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

* Monetary Shrapnel
* Calamity in Europe Explodes
* Greek Expulsion & End of Democracy
* Central Banks Coordinate Inflation
* Financial Fraud Climax in Full View
* USEconomy Caught in Housing Web


HAT TRICK LETTER
Issue #92
Jim Willie CB, 
“the Golden Jackass”
13 November 2011

"European banks and others that have hedged their cash position in Greek debt by buying Credit Default Swap protection on Greece would not receive a compensating credit protection payment. The demonstrated ineffectiveness of the CDS hedge on Greece would put into question the credit protection they have purchased on other sovereigns." ~ Moodys Investors Service (therefore Italian Govt Bonds are vulnerable)

"So when the Fed says they are selling short-term bonds (like 2-years) to purchase long-term bonds in equal amounts (like 10-year bonds), the other side of that trade, likely JPMorgue, Goldman, BofA, Citi, Morgan Stanley, or a host of foreign banks participating in this bonanza, are making out like bandits because they are having their duration weighted risk (yield curve risk) absorbed or monetized by the Fed. This is bolstering the balance sheets of all banks who trade spreads on the yield curve in US Govt Treasury bonds. Furthermore, it appears they are doing the same in Agency bonds too (Fannie & Freddie)." ~ Rob Kirby

"[It is perilous to have] trusted the firm being run by Jon Corzine, former Goldman CEO and former Governor of New Jersey. If you lie down with dogs you wake up with fleas. In this case, if you lie down with someone who is both a Wall Street executive and a politician, you wake up with a combination of late-stage pancreatic cancer and hepatitis-C." ~ Dave in Denver

MONETARY SHRAPNEL

◄$$$ USGOVT SUPER-COMMITTEE HAS RAMIFICATIONS SOON TO BECOME APPARENT. THE SOVIET STATES OF AMERICA WILL EMERGE, AS COUNCILS EXERT DICTATORIAL POWERS ON A WIDER BASIS. THE PROCESS WILL BE SLOW AND GRADUAL, MORE POWERS GRANTED AS THE DISORDER AND CRISIS BUILD. AN EXTERNAL COUNCIL WILL RULE OVER THE DEBT DEFAULT. $$$

So Goldman Sachs pedigree Timothy Geithner believes the Super-Committee holds the key to rebuilding confidence in the United States. The Politburo in the Soviet Union had a profound impact on that nation's confidence and economic growth. US Politics are at loggerheads. The USCongress has Democrats and Republicans several $trillions apart on a deficit reduction deal as the November 23rd deadline nears. If the committee, designed to highlight the stalemate in full view, fails to reach a deal before its deadline, $1.2 trillion in automatic spending cuts kick in, effective by January 2013. The cuts are trivial really. Call it grandstanding or identify the dysfunction. Without an agreement, the defense industry faces $500 billion in extra cuts, in addition to the $350 billion in cuts already fixed in stone. In line for cuts are farm subsidies and federal worker pensions, along with various token hikes in taxes. Expect also some reductions in government gifts to weak special interests. Then factor in less generous calculations in cost of living adjustments for Social Security, Medicare, and government pensions. Bear in mind that US national elections will be held before the automatic cuts go into effect. A new Congress could abandon the entire initiative and march intended to install a Politburo as the powerful council. The USGovt specializes in avoidance of concrete action. By taking new taxes and entitlements off the table, a deadlock is assured on stage.

The gulf between the polarized members on the Super-Committee has narrowed somewhat. The most recent Republican offer includes $770 billion in spending cuts and between $550 billion and $600 billion in new revenue from a variety of sources, including selling public lands, increasing the price tag on postage stamps, and new energy leases. Some Republicans support is there to limit deductions and certain tax breaks, in order to reach nearly $300 billion in new tax revenues. In exchange, Republicans want to slow the rise for Social Security income, cut Medicaid, and increase Medicare premiums for the wealthy. They want revenue gains to be used for deficit reduction, thus painting the move as a serious concession. Democrats argue lowering tax rates would cost the government more revenue than it would raise from changing deductions. In over 50 years, they have failed to comprehend that higher tax rates result in lower total tax revenue, as business is discouraged. Obama even has a proposed Christmas tree tax, a certain winner. Opposition from the rank & file in the USCongress will be fierce, even though they do not comprehend the gravity of the budget impasse and consequences. The next important USGovt debt ceiling approaches within weeks, as the debt rises in huge chunks. Two more USTreasury auctions are on the docket, certain to draw printing press demand from subterranean chambers. See the Zero Hedge article (CLICK HERE and HERE).

A showdown exposes the Congressional Super-Committee as a dysfunctional US Politburo in the formative stage, the new great fledgling American council. Some analysts describe the committee as filled with eunuchs. They will gradually assume greater powers. Recall the word 'Soviet' means council in Russian, as in government run by councils, not representatives. Watch for executive appointments to the council before too many more months, as the crisis deepens. Initially, the committee made up half from each opposing camp has been designed perfectly to create a deadlock in a visible crystallized manner. They will be divided routinely as they make important decisions for across the board spending cuts. They will be made a smaller target for criticism, anger, and blame for the systemic failure that ratchets inevitably. Rather than make difficult decisions on waste, fraud, and abuse, they will make decisions to share the pain, a principle tenet of socialism itself. They will not decide to cut the corporate tax rates, to liquidate the big US banks, to limit lobbying influence, to halt the home foreclosure process, to revamp federal regulations directed against businesses, or to end war profiteering. These are the routes that affect tax revenues. Their decisions will pit Wall Street and the Pentagon against the committee, sure to result in allowances. The march to collectivism, marxism, and state socialism is proceeding apace.

◄$$$ AMERICANS ARE REMOVING FUNDS FROM THE BIG US-BANKS. THE 'MOVE YOUR MONEY' MOVEMENT HAS HAD AN IMPACT. MUTLIPLY THE CASH REMOVED BY 10X TO 20X TO COMPREHEND THE IMPACT ON BANKS, DUE TO FRACTIONAL BANKING PRACTICES. THE BANK DEFENSES SEEM TRIVIAL. THE DESTINATION FOR THE FUNDS IS SMALLER BANKS AND CREDIT UNIONS. $$$

Despite pleading by the big US banks for customers not to move their money, impressively 650 thousand customers moved a total $4.5 billion dollars out of the big banks. The funds went into smaller banks and credit unions in October. The myth swirling is that the big banks do not really care if money exits, since the USGovt and USFed will cover them. They do care, as deposits serve as an important part of reserves in their fractional banking practices. The personal stories are powerful. A woman withdrew her $200 thousand from Wells Fargo after speaking to a young arrogant branch manager, and closed her account. When asked, she explained her belief that Wells Fargo was part of the problem with the economy, and her account would be moved to the North Carolina State Employees Credit Union. Her husband is a state worker. A woman directed a Bank of America branch teller to close her multiple accounts, and to cut her a check for the full amount. They gave her one third of her money, mentioning daily limits. She had to come back the next day for the rest after waiting in line to speak to a manager. A flock of people awaited more withdrawals. At SunTrust, the branch manager lost his composure, asking twenty times is if there anything that they could do to change her mind, looking nervous. The woman was not interested in explaining or even meeting the market executive as suggested, to meet with her and hear out any concerns. She told him she was not interested. He showed his nervous condition. These stories were repeated at over a thousand bank branches last month. The big US banks are targets for citizen action. Smaller banks and credit unions are more trusted. See the Ritholz article (CLICK HERE).

◄$$$ THE VATICAN HAS SUGGESTED THE CREATION OF A GLOBAL CENTRAL BANK. WE MIGHT BE WITNESSING AN ATTEMPT TO CREATE THE UNIFIED GLOBAL POWER CENTER AND ITS CENTRAL BANK. $$$

The Vatican has called for the creation of a central world bank and a global public authority to rule over financial institutions that have become outdated and ineffective in dealing with crises. In a major document from their Justice & Peace Dept, the Vatican suggests taxation measures on financial transactions. It condemned what it called the idolatry of the market as well as a neo-liberal thinking that it said looked exclusively at technical solutions to economic problems, going so far as to condemn collective greed and hoarding of goods. They warned of growing hostility and violence, and ultimately the undermine of democratic institutions. A supra-national authority emanating from the United Nations was urged. Their cause as stated is to prevent excessive power wielded over the weaker countries. The Vatican believes reform of the global economy is required. They pointed to the Intl Monetary Fund (IMF), claiming it no longer had the power or ability to stabilize world finance, having failed in regulating money supply and systemic credit risk. The transformation would be made at the cost of a gradual, balanced transfer of a portion of each nation's powers to a world authority and to regional authorities. See the CNBC article (CLICK HERE). The problematic idolatry might be of money and power. A competition with the Bank For Intl Settlements could be coming. The Vatican has longstanding relationships with central banks and other organizations, with favors exchanged, short-term loans provided. Biblical Prophesy students would have much to comment on the political throne, its beast and its religious counselor. But not here, since outside the scope of the report.

◄$$$ THE DEATH OF THE MONETARY SYSTEM HAS ITS MAIN MOTIVE IN THE REFUSAL OF GOVERNMENTS EITHER TO MANAGE FINANCES OR TO REPAY DEBT. THE SWINDLE IS INFLATION. THEIR ONLY VIABLE APPROACH, HARDLY A SOLUTION, IS TO INFLATE DEBT AND THUS TO REDUCE ITS BURDEN. CREDITORS FEEL BETRAYED, SEEK DEFENSIVE MEASURES, LIKE TO CUT OFF CREDIT. A RUN ON THE USTBONDS IS OCCURRING QUIETLY BY ANGRY FOREIGN CREDITORS. THE USDOLLAR IS KEPT AFLOAT BY SOME SECRET CORNERS. $$$

The pages of history are littered with examples of government debt default, but more often with the public paying for debt reduction in basic price inflation. Their pensions and life savings are reduced in value so as to accommodate the costs of social welfare systems, a society living beyond its means, and even the excesses of war. The debts accumulated by many governments large and small cannot be repaid. In some cases riots, corruption, and political extremism have been malignancy offshoots encouraged by the hyper-inflation. History shows that tangible assets like Gold & Silver protect from the worst economic consequences. For the current financial crisis, only one pathway seems likely, although painful. The system cannot be remedied, only patched over. Vast inflation is the only politically viable method of repudiating these unmanageable obligations. Of key importance is the velocity of money in determining whether or not inflation turns into hyper-inflation, which requires final demand not to falter badly. Hyper-inflation requires sustained activity like an engine, which cannot stall. Higher price inflation is coming like night follows day, but probably not an extreme case. It will be painful though, since the cost structure will be the primary damage center. A great honest quote came from Jean-Claude Juncker, prime minister of Luxembourg. He recently commented with respect of the sovereign debt crisis, "We all know what has to be done. What we do not know is how to get re-elected once we have done it." It is like burning people's homes and expecting to stay in high office. The other betrayal is to creditors, who suffer losses in the principal repaid, as a result of a unilateral decision not within their participation. They see the inflation approach as a deep betrayal, and lose their willingness to offer further credit. See the Zero Hedge article (CLICK HERE).

The Fed was hit with withdrawals of $83.3 billion on November 2nd, the largest withdrawals coming from its deposit accounts. This single day yank was the largest since February 2009, and not associated with quarterly tax payments. The USFed was forced to meet $76 billion in requests apart from movement net of outlays. Details of transactions were in the USFed weekly H.4.1 report. Extraordinary measures were taken to fund the withdrawals, like the outright sale of nearly $24 billion in its USTreasury Note and Bond holdings from the System Open Market Account. After clearing, the SOMA account fell to $2.611 trillion, $43 billion below their stated target of $2.654 trillion. See the Minyanville article (CLICK HERE). The withdrawals are being demanded by countries angered by USGovt policies, like China, Russia, Latin American, and other Asian players. It is only the beginning of a bloodletting. The syndicate running the USGovt is totally clueless what they are up against, misjudging the adversaries. A run on USTBonds is in progress, covered up by Quantitative Easing and Operation Twist, programs given innocuous names but integral to hyper monetary inflation itself.

Some additional comments are warranted. Colleague Craig McC in California made reference to the Civil War. He said, "The Confederate Dollar collapsed from the outside in. As Union forces occupied Southern states, the Confederate Dollar fled to the ever smaller remaining states. This accelerated the Confederate price inflation. The USDollar will likely collapse in a similar fashion, as countries no longer accept the USD and more dollars flood back into the United States." Aaron Krowne of the Mortgage Lender Implode website made reference to a key factor rarely discussed. He said, "See the global narcotics trade. If these cash flows move out of USDollars, the currency is finished, possibly very rapidly. Remember the IMF has admitted that this is what is keeping banks propped up. Insiders might do it and pull the plug once they hold enough Silver and Gold." My perspective is similar. One has to wonder when major nations will hasten their rejection of the USDollar. Also, the longshot risk is some states will reject it indirectly by giving it some competition, like Georgia and Texas and Utah. These states already have movements for acceptance of gold. That brings question to the USDollar quality if not validity. The deep intrigue, deception, and treachery can be traced back to the Revolutionary times and the framing of the Constitution. Thomas Jefferson once said, "I prefer dangerous freedom to peaceful slavery." How true! But Jefferson let some London banker agents into the fold, like Alexander Hamilton. Important errors were made along the way. Hamilton, whose face is on the $10 bill, although never a president, was such an agent for England and the same London bankers that the American colonies tried to escape.

John Pierpont Morgan was an agent for London bankers to a much bigger degree. He helped create the Federal Reserve, with key links and levers controlled by the Bank of England. The close relationship continues to exist in deep subterranean cooperation, including gigantic fraud programs and narco money laundering. Morgan enabled the United States to remain a colony under a formal controlled leash with hidden handlers. Franklin Roosevelt did not deal with a failed attempted Nazi coup. Over 60 years later, the takeover has been completed in a continued chapter, although hidden from view to the sleepy dumbed down American public. Their syndicate includes major important structures of the current system in place, even establishing a Gestapo after the seminal 911 events, but under another name similar to Fatherland, and exactly the KGB translation. The Fascist Business Model flourishes, but at the great cost of systemic ruin for the nation. The US banking system could not survive without the money laundering fees. Irony runs deep, since the USDollar is probably kept alive by the narco barons and their vast drug business protected by US security agencies. They run cash operations, with cash storage, and expansive investment. They purchase national industries, entire small nations like Paraguay, and even assets belonging to sovereign city states.

◄$$$ THE ENTIRE CONCEPT OF TOO BIG TO FAIL IS A HANGMAN'S NOOSE AROUND THE US-BANKS AND THE BANKING SYSTEM. THE DEBATE OVER CAUSE OR EFFECT IS CURIOUS. THE RELATED PROPAGANDA IS OBSCENE, IF NOT COMICAL. THE SMEAR CAMPAIGN AGAINST GOLD WILL TURN ABSURD, BEFORE THE USDOLLAR BREAKS PERMANENTLY ON THE WORLD STAGE. $$$

Conformity with the Too Big To Fail doctrine is synonymous with the path to systemic failure. Charles Hugh Smith sees the destructive force clearly. The absent liquidity of the biggest Western banks assures the systemic failure itself. Smith wrote, "The irony is that the propping up of a deeply intrinsically pathological and destructive financial system is not saving the economy, rather it is the reason the economy is imploding. The Big Lie technique of propaganda is to reverse the polarity of reality: we are told up is down until we believe it. We are told that liquidating the overhang of bad debt, leverage, and hedges would destroy the world as we know it. The truth is that keeping the zombie system from expiring and covering up the corruption with propaganda is actually destroying the world as we know it. Thus the collapse of the current financial system of central banks, pathological Wall Street, and insolvent banks would be the greatest possible good and the greatest possible positive for the global economy and its participants." See the Of Two Minds article (CLICK HERE). Jim Grant seconds the view, that hard decisions and painful liquidations would enable the United States to be on at least a path of recovery, but they are not permitted. He avoids the underlying reason, the forfeit of power by the big banks. In my view, the worst of the worst in coordinated policy action is the accusations directed at both gold and large outflows of money seeking safe haven. The USGovt authorities, the cohorts to the narcotics enterprise titans, the money laundering bankers, even the warmongers, who are involved in $1 trillion in annual narcotics sales conducted under CIA auspices, accuse people of terrorism when moving large amounts of money to safety. They go so far as to risk credibility and backlash from absurdity, by claiming that gold payments fund the terrorist organizations. The press story was given zero traction. If the people only knew that at times packaged narco bricks sit side by side gold bars in US bank vaults, sometimes delivered for overnight and temporary transfers.

◄$$$ MANHATTAN PROPERTY PRICES SEEM FIRM, HARDLY AN INDICATION OF THE NATIONAL MARKET. CHECK OUT THE ELITE. $$$

Sandy Weil of Citigroup infamy seeks to sell his Manhattan home. In 2007 he bought the 6700 square foot high rise condominium for $44 million. He has put the condo on the market for $88 million. He claims sale proceeds would go to charity. The Jackass calls him a liar. One must wonder if Jamie Dimon received his desired price for the Chicago mansion. Let's hope not.

CALAMITY IN EUROPE EXPLODES

◄$$$ THE CREDIT DEFAULT INSURANCE DOMINO EFFECT PREVENTS ANY PROPER RESOLUTION OF THE EUROPEAN SOVEREIGN DEBT CRISIS. THE DEBT INSURANCE IS TOO LARGE. THE PAYOUTS CANNOT BE MADE BY THE SAME BANKING SYSTEM THAT FEELS ITS IMPACT. THE DEBT DEFAULT PATH CANNOT BE PERMITTED, SINCE IT WOULD REVEAL THE FRAUDULENT SHADOW SYSTEM. ALL EYES SHOULD BE ON FRANCE FOR FAST RISING CDSWAP CONTRACT PRICES BUT ON ITALY FOR THE DEBT BUST. BAILOUT REQUESTS ARE NEXT. $$$

A gang of rogues cannot act as insurance underwriter for itself. They thrive in a closed system. The debt derivative market is full of fraud, a game among the banking sector much like a shell game. If a debt default in Greece occurs, the ripple effects would be felt immediately in France with their exposed banks. The contagion would cast great suspicion on Italy and Spain, the large remaining countries. Their bond yields would go sky high. That is happening in Italy right now. The counter-parties in any string of failures would themselves fail instantly, setting off a Credit Anstalt domino collapse of banks to London and Wall Street, including the big French banks. The following wave would reach the large European banks, as all sovereign bond debt among Southern Europe was be greatly affected. Worse, the deep distress in France would spread to Belgium and elsewhere. The cost of Credit Default Swap contracts is rising steadily. The following graph was taken over two weeks ago. Since then, the Italian Govt Bond has seen its CDSwap cost go from under 4.0% toward 5.5% and higher. It is marching toward 6% last week. In response to the blossoming crisis, expect further action by the Euro Central Bank to draw up on Dollar Swap Facilities created by the USFed. Ironically, the drawn funds will lift the Euro by creating artificial demand. But much European bank debt is denominated in USDollars, which seeks satisfaction.

The French Govt Bond risk is rising fast. They are the foremost PIIGS creditor. The Credit Default Swap contract rose two weeks ago significantly, to 2.04% according to CMA. That was the highest level among any AAA-rated nations. The pan-European Markit iTraxx SocX index rose to 3.45%, a five-week high. The French Economy will not grow anywhere as much as the official projections, surely not what Sarkozy expects in his promoted fiction. Look for him to be deposed in coming months. The Italian CDSwap stood at 5.63%, and the Spanish CDSwap at 4.20%, after rising to record levels in midweek. The European Commission forecasts that the  French Govt debt burden will climb to 92% of GDP in 2013, after factoring in some generous bank support. The government has interfered with the financial market in another manner, limiting for three months the shorting of crippled zombie banks. Credit quality is falling off the cliff. Contracts on the Markit iTraxx Crossover Index on 50 companies with mostly junk credit ratings increased to 7.55% on CDSwaps. The Markit iTraxx Europe Index of 125 companies with investment grade ratings rose to 1.83% on CDSwaps. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers rose to 2.82% also. One basis point on a CDS insuring EUR 10 million of debt from default for five years is equivalent to 1000 Euros per year, the key to the above chart. See the Bloomberg article (CLICK HERE). The exposure by nation to debt covers the entire set of Western industrialized nations, plus Japa. Despite the heavy French exposure to Italy, Germany has the most exposure to the entire set of Southern European nations. Notice the presence of London banks in yet more exposure, equal to France but with little mention by the financial press.

◄$$$ THE G-20 NATIONS ISSUED A BLAND VAPID COMMUNIQUE AFTER AGREEMENT ON NOTHING. THEY MIGHT AS WELL HAVE STATED DESIRE FOR WORLD PEACE, ERADICATION OF CANCER, AND CLEAN WATER. THEY ESSENTIALLY PUNTED TO THE EUROPEAN BANKERS, WITH MILD DEMANDS TO SOLVE THEIR PUTRID CONTAGIOUS MESS. THE G-20 COMMITTED NOTHING, AND DEMANDED THAT EUROPE DEAL WITH ITS GRAND PROBLEMS. THE G-20 NATIONS DO NOT WISH TO CONTRIBUTE FURTHER TO THE EURO BANK BAILOUT PLAN, VIA THE I.M.F. FUND. THEY SEE ANY FURTHER INVESTMENT AS MONEY TOSSED INTO A BLACK HOLE.$$$

G-20 leaders in Cannes France might have agreed to increase the IMFund resources, but with specifics lacking their promises are empty. No detail on plans for the EuroZone were offered except platitudes, the continuing sovereign debt crisis dominating the summit. A cold final G-20 communique included, "Resourcing the IMF is not a substitute for the EuroZone dealing with its own issues and problems." They slammed the door on the host nation. French President Nicolas Sarkozy gave a cheer at the conference close, urging support to fight to defend Europe and the Euro currency, to be his famous last words. Economics editor Stephanie Flanders from British Broadcasting Corp flatly stated the shakedown attempt of the expanded list of G-20 finance ministers failed. Host nation France could not convince the ministers to commit funds. Sarkozy claimed that France and Germany were in favor of a financial transactions tax, with hoped 2012 implementation, but he probably lied. UK Prime Minister David Cameron was in the center of disputes, concerning agreements made, deals struck, and details in place. While confirming on platitudes for confidence and stability, he reaffirmed that the UK would not contribute to any EuroZone bailout. German Chancellor Angela Merkel confirmed that no countries outside Europe offered to contribute to the bailout fund. US President Obama showed enthusiasm about commitments to greater Chinese currency flexibility, the tired stick. Obama mentioned having a crash course in European politics, like a rookie.

The G-20 leaders refused to write new checks to feed the IMFund. Instead, they demanded the EuroZone governments to do more to remedy the debt crisis. The leaders approved a plan in which Deutsche Bank, BNP Paribas, Goldman Sachs, and 26 other banks will face additional capital buffers by raising reserves levels. The G-20 ministers agreed to limit the risks posed by the giant banks, and called on regulators to examine the effect of Credit Default Swaps on bond prices. They strengthened language on exchange rates to be set by markets, and in an appendix welcomed Chinese determination to increase Yuan flexibility. A grand disappointment was for the showcase of a broad plan to secure external support for a doubling of the EUR 440 billion (=US$607 bn) bank bailout fund. The objective was to protect bigger economies such as Italy from contagion in Greece, the so-called ring fence. The plan blew up and fizzled, when on the eve of the meeting Papandreou called a Greek referendum that was later retracted in an absolute clumsy fumble that revealed the absence of democracy. The spotlight of Italy also distracted the conference. The G-20 agreed to have the IMF create a new six-month line of credit for countries, only if they hold firm to strong policies and fundamentals. Newly installed IMF chief Christine Lagarde commented that the amount was too small, and a better approach is to show strong support to do whatever is required. They are talked to a wall of deaf ears. See the Bloomberg article (CLICK HERE).

◄$$$ THE G-20 GROUP ACTUALLY SUGGESTED THAT GERMANY DONATE A BLOCK OF GOLD FOR EUROPEAN STABILITY. OBVIOUSLY THE GERMANS TOLD THEM TO GET LOST AND MIND THEIR OWN BUSINESS. THE GERMAN NATION HAS BEEN THE OX & YOKE TO PULL THE SOUTHERN EUROPEAN CART FOR A DECADE. ENOUGH IS ENOUGH! THE EMERGING NATIONS SHOWED A MIX OF CHUPTZPAH AND IGNORANCE. LOOK FOR THE P.I.I.G.S. NATIONS INSTEAD TO FORFEIT THEIR CENTRAL BANK GOLD IN THE NEXT SEVERAL MONTHS. $$$

In a bold stroke, the G-20 finance ministers actually demanded that German Gold reserves be used to backstop the EFSFund for bank bailouts. The fund seeks EUR 1 trillion and perhaps needs EUR 3 trillion, possibly supplied via leverage. Much confusion has circulated around the story, not fully confirmed. But Reuters cited that, "The Frankfurter Allgemeine Sonntagszeitung reported that Bundesbank reserves, including foreign currency and Gold, would be used to increase Germany's contribution to the crisis fund, the European Financial Stability Facility (EFSF) by more than 15 billion Euros ($20 bn)." The recipient of the alleged transfer would be the most insolvent of global hedge funds, the European Central Bank. One must suspect that no pledge was made, and a trial balloon was floated. It was promptly shot down. Germany has lost its appetite to make huge annual donations to support an unjustified standard of living for Southern Europe, which grossly lacks industry. Those nations abused the low Germanic interest rate, built housing bubbles, continued the non-work ethic, perpetuate young pension benefits, and face ruin. Germany will no longer sacrifice Euros at the foot of any PIIGS altar, plainly stated.

Conclude that the EuroZone, the Euro Central Bank, and the European Financial Stability Facility are all dead broke and insolvent. They have zero credibility in the capital markets. The European Commission has no voice either, having pandered to the bankers. The backward irony of the story is that Germany will in no way whatsoever hand over Gold bullion to stabilize a system it finds revolting on a beneficial one-way street. Instead, the more likely scenario is that PIIGS nations might be forced to relinquish their central bank Gold in order to remain in the EuroZone, in order to receive continued government debt finance, and in order to avoid an economic collapse. That or they forfeit large tranches of their asset base. Some Gold could in fact be transferred to China in exchange for their sizeable investment in discounted PIIGS bond purchases. See the Zero Hedge article (CLICK HERE).

The cynics point to the Libyan gold plundered by the Western banks. A total of $90 billion in Qaddafi funds was frozen, surely never to be thawed. It included some gold. War was the cover cloud, and freedom was the battle cry for theft. Conclude from the shrill bold audacious calls for German Gold to be confirmation that Gold is money and nothing else, a firm counter to fiat money that is actually denominated debt masquerading as legal tender. It is the agent of price inflation and wealth confiscation. Gold is pure wealth untainted by human contract.

◄$$$ JAPAN PURCHASED A SIZEABLE 10% BLOCK OF THE EUROPEAN BAILOUT FUND NEXT INSTALLMENT. JAPAN MUST NOT WISH TO HOLD MORE EURO EXPOSURE, WHILE AT THE SAME TIME THEY WISH TO PREVENT THE YEN CURRENCY FROM RISING TOO MUCH. JAPAN PROTECTS ITS EXPORT TRADE MORE THAN ANY OTHER NATION. $$$

The Japanese Ministry of Finance confirmed the purchase of 10% of bonds issued by the EuroZone official rescue fund. Japan purchased EUR 300 million (=US$413 mn) of bonds issued by the European Financial Stability Facility. Do not be impressed, since their purchase is the smallest to date from the fund. European leaders have not been successful in drumming up increased investment for the fund to aid the nations burdened by grand debt levels. In the past, Japan has bought bonds from the EFSF on three occasions, taking in EUR 2.975 billion. The new installment is relatively small and minor. The first EFSF installment a year ago resulted in Japan gobbling up 20.5% of the total bond launch, then later 22.0% of the second tranch. They also devote hundreds of $billions in massive strokes toward currency market intervention.

Clearly Tokyo wished to appear cooperative but not commit anything of substance. Here is the rub. Decisions have been driven by the status of Japan's foreign exchange holdings. They are extremely USDollar heavy in their reserves. Therefore, unless Japan sold USTBonds, the amount of money it has to invest in Euros would be limited. They seem unwilling to accept more cross currency risk, as in investing in Euros. Furthermore, Japanese decisions are motivated to support its export market in Europe. The recent shredding of confidence in the EuroZone debt extended to the Euro currency. Many investors dumped their Euro holdings and bought the Yen, especially Asians seeking safe haven near home. The Yen has surged on the FOREX market in recent months, making multi-year highs. The ultra-strong Yen harms the Japanese export driven economy, making goods more expensive to foreign buyers. It also reduces profit margins for exporters. The same phenomenon is at work with China, which resists a rising Yuan currency. Geopolitics mixes with economics. See the BBC article (CLICK HERE).

◄$$$ THE JAPANESE YEN CURRENCY IS READY TO JUMP STILL MORE. IT SHOULD FILL THE GAP AND REPEAT THE REBOUND LIKE IN AUGUST. JAPANESE FINANCIAL FIRMS ARE GRATEFUL FOR THE OPPORTUNITY TO DUMP USTBONDS AT A HIGHER EXCHANGE RATE. JAPANESE EXPORTERS ARE WORRIED SICK AS TRADE SUFFERS. THE BANK OF JAPAN IS WASTING MONEY, FLAILING IN FULL VIEW. $$$

In the last 18 months, the Toyota market share in North America has fallen from 17.0% in 2009 to 12.8% in 2011. The  Honda market share has fallen from 10.9% in 2009 to 9.4% in 2011. A combination of natural disaster impact, higher Yen, and global recession is the cause. The massive late October intervention by the Bank of Japan was estimated at least $50 billion, roughly equal to the early August intervention. However, history reveals such displays, however ostentatious, to be fleeting in effectiveness. More wasted money, mere subsidies for firms wishing to exit, given a better price. The rebounds are quick and powerful, since the result of the action is to offer an even better price to those parties seeking to sell whatever they sell, or buy whatever they buy.

In this case, the Japanese financial firms are selling USTBonds and US Stocks, even as Asian firms are retreating to the secure trench of Yen-based havens. They respond to reconstruction concerns and safe haven pursuits. If the J-Yen rises to the 131 level, which seems a very good bet given the momentum behind the gap filling process, the major central banks will be put on alert again. The directive theme has been Global QE, as all central banks will attempt to coordinate currency debasement. The gap of 128 to 132 will fill entirely, even to provide some strong upward momentum to clear 132 before year 2012 is too far along. Japanese strength and industrial muscle is too much for the gutted USDollar to resist. My forecast has been for simultaneous monetary expansion in all major currencies so as to hold the FOREX exchange rates as stable as possible, to minimize the disruption to those exchange rates, and to keep the USDollar as elevated as possible to prevent the global commodity costs from rising. That is Global QE. Recall the Jackass forecast in April, that the J-Yen would rebound with gusto and recognized force. It did exactly that, and BOJ intervention will not stop it.

◄$$$ THE BIGGEST AND MOST IMPORTANT DANGER SIGNAL FOR COMPLETE ERUPTION OF THE EUROPEAN FINANCIAL CRISIS IS THE ITALIAN SOVEREIGN BOND. THEIR YIELD SURPASSED THE 7% MARK TO SOUND GREAT ALARMS. THIS LEVEL IS THE RECOGNIZED CRISIS RUIN SIGNAL. THE BOND YIELD HAS ZOOMED UPWARD IN RESPONSE TO HIGHER MARGIN REQUIREMENTS. ITALY IS THE NEXT GREECE, WHICH WAS A CRISIS PRELUDE. $$$

The Italian Govt Bond yield remained for 40 days above the 5% mark before it hit 6% two weeks ago. Its rise has accelerated, as the panic widens. The Italian yield suddenly surged past 7% with haste last week, reaching 7.5%, setting off shrill alarms. The Italian leadership is in question, its Prime Minister to be a victim. The 10-year yield went below 7% only because of heavy emergency buying by the Euro Central Bank, against their stated wishes. The Italian banks are far weaker than they reveal. The next PIIGS domino is soon to fall. Formal requests for bond relief are sure to come soon, since the costs are so much higher on rollover. Expect glaring Italian bond auction failures. The IMF has been busy pressuring the Italian Govt for spending cuts and formal plans, even sending teams to confer with officials in Rome. See the Bloomberg link for monitor of the yield (CLICK HERE). Look for a series of failed Italian Govt Bond auctions, where debt cannot be rolled over, occurring very soon, despite the EuroCB hand on the bid. Many analysts point to the one third of a trillion Euros in debt that Italy must refinance by end 2012. The crunch time comes much sooner, like within weeks, like the next auction. That failed event will force the issue with the new Draghi EuroCB, which must cover the debt or watch the European Monetary Union crumble in a sea of fire. The central bank must make overt commitments of magnitude. If the crumble happens upon inaction, expect 20 Lehman events with numerous bank failures, starting with France.

Italy borrowing costs soared to a record 7.5% in midweek. The 7% level is widely regarded as unsustainable, the point at which Portugal, Greece, and Ireland were forced to seek a bailout. The announced future resignation of Prime Minister Silvio Berlusconi after passage of budget reforms went over poorly. The more critical push of their bonds off the table came from the LCH Clearnet decision to hike margin requirements on Italian Govt debt, to cover the increased risk of non-payment. They serve as a clearing house for buying and settling debt. The margin was raised from 3.5% to 7.15% on 2 & 3 year bonds and from 6.65% to 11.65% on 7 & 10 year bonds on November 9th. Forced selling ensued. An inversion has occurred, as the 1-year bond had an 8% yield versus the 7.5% yield on the 10-year bond.

The market is stating that Italian Govt repayment of rollover debt is in crisis mode, highly unlikely. Italy must roll over more than EUR 360 billion (=US$490 bn) of debt before end 2012. The borrowing costs for Italy have become highly burdensome, if not crippling and destructive. Italy has been thrust front & center as the next crisis zone, the next killing field, in the unfolding two-year long debt crisis. The debt rollover in upcoming auctions stands as the immediate event to watch. The BBC business editor Robert Peston put it well, saying "No one wants to lend to a country when that country would use the loan to pay the interest on previous loans. That is throwing good money after bad." A team from the European Union has descended upon Rome to monitor how Italy plans to cut its soaring ongoing festering debt burden. The Italian Parliament must work to approve a package of budget reforms by the end of November, something it has been unable to do in the past ten years. Even if it succeeds, the austerity measures will constitute more poison pills that assure a faster economic recession from cut projects, more unemployment, and hostile response by the public, like worker strikes. See the BBC article (CLICK HERE). Recall Jackass comments made a year ago. The prevailing opinion was that Italy had favorable debt ratios, like cumulative debt to GDP, like annual deficit to total budget. My objection was that ratios mattered little, when the required debt volume to finance was too large in a crisis filled bond market. My forecast was for Italy to erupt along with Spain eventually. That viewpoint has turned out to be correct.

Goldman Sachs warned that Italy might undertake unilateral decisions such as seizing banks or limiting bond market sales, effectively holding investors captive, if officials feel boxed in. The crisis has triggered a lethal dynamic which will render impossible the Italian Govt to roll over debt. In the process, the European formal bailout fund has been demonstrated as toothless and puny, actually under-funded by a factor of three to five. Professor Giuseppe Ragusa from the Luiss Guido Carli University in Rome called the EFSFund basically doomed to be worthless in his words. Its shifting mandate and squabbles over funding, even leverage, made it a marginal force. European Central Bank  member Jose Manuel Gonzalez-Paramo issued a blunt warning that Italy can expect no white knight, as the ECB is not a lender of last resort, bearing no magic wand. The discussion in recent weeks to expel Greece from the monetary union might have set in motion a sequence of events which could have started a run on sovereign bonds and bank stocks in peripheral countries. What comes next is the full blown disaster.

◄$$$ BARCLAYS HAS DECLARED THAT ITALY IS FINISHED KAPUT. THE NEXT GREEK RUIN ON THE PLAZA SQUARE IS HAPPENING IN ROME. THE BOND MARKET IS REJECTING ITALY LOUDLY. ITALY HAS DRAGGED ITS FEET FOR TWO MONTHS, REJECTING WARNINGS, REFUSING BUDGET CUTS, WHILE ITS PRIME MINISTER HAS GIVEN DEFIANT MESSAGES LOADED WITH DENIAL. TIME HAS RUN OUT ON ITALY. WATCH FOR FRANCE TO CATCH THE VIRAL CONTAGION, BEING A MAJOR CREDITOR. THE EURO CENTRAL BANK IS THE ONLY BUYER OF ITALIAN GOVT BONDS. THEY ARE THE FOCUS FOR ACTION. $$$

The only people in Europe more volatile emotionally than the Greeks are the Italians, by a wide margin. They will take to the streets and release tremendous emotions against the system run by bankers. Europe is on the verge of exploding. When Italy erupts, it will spread to France first as its primary creditor, and quickly to Spain. The nation of Spain is not in the news at all, but it will be next year, just like Italy with the same type of problems, but compounded by a bigger housing bust. The research staff at Barclays in London has declared that Italy is formally finished and cooked, as they put it "Italy is now mathematically beyond the point of no return." The Greek tragedy has finally struck Italy. The austerity measures will be fought on budget spending, and riots will ensue in Rome and other cities, just like in Greece. Expect them to be much more violent, an Italian tradition where innocuous brands of communism have splintered roots. Notice the last item, as the Euro Central Bank already stepped in to purchase Italian Govt Bonds last week. See the Zero Hedge article (CLICK HERE). Summary from Barclays Capital:

  • At this point, it seems Italy is now mathematically beyond point of no return
  • While reforms are necessary, in and of itself they will not be enough to prevent crisis
  • Simple math, how growth and austerity is not enough to offset cost of debt
  • On our tests, yields above 5.5% make an inflection point where game is over
  • The danger: high rates reinforce stability concerns, leading to higher rates
  • Deeper conviction of a self sustaining credit event and eventual default
  • Decisions at the EuroZone summit put a step forward but EFSF is inadequate
  • Policy reforms are not sufficient to break negative market dynamics
  • Investors do not have the patience to wait for austerity and growth to work
  • Rate of change in negatives is insufficient to offset the slow drip of positives
  • Conclusion: The EuroCB needs to step up to the plate, print and buy bonds
  • The ECB remains unwilling to be lender last resort on scale needed
  • The central bank will be forced by the bond market, given massive systemic risk.

Independent gold analyst Jim Sinclair offered his perspective. He wrote, "The big problem: Berlusconi does not seem like he is in an urgent mood to make reforms. The ECB is not doing much. And China and Brazil have dropped out of the picture. Hence we could get a big bustup. For us there is no obvious near-term solution other than a stress event which prompts action. Maybe the EU authorities will use the experience learned from the Greece situation last week that a hard line response is the only way to force countries to act in the way they want. It is a big risk but at the moment the weaker countries seem to still want the Euro enough that the ECB and Germans could play hard ball and get what they want, if they are prepared to take the risk. Indeed ECB Governing Council member Yves Mersch fired a warning over the weekend saying that the ECB often discusses the possibility of ending the purchase of Italian government bonds and could, if it concludes Italy is not adopting promised reforms. Such talk will not encourage private capital into Italy, meaning that the ECB may need to intervene more to have the required impact." Italy is isolated and burning. Berlusconi has agreed to step down as soon as austerity budget has been passed. He has done so, to be replaced by an elite technocrat with too many connections to the same Syndicate of viper bankers. The government in Rome is in total disarray.

◄$$$ AN INVISIBLE BANK RUN IS OCCURRING IN ITALY. THEIR BANKS ARE TRAPPED, ATTEMPTING TO DE-LEVERAGE ON A PERILOUS TIGHTROPE. THEY HAVE DEVELOPED A BIG DEPENDENCE ON EURO CENTRAL BANK FUNDS. THE CDSWAP MARKET INDICATES AN EXPECTED ITALIAN DEFAULT. NEXT THE BANK DEPOSITS WILL EXIT. $$$

Italian banks have grown dependent on the European Central Bank. They borrowed EUR 111.3 billion (=US$152 bn) from the central bank at the end of October, up from EUR 104.7 billion in September and EUR 41.3 billion in June, as per Bank of Italy data. The five biggest lenders accounted for 61% of the country's draw on ECB funds in September, double that of January. The banks include UniCredit, Intesa Sanpaolo, Banca Monte dei Paschi di Siena, Banco Popolare, and UBI Banca. A quip quote came from Alberto Gallo, a credit strategist at Royal Bank of Scotland in London. He said "The banks are de-leveraging on a tightrope." They must reduce their debt load in a highly dangerous bond environment marred by distrust and volatility. The decline in Italian Govt Bonds has rendered great damage to the private banks, reducing their reserve ratios and eroding loan collateral to regular business credit. The Italian banks are trapped in the Italian sovereign debt securities.

The austerity plans being forced will ensure a recession, thus even more losses for the banks. The run on Italian banks is just beginning, to become more visible in a couple months. The bond market expects some calamities. The CDSwap tied to the senior debt of UniCredit (largest) jumped 150 basis points in November to 502 basis points, back toward the record reached in September. They serve as the bellwether. Debt insurance contracts on Intesa Sanpaolo (second largest)  jumped 129 basis points to 467 bpts. Data is from CMA in London. The market anticipates a default event in Italy. It is assuming that Italy will fail. The next slam for the Italian banks is removal of depository funds. Despite a supposed solution in Ireland, the annual rate of decline in Irish private sector deposits was 10.5% by end September. In Greece, deposits fell in September for a whopping net outflow of EUR 6.29 billion, the largest monthly exodus in two years. The decline in balance sheet assets and removal of deposit funds work to kill the banks. See the Business Week article (CLICK HERE).

◄$$$ THE POLITICAL AND BANKING LEADERS MUST FACILITATE THE DEPARTURE OF GREECE FROM THE EUROPEAN UNION. THE TEMPLATE WILL BE USED FOR ITALY AND SPAIN NEXT, PERHAPS EVEN FOR FRANCE. LIKE A MOUNTAIN CLIMBER WITH DEAD WEIGHT ON A CORD, IT MUST BE CUT TO SAVE THE STRONGER CLIMBER ABOVE. $$$

European bank leaders prepare a path for Greece to exit the Euro currency. They are resigned to its inevitable departure, or better yet expulsion. Greece must leave, since it drags down the entire European Union. When it does leave, the impact will be like a powerful earthquake to the banks, whose executives are the only players insisting on continued bailouts and bank aid. Merkel has opened Pandora's Box on the Euro exit for Greece. The event driven scenario will soon show its course, without many possible deviations. Dominoes will fall. As leaders attempt to erect firewalls against the assured killing field for banks, control will be lost.

◄$$$ THE EUROPEAN BANKING SYSTEM IS TOPPLING. IT CANNOT BE STOPPED. GREAT CONTROVERSY WILL RESULT. MOST LARGE BANKS ARE POSTING HUGE LOSSES FROM GREEK EXPOSURE. THE NEXT ROUND OF LOSSES FROM THE OTHER P.I.I.G.S. NATIONS WILL BE AN ORDER OF MAGNITUDE LARGER. $$$

European private banks are dumping sovereign bonds, hampering the already strained market. They are forced to comply with tougher newly enforced reserves requirements. They are fighting to survive, but exposing the sovereign bonds as junk. The private banks must be disentangled from sovereign bond infection. The Euro Central Bank will soon become the major holder of such toxic bonds. Their balance sheet is in ruins, just like the US Federal Reserve. The bond yields are rising across Europe, including France. Watch Italy with focus. Old real estate debts drag down European banks, just like in the United States. But their sovereign debt assets double the damage and assure massive wreckage. The counter-party guarantor risk further amplifies risk, especially to Deutsche Bank, which is ruined. Expect 20 Lehmans to appear in Europe, and five more in the United States. No bailouts can save the affected banks. The entire system is collapsing without potential remedy unless all major banks are liquidated, and that will never happen. At the heart of the vulnerability is the fractional banking system itself. Insolvency arrives quickly and only worsens until a run occurs. Then comes rampant bank failures.

France introduced austerity, a surefire time bomb for the big banks that teeter in Paris. Its banks bear the largest load for Italian Govt debt, more than double the German load and almost half the entire European load. France is tied with the lethal umbilical cord from Italy. The Dexia exposure to Greece and Italy has been detailed. German banks are not immune from big losses, nor immune from the financial crisis. Commerzbank suffered a big loss, typical of the German banking sector. With all the attention last month given to the big French banks, the weak links inside the German banking system are only recently coming to light. They are less but still sizeable.

US banks are deeply exposed to European Govt debt default insurance. The risk is not offloaded, but rather shared and joined. The risks are rising astronomically for American banks, while large commitments are made, and partnerships are formed. The US press blithely reports a condition of near immunity of US banks from the financial crisis separated by an ocean. Great controversy lurks on insured debt. The bank leaders have attempted to redefine debt default, as part of the bailout fund negotiations. This is the latest deeply corrupt practice, with some objection showed by the major debt rating agencies. Any loss of original debt security terms is a default, whether voluntary or blessed by the elite cartel. Expect court action and lawsuits in response. Another angle is being covered, whereby redenomination of debt in another currency is also declared not a default event. Great lengths are being taken, for a simple reason. A string of Credit Default Swap claims on debt default would expose the entire market as corrupted and under-funded by a wide margin to honor claims. With defaults, all the big banks would die in a flash. This is huge issue not addressed that invalidates an entire market. If sovereign bonds cannot be hedged effectively and predictably, the bond yields will rise fast from lack of demand. Watch out below for Italy. European banks will suffer losses without buffers that were expected to serve as hedges.

GREEK EXPULSION & END OF DEMOCRACY

◄$$$ MEMBERSHIP IN THE EUROPEAN MONETARY UNION ALMOST CAME TO A VOTE, BUT THE REFERENDUM WAS SEEN AS DISRUPTIVE TO THE BANKER ELITE LONGSTANDING STRATEGY. DEMOCRACY IN GREECE IS DEAD. THE REFERENDUM HAS BEEN AVOIDED, SINCE THE PEOPLE WOULD REJECT FURTHER BAILOUTS OF BANKS AND CONTINUED ELITE COLONIALISM. PAPANDREOU IS GONE, THE COMPROMISE FROM THE FOREGONE REFERENDUM APPARENTLY. $$$

Crisis management in Athens has taken a toll. The Euro membership for Greece almost was put to a vote, where the people could have decided. But politics prevailed and banker elite continue to rule. Give Papandreou credit for seeking to walk down the democracy path, but take that credit away as he yielded to political pressures, the banker overlords looking on, pulling chains. European leaders have finally raised the prospect of the domain of common Euro usage splintering. The Greek Prime Minister had taken steps to turn the national referendum in December into a vote of exit from the monetary union, and refusal of the strict bailout package laden with hooks to the elite forces. The people almost had a voice to be heard in the process. Perhaps the financial markets trumped the people, by reminding them that horrible conditions could turn into a living hell nightmare. But the opportunity was snatched away. Departure would cause trade to fall by half before the impact of any devaluation enabled a stimulation. Leaving the Euro would permit Greece to regain control of a Drachma exchange rate. It would force the creation of a Greek central bank again to determine interest rate policy. But it will cause chaos when it comes. See the Bloomberg article (CLICK HERE).

The French and German bank exposure to Greece has been beaten to death in the last year. While the Italian exposure makes for fresh juicy reading, the Greek nightmare lingers seemingly forever. A UBS economic research report claims borrowing costs would rise temporarily until some equilibrium set in. Once again, the French are the biggest bagholders of Greek debt, with a whopping $55.8 billion, of which $10.7 billion is sovereign debt. Add another $43.5 billion from Credit Agricole's Greek division, namely Emporiki Bank. That sums $100 billion in total French exposure, mostly to its private sector. The Germans hold $12.4 billion in Greek Govt debt, plus another $10.0 billion as part of the FMS Wertmanagement bad bank from the nationalized Hypo Real Estate Holding fallout. The hooks lie under the table in German bank linkage, as collateral asset seizures seem the norm all along.

◄$$$ DEMOCRACY IN GREECE IS DEAD, A VICTIM OF DEEP DEBT. THE REFERENDUM HAS BEEN AVOIDED, SINCE THE PEOPLE WOULD REJECT FURTHER BAILOUTS OF BANKS AND CONTINUED ELITE COLONIALISM. PAPANDREOU IS GONE, THE COMPROMISE FROM THE FOREGONE REFERENDUM APPARENTLY. $$$

George Papandreou took a gamble on the democratic option of hearing the people. The impact was anticipated, and it was powerful. The political arena in Athens is fractured, with splinters and chards and smoke from burned paper forcing the Prime Minister out. The country is ripped apart, torn asunder by the Euro currency knife. It struggles to maintain funding and to hold onto its prized assets. The bold idea from outgoing Prime Minister was to solicit a referendum, but it surprised his European partners as well as his own coalition lieutenants. Financial markets were roiled by the vote concept, and they were roiled again by the scrub of the vote. The vote served as symbol for Greece caught between a rock and hard place. Papandreou's ideals were the victim, along with the people's voice, each smothered within the dispersing chaos. The European leaders reacted by cutting off financial aid for Greece, pending the outcome of the referendum.

The referendum served to crystallize the EU leader decision to halt the aid process entirely, and bring an end, or at least a freeze. Papandreou had struck an accord in Brussels at the end of October, a deal that assured Greek funding aid but with a 50% bank writedown on Greek debt. An important break took place, as the Greek Finance Minister Evangelos Venizelos declared the country should safeguard the foreign financial aid by abandoning the vote. That essentially cast the prime minister to the wolves, and he was deposed. He misjudged his own coalition and ministerial support. Papandreou nobly claimed he did not care if forcing through unpopular choices to save his country cost him his post. He would lose his job either way. See the Bloomberg article (CLICK HERE).

◄$$$ THE BIGTIME BANKSTERS ARE TAKING DIRECT CONTROL OF IMPORTANT POSTS. THEIR PEDIGREES ARE CLEAR FOR ALL TO SEE. THE SYSTEM REFERS TO THEIR BACKGROUND AS AN ADVANTAGE, BUT THE ELITE ARE FILLING OTHERWISE DEMOCRATICALLY APPOINTED POSTS. DEMOCRACY IS BUT A CONGAME AND GRAND ILLUSION. $$$

Mario Draghi has taken over as chief of the European Central Bank as of November 1st. He was vice chairman and managing director of Goldman Sachs Intl. He was the Italian Executive Director at the World Bank. He has been a Fellow of the Institute of Politics at the John F. Kennedy School of Govt, within Harvard University. Lucas Papademos takes over on November 10th as Prime Minister of Greece. He was an economist at the Federal Reserve Bank of Boston. He was a visiting professor of public policy at the Kennedy School of Govt. He was previously a vice president of the European Central Bank. He has been a member of the Trilateral Commission since 1998. The likely successor to Berlusconi as Prime Minister of Italy is Mario Monti. He did graduate work at Yale University, where he studied under James Tobin. He is a member of the European Commission. He is European Chairman of the Trilateral Commission and on the managing board of the Bilderbergers. Notice that none of these three men Draghi, Papademos, and Monti were elected by a democratic process. The process has seen no vetting, no debate of policy, and no scrutiny over past records or associations. The press seems to call them technocrats, genuflection being the norm, as they step forward to provide urgently needed relief to the public. Experts have taken control. The Italian Parliamentary leaders are furious over the outside interference in forcing Monti into power without even internal elections to form the working coalition. They point the anger at Sarkozy in France, the point man for pressuring President Napolitano. The banker power merchants made their impact, the resentment very deep. See the Le Nouvel Observeur article in French (CLICK HERE).

In my opinion, democracy is but a hollow slogan to deceive the masses into thinking they are in charge and have a strong voice, when they are objects of control, mere human livestock units dangling on the end of wage tethers and withering inflation winds. Worse, the leaders in power are themselves low ranking conduits placed in authority by carefully crafted news direction and more alteration of election results than meets the eye. US Presidents appear from nowhere, with little experience, no track records, but favored by the press, for reasons that surface later or not at all since too rich in bloodline. Jimmy Carter was nobody, but he is the half brother of the Kennedy boys John, Robert, Edward, thus royalty in the camelot sense. Mother Lillian worked as father Joseph Kennedy's secretary while ambassador to England. Bill Clinton was nobody, but he is the grandson of John David Rockefeller, thus royalty in the affluent sense, well groomed. Candidates that obstruct the path are smeared, or directly threatened with an abrupt death, like Ross Perot was. Watch the Herman Cain smears, whether true or not. One must wonder if the Rick Perry candidacy serves only the wrecking ball purpose, since Cain's resume is like a superstar compared to the pedestrian flashy Barack Obama. The sitting US president has nothing on his resume except seven blank suspicious years, not a single piece of legislation to hang his hat on. Keep in mind that Herman Cain never spent time in Chicago during his career. Therefore it is curious that all the sexual harassment allegations against Cain originate from Chicago, home of Obama and his long-time advisor David Axelrod. More dirty politics to produce the weakest Republican opponent. Where is the dullard John McCain, who ranked #760 in his class of 770 at the Naval Academy, and who wrecked three aircraft in his flattop experiences, but whose father pulled many strings?

The Jackass has long thought that the next Republican candidate for President would eventually be the most bland, the most uninteresting, the most unimpressive to challenge Obama, whose rooted allegiance is pure CIA. The agency has taken control of the country since their project on 911 was put into action. They must produce a candidate as vapid, dull, and witless as John McCain. Watch them go to work on it, a tough task since the nation is mired in recession. Sadly, democracy is but a confidence game, as patriotism has been turned inside out, and economic principles are mere slogans shouted while the middle class vanishes as quickly as home equity, job security, pensions, even Madoff and MF Global accounts. Justice has become a whip, not a shadow cast by law. Anger hides my deep sadness. A special disgust is directed at the American press, which bears the same tinted roots as the big bankers and their narco baron masters. The press used to be a light of truth, but in recent years it is more a megaphone to shout over the truth, to hide the grandest crimes in the history of our nation committed in just the last 15 years, after Greenspan opened the floodgates to easy money and impunity for financial crime. Enough!

CENTRAL BANKS COORDINATE INFLATION

◄$$$ USGOVT MONETARY EXPANSION IS BACK IN FULL GEAR. THE COUNTERFEIT GAME IS RELIED UPON AS A SOLUTION TO NATIONAL INSOLVENCY. IT WILL NOT SUCCEED NOR STOP UNTIL THE DEBT DEFAULT. OUTSIZED DEFICITS ARE SET TO GROW, AND USTREASURY BOND ISSUANCE IS SET TO ACCELERATE. THE DEBT DEADLINE AGAIN APPROACHES WITHOUT ANY SUBSTANTIVE CHANGE TO THE BUDGET. THE USDEPT TREASURY WILL BE PRESSURED TO REQUEST USFED MONETIZATION (Q.E.) PRECISELY WHEN EUROPE ATTEMPTS TO ATTRACT HUGE BLOCKS OF BOND CAPITAL. RELENTING, THE USFED HAS DECLARED MORE STIMULUS IS BEING CONSIDERED. $$$

The USGovt plans to issue $846 billion in USTreasurys in the next 6 months. Recall the deficit last year was $1.45 trillion, and talking heads from the White House mentioned deficits would be reduced. They will not, as the Jackass forecasted. The foreign creditors are stepping aside, dumping the USTBonds under the clever Operation Twist cloud cover. The USFed remains the main buyer, pure hyper-inflation. The USDept Treasury released its schedule for Q1 (Oct-Dec 2011) and Q2 (Jan-March 2012) of fiscal year 2011. The amounts come to $305 billion and $541 billion, totaling $846 billion in the six months. The runrate will be $141 billion per month. Compare to the same quarters last year, when a total of $628 billion was issued. Thus the USTBond issuance is set to be 35% more than last year when the US Federal Reserve was monetizing all gross issuance. Bear in mind that Europe plans to compete with the USGovt, as it attempts to attract and soak up EUR hundreds of billions of fixed income targeted capital. The flat-footed Operation Twist will take care of long maturity demand. The current schedule is not even remotely sustainable without some form of Large Scale Asset Purchase program immediately on the horizon. It could be implemented with or without mortgage bond monetization. See the Zero Hedge article (CLICK HERE).

USFed Chairman Bernanke has admitted that more stimulus is on the table. He pointed the blame to a stubbornly high unemployment rate, thus forcing the USFed to take further steps to boost growth. The august body, center of the US financial crime syndicate, source of unapproved multi-$trillion grants to global bankers, cite of disclosure only after court order, mentioned the possible action to buy mortgage bonds as a viable option in their words. The Board panel cut their growth forecasts for 2012. The inexperienced diminutive bald professor declared the medium-term outlook relative to June projections has been downgraded and remains unsatisfactory. Clearly, the US central bank has run out of tools, and must rely upon devices that failed in the past and have resulted in a vast backfire in cost structure. See the Bloomberg article (CLICK HERE).

◄$$$ THE EURO CENTRAL BANK CUT THE OFFICIAL INTEREST RATE BY 25 BASIS POINTS. THE RATE CUT WAS A QUICK ACTION TAKEN BY NEW CHIEF MARIO DRAGHI ON HIS FIRST DAY IN OFFICE. LAGGING GROWTH WAS THEIR STATED REASON. DRASTIC ACTION IS NECESARY TO SAVE THE EURO CURRENCY AND ITS MONETARY UNION, NOT INCREMENTAL STEPS. DRAGHI WAS CLEAR THAT HUGE BOND BACKSTOPS ARE NOT IN ORDER. THE EUROCB CAN ONLY BUY TIME, AS THE RECESSION WORSENS, TOPPLING THE BANKS. $$$

Mario Draghi began office on November 1st and took swift action, but it seemed incremental and slight. Drastic action is urgently required. The 25 basis point rate cut to 1.25% worked to reverse the Trichet rate hike ordered into effect several months ago. While Trichet was fighting price inflation, Draghi fights economic recession in the 23-member Governing Council. More importantly, the new EuroCB head indicated clearly no plans to backstop the sovereign bonds from Southern Europe that are turning toxic quickly. Speaking in Frankfurt, he said defiantly "We are observing slow growth heading toward a mild recession. What makes you think that becoming the lender of last resort for governments is what you need to keep the Euro region together? That is not really in the remit of the ECB. The remit of the ECB is maintaining price stability in the medium term. [The ECB bond purchase program is] temporary. It is limited in the amount, and it is justified on the basis of restoring the functioning of monetary policy transmission channels." The words by Draghi seem hollow already, as they stepped in to buy Italian Govt Bonds last week. Credibility of central banks is near shoetop level these months, with justification.

One might wonder how his position openly changes as his home country Italy suffers a lockout in the bond market and zooming bond yields certain to crush the deficit refinance rollovers. As the regional economic slowdown deepens amidst shaky investor sentiment, the ECB was under pressure to reverse the last two rate increases. Expect another small rate cut within months, but it will matter little. The major risk is abandonment of PIIGS sovereign debt and a run on the Euro banks. Some will likely fail soon, starting with the big French banks exposed to Italy. Escalation of the regional debt crisis is gathering momentum and intensity. Pressure to formally purchase more toxic bonds will be acute. The EuroCB has gathered a total of EUR 173.5 billion (=US$239.4 bn). The shaky 17-nation bloc that lives under the common Euro currency is destined to break apart. Its fate rests in large part on decisions made by the EuroCB under Draghi. In my view, he can only buy time. Bailouts and austerity measures put forth in budget cuts will not prevent the recession from gaining powerful momentum. They will make the recession worse. National deficits will rise, not fall. The big Euro banks will topple like pine trees in a winter storm. Few analysts seem to factor in the civil disorder that is on the rise. The street riots could turn more violent and direct more heated emotion at the bankers. The economies will fall another 1% to 2% if rioting grips the major cities of Europe like they have in Athens. In fact, Rome has already seen some street violence. Expect more. The Italians are the most outwardly expressive among all Europeans, especially with their hands. The only class of people more volatile emotionally than the Greeks is the Italians, by a wide margin. They will take to the streets and release tremendous emotions against the system run by bankers. Europe is on the verge of exploding. The Jackass lived in Naples for two years when very young, from which memories have stuck firmly.

Downward revisions in the EU Economy have been routine. Draghi will revise down his growth forecasts in the next December projections. Unemployment surprisingly rose for the first time in more than two years in October. The European manufacturing industry contracted for a third month. The OECD recently lowered its growth forecast for the United States and the EuroZone. While the current inflation rate in Europe is creeping upward, even past the ECB permitted limit, weaker growth is the higher priority in focus. Draghi proved he is a lousy economist like his brethren by actually stating that, "If sustained, sluggish economic growth has the potential to reduce medium-term inflationary pressure in the Euro area." Inflation has been and will always be a function of monetary expansion, money supply growth. That fact of life remains elusive to the heretics in high priest robes preaching false ideology. See the Bloomberg article (CLICK HERE) and the Business Week article (CLICK HERE).

◄$$$ THINK GLOBAL QUANTITATIVE EASING. THE AMERICANS AND EUROPEANS REQUIRE COMPLETE COOPERATION TO RECAPITALIZE THEIR BANKING SYSTEM. FOREIGN CENTRAL BANKS MUST PARTICIPATE WITH AN EQUALLY SIZED FLOOD OF NEW MONETARY CREATION. $$$

Word is circulating widely of an announcement that the Intl Monetary Fund has warned Canada to get ready to do its own Quantitative Easing at the first signs of trouble. Translate that to mean they must prepare to print vast sums of money, buy vast sums of USTreasury Bonds, and contribute to the systematic and simultaneous ruin of their currencies. Trouble is surely coming when they include the vast nation in the Great White North with a small population, but loaded with huge minerals and resources. If the Western bankers are to avoid a sudden grand decline in the value of the USDollar or Euro currencies, they require an equivalent flood in the minor currencies. Witness Global QE, which will assure all currencies fall in value, rather than just the USDollar and Euro. The key is the US$, which if it falls much, will raise the cost structure for the entire world. So essentially, the Western bankers are demanding that Australians, Brazilians, Japanese, and many other nations erode their entire wealth, so that the global cost structure does not rise too much. This is not progress, but rather socialist monetary policy to share the misery in a grand process of wealth destruction and lost standard of living. At the core has been the theft by Wall Street banks, the lunacy of the housing bubble as an engine of wealth, vast social net systems that nationalized entitlements as well as financial toxic vats, and the US wars for private profit and narcotics enterprise development. The Australians, Brazilians, Japanese, and other nations are being solicited to share in the fraud, lunacy, and entitlements. In time, they will say no more!! Then the United States will find itself further isolated.

◄$$$ JAPAN INTERVENED IN LATE OCTOBER. JUST LIKE IN EARLY AUGUST, THE BENEFIT TO BE TEMPORARY AND FLEETING. THE DESIGNED INTENDED YEN DECLINE WAS TO AID THE EXPORTERS IN JAPAN, A LARGE IMPORTANT SEGMENT. THIS IS THE THIRD BIG INTERVENTION. LIKE THE FIRST TWO, THIS LATEST ATTEMPT WILL FAIL. THE J-YEN WILL SOON BE ABOVE 130 AGAIN, CAUSING GREAT TURMOIL IN JAPAN. THEY WILL CONCLUDE THAT NOTHING CAN STOP THE RISING YEN. A VERY SLUGGISH ECONOMY IS THEIR FATE. THEY MUST RELOCATE A SIGNIFICANT PORTION OF THEIR INDUSTRY, AND RAMP UP OUTSOURCING LIKE IN CHINA. RECESSION AND STALE GROWTH ARE COMING TO THE JAPANESE ECONOMY. $$$

Another mammoth intervention was done by the Bank of Japan. If it does not work in April, does not work in August, do it again, bigger than ever. They follow the US lead on repeated failed policy action. The response from at least $50 billion in USTBond purchases was over a 4% one day gain in the USD/Yen exchange rate. The Finance Minister Jun Azumi claimed to act alone but informed other central bankers of decisions. Their action is not a single shot, but to continue in a chain. He promised like a clown to step into the market, unaware that it cannot succeed. The huge action came days before the G-20 Summit in France. Dealers claim a similar size in purchases compared to the August 4th move. The impetus came from the J-Yen rising to reach the 132 level, a historical high. The world's third largest economy is in danger of its vast industry and components sector losing profitability. Either price goes up for foreign customers, or price is subsidized in a manner to remove all profit margins from the Yen rise. Tokyo ministers wish to influence G-20 leaders, to convince them of the strong Yen threat, but those nations could benefit from relocation of Japanese industry. They wish for significant Japanese export of technology, where it can be given free to nations in partnership. So expect deaf ears. One major factor behind the Yen rise is the $250 billion reconstruction from the March earthquake and tsunami. The Japanese Economy has been recovering from the natural disaster, as companies swiftly restore production and supply chains. Other Asian firms recognize the rising Yen trend, having turned to the Japanese havens for safety after the European sanctuary turned toxic.

The Honda Motors CFO Fumihiko Ike expects little impact. He said, "Frankly, my reaction was 'FINALLY THEY INTERVENED.' But I am also aware that a solo intervention has a limited impact. Will we be able to keep these levels? I am not at all hopeful." Almost no Tokyo asset managers expected any lasting effect either, but some expected more central bank action to come. The Bank of Japan governor issued a bland rote comment about currency market stability. A curious factor deserves comment. The Yen exchange rate measured against a trade weighted currency basket (adjusted for inflation) is not far from its 30-year average. However, the Yen dollar rate is much higher, which is used by exporters in their earnings projections. Trade is usually denominated in USDollar terms for settlement. A case in point on relocation. Chipmaker Elpida warned it might have to move production overseas. The Honda CEO said the company would cut half its exports from Japan over the next decade because of the strong currency. The Bank of Japan is openly concerned about a hollowing out effect of their industry, and the impact on economic recovery.

◄$$$ THE NEW USDOLLAR IS BEING PLANNED. INFORMATION HAS BEEN SHARED WITH LARGE AND MIDSIZED US-BANKS. ITS LAUNCH IS EXPECTED TO OCCUR IN 12 TO 18 MONTHS. EXPECT A LARGE DEVALUATION AND VANISH OF MUCH WEALTH. THE OLD (CURRENT) USDOLLAR WILL NO LONGER SERVE AS GLOBAL RESERVE CURRENCY, NOR THE STANDARD FOR GLOBAL TRADE SETTLEMENT. BOB CHAPMAN REPORTS A NEW USDOLLAR IS UNDERWAY. $$$

Bob Chapman has reported some potentially important news. Whether its timetable is soon or distant, nobody knows since the path traveled is an event driven scenario. He broke the story three weeks ago. He claims to have received the information directly from people at the top of the banking profession, but from the leading mid-sized banks. He does not have a line of information from the top major banks. These mid-sized executive bankers attend meetings directed by the USFed and they pass details to Chapman. He reports, "The big US banks are being told to clear safe secure storage, because they are getting ready to print a new currency. It is not the Amero. It is a new Dollar, probably different from what you have already. It is underway. It may not be in the printing stage yet, but the plans are there. The USFed is expecting, as is the USDept Treasury, that the USDollar is not going to be the reserve currency of the world in about a year and a half, maybe less." The report is not specific, but the blueprint is clear that a response is planned for the death or rejection of the USDollar. See the Chapman weblog (CLICK HERE).

The Jackass reaction follows. Plans are being shared with mid-sized US banks, since they are subservient. They talk to mere mortals like Chapman since they too are mortals, ranking minions in the banking industry. A new USDollar is due to launch in 12 to 18 months, the American response to crisis. A very big devaluation comes in my opinion, complete with nasty price inflation in the domestic USEconomy. Built in will be considerable debt writedowns, perhaps directly applied, probably forceably to the foreign creditors with enormous resentment. Tremendous complications are involved, since the USDollar is used in global contracts and commerce, like trade settlement. The end of the USDollar is near. The beginning of the Third World Dollar is fast approaching. Its birth will be the final cold water in the face of Americans, all too sleepy for years, as they will awaken in horror. They will see their pensions, life savings, and more perhaps cut in half. Ramifications and impact will be broad, as a ticket to Third World will be issued and used without a choice. The initial devaluation might be 30% to 35%, but more loss is assured after time passes. My forecast is for a follow-up devaluation of another 15% to 20% after a period of time, like six to nine months. The deficits are too great, for both trade and the government budget. The hemorrhage will deal crippling blows to the new USDollar, which will not be supported by the printing press any longer. If in effect, the new USD will not be readily accepted for trade, since it will be toxic, a true reflection of the horrendous fundamentals for the USEconomy and USGovt. If in effect, financing the USGovt debt will not be easy, since the printing press will be mothballed. The domestic US interest rates will rise past 10% quickly, matching the true rate of price inflation. The price of food will double quickly, gasoline too, and all utilities. The reckoning will result in total 50% USD devaluation down the road 2 or 3 years.

The overall impact from birth of a new USDollar is its ticket to the Third World, a tourniquet on the US national neck. Some caution must be given concerning Bob Chapman. He is bold and intrepid, but half of his shocking calls have been nothing more than hot wind that passed to the desert hills. For three years, he has been warning of bank shutdowns and bank holidays. The Jackass has expected them eventually, but Chapman gave at least three such wrong calls. He has been alarmist at times, but his calls are surely contingency plans in the shadowy conference rooms where the elite meet and the security agencies map out logistics. At times Chapman seems to lack some comprehension of practical implications. But he does have some deep sources. The best approach for this information is to plan on it in the future, but that door might not open for some time. The timetable will be dictated by events, which are unquestionably turning more toward chaos and disorder.

NEXT FINANCIAL FRAUD CHAPTER

◄$$$ A PREAMBLE IS WARRANTED IN COVERAGE TO THE MF-GLOBAL FRAUD, THEFT, AND RAPE OF THE FINANCIAL MARKETS. A SACRED VIOLATION HAS TAKEN PLACE AGAINST SEGREGATED ACCOUNTS AND THEIR PARTITIONED SANCTITY. WITNESS THE SECOND STAGE OF THE GRAND AMERICAN FRAUD EXPOSURE. THE FIRST STAGE WAS THE SUBPRIME MORTGAGE FRAUD, WITH LEHMAN BROTHERS KILL, FOLLOWED BY THE T.A.R.P. FUND DISPERSAL, AND THE MORTGAGE CONTRACT FORGERIES. THE MF-GLOBAL THEFT EXPOSES THE LACK OF INTEGRITY IN THE FINANCIAL MARKETS, AND THE DEATH OF JPMORGAN, WHICH IS PLUGGING HOLES RATHER THAN PERMITTING A C.O.M.E.X. DEFAULT. THE FINAL STAGE COULD FEATURE A BANK HOLIDAY AND BACKGROUND HEIST OF PERSONAL ACCOUNTS. PRECEDENT HAS BEEN SET, WARNING GIVEN. NOTHING IS SAFE IN THE AMERICAN SYSTEM. $$$

John Roe of BTR Trading Group and James Koutoulas of Typhon Capital Mgmt in Chicago gave a fine opening argument against MF Global. They wrote, "The failure of MF Global has wide ranging consequences for the American economy and its bankruptcy is being handled in a manner that is making these consequences much worse than they need to be. The freezing of customer segregated funds is having a chilling effect on global financial markets. It also has a less obvious but significant impact on the day-to-day operations of farmers, mining operators, ranchers, and other commodity consumers and producers. The failure of MF Global directly contributed to the loss of approximately 2800 jobs or more during this period of already high unemployment. But, the unnecessarily slow speed of this bankruptcy process will cause the loss of even more jobs as it directly damages other brokerage firms, investment advisors, and commodity consumers and producers. In fact, the only person served by the current bankruptcy process is the Trustee who has already submitted bills to the MF Global estate at $891 per hour for his time and an average of approximately $500 per hour for his staff. This is the same Trustee that spent three years working on the Lehman bankruptcy and billed the estate over $160 million dollars despite not returning any customer funds. If this bankruptcy is managed the same way as Lehman's, it will be the end of the United States as a viable jurisdiction for commodity trading. Congress should use whatever power it has to prevent this from happening."

MF Global is a more visible, broad, deep episode than the Madoff Fund fraud and theft. The authorities never found the Madoff money because it was never lost. The money remains in Israeli banks located in Switzerland protected by anti-semitism laws. The total missing Madoff funds was reported to be $50 billion, when the actual total was closer to $150 billion. The MF Global missing funds are reported to be $650 million, when in reality the total is closer to $2 to $3 billion. MF Global has located $658.8 million in customer funds in a custodial account at JPMorgan Chase, which contained a total of $2.2 billion as of October 31st, including both the MFG money and customer funds, pure commingling of funds. This is a smoking gun. The close relationship with JPMorgan was immediately reported, complete with denials by the giant bank of no involvement. My belief is that JPMorgan stole the easily accessible funds placed too close to the action. Harbor doubts that CEO John Corzine will be indicted or serve prison time. The FBI is on the case. Their investigation will most likely be as effective as with Madoff, and recall they protected Goldman Sachs three years ago. A Russian man made off (play on words) with the Unix software used by GSax for insider trading that viewed incoming orders on the NYSE microseconds before the orders were executed. The FBI arrested the man, and the illegal trading trail went cold. In my view, the MF Global case will render irreparable harm to the US financial system on the commodity side. Countless professional traders and their firms recognize the threat to segregated accounts and their sanctity. Trust is gone. See the Cafe Americain article (CLICK HERE).

Safeguards did not merely fail, they were abused once more in a long list of fraud events. The Commodity Futures Trading Commission has failed on the job, while doing an excellent job for the syndicate in power led by JPM and GSax. The CME Group and the CFTC should have protected customer money in late October when it was clear the firm was in trouble. They did not. Notice CFTC head Gensler recused himself, since too close to Corzine, the former prominent figure who migrated into the syndicate shadow for duty after public service. The CFTC chairman Gary Gensler stepped back from the probe to avoid any appearance of a conflict of interest, since Gensler worked at Goldman Sachs when it was headed by Jon Corzine. This is another inside job in a long series of inside jobs. Corzine is an ex-US Senator, an ex-New Jersey Governor, and a former Goldman Sachs CEO. He will therefore not see a court or jail time. The story will be painted as an unfortunate event in a difficult market. The impact of lost confidence will possibly isolate the COMEX further. Thousands of Gold contracts will not be delivered. Influential customers are closing out their remaining accounts that have other clearing groups. Gerald Celente of the Trends Journal has been affected, his account with Lind Waldock owned by parent MF Global.

What has happened could be a critical step toward the ruin of the COMEX itself, and its transition into a Cash & Carry operation for precious metals. The USTBond trading is an entirely different animal since paper based, not a tangible product. The same violations are more subtle with the SPDR Trust in the GLD exchange traded fund. Cash in segregated accounts is not stolen. Rather metal in inventory is pilfered with COMEX blessing under CFTC oversight. JPMorgan clearly raided cash accounts, stole the money, and will go scott free unpunished. The next grand theft will likely be of private bank accounts during a system wide bank shutdown. Those who continue to trust the US banking system, and financial markets are deaf, dumb, and blind. Trust given after a financial coup d'etat is misplaced. The next losers do not deserve to be victims, but they should not be surprised. We could be seeing the early stages of a JPMorgan trip to to the morgue. The MF Global failure and theft is a game killer story.

◄$$$ MF-GLOBAL EXHAUSTED ITS CREDIT LINES, ACTING AS ANCHOR TO JPMORGAN IN DERIVATIVES TRADES, MY CONJECTURE. CASH IS BEING TREATED AS LESS SECURE THAN ACTUAL FUTURES POSITIONS INCREDIBLY. COMMINGLING OF FUNDS BETWEEN CLIENTS AND THE FIRM CONTINUED WITHOUT REGULATORY RESPONSE. TRADING ACCOUNTS AND POSITIONS HAVE BEEN TRANSFERRED, CASH NOT, WHICH MEANS STOLEN. OWNERS ARE ANGRY. INVESTOR CONCERNS WILL HIT WALLS. THE COMMITTEE TO SORT MATTERS OUT IS LED BY THE BIG US-BANKS. CASH ACCOUNTS ARE FROZEN, A HORRENDOUS DEVELOPMENT, AS FURTHER PROOF THAT  THE FUNDS WERE STOLEN. $$$

MF Global filed the eighth largest bankruptcy case in US history. The New York-based futures broker suffered a ratings downgrade and sudden loss of customers after revealing it had investments related to $6.3 billion in European sovereign debt, which caused the rupture. MF Global drew almost the entire $1.2 billion credit line revised last year to give it more liquidity. Its broker dealer unit borrowed $210 million of a $300 million secured credit line. JPMorgan is the agent to lenders who supplied credit for both loans. The Jefferies Group is involved, having underwritten a $325 million MFG bond offering in August. JCFlowers is involved, since Corzine serves as operating partner. JCFlowers is an affiliate of one of the largest MF Global shareholders, certain to be protected. My conjecture is that MFG acted on the flip side to derivatives trades executed by JPM. The debt insurance to European PIIGS government debt is complex, vast, and shady, totally unregulated. Each derivative trade has an anchor in the finanicial market. Like each Interest Rate Swap contract has a purchased USTBond as anchor. My belief is that MFG acted as obligatory patsy to place Greek, Italian, and Spanish Govt long bond trades in subservient service to JPM. Corzine signed up for a captain role in service to the syndicate, and was caught in the crossfire as victim. But he will never serve prison time, since no Wall Street executive ever does. JPM made big money on the PIIGS Credit Default Swap trades. MFG was its obligated counter-party, now dead. Just my view.

James Giddens is the trustee handling the liquidation of MF Global. Commodity customers have been told their collateral is held back until a probe into the complex cash movements formally establishes the size of the shortfall. His staff has finished transferring 50,000 commodity accounts to other brokers, releasing $1.6 billion in collateral. Under bankruptcy law, the Trustee must hold back enough collateral to cover a pro rata distribution of estimated claims to be filed. The commodities and securities customers will receive claim forms and filing instructions. Distributions will follow, possibly in increments, after claims are reviewed. The gang has been assembled, representing Wall Street but not the small guys. JPMorgan, Bank of America, and Wilmington Trust were among companies appointed to the unsecured creditor committee of collapsed futures brokerage MF Global. The interests of the big banks will be protected, the theft covered up. JPMorgan is the agent for a $1.2 billion syndicated line of credit to MFG. It was named to the committee despite also having a $300 million secured loan against the MFG brokerage unit, a position pitted against other unsecured creditors in an obvious conflict of interest. The client base is naturally very frustrated, certain to see their funds held up in bankruptcy court for 12 to 18 months. The CME Group is losing the trust of investors who use the exchange and expect their money to be protected, said a trader with $500,000 in a frozen MF Global account. The veteran trader since 1987 asked not to be named due to fear of reprisals. CME Group informed him the trapped money may be tied up in the bankruptcy proceedings. See the Bloomberg articles (CLICK HERE & HERE) and the Reuters article (CLICK HERE).

◄$$$ OUTSPOKEN BART CHILTON SUSPECTS A MASSIVE PLOY, IN AN HONEST OUTBURST. CHILTON IS NOT EXACTLY A WHITE KNIGHT. $$$

CFTC commissioner Bart Chilton calls the MF Global case a massive hide & seek ploy. The official query should be as much a cover-up as a true investigation. The CFTC has begun a review of futures brokers to determine if client funds are properly segregated elsewhere. The initial review will include between 10 and 12 futures brokers. Chilton said, "This is not just a lost & found inquiry. It is a full-on effort to get to the bottom of what appears to be a massive hide-and-seek ploy. It is a distinct possibility, some would say probability, that somebody has done something with the money, and that it is not going to be all of a sudden discovered with an innocent explanation. If that is the case, it is patently illegal. I do not know yet. Our investigation will uncover that. We are aggressively pursuing this." See the Bloomberg article (CLICK HERE). My view is that Chilton is the false public champion put forth, so that people can be led to believe that the corruption has a hard charging white knight. The Jackass maintains that the face of Bart Chilton is reminiscent of a Star Trek character.

◄$$$ JPMORGAN SLAPPED A LIEN ON MF-GLOBAL ASSETS. SO VICTIMIZED ACCOUNTS WILL BE MADE AVAILABLE TO THE THIEF WHO STOLE THEIR FUNDS. THE INSIDERS ARE WELL PLACED AND KNOW THE GAME. A FORMAL DANCE IS IN PROGRESS, WHERE THE PUBLIC IS AMATEUR. LACK OF COOPERATION HAS BEEN GIVEN BY MF-GLOBAL SO FAR. WITNESS A POSSIBLE HIDDEN DERIVATIVES MELTDOWN, AS THE EUROPEAN IMPLOSION HAS A CONDUIT TO THE UNITED STATES. THE STORY IS NOT TOLD THAT WAY, ONLY AS A LARGE FINANCIAL FIRM FAILURE, A FALLEN PILLAR IN THE FINANCIAL CRISIS. $$$

JPMorgan has pursued a lien on all MF Global assets in a bold move of criminality. MF Global with assets valued at $41 billion has five operating accounts, all with JPMorgan, which itself acts as agent and lender. Due to so-called setoff rights related to the credit line to MF Global, the giant criminal bank can place a lien on the entire balance. The major lenders have moved to protect themselves after a bankruptcy filing. JPMorgan made a formal statement in an objection filed in US Bankruptcy Court in Manhattan to a proposed cash management plan. Expect limits to be placed on the remaining cash. JPMorgan holds less than $80 million of the MF Global debt, among a $1.2 billion credit line to MF Global Holdings and a $300 million credit line to its broker dealer unit. With bold audacity, JPMorgan seeks hooks into MFG assets to protect its collateral, including proceeds of potential lawsuits, as well as reimbursement for its own legal fees in the bankruptcy. MF Global has asked to have until January 30th to report a full list of its assets and debts. The courts have been generous in granting time for MFG to complete its thefts and hide its tracks. JPMorgan refused to allow its collateral to backstop payment of the administrative expenses for MF Global bankruptcy process. In turn, MF Global asked for a set aside of $4 million for professional costs, citing challenges that existing assets are sufficient to pay for the costs of liquidation. Witness an elaborate dance on the visible stage, when theft goes on behind the curtain. Expect pennies to be recovered for cash account victims, or the funds eaten up by legal costs. The depth of American financial fraud is chilling.

Panic is reported behind the scenes, as the firm refuses to disclose information to regulators even during its death autopsy. Whatever MFG is hiding has a bearing and impact to those behind the corporate veil or even to banks and primary dealers. A vast fraud is being protected. Delays will be used to destroy evidence, move funds, and hide their tracks. See the Zero Hedge article (CLICK HERE). Rumors are powerful and swift that a global derivative implosion is in progress, whose momentum cannot be stopped. MF Global might be its center, with JPMorgan attempted to control the whirlwinds. The dominoes are falling fast. The $quadrillion derivative monster is unraveling. A sad lesson is that cash is not secure, nor is it a hard asset. It is nothing more than an electronic entry that can be heisted easily, once inside the current system. The European implosion has touched US soil, the story altered to obscure the connection. The US implosion continues without proper recognition. When the dust clears, people with money in the system will end up with nothing but empty accounts and legal expenses. The clarion call has been to move money out of the system, out of the United States, and into precious metals, only pure valid allocated accounts.

USECONOMY CAUGHT IN HOUSING WEB

◄$$$ FANNIE MAE EXTENDS ITS TIN CUP ONCE MORE, ASKING FOR $7.8 BILLION FROM THE USGOVT. ITS BAILOUT TOTAL HAS COME TO $112 BILLION FOR LIFE SUPPORT. THE BLACK HOLE WILL DEMAND MORE MONEY. IN FACT, ITS DERIVATIVES CERTAINLY REQUIRE MORE $TRILLIONS IN SECRET SLUSH, THE REAL REASON BESIDES BOND FRAUD FOR ITS NATIONALIZATION. $$$

Fannie Mae announced it will seek $7.8 billion from the USDept Treasury after reporting a third quarter loss, more than double the Q3 loss a year ago. The toxic vat agency had a net loss of $5.1 billion due to defaults on home loans made before 2009, plus derivative losses linked to a decline in interest rates. Their hedges on mortgage rates turned against them in declining long-term bond yields, as nothing goes right on this agency. The Q2 loss was $2.9 billion.The 3Q2010 loss a year ago was $3.5 billion. Losses are accelerating rapidly, due to falling home prices and continued loan defaults. No evidence of recovery here. The $7.8 billion in submitted aid request includes $2.5 billion to be repaid to the USDept Treasury due to dividends on the USGovt stake. The borrowing confirms the Fannie Mae line as endless, even though $17.2 billion in dividends has been returned. The total bailout debt to the taxpayers will escalate to a ripe $112.6 billion. They have been on life support since 2008, and incur growing $billion losses every quarter. No evidence of capitalism here either, pure socialism. See the Bloomberg article (CLICK HERE).

◄$$$ PROPERTY TAX COLLECTION IS FALLING, ADDING STRESS TO LOCAL GOVTS. RISING PROPERTY TAXES HAVE ELIMINATED THE BENEFIT FROM LOWER MORTGAGE INTEREST RATES. MEANWHILE, HALF OF AMERICAN HOMES WITH A MORTGAGE ARE DEALING WITH EFFECTIVE NEGATIVE EQUITY, A NEW TERM. $$$

State & local tax collections continue to rise, even though federal tax revenues have fallen 10% below the 2007-2008 peak. They cannot run budget deficits, and must raise taxes to cover their expenses. Property tax revenue might be down hard, but for those who are paying, the tax is actually rising while home values actually decline. State & local employment has fallen by more than half a million people since August 1998, as cuts have been brutal. Much of their spending had been linked to federal programs. Here is a shocking statistic and chart. On an aggregate basis, property tax payments have exceeded the total home mortgage interest paid. Interest had been almost double the tax, but they are dead even nowadays. Therefore, conclude that rising property taxes have wiped out the impact of lower interest rates and lower home prices on households. The property tax data includes commercial as well as residential taxes. More than two thirds of total property tax collections are from households. See the Asia Times article (CLICK HERE).

In 3Q2011, among single family homes with mortgages, those with negative equity rose to 28.6%, according to Zillow. The rise is sharp, up from 26.8% in Q2, as housing prices have resumed their decline. The wrecked portion translates to 14.6 million zombie homeowners. Many are behind on mortgage payments or in the foreclosure process, or else in danger of defaulting sooon. Next give thought to a concept raised by intrepid analyst Mark Hanson, regarding effective home equity. Many people cannot afford to sell and move. Consider that a home buyer must have at least 10% for a down payment, plus another 6% to cover the realtor fee. So one can practically conclude that the effective negative equity target would be 85% of home loan balance. Based on this extra load from down payment and realtor fee, over 50% of all mortgaged households in the US are effectively underwater. They are unable to sell for enough to trade down and move out. See the CNBC article (CLICK HERE).

◄$$$ A SLEW OF ADDITIONAL FORECLOSURES ARE COMING FOR US-HOMES, UP TO 10 MILLION MORE. DEBT FORGIVENESS IS THE ONLY SOLUTION, BUT A WEAK ONE. BANKS CONTINUE TO RESIST, AS THEY PREFER FRAUDULENT ACCOUNTING TO BUY ANOTHER DAY OR WEEK OR MONTH OR YEAR. THE HOUSING MARKET IS FROZEN BY LOW RATES, NOT STIMULATED BY THEM. $$$

A huge block of homes is on the edge of insolvency. Of the 55-million families with mortgages, 10.4 million of them are sliding toward failure and foreclosure, according to the analysis by distinguished economics journalist William Greider. His work will be published in the November 14th issue of The Nation magazine. The ongoing tragedy will depress the US housing market for years to come. Supply ramps up, while buyers are depleted. Greider said, "Economic recovery will have to wait until that surplus (excess houses) is gone, because the housing sector has always led the way out of recession. The more housing supply exceeds demand, the more prices fall. The more prices fall, the more families get sucked into the deep muddy. The vicious cycle is known in the industry as the death spiral. So far, there is no end in sight. [The solution is to] write down the principal they owe on their mortgage to match the current market value of their home, so they will no longer be underwater. Refinance the loan with a reduced interest rate, so the monthly payment is at a level that the struggling homeowner can handle."

Bank held inventory is frozen by the ultra-low rates. Banks can fudge their balance sheets on the value of held assets, but refinance the actual associated debt with the USFed generosity. Low rates therefore keep the banks from clearing inventory from easy bank finance terms. On the other side, fewer qualified buyers show up to make purchases. See the Before It's News article (CLICK HERE). Recall a point made by the Jackass periodically, and before 2007 many times. The USEconomy, lacking industry, relied upon the housing boom as an income generating source and an ATM for consumer spending. It was the last virtuous asset bubble. That reliance has backfired to kill the economy and the banking industry, precisely as predicted, played out in a vicious cycle described in my analysis.

Another vapid mortgage settlement deal is near. To be sure, it will be 100 times too small and be plagued by delays. Worse, only the least desperate will be aided, not the most in need. A mortgage setttlement deal could be signed before Christmas, but the gift would be small and to the wrong child. In other to be placed off the hook for countless mortgage fraud abuses, five major banks could be required by a court sponsored deal to commit roughly $15 billion toward principal balance reduction for struggling homeowners in loan modifications. They wish to settle charges linked to the so-called Robo-signing scandal, the blatant contract fraud scandal. The only remarkable part of the deal would be the first broad usage of principal writedowns. See the Calculated Risk article (CLICK HERE). The true requisition should be at least $1.5 trillion, one hundred times larger, if any remote dent is to be made in the aggrieved condition of affected homeowners, writhing in hardship. Make that $3 trillion. If this is a nation of the people, for the people, and by the people, then bring on price inflation only if valid realistic aid is given in spades. The bank sector aid, including $700 billion in TARP Fund aid, is lifted beyond $1 trillion when other support is added. When the grandiose homeowner bailout plan finally comes, the bill will sharply increase the USGovt debt, add to inflation markedly, but actually work toward a recovery path, even if rocky.

◄$$$ THE US-HOUSING MARKET REMAINS A TOTAL NIGHTMARE HELD DOWN BY PROFOUND NEGATIVE EQUITY. A GIGANTIC HOLE PERSISTS WITHOUT IMPROVEMENT OR SOLUTION. THE HOUSING MARKET WILL SERVE AS THE HANGMAN'S NOOSE AROUND THE USECONOMY'S NECK, LEADING TO SYSTEMIC FAILURE. $$$

The USEconomy cannot recover when its grotesque insolvency does not improve. While the ruined US banking system is exposed as the broken credit engine, the ruined US housing market is exposed as the body in the Intensive Care Ward. The Jackass forecast has been consistent for four years. The housing decline will be chronic, deadly, unfixable, and lead to systemic failure, ultimately to USGovt debt default. The dissenting views have been shallow, easily cast aside over time. The new supply of homes in foreclosure is ample. The job loss and insecurity is constant. The need to de-leverage the entire USEconomy is acute. The banks are overloaded with a surplus of homes held in inventory, not to dare test the market with liquidation sales. The home prices would fall suddenly by 20% to 25% and cause a national panic, a mortgage bond collapse, and a string of bank failures. So the market insolvency continues like a festering wound with open sores and pus in full view. No solution is coming or planned.

The total aggregate value of negative equity associatd with 11 million residential properties  in the United States is $710 billion. The proportion of homes with negative equity continues to rise, creating consumer zombies when the home has a loan balance greater than the home value. Negative equity can occur because of a decline in value, an increase in mortgage debt from interest accumulation, or a combination of both. Another quiet route has been excessive home equity withdrawal, like to cover college or medical costs. The soon to be negative supply is ample, the symptom of the chronic problem. In all, 2.4 million borrowers have less than 5% equity. Almost one third of American houses have the drag of negative or near negative equity. The homeowners are under burden, as over 75% of them are stuck in underwater properties with mortgage rates above the market. When in negative equity, the  borrowers cannot capture the benefit of the low-rate environment. There are nearly 28 million outstanding mortgages that have above market rates and are therefore not refinanceable. The disparity is even greater when negative equity is severe. More than 40% of borrowers with 125% or higher loan-to-value (LTV) ratios have mortgages with rates at 6% or above, compared to only 17% for borrowers with positive equity.

Negative equity homes act like a disease contagion at the local area. It restricts refinancing and also sales. Here is a remarkable data point. Since the 2005 sales peak, non-distressed sales in zip codes with low negative equity have fallen 61%, compared to an 83% sales decline in high negative equity zip codes. A sick nearby zipcode affects its neighbor. Areas are affected even if sellers have equity. Similarly, if a home foreclosure liquidates for a sharply lower price, the entire neighborhood is affected on sales price. The total amount of loss in real household wealth from 2006 to 2010 has been $12.4 trillion, 70% of which was due to home equity destruction. The process is nowhere complete. Highlights are grim. Nevada has the highest negative equity percentage with 60% of all of its mortgaged properties in negative equity, followed by Arizona at 49%, Florida at 45%, Michigan at 36%, and California at 30%. Nationally, the level of mortgage debt still remains high relative to home prices. See the Core Logic article (CLICK HERE). Nevada has gone so far as to make a law against foreclosures that feature contract forgery. Bank of America should be very careful, JPMorgan too, even Wells Fargo. See the Housing Predictor article (CLICK HERE).

◄$$$ ROTTEN LOW GRADE CAR LOANS WERE PACKAGED INTO SUBPRIME TOXIC MORTGAGE BONDS. IN SOME CASES THE RISK FROM BORDELINE LOANS SUCH AS VENDOR FINANCE DEALS HAVE BEEN SHIFTED TO BOND INVESTORS. EXPECT THE SAME RESULT, A MELTDOWN. $$$

Auto loan financiers have learned much from corrupt or shady Wall Street banks. Car dealers have approved loans to borrowers who often cannot qualify for a traditional car loan. Enter the Subprime Car Zone. The same car dealers turn and package the rotten loans, selling them to hapless investors who react to high yield even if ignoring risk. Dealerships package $billions in subprime car loans into bond securities. The Los Angeles Times reports the story. Reminiscent of the shoddy but common mortgage lender practices, toxic car loans are being packaged into securities and sold to investors, a surprising total of $15 billion in the last two years. This part of the car finance business will end up like the housing and financial crisis. The practice is picking up speed, as potential car buyers with poor credit find it easier to qualify for the high risk road on loans. New car loans for buyers with credit below prime rating rose more than 20% in 2Q2011 versus Q2 last year, according to the Automotive Credit Trends Report. The number of car loans to applicants with a subprime credit rating jumped by 60% in 2010 from the year before, according to New York Times. CEO Michael Maroone of AutoNation believes that car sales rose in 2010 primarily because of these borderline loans to push sales. Expect a toxic rot to spread, especially since some of these car loans exist as tranches in asset backed mortgage bonds too. See the Huffington Post article (CLICK HERE).

◄$$$ THE JOBLESS RATE STILL RISES. THE USECONOMY GRADUALLY RESEMBLES A THIRD WORLD IN THE LABOR MARKET. THE TRUE JOBLESS RATE IS 22.9%, FAST APPROACHING SOME DREGS NATIONS. THE YOUTH OF AMERICA HAVE OVER $1 TRILLION IN STUDEN LOANS, AND FADING PROSPECTS, EVEN QUICK TRIPS THROUGH BANKRUPTCY TURNSTYLES. HOPE DWINDLES. $$$

The US employment rate has falllen dramatically in the last decade, a strong sign of deterioration. The percentage of the population employed was 64.7% in January 2000, but has declined dramatically to 58.2% in March 2011. Dismiss the official unemployment rate as simply a reflection of those collecting the limited jobless state insurance, as simple as that. The USGovt reported the broad unemployment rate as 16.2%, a serious black eye especially since for minorities the rate is almost double that level. The Shadow Govt Statistics, an honest broker, calculates the US jobless rate to be 22.9% and still rising slightly. Europe is not far behind. The ranks of the long-term with jobs, defined as 27 weeks or more, has swelled to 5.9 million people. The United States actually rivals some of the worst corners in the world. For countries with a population over two million, Macedonia leads the world with 33.8% unemployment, followed by Armenia at 28.6%, Algeria at 27.3%, and the Gaza Strip at 25.7%. The next generation of Americans is saddled with costly student loans but scant opportunity. The official student loan burden amounts to over $1 trillion. The student default bankruptcy rate out of the gate is 30% to 40% in the US. Compare to the American labor participation for those between 16 and 29 years of age, at only 48.8% in 2011, the lowest level ever recorded.  Lack of economic opportunity among the energetic youth is a wild card, as they tend first to take to the streets in protests. Hope is a dangerous thing to lose. Thanks to Shadow Govt Statistics and John Williams, for his tireless work over the years to provide accurate statistics in a day and age of total corruption.

◄$$$ BEWARE THE SIGNS OF THE UNITED STATES ENTERING THE THIRD WORLD. THE PROCESS IS WELL ALONG. HYPER MONETARY INFLATION, WIDESPREAD POVERTY, AND URBAN DECAY ARE OBVIOUS SIGNS. LET PICTURES TELL THE STORY, WITHOUT WORDS, EXCEPT ONE QUOTE. $$$

The great global subsidy provided for the United States is soon to end. A grand wake-up call is coming. The 2008 shock wave was supposed to awaken Americans, but only a portion heeded the shock and altered their perceptions and behavior. Spengler of Asia Times put it well. He said, "In either case, households that considered themselves comfortably middle class, and looked forward to a comfortable and secure retirement, find themselves on the edge of calamity. During the bubble years of 1998-2007. When America imported $6 trillion of overseas capital, the ride was easy. When the whole world brought its savings to the United States, people of mediocre skills and slack work habits could afford big houses, expensive vacations, and (at taxpayer expense) generous pensions. Why Americans expected to live well indefinitely on the largesse of foreign investors is a question for the psychiatrists, not the economists."

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.