liquidate their portfolios before the onslaught of sales directed from the nationalized banks folded into the SAREB Bad Bank, an official garbage can. The Spanish officials have ordered Madrid to accelerate the pace of SAREB sales as a condition of the EU bail-out in July 2012. The details are horrifying and nightmarish. Madrid consultants RR de Acuna estimated last December that there are almost two million properties waiting to be sold, including 800,000 used homes on the market, another 700,000 units on the books of developers (many built but never purchased), another 450,000 seized or in foreclosure, and another 250,000 still in the construction phase. Expect the skein of bank failures that results to force the exit of Spain from the common Euro currency, finally.

The consultancy forecasted prices to fall a further 30% in Madrid, Barcelona, and other big cities before hitting bottom in 2018. That is not all. Even steeper price crashes enduring a full decade of years will persist in some of the coastal areas that ran totally out of control during the bubble from British and Swedish demand, due to the vacation and pension effect. Acres of concrete would have to be torn down and returned to pasture, as nature reclaims the land that humans mismanaged. Germany is marching to an entirely different drummer from the rest of the EuroZone. It held onto its industry, and did not forfeit it to China. Minor but important German housing price gains of 3.0% are expected this year, following the 3.5% gain in year 2012. The German economy is at the other end of the property cycle, bolstered by more favorable price-to-income ratios nearer to historic levels. See the UK Telegraph article (CLICK HERE).

## FIVE YEARS OF USECONOMIC RECESSION

◄$$$ THE MARCH TRADE GAP FOR THE UNITED STATES FELL 11% AS IMPORTS SLUMPED MORE THAN EXPORTS. THE SIGNALS ARE TYPICAL OF A FIERCE RECESSION IN THE UNITED STATES. $$$

Perversely, a big US trade gap is a primary signal of a USEconomy doing as well as possible, given its outsourced industry and debt suffocation and pre-occupation with consumption. When Americans go shopping, whether to meet needs or to deal with personal depression, they buy foreign stuff. The US trade deficit fell hard in March as imports slumped, particularly from China. The chronically inept economists claimed that the deficit contraction would mean a small boost to the US recovery. Not so! Instead, it is a dire signal that they have not comprehended in over a decade. The March US deficit in international trade of goods and services declined 11% to $38.83 billion from a revised $43.63 billion deficit in February. All kinds of queer tidbits were inside the report, but the glaring data point was the March trade gap with China, the country's second largest trade partner. It fell to its lowest level in three years.

◄$$$ THE USUALLY ROBUST STATE OF TEXAS HAS ENTERED DECLINE. THE DROP WAS MATCHED BY THE IMPORTANT CHICAGO PURCHASE MANAGERS INDEX. THE USECONOMY IS REELING IN BIG TROUBLE. $$$

Business activity among manufacturers in the Texas region fell sharply into contraction this month, as per the Dallas Fed report. Its general business activity index plunged to minus 15.6 in April after a plus 7.4 in March and from plus 2.2 in February. The April reading is the lowest since July 2012, the biggest one month drop on record. Readings below zero indicate contraction, and positive numbers indicate expanding activity. The subindexes were generally much weaker in April also. The production index dropped to minus 0.5 from 9.9 last month, and shipments declined to minus 0.4 from 10.6. The new orders index fell sharply to minus 4.9 from 8.7, the forward indicator. The Jackass impression for years has been that Texas is the strongest economy in the messy union. Its diversity and energy sector strengths have made it a national leader. When Texas hurts, the nation is in deep trouble. See the Gold Tent article (CLICK HERE). The American Heartland has another significant indicator, the Chicago Purchase Managers Index. It imploded in April to 49.0 from 52.4 last month. The April reading is the first sub-50 headline since September 2009, indicating a sudden contraction. The subindexes were all beaten up. Deliveries, Prices Paid, and Production all hit their lowest since 2009. Backlogs posted their tenth month of contraction in the past 12 months. Employment plunged from 55.1 to 48.7, its third month over month decline.

◄$$$ THE APRIL JOBS REPORT WAS PURE MATH GIMMICKRY, AGAIN. AVERAGE WEEKLY HOURS, WITHIN THE LAW OF LARGE NUMBERS, SHOWED A DECLINE, YET THE OFFICIAL APRIL MONTH REGISTERED A GAIN IN NET JOB CREATION. THE CONTRADICTION IS OBVIOUS. THE USECONOMY IS STUCK IN AN ENDURING STUBBORN RECESSION. $$$

The Jackass has harped on the Birth-Death Model as being a hokey plug for several years. It almost never makes the news, since it is a grand deception device. A month can be distorted easily to produce job gains. Once more it happened, as the financial press squelched on the story. The official Non-Farm Payroll reported an increase of 165,000 jobs in their fantasy world. Notice the plug, a phony fictional adjustment, of an added 193,000 jobs on the month from the Birth-Death Model. Remove the gimmick, and the USEconomy would have reported a 28,000 net job loss. This over-used tired device is such old news, but so handy in deceptions every month. It was originally designed to estimate the number of small business job additions, which were not captured in the survey. Instead, the Bureau of Labor Statistics monkeys use the model to bring about a desired result. In three months, the Birth-Death Model has plugged in an additional 387,000 mythical jobs. Handy revisions also help paint the picture. The prior two months were revised up significantly. The economy added 138k jobs in March, compared with the initially reported 88k, and a robust 332k jobs in February, compared with the previously reported 268k. No explanation was given to the wondrous upward revisions. In Reich Finance, growth is seen every month, every quarter, every year.

Apart from the low quality of new jobs, and the double counting of part-time jobs, the data still stinks. The productivity card has been overplayed. The government sector as job growth source is a regular feature. But the little smoking gun is the steadily declining wage index. The Jackass has found the payroll tax withholdings to serve as an excellent indicator, very hard to fudge with doctored adjustments. The average hourly earnings is another excellent fool-proof statistic. It should show a rising line, if a true recovery were in progress. This chart has been in secular decline for five years. It just posted the second decrease in a row. The declines are always described as surprises, since growth is mandated by law. The average weekly hours for all employees posted a surprising and disappointing decline from 34.6 to 34.4 on loftier dashed expectations. It amounts to a 12 minute shorter workweek on average for the entire US labor force. The USEconomy has been mired in a powerful recession for five full years, the stark reality supported by the data.

Yet another rigged report was issued by the USGovt stat-rats, expert in deceptions and handy adjustments. They rely upon the murky hedonic lifts from enhanced product quality. But the biggest lie is the inflation adjustment, which contains an error of between 5% to 7%. It means the Gross Domestic Product figure is wrong by leaps and bounds, exaggerated to the extreme on a regular constant basis. The official GDP was reported at 2.5% for 1Q2013. It is all nonsense, as the the USEconomy is stuck in a deadly recession. The true GDP growth for the first quarter is somewhere around minus 3% to minus 4%. In Reich Finance, growth is seen every month, every quarter, every year.

◄$$$ THE OFFICIAL STORY IS THAT THE US-HOUSING MARKET IS IN RECOVERY. NOT AT ALL. THE DOMINANT NEW FEATURE IS USGOVT RENTAL HOMES WITH WALL STREET REALTOR AGENTS. BIG BANK HOME INVENTORY REMAINS A MAJOR ABSCESS. THE MARKET IS WRECKED. $$$

A huge amount of real estate sales are to Wall Street firms. They are lined up with cozy agreements linked to Fannie Mae. The big US banks are purchasing large blocks of thousands of foreclosed homes, the old owners pushed out. The new tenants for the featured programs are 60% welfare cases, arranged to so-called 'Section 8' tenants on government subsidy programs. Just as the Jackass predicted in 2005 and 2006, the USGovt would embark on a vast Fannie Mae Rental program. Call it the collectivist response to wipe out the American Dream in favor of the communist state ownership worker paradise. The bank owned (REO) home inventory still remains over eight million units, kept off the sale blocks, so as to prevent a housing market steep price decline. So supply is hidden, while demand is from Wall Street through the slushy USGovt programs. This is the heart of the supposed recovery, a total sham. See the Washington Post article (CLICK HERE). The United States is grinding down, evident in the cities. They are becoming poverty stricken zones. Witness the tragic decline of the nation toward the Third World. See the Economic Collapse article (CLICK HERE).

## THANKS

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