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

* Intro Monetary Fragments
* Chinese Chess Moves
* Prying Eyes & Probing Ears
* Geopolitical Grotesque Gems
* USTreasurys Reach Break Point
* Central Banks Submit to Inflation
* Draghi EuroCB Defies Germany
* Banks in Final Collapse Stage


HAT TRICK LETTER
Issue #116
Jim Willie CB, 
“the Golden Jackass”
20 November 2013

 

Correction: The GLD Exchange Traded Fund did not convert to a Debenture officially, or in any manner, my gross error. The South African Exchange had a listing which confused the two investments bearing the same trading symbol. My error, due to excessive zeal. But it remains true that investors of GLD gold are the laziest, most deluded, and most clueless members of the entire gold community. They are devoted to a horribly corrupt fund. The exception is the juice junkies who are basic addicts of leverage, and the peculiar types who use the fund to hedge next to a temporary gold position. My apology for a wrong sensational story. In the meantime, the GLD Fund is being drained of its gold inventory to supply the gold cartel its fodder, under the sleepy dopey noses of its investors, who own no metal, and will never see a single bar of metal. Even legitimate requests by authorized investors are being denied. The capture, seizure, and rehypothecation of the GLD gold bars is a final stage in the great gold game sequence, a signal of the climax near.

QUOTES ON MONEY

"I consider it imperative that we do what we can to promote a very strong recovery. I do not see the program as continuing indefinitely. We are attempting to assess whether or not we have seen meaningful progress in the labor market. What the [Fed's policy] committee is looking for is signs we will have growth that is strong enough to promote continued progress." ~ Janet Yellen

(before the Senate Banking Committee on the approval process, who made clear the USFed intention to continue the hyper monetary inflation (as backdoor Wall Street bailout), until officials were confident a durable economic recovery was in place that could sustain job creation (THUS NEVER SINCE USFED POLICY KILLS CAPITAL), as current policy benefits outweigh the costs (for big Wall Street banks), citing no timetable for ending ZIRP or QE (expect until a significant bank or derivative breakdown or even the USGovt debt default), exhibiting full denial that a US stocks or housing markets were in a bubble (overlooked USTreasury Bond market being the biggest asset bubble in human history), boasting diligence to spot risky financial behavior (overlooked abuse of interest rate derivatives that sustain the bond bubble), and promising to use policy to prick future asset bubbles (already tried that with Taper Talk trial balloon), while arguing that higher capital and liquidity at the biggest US banks was a high priority (too late, since dead insolvent zombie monsters), the Reuters reference (CLICK HERE). She might be soft spoken now, but by next September with all the pressure to print and redeem, she will be yellin.

"The new chairperson's hopeful view is detached from reality. In a critical upshot of years of flawed policymaking, central bank liquidity these days greatly prefers Bubble securities markets to real economies. Having now fueled a full-fledged global securities market Bubble, there will be no returning to a more normal approach to monetary policy. It is a myth in the same vein as the Fed's 2011 Exit Strategy. It is now a matter of how long until this how-crazy-do-things-get phase runs its fateful course. I sympathize with Dr Yellen. Her predecessors were never held accountable. Deeply flawed economic doctrine has yet to be called out. History's greatest monetary experiment has not yet run its course. Inflationism, with the contemporary version cloaked in sophisticated and elegant rationalizations, is widely accepted by policymakers, Wall Street, the media, and popular commentators alike. Meanwhile, the great flaw in discretionary monetary policymaking has come to fruition. A major error has ensured a series of ever greater policy blunders and a course toward catastrophic failure. It is an unbelievable fiasco, and I do not see how this historic Bubble does not burst on her watch." ~ Doug Noland (a parallel view to the Jackass, but from a higher vantage level, to his credit)

"We make money the old fashioned way. We print it." ~ Art Rolnick (Chief Economist for the Minneapolis Federal Reserve Bank)

"We the People of the United States hereby establish an unlimited Government that can impose its will in any manner it chooses, on any subject that it wishes, with constraints or accountability notwithstanding. Furthermore, our Government shall borrow as much money as possible to cover up the toxic bonds and fraud crimes and institutional insolvency of the banker elites, to issue unlimited volumes of gifts disguised as loans to its global banking cohorts, to provide the good life for the lazy and the malingerers within this once great nation, and to shift our financial burdens far into the future to be paid by our unfortunate progeny." ~ Adapted Preamble to the Nazi Manifesto (cooperative effort with Darrell-D in Colorado)

"We have never been in a more dysfunctional state at the corporate, political, and individual level in history. It is time to realize that the reason capitalism won the war against communism in the 1980s was its strong market based economy, itself based on price discovery. Now the policymakers in their wisdom are copying everything a planned economy entails: central planning and control, no price discovery, one supplier of credit and money, with the corollary effect of suppressing small & medium sized enterprises, even individuals." ~ SAXO (it is not wisdom, but desperation since no policy options exist except to continue building the American Politburo monstrosity, given the national directive couched in refusal to liquidate the big banks and in obstruction to permit the markets to seek equilibrium)

"If the Saudis take the lead in pulling the plug on the Petro-Dollar, it will be an implicit signal to declare acceptance also of Euros and Yen and Chinese Yuan as payment for crude oil shipments. They will do it after inviting the Chinese Army to protect them. They might actually wait until the newly appointed USFed Chair Janet Yellen orders the next round of QE bond purchases. Then the Saudis can lay the ultimate blame on the Fed, which is cornered and exposed. They deserve the blame." ~ EuroRaj

"It is as though the Euro Central Bank were acting as a purchasing agent of German savings, which it then services and distributes to the crisis countries at whatever conditions it deems appropriate." ~ German economist Hans Werner Sinn (preview the coming departure of Germany)

"These fools think they are monetary gods. Instead, the central bankers are mad destructive scientists whose work is founded in heresy, whose output is lost wealth and wrecked engines of wealth. What they do is basic bloodletting, like medieval doctors pretending to practice medicine. Out of view, they steal other nation's gold reserves, exposing the Modus Operandi of nazis." ~ Jackass

"The war on drugs brought in more drugs, and the war on terror created more terrorists. Maybe next year we can have a war on money and jobs, and see where it goes." ~ Anonymous

## INTRO MONETARY FRAGMENTS

◄$$$ INDIA'S GOLD REFUGE FROM THE ESTABLISHMENT WILL DAWN ON THE WESTERN SOPHOMORIC NITWITS, ALL IN TIME. GOLD IS THE PROTECTION AGAINST BOTH BANKER INFLATION AND POLITICIAN LARGESSE. THE WEST HAS FORGOTTEN, BUT WILL LEARN FROM THE WISER EASTERN ELDERS. $$$

The Indian Govt policymakers understand full well the family challenge, captured in their demand for gold as protection. Foreign nations are under siege from the USDollar inflation waves, as well as their own governments which hand out money to extend the socialist system and to buy votes. The public understands that gold is the only refuge from inflation for the Indian population. However that viewpoint and strategy must be resisted, since it is not acceptable to The Establishment. The Indian Govt debt has been run up by politicians amidst a corrupt ruling class and badly inefficient bureaucracy. The citizens will continue to patiently accumulate real wealth one gram at a time, one kilogram at a time, one bar at a time, just like they have over many centuries. In the Western nations, the people are not accustomed to the brand of inflation levels, government confiscation, and currency volatility so common in developing market nations. They will be caught off guard, already happened. The need to own gold as protection is not fully appreciated in the West. The people of the Western nations pay lip service to how gold serves as an inflation hedge or acts a supreme currency, even a safe asset. They are bombarded by propaganda of the huge decline in Gold from the 1980 peak, as well as by altered data that price inflation is not present. They are told that Gold pays no interest income, but neither do the USTreasury Bills or bank saving certificates.

Those in the West who have a solid understanding of gold and its value are in the extreme minority, denigrated by the propaganda merchants. However, the times are changing; the winds are blowing against the USDollar regime; rebellion is growing its ranks. The fascination with the fiat dollar will prove to be a passing fad for this generation, sure to be deeply impoverished for their stupidity, ignorance, stubborness, and gullibility. Its younger generation is equally duped and discouraged. They will awaken very late to learn that Gold is the only safe money alternative, and that the Gold Standard ensures stability, equitability, even promoted capitalism and wealth. The search for jobs will lead to the golden paths. See the Zero Hedge article (CLICK HERE).

◄$$$ ITALY PLANS TO OFFER GUARANTEES ON GOVT BOND DERIVATIVES. THEY APPEAR TO BE LAYING THE GROUNDWORK FOR ISSUING NON-EURO DEBT. THEY MIGHT BE CONSIDERING DEBT IN CHINESE YUAN, WHICH WOULD BE A MAJOR BLOW TO THE EURO AND USDOLLAR BOTH. $$$

The Italian Govt Treasury announced plans to introduce a system of bilateral guarantees for derivative contracts that involves domestic government bonds signed with national and foreign banks. They seem intent on helping lenders to manage risks toward facilitating their debt sales. Under the planned system, the Italian-based Treasury and the banks would exchange cash amounts on a short-term basis, in response to mark-to-market changes with respect to their respective derivatives positions. A local Treasury official told Reuters the new system would help Italy issue debt denominated in currencies other than Euros. The hedged insurance would be too costly without the collateral guarantees, thus the evolving necessity. Such activity is complex, requiring sophisticated hedges against currency risks through derivatives contracts. Conclude that Italy might be paving the way toward sovereign bond issuance, but denominated in Chinese Yuan. If Italy issues debt securities in CNY, it will be a major blow to the EUR and to the USD, the bell heard around the world. At the same time, it would immensely raise the stature of the CNY as a global currency. See the Reuters article (CLICK HERE). Time has run out for Italy in juggling and bungling the mass of cobwebs linked to sovereign debt, its bank derivatives. The moment has arrived for Italian Govt debt, with which Wall Street and London have effectively strangled the nation. They might be forced to borrow in Chinese Yuan currency to exit the mess. See the Reuters article (CLICK HERE).

European jobless young are legion. In the broad EuroZone, youth unemployment has hit 24%. A grand pathogenesis is in progress. Failure to adopt sound money has resulted in rampant inflation which has methodically destroyed the system's capital, spitting out qualified workers to the streets. New records were set in Spain (56.5%), Greece (57.3%), Italy (40%), and France (26%) for jobless rate. Governments that allow youth unemployment to escalate, do so at their own peril, as social disorder follows. Talented Spanish young professionals are fanning out across the entire Latin American regions. In the process, Spain is losing its most qualified generation ever. For too many countries, the delicate balance of power between labor and capital has shifted in the favor of capital. As a consequence, employers can demand such low wages that they seem to exploit the workers. The United States is not above the jobless scourge. Since 1994, a Rubin trick sought to remove all trace of unemployed workers who have not actively searched for a job in the previous four weeks. The inocuous 7% to 8% jobless rate rings hollow against the reality of a 23% jobless rate, according to Shadow Govt Statistics. The old method was the more accurate.

A cannibalization process has hit the capitalist economies that have forgotten capitalism and resorted to financial engineering, to their own destruction. The present course is not the capitalist serpent eating its own tail, as Karl Marx would describe (gloat). It is instead the destructive consequence of unsound money, currency with an implied debt foundation, and the implosion of financial structure from excess debt. The astute preachings of Ludwig Von Mises would advocate a quick fix of return to the Gold Standard, and immediate big bank liquidations, precisely the Jackass remedy. See the Testosterone Pit article (CLICK HERE). It is astonishing how few smart analysts fail to comprehend the consequence of unsound money, the monetary cancer, and its effect on capital within an economy. The Jackass do.

◄$$$ PAUL CRAIG ROBERTS WARNS TO EXPECT A FRIGHTENING BLACK SWAN EVENT, A GLOBAL USDOLLAR REJECTION. ROBERTS COMPREHENDS THE OUTCOME, BUT NOT THE PATH. THE USFED CAN PRODUCE EXTERNAL USDOLLAR DEMAND, THE ROBERTS ERROR. HE DESCRIBES THE GLOBAL REJECTION WILL COME AS A RETURN TO THE GOLD TRADE STANDARD, THE EUROPEANS TURNING EASTWARD, THE SAUDIS ABANDONING THE PETRO-DOLLAR, WHICH WILL COMBINE TO KILL THE USDOLLAR. MANY KEY EVENTS WILL FOLLOW IN THE DEATH WAKE. A GRAND GLOBAL SHUN HAS BEGUN. $$$

After a prefatory message on the nasty situation on financing the Social Security and Medicare, Paul Craig Roberts warned of a severe global reaction to the USDollar generally, a rejection. The official finances are a wreck, the hidden impact to the USGovt deficit coming from a series of costly wars, as he points out. The response globally to the toxic condition of official finances seen in USTreasury Bonds and the reckless behavior from refusal to make spending cuts, in addition to the travesty of the USGovt shutdown, will be for the world to work around the USDollar, to isolate it, and to diversify away from it. Roberts is the former Treasury Asst Secretary in the Reagan Admin. He stated the following. See the King World News interview (CLICK HERE).

"[The USGovt finances have] almost insurmountable problems. We have experts that have estimated the cost of these wars is $6 trillion.  Well, that is most of the debt increase. But they do not talk about that because the Military Industrial Complex is just too strong. But when you shrink aggregate demand, the economy goes down, and the deficit gets bigger. So, they are trapped. I do not think they can get out of this. The foolishness [in Washington] is going to lead to more removal from the use of the dollar. Foreigners are just going to stop using it. We already see it happening.

This shows a fantastic erosion in American financial influence. You see the BRIC's settling their trade differences without using the dollar. You even see our puppet state, Australia, is now settling its trade balance with China in their own currencies, aborting the dollar. This means there are decreased demand for dollars which means a lower price [in US$ exchange rate]. The Fed can print money all day to keep the price of bonds high, but they cannot print foreign currencies to buy dollars. [WRONG!!! says the Jackass] So, that is the real black swan that is waiting to happen. When does the dollar plummet? When can the Fed not get enough loans of foreign currencies to buy back the dollars? When that happens, then it is all over. They lose control. The interest rates skyrocket, bonds collapse, stocks collapse, real estate collapses (in real terms), and the deficit becomes huge. I mean really huge. So the whole situation is headed to hell in a hand basket."

Roberts is incorrect on one important point. With the Dollar Swap Facility, the USFed can print more USDollar currency, and have its European partners use the newly hatched money to demand USDollars. The result is support of the USD and a lower Euro, the precedent seen in 2010 and again in 2011. The Euro Central Bank executed $2.3 trillion in such USDollar demand off the Dollar Swap facility at that time, which lifted the USDollar. So the USFed can fabricate USD demand, which in reality is more like support of all the major currencies. In fact, the group of major currencies (USD, Euro, BPound, Japanese Yen, Swiss Franc) will all remain lashed together and fall together, but versus the Gold price. The gold meter will return to manifest the magnificent USDollar devaluation on the global stage, which will occur simultaneously with a big devaluation in all major currencies, according to Roberts. This is the essence of the Global Currency Reset, better described as the return to the Gold Standard. The Jackass disagrees strongly with this wrong viewpoint on an event sequence. It is Game Over for the USDollar when four events occur. 1) The major currencies will join the Gold Trade Standard, and leave the United States in its toxic backwater. 2) The Saudis and other significant oil producers will accept non-USD payment for shipments. 3) Sovereign nations and corporations (US & foreign) will issue debt securities denominated in Chinese Yuan. 4) The USD will be forced to split and be heavily devalued versus the major world currencies. Its wretched fundamentals will catch up with it. The world is demanding a different USD for bank assets outside the US jurisdiction, as a consequence to the tremendous debasement in progress by the USFed itself in monetary expansion. Permission will be given for the USFed to continue its work, but with the new domestic USDollar. It will be wrecked.

Beware that London and Frankfurt are already lining up to sell Yuan-based bonds. McDonalds of US infamy as purveyors of fatty dross has Yuan-based corporate bonds on its books. On an increasing basis, global players wish to avoid the USDollar in financial deals, due to rampant corruption and profound bond fraud, if not basic official debasement. They cannot force a solution directly. Therefore they will force a solution by avoidance, rejection, and a grand global shun. Clearly the death blow to the USDollar will be the reinstallment of the Gold Trade Standard together with the departure from USD-based crude oil sales by the Saudis and OPEC. A grand sequence will be played out.

◄$$$ PRESIDENT OBAMA'S FINANCE TEAM IS RECOMMENDING A ONE PERCENT (1%) TRANSACTION FEE (TAX) ON ALL BANK TRANSACTIONS. ALTHOUGH NOT YET LAW, EXPECT IT TO SLIDE THROUGH. THE TAX WOULD IMPOSE A GREATER BURDEN ON THE USECONOMY, AND PAY HOMAGE TO THE BANKING ELITE FROM THEIR SYNDICATE. $$$

The proposed Congressional bill calls for a 1% tax on all bank transactions, under the name HR 4646. The levied tax would hit all money movements, whether going in or going out, much like a toll taker on a highway. The tax would apply to all transactions at any financial institution, such as banks, credit unions, savings & loans, and possibly mutual fund investment houses. Furthermore, in January 2014, the USGovt will require all citizen (syndicate subjects) to use direct deposit for Social Security income checks. They could not enact the carbon tax on the air we breathe, so they will tax the blood flow instead. Bear in mind that police authorities are monitoring car movements in addition to the USGovt monitoring telephone and email communications. Some day bedroom activity might suffer the thrust of a tax levy. The police state is merging with the socialist state, the bankruptcy clear.

## CHINESE CHESS MOVES

◄$$$ CHINESE YUAN CROSS-BORDER TRADE SETTLEMENT HAS HIT CNY 8.6 TRILLION. THE SWAP FACILITY REINFORCES THE YUAN SETTLEMENT IN TRADE. THE CHINESE CURRENCY IS COMING OF AGE, READY TO CHALLENGE THE KING DOLLAR. $$$

China's cross-border trade settlements in its national currency totaled CNY 8.6 trillion (=US$1.4 tn) by the end of September, since the program's launch in July 2009. Cross-border Yuan transactions have been conducted in 220 countries and regions using the Yuan currency, also known as renminbi (people's money). The grand list of nations with which the Chinese Govt has signed currency swap contracts has reached 23 countries and regions, as of end September, according to the Peoples Bank of China, their central bank. It qualifies as a global critical mass in a settlement alternative to the USDollar. The southern province of Guangdong is the pioneer of cross-border Yuan transactions, the interior model. Its cross-border trade settlements in renminbi totalled CNY 3.2 trillion by the end of September, as 22 thousand enterprises as well as 2189 bank outlets conduct the business. The practice of cross-border transactions began with trials for Yuan trade settlement in in 2009 with participants from Hong Kong, Macao, ASEAN countries, and selected other locations. The scheme has been extended to all parts of China, as well as to many nations of the Western world, including Australia and New Zealand. The parallel program, the Yuan Swap Facility, is being installed in England, France, Switzerland, and Germany in the heart of Western Europe. The culmination was the October signing by the PBOC and the European Central Bank for a CNY 350 billion currency swap agreement, bringing the volume of currency swap deals to 2.2 trillion Yuan in total. See the China Daily article (CLICK HERE).

◄$$$ CHINA HAS AGREED TO A MEMO OF UNDERSTANDING BETWEEN THE FDIC AND THE CHINESE CENTRAL BANK. THE EXCHANGE OF INFORMATION WILL BECOME MORE FORMAL. REGARD THE MEMO AS PROTECTION FROM WALL STREET SUBTERFUGE AND CORRUPT PRACTICES IN THEIR USUAL EXPLOIT. THE CHINESE ARE LEARNING TO PLAY THE LEGAL GAME. WHEN THE MELTDOWN OCCURS, THE CHINESE INTEND TO BLOCK THE WALL STREET HEAVYWEIGHT FIRMS FROM ANY BIG FIRE SALES. $$$

A Memorandum of Understanding between the FDIC and Peoples Bank of China has been signed. The Federal Deposit Insurance Corp is the official insurance agency to guarantee deposits from failed US banks. The Chinese Govt is laying the groundwork for some yet unspecified event. By itself, the MOU is a nothing burger, as described by a clever colleague. But it does spell out details for information exchange between the FDIC and PBOC. The main question pertains to why the agreement comes now. In the end game, which clearly is within view, some financial firm as a large dominant player (as hunch Goldman Sachs) will try some shady devious maneuvers as hanky panky. The MOU is in place to prevent it, by setting up a protocol to follow. As EuroRaj described, "If the banks are going to declare insolvency on the back of a derivative collapse and do a bail-in grab on depositor accounts, there will still be some intrinsic value in the infrastructure that the banks own in terms of buildings, computer systems, intellectual property, and staff expertise. The PBOC must want this to be revealed and understood in an open fashion, in order to prevent the Wall Street entrenched players from snatching a banking franchise (such as JPMorgan or Bank of America) for pennies on the dollar."He noted the predators are the usual suspects, Goldman Sachs, Morgan Stanley, even the large favored hedge funds. See the FDIC website notice (CLICK HERE).

◄$$$ CHINA DOES NOT WANT THE CORRUPT BANKSTERS , NOT EVEN THE LONDON METALS EXCHANGE, OPERATING INSIDE THEIR NEW FREE TRADE ZONE. THEY WANT TO MAKE IT A CAPITAL PARADISE, FREE OF THE LONDON-BASED LME AND OTHER BANKSTER ORGANIZATIONS. PLANS ARE MANY, SO FAR THE RESULTS SPARSE. CONCERN OVER FOREIGN COMPETITORS AND PREDATORS IS STRONG. $$$

The bars are being constructed, as in barriers and not water holes. The rules are being laid down. No Western bankers are to be permitted, this is the marquee posted sign. The Chinese are establishing the rules and guidelines for the Shanghai Free Trade Zone, with a first blow being a ban on overseas commodity exchanges and their related warehouses. The London Boys will be blocked, dashing their expectations to invade the trade zone. The complexity is clear. At one time, the state-owned local media had reported that commodity warehouses would be authorized in the free trade zone, not appearing on a list of banned activities. The Hong Kong Exchange is deeply involved. Last year it invested $2.2 billion to acquire the LME. Warehouses on the Chinese Mainland seek legitimate access from the world's biggest marketplace for industrial metals. The warehouse ban was issued by the China Securities & Regulatory Commission (CSRC) in 2008. Although the Shanghai officials hoped to have the LME open storage facilities in the zone, the concept ran into strong opposition from the securities regulator. They did not want the London challenge for control, or their usual exploit.

The Shanghai Futures Exchange (SHFE) currently lists futures contracts in copper, aluminium, zinc, and lead, placing it in direct competition with the LME. The London bankers and commodity professionals have long desired to set up delivery networks in China. Their motives are suspicious though. Some legitimate need exists, since many Chinese manufacturers strive to cut logistics fees and premiums paid on top of LME contract prices required to obtain the metal. The Shanghai Free Trade Zone has been billed as a watershed event for China's development. The Beijing leaders have promised to roll out a range of ambitious reforms including Yuan currency convertibility within the next three years. Such convertibility is a key item in reforms, in global credibility, and in overseas debt issuance. For the commodities markets, the Shanghai government has promised to open up its prized futures markets to foreign players and to allow local firms to hedge on overseas bourses. Some doubt has entered. A Shanghai-based executive with a foreign bank is involved in policy discussions. He said "It seems like there are concerns about control. So there would likely be restrictions on the types of foreign firms who can participate, how much they can invest, and how much profit they can take out."

Under the latest rules, the SHFE would be allowed to set up an International Energy Trading Centre in the zone, from which it can open its overdue crude oil futures contract and other energy products to qualified foreign investors. Brokers registered in the zone will also be able to trade on overseas futures exchanges for local clients via the over-the-counter market. Plans laid out in 2011 have not come to fruition, very little realized to date. Word has it that some within the Beijing decision body are worried about Chinese firms being losers in a difficult competitive arena with globally savvy traders and financial institutions. Memories are fresh of past bitter experiences. A few large Chinese airlines and shipping companies lost hundreds of $millions in 2008 on derivative trades made with international banks when oil prices plunged. The predators are numerous in London and New York, where the criminal bankers operate. See the Reuters article (CLICK HERE).

◄$$$ CHINESE US$-BASED DEBT HAS SOARED IN THE LAST THREE YEARS. THE GREATEST EXPOSURE IS FOR BRITISH BANKS. THE EASY MONETARY POLICY HAS RAISED THE RISK IN CHINA. THE CONCERN IS TOWARD A REPEAT OF THE ASIAN MELTDOWN. $$$

The BIS sees risk of a 1998-style Asian crisis as Chinese dollar debt soars. The world's banking watchdog warns that foreign loans to companies and banks in China have tripled over the last five years to almost $900 billion. The exposure might be sufficiently large to set off financial tremors in the West. The biggest risk lies with Great Britain. The Bank for Intl Settlements offered an official report on China, pointing out the fast rise since 2009 for the debt level from $270 billion back four years ago. The issue is US$-based funding. The Chinese Govt reserve body SAFE claimed 81% of foreign debt under its supervision is in USDollars terms, 6% in Euros, and 6% in Yen. Since the loose money policies began in 2009, ordered by the Western central banks in desperation, the cost of foreign funding in East Asia was also reduced, tempting firms to borrow heavily in USDollars. The seized the open window. The risk comes from a possible end to the USFed accommodation with QE and ZIRP. The heightened concern is for a repeat of the East Asian crisis in 1997-1998. British-based banks hold almost a quarter of all cross-border bank exposure to China, and the figure has risen since 2008. By contrast, the more prudent German, Dutch, French, and other European banks have vastly cut back on their share from 32% to 14%, the trend being to fortify their capital ratios at home. See the UK Telegraph article (CLICK HERE).

◄$$$ THE BRICS NATIONS ARE INTEGRATING A NEW GLOBAL DEBT RATINGS AGENCY. THE SECOND RIVAL TO THE BIG THREE IS COMING BY THE NEW YEAR. THE GLOBAL FINANCE SECTOR IS MOVING AWAY FROM ITS US-CENTRIC AXIS. $$$

Brazil, India, and South Africa are teaming to be part of a new global ratings agency, the joint international venture called ARC Rating. It would serve the global financial sector, unlike the major debt rating agencies that cater to the New York, London, and Western Europe banking community. The ARC agency is equipped with a European Securities Markets Authority (ESMA) licence and would issue challenge to the dominant US tools. The bias of Standard & Poors, Moodys, and Fitch is fast becoming obvious and blatant, globally recognized to be compromised after the grand tarnish suffered in late 2008. The big three constitute 90% of the ratings market. The new formal launch is scheduled for December or January 2014, with its headquarters to be in London. The ARC website promised to devote its output to the new multi-polar world economy in direct competition with US-centric agencies, designed with a global cooperative approach to credit ratings. Three of the five companies involved are from the BRICS bloc, notably SR Rating from Brazil, CARE Rating from India, and GCR from South Africa. They are also bringing in CPR from Portugal and MARC from Malaysia. The ARC rival is not alone in its attempt to break the monopoly of the ratings market. Rating agencies from China, Russia, and the United States officially launched a new credit rating company Universal Credit Rating in Hong Kong last June as a challenge the current industry leaders. See the BRICS Post article (CLICK HERE), and the RT News article concerning the UCR reference from last May (CLICK HERE).

## PRYING EYES & PROBING EARS

◄$$$ NOTES ON THE NSA DATABASE CONTINUE TO BE REVEALED. THEY INDICATED STEALING TRADE SECRETS AGAINST EUROPEAN COMPANIES, INCITING GREAT ANGER. THE PHONY WAR ON TERROR HAS MANY HIDDEN SIDES, NOT JUST NARCOTICS PRODUCTION AND DISTRIBUTION BY THE USGOVT AGENCIES. ACTION TAKEN BY THE EUROPEAN UNION PARLIAMENT SEEMS SHOCKING AND SEVERE. THEY TOOK ACTION AGAINST THE UNITED STATES ON SWIFT, DENYING THE US-BANKS ACCESS TO THE SWIFT DATABASE (AWAITS CONFIRMATION). $$$

Indications stack up on an unprecedented split with Europe, as the US isolation increases. The European corporate newswire outlets are full of stories about anger expressed by European leaders over the fact the widespread NSA eavedropping and monitor activity. Apparently, the espionage had been focused upon stealing corporate secrets. Once more, the rubric of fighting terrorism is a false front to permit tremendous criminal activity under a massive smokescreen. Ben Fulford reported a rather shocking development. Resentment over USGovt impropriety has reached such a fever pitch, that a vote took place in the European Union Parliament recently to suspend the United States from the SWIFT international financial database. He commented that such action taken in the past were often against nations like North Korea and Myanmar, rogue nations. If true, and the Jackass awaits confirmation, then the US is fast moving into rogue nation status. BenF notes that the major Western news networks, calling them corporate news companies, have blocked any coverage of these stories.

Information is the currency of power, whether it is email messages to reveal insider trading, monetary policy to shine light on the path for currency trading, new litigation to drain banker reserves, new product announcements, or whatever. Independent German financial journalist Lars Schall talked with former senior NSA executive Thomas Drake. In particular they discussed the Snowden saga, the financial dimension of the extensive NSA activities, informed trading and banking, the technical abilities at the disposal of intelligence agencies, and the growing nature of fascism. See the Metallwoche video (CLICK HERE).

◄$$$ THS US-SUPREME COURT HAS BLOCKED A CHALLENGE TO NSA PHONE TRACKING. THE COMPLAINT FILED BY A PIRACY WATCHDOG GROUP WILL NOT BE HEARD BY THE LOW COURT (FORMERLY HIGH COURT). THE FASCIST NATION PROCEEDS APACE. MEANWHILE, THE EUROPEAN UNION HAS DISPATCHED A NEGOTIATOR TO DISCUSS THE EAVESDROPPING BY THE NSA IN EUROPE. THEY ARE ANGRY AND HAVE BEGUN TO ERECT POLITICAL FIREWALLS. THE GLOBAL ISOLATION OF THE UNITED STATES IS GAINING SPEED. $$$

The Supreme Court announced on November 18th that it would not hear at this time a complaint filed months ago that challenged the legality of the National Security Agency's nationwide telephone surveillance program. The high court (once upon a time it was a high court) issued a notice without detailed comment to acknowledge that it would not proceed with the complaint introduced this past June by a privacy watchdog group. The case is a systemic response to the NSA intelligence agency activity on collecting metadata pertaining to the phone calls of millions of Verizon customers on a regular basis. The watchdog organization is Electronic Privacy Information Center (EPIC) based in WashingtonDC. The complaint formally petitioned the Supreme Court to consider taking action that would halt the collection of phone records on a major scale. In the recent few month, five separate complaints have been filed to the court, none of them heard. The Constitution of the United States is just a piece of paper after all, shredded by George W Bush. It is difficult to dispute the claim of a fascist state, run by modern day national socialists with a penchant for high corporate crime and war aggression.

When EPIC filed their petition in June, they wrote, "We believe that the NSA's collection of domestic communications contravenes the First and Fourth Amendments to the United States Constitution, and violates several federal privacy laws, including the Privacy Act of 1974 and the Foreign Intelligence Surveillance Act of 1978 as amended. We ask the NSA to immediately suspend collection of solely domestic communications pending the competition of a public rulemaking as required by law. We intend to renew our request each week until we receive your response." The formerly high court, now just a rubber stamp for the fascist state, has responded with a measure of stone silence. At the time the decision was rendered, EPIC made a final comment on how the secret surveillance program has been disclosed, how Congressional leaders and legal scholars agree it is unlawful. They wanted to give a chance for the Supreme Court to weigh in. They did. See the Russia Today article (CLICK HERE) and notice that the US-based news networks are strangely silent also on the story. Look for the EPIC executives to have tax audits in the near future.

Viviane Reding has been dispatched as commissioner for critical NSA talks with the USDept Justice. She will meet with the outlaw Eric Holder, who occupies the USGovt Attorney General post. Reding is regarded as a very tough serious formidable negotiator, and comes from Luxembourg. The talks begin on November 25th to discuss the consequences of the National Security Agency spying scandal. Her decisive attempts to ensure that Europeans enjoy the same rights to data protection as US citizens have not been well received. Some misperception and baffling ignorance is at work. A high ranking USGovt working on the trans-Atlantic talks stated that, "If Reding wants to continue keeping big US companies away from Europe, then she should not be surprised if Europe is soon as isolated as North Korea." Quite the delusional viewpoint. Reding has firm resolve. She is on record stating, "Data protection is a fundamental right in Europe. Fundamental rights are non-negotiable, period. The American government must guarantee the legal protection of EU citizens in the US. I want clarity. The European Parliament will never vote in favor of an agreement that does not clear up this point." The opposite reaction is almost a guaranteed outcome. The United States is to be isolated, not Europe. The Europeans are forging much stronger ties with Russia, China, and the Eastern Hemisphere, working toward a Eurasian Trade Zone. The US will be outside, looking in. The US ideals go counter to anything remotely resembling a trade zone, or a free trade zone. The US will be the isolated nation, the perceived rogue nation, the derelict nation set adrift on its Weimar craft. See the Spiegel article (CLICK HERE).

◄$$$ AUSTRALIAN SECURITY AGENCIES SPIED ON JAPANESE COMPANIES TO HELP ITS INDUSTRIES NEGOTIATE TRADE DEALS. THE ANGLO ROOTED EAVESDROPPING ACTIVITY IS WIDESPREAD ACROSS THE WORLD. $$$

Global surveillance, spying, and snooping with bugs and wire taps have been conducted by the NSA (USGovt) and the GCHQ (British Govt) for a long time, becoming well known. However, add Australian security agencies to the fascist mix. Once again, their activity pertained little if any to fighting terrorism, as a recent EFF article made plain. The massive surveillance programs are not done to protect people from extreme threats. The recent revelation details how commercial espionage was also being conducted by Australian officers against Japanese corporate targets. Apparently, the corporate espionage is more than in Brazil. The Sydney Morning Herald has divulged information about extensive industrial spying on Japanese companies carried out by Australian secret services. The world's largest mining company BHP Billton was among the companies aided by Australian security agencies during delicate negotiated deals with Japan. The information comes from a former Australian Secret Intelligence Service officer. A former diplomat has also confirmed Australian intelligence agencies have long targeted Japanese companies. The Australian companies benefited from the intelligence operations while in contract talks. Professor Gregory Clark wrote, "In Australia, favored firms getting spy material on Japanese contract policies and other business negotiations used to joke how [it had] fallen off the back of a truck." See the Tech Dirt article (CLICK HERE)

## GEOPOLITICAL GROTESQUE GEMS

◄$$$ THE AMERICAN MARCH TO GLOBALISM HAS BEEN HIDDEN. $$$

The Jackass chooses to step aside from in-depth reporting of the geopolitical and sinister events. However, they are becoming front page news, without much recognition of their dastardly side. The main elements will be touched upon, as more research and investigation is the option on the reader's end. Some climax events are in progress. Patrick Buchanan has a realistic viewpoint. He stated, "[On America's conversion to Globalism], from 1989 to 1993, the Bush I Admin ran $360 billion in trade deficits in goods, a US record. Bill Clinton, who enlisted the Republican establishment to help ratify NAFTA and US membership in a World Trade Organization, where the United States has the same vote as Armenia, ran $1.8 trillion in trade deficits. Clinton's deficits were then dwarfed by George W Bush's, who ran up $5.3 trillion in trade deficits in goods. In four years and eight months, Obama has piled up trade deficits totaling more than $3 trillion. Thus during 25 years of free trade globalism, the United States has run up well over $10 trillion, or ten thousand billion dollars in trade deficits in goods. And what do we have to show for it? Our economic independence is history. We rely on foreigners for the necessities of life. We are the greatest debtor nation in history. Beijing and Tokyo banks score with $billions in annual interest payments on the USTBills and USTreasury Bonds they hold. As the gleaming cities of Asia rise, America's infrastructure visibly crumbles. The real wages of our working men and women have not risen in decades. In the first decade of this century, we lost 6 million manufacturing jobs as 55,000 factories disappeared." Observe the betrayal of the United States by its political and corporate leaders over three decades. Globalism is the visible banner for global fascism, whose objective is to destroy the United States, since the cradle of capitalism and the beacon of freedom. No more!!

◄$$$ RUSSIA IS EXPANDING ITS MILITARY PRESENCE IN THE MIDDLE EAST WITH A GROWING FOOTHOLD IN THE MEDITERRANEAN. THEIR HEAVYWEIGHT PRESENCE WILL ALTER THE REGIONAL BALANCE QUICKLY. THE TEAM KREMLIN WILL WIN TWO NAVAL PORTS AS PRIZES. THE EFFECT ON THE PETRO-DOLLAR WILL BE SUDDEN AND SOON. THE TEAM OBAMA WILL RACK UP MORE SIGNIFICANT LOSSES, LIKE THE PETRO-DOLLAR THRONE. $$$

The chess match between Putin of Team Kremlin and Kerry of Team Obama seems like a mismatch. The board is the Middle East on the Mediterranean side of the room. After a visit to both Egypt and Saudi Arabia, the Secy State Kerry made no formal comment. One can only believe the meetings went badly, and the US mission was rejected. Russia is being welcomed back to Egypt after 50 years. The artful maneuver by Putin (the Man from Vlad) who defused tensions in Syria is being widely praised. The Nobel Peace Prize winner Obama is the object of scorn and ridicule. The Russian prizes are two naval bases soon to be built, in Lebanon and in Jordan. The deception by the USGovt is being widely recognized, such as the Saudi usage of chemical weapons (sarin) near Damascus, and having the US press accuse Syria of culpability. The weapons were purchased by the Saudis from a British firm. The US is acting like squirrels in Team Obama, looking like amateurs. The Team Kremlin could look like puffed roosters, but they proceed step by step to quietly capture the leadership role in the Middle East. The diplomatic winds are changing. The US has for two generations been at the front and center of every business, military, or diplomatic meeting of any sort. That has changed, and radically so.

Egypt and Russia will enhance military cooperation. They will continue, and thus replace the USMilitary as a fixed piece on the board. Aid will come from the Saudis, no longer in volume from the Americans and British. The press prefers to point out the hundreds of protesters who died during the overthrow of the US puppet Mohamed Morsi. However, thousands died of starvation due to the Morsi government's incompetence, and from the USFed monetary policy which lifted food prices. Thus the coup d'etat and installation of General Sisi in Cairo. The US is seen more often as a rogue nation. See the Debka article (CLICK HERE), the Rediff article (CLICK HERE), the Washington Post article (CLICK HERE), and the XinhuaNet article (CLICK HERE). On an increasing basis, one must locate news from non-US sources for completion and accuracy.

◄$$$ FURTHER OUTRAGE AMONG ASIAN NATIONS HAS COME, AFTER LEAKED INFORMATION REVEALED PIRACY CRIMINALIZATION. THE TRANS-PACIFIC PARTNERSHIP TREATY WAS COMPROMISED AND UNDERMINED. IT IS BEING SEEN AS A CORPORATE ELITE GLOBAL SLAM. RESISTANCE WILL CONTINUE. $$$

A serious Wikileaks revelation has hit. The issue is over the intellectual property rights chapter of the Trans-Pacific Partnership trade agreement. The party most angered is the Australians, who could face new draconian measures if caught infringing on copyrights online. Comments were made off the record, but the treaty document was leaked in draft form. As more of the TPP Treaty becomes known, the parties are shirking and retreating. Reactions are being described as chilling. The agenda behind this queer TPP trade movement is slowly being revealed. The corporations of the West wish to maintain control over intellectual property, whether it be technology patents, bio-engineering methods, military weapons, or food genetics. It is no longer about books, music, software, and chip design.

The Pirate Party Australia issued its own furious statement on the hidden TPP agenda. They wrote, "This corporate wishlist masquerading as a trade agreement is bad for access to knowledge, access to medicine, and access to innovation. It is absolutely appalling that we are still relying on leaked texts to determine just what we are getting ourselves into with these trade agreements. Even Parliament is being kept in the dark. It is time to release the text, and all future texts, so that transparency and oversight can result in texts that help, not hinder, legitimate Australian interests. There is no economic justification for the Trans-Pacific Partnership Agreement's intellectual property provisions. DFAT must immediately hold public briefings to explain their now public negotiating positions. It is time for some accountability." The TPP is a bold clandestine attempt by the USGovt to maintain a corporate elite order. Prime Minister Tony Abbott is seen as a limpwristed tool, claiming all parties will be better off. Check his private bank accounts for a hint of the direction and influence. See the Delimiter article (CLICK HERE).

The battleground is extending to Japan. The Land of the Rising Sun, under extreme competitive pressures from ancient rival China, might be turning on its Western masters. They are being exposed as using industrial espionage on an increasing basis. It is part of the sophisticated information espionage wars. The lesson is clear, that in response to Anglo subterfuge, the world will engage in counter attack. See the Giza Death Star article (CLICK HERE).

◄$$$ WEATHER WARS FOCUS ON THE PHILIPPINES. VENGEANCE IS UGLY, PART OF AGENDA-21. A DUTCH WEATHER CHASER HAS DOCUMENTED THE CREATION OF THE HURRICANE (CYCLONE). $$$

Permit the Jackass to be candid. Those people who dismiss the HAARP weapon as fantasy and futuristic mumbo jumbo are ignorant at best, and morons at worst. It is real. People without scientific background should shut the hell up, and pay attention to those who have such valued background, often from hard work during the university years. My experience has benefited from direct contact with two people who actually personally know engineers from the longstanding HAARP project. The events behind the Phillipine hurricane are full of intrigue. Within a couple weeks after the USGovt was criticized for failing to attend a crucial Pan-Asian conference in the Philippines, where the theme of the gathering was cooperative economic efforts across Asia, and even work to produce a common regional currency, the island nation was hit by a hurricane. Despite over one million USMilitary personnel stationed within a few hours of the Philippines, not a single vessel or air shipment has been deployed to help its ally in a critical time of need. The US treats the Philippines like a colony, running it as a mercantile economy, accessing cheap labor, exploiting natural resources, and for 50 years using the nation as a naval base. Behold yet another crazy weather anomaly that liquidated 10,000 people in a single stroke. The credible theory put forth is that Typhoon Yolanda was artificially created using a weather weapon. The HAARP device uses microwaves, which can be detected. They are not naturally occurring in the atmosphere. Such waves detected are a tell-tale signal of manmade mayhem.

Microwave pulses gave birth to Typhoon Haiyan (Yolanda). The engineers must be proud of their work. The world's strongest storm in recorded history, Typhoon Yolanda, with sustained winds slammed the island nation with winds reaching 195 mph, with gusts up to 235 mph. The massive storm originally began its rotation born out of a manmade microwave anomaly in the West Pacific. This video discusses the findings, and possible origin of the microwave pulse. The suspicion and evidence point to the USAirForce base near the location, the base a satellite communications hub. See the YouTube video (CLICK HERE). A friend told me how a casual observer can notice the abnormal unnatural weather on a televised weather program. Look for striations (lines in parallel) from the Doppler Graph. It is clear in many cases. Mother Nature does not produce lines in such an orderly way. Manmade equipment does.

The Dutch just did an amazing update. They tracked the storm development, even identified its characteristics which fall outside the normal natural scope. They identified another storm as generated and confirmed. The Philippines was hit a second time. See the Since Dutch WordPress ongong weblog for information (CLICK HERE) and the YouTube video (CLICK HERE). As footnote, a hurricane appears in the northern hemisphere, but a cyclone in the southern hemisphere. They differ in rotation clockwise versus counter-clockwise.

The president of the Philippines was pivoting away from the Trans-Pacific Partnership (TPP) for a simple reason. President Obama did not show up for the Asian economic conference, the reason given as the USGovt shutdown. Thin excuse, empty chair as leader. Besides, the Philippines concluded that the United States was not the right partner. The nation had been instead looking seriously at pivoting to the ASEAN version in the Chinese sphere of influence. A week or so later, the biggest and most powerful typhoon in recorded history headed directly toward the Philippines. Such events do not occur naturally or with such excellent timing. So HAARP the herald angel sings glory to the new born king, or rather vengeance to any nation that betrays the King Dollar. A video below showing the HAARP stations and the microwave methods is detailed for all to see. That is, all who have an interest in learning about a major global weather weapon, capable of producing a hurricane when directed upward to the atmosphere, and producing an earthquake when directed downward to the earth's crust.

The intrepid 21st Century Wire has gone boldly public. A prolific weather watcher known as Dutchsinse has linked the latest storm formations in the Philippines to man-made microwave pulses using HAARP technology. He detailed its usage to show how Typhoon Yolanda was created. In recent years, weather modification has been forced into the spotlight by many independent investigators as well those from scientific fields, including admissions by prominent figures. One such scientist who has acknowledged that this technology exists is theoretical physicist Michio Kaku, an American theoretical physicist, the Henry Semat Professor of Theoretical Physics at the City College of New York. See the 21st Century Wire video (CLICK HERE).

◄$$$ GERMANY HAS SUSPENDED DRONE PURCHASES FROM THE USMILITARY CONTRACTORS. THE GERMANS REJECT ILLEGAL KILLING OF CIVILIANS. $$$

Berlin has suspended the purchase of armed drones on the basis that such weapons kill civilians. More specifically, as they stated, the German Govt categorically rejects illegal killings. This follows a report by Amnesty International that accused Merkel's government of aiding the USGovt with drone strikes in Pakistan. Despite opposition, the Germans had made several official purchases valued at hundreds of million Euros of drone weaponry from the USMilitary defense contractors. The purchases will cease. In recent months, Berlin officials had criticized the USGovt for usage of remote controlled aircraft to carry out strikes, often in Pakistan, which have killed thousands of civilians. The USGovt defends their usage, claiming they save US soldier lives. The race is on to produce advanced defense systems using bat drones to jam radar equipment. Russia and the US are in competition. See the Russia Today article (CLICK HERE and HERE).

◄$$$ SOMETHING BIG GOING DOWN IN GENEVA EARLY IN NOVEMBER, BUT IT STALLED. THE IRAN NUCLEAR TALKS MADE PROGRESS, BUT SUDDENLY WERE STALLED AT A BIG IMPASSE. BLAME THE FRENCH. $$$

Kerry and Lavrov met in Geneva. The state ministers from the United States and Russia made progress. The detente between the United States and Iran is desired universally, but to forge a pact, numerous thorny issues had to be settled. The Jackass preferred to call it a conference to agree on which nations would nuke which other nations if they got out of line. See the PressTV articles (CLICK HERE and HERE). At risk is the Petro-Dollar strangely, since the USGovt has produced such great tensions with Iran, that the Eastern Alliance of nations has rushed to develop and soon implement a USDollar alternative to trade. Their efforts were hatched from Iran sanction workarounds, like avoiding SWIFT bank obstacles, and furthering gold exchange to settle bilateral net trade balances. The usage of gold is frowned upon the USGovt global dictatorship regime. Too much progress has been made on the Gold Trade Settlement. Thus the motivation by the USGovt to hastily work toward resolving issues with Iran. The ruse is that Iran possesses nuclear weapons. The reality is that Iran is the principal nation settling oil & gas trade outside the USDollar. Thus the Anglo nations, their leaders, and their subservient press networks label the Iranians as rogue nation. The talks could have been called the Iran Dollar Talks with a nuclear diversion.

The Iran Nuclear talks failed due to a block in progress by French. Some argue that a new Saudi-French alliance is emerging. Few expected a quickly forged pact. But fewer expected the reason for the impasse to be French obstruction and intransigence. US delegate John Kerry had been urging for the Iranian deal for weeks. So when news hit that it was France that scuttled a deal with a last minute block, many were surprised. More specifically, it was France, Saudi Arabia, and Japan that formed the final block to a pact being signed. See the Zero Hedge article (CLICK HERE).

The grand losers will ultimately be the French and Saudis together. While Paris leaders try to make a difference, they do not realize that they are dead men walking, the Saudis included. More accurately, dead nations. EuroRaj made an intesting comment as footnote. He wrote, "The French have been selling out to the Arabs for a long time. Look at who owns their football (soccer) clubs. That is the visible nature of the transfer of ownership and prestige. Their companies, their property are all being sold. This is desperation on the part of France. This is their Elite cutting side deals into the end game. They are being penny wise and pound foolish, but that is what one does when left with bad choices. What is a bigger market for French goods, Saudi Arabia or Russia or China? Witness the last ditch defense." The Jackass harbors no animosity to the French people, some friends included, even one visiting national to dine with in San Jose Costa Rica on a couple of occasions. However, the French appear to overplay their hand, hardly the global leader in diplomacy. They settle no major bipartisan disputes, including in Lebanon. Their leaders are often CIA tools like Sarkozy. Their security agency is a mere outpost for Langley. They seem a spent nation with arrogant leaders that adopted socialism in the midst of failure, not capitalism. They seem to act like hand servants to the Americans. When not kowtowing to the Americans, they act as squires to the Germans, who own over 90% of their sovereign debt.

## USTREASURYS REACH BREAK POINT

◄$$$ THE USGOVT DEBT HAS GONE OUT OF CONTROL (LEGAL LIMIT LIFTED). OUT OF THE GATE FOR FY2014, ANOTHER $1 TRILLION HAS BEEN ADDED TO THE DEBT BURDEN. THE USDOLLAR IS BEHAVING LIKE A THIRD WORLD CURRENCY ON FUNDAMENTALS AND MANAGEMENT. THE DOLLAR RESERVE EQUILIBRIUM IS BREAKING DOWN. THE DYNAMICS ARE PUSHING FOREIGN NATIONS TO ADOPT THE GOLD STANDARD. $$$

Just in time to greet the first tranche of new debt, the USCongress lifted the legal limit requirements on USGovt debt. It will simply be ignored, since a formality and nuisance. An extremely large red flag. The USTreasury has issued a hefty $1 trillion in new debt in the first 6 weeks of Fiscal Year 2014. This is standard and customary, very expected. The first few weeks of a new fiscal year are always outsized on debt. In July and August, the budget managers put off certain expenses until the new FY to make the last FY look better, or not so terrible. There is more to the factor. Many different trusts were raided when the debt limit was obstructing the business of running the government. With the shutdown out of the way, the limit pushed aside, the trusts are being replenished, the funds put back. Watch for new extraordinary measures by the new Treasury Secy Jacob Lew, since no limit must be kept in mind, no budget caps, no imposed ceiling. Expect $19 trillion in total USGovt debt by the end FY2014. Global bond investors are watching, and their reaction will be to diversify out of USTBonds, to sell them, and to appeal behind closed doors to the USFed for quiet redemption that does not disrupt the USTreasury Bond market. The temporarily broken REPO market gave the players an opportunity to test the quiet back office mechanisms. Silly analysts state that the pace is for $9 trillion for the current year annualized, when the better method would be to compare with last year for the initial couple months. It is always the same pattern, the biggest debt months after Labor Day when the new fiscal year kicks in. See the 12160 News Info article (CLICK HERE).

The USGovt debt is totally out of control, spending not reined in, war costs persistent, the welfare state expansive, support for food and disabled workers huge, Social Security gone into the red, and pensions bloated. The debt buildup will continue until the system implodes. It is imploding here now. In no way can any equilibrium be maintained. The debt is way out of balance with what a market can provide in demand to fund the bonds. The debt has grown during decades of structural economic development for the United States, along with the Cold War with the Soviet Union, and a decade of staggering costs in the Iraq War and Afghan War. To put it back in balance, the USEconomy must be restructured more toward exports, a very costly and time consuming process. For foreign nations, they have begun to realize that accumulating more US$-based reserves makes no sense, and even adds to their risk of instability. The Gold Standard will return, since it is in the best interest of all nations, except for the US nation. Departure from a gold standard is a relatively new and unique situation since 1971/1973, a recent aberration. Therefore the biggest shock will come to the United States. The guest does not claim the Jackass conclusion, but he paints a picture of the US entering the Third World. See the Matterhorn interview of John Butler by Lars Schall (CLICK HERE).

◄$$$ THE US-HOUSE OF REPRESENTATIVES VOTED TO PROVIDE BANKSTERS FULL LIBERTY AGAIN IN THE DERIVATIVES BUSINESS. THE REQUIREMENT FOR MAINTAINING COLLATERAL ON THEIR HIGH RISK DERVATIVES WILL BE WAIVED. THE BIG US-BANKS CAN DECLARE VALUE ON THEIR ASSETS, CAN DELVE DEEPER INTO DERIVATIVES, AND CAN AVOID SETTING ASIDE COLLATERAL. THE SYSTEM IS TRULY DEAD, WITH BIGGER UGLIER ZOMBIES WANDERING ON WALL STREET DEFENDING AMERICA FROM FICTIONAL PREDATION. $$$

In late October, the US House passed a reportedly minor (but highly significant) reform to the Dodd-Frank Financial Regulatory Bill. It was cited as a necessary reform to the major sweeping reform passed three years ago, after the banksters wrecked the financial system in 2008. Official called HR 992, the Swaps Regulatory Improvement Act was authored primarily by Citibank lobbyists, and will allow predatory Wall Street financial institutions to once again engage in high-risk derivatives trading. It legitimizes what they already do, as they break the law. The requirement for collateral against positions will be waived. Losses will be socialized, paid for by the American taxpayer through the FDIC. It is absurdly under-funded and thus useless. The New York Times commented, "Citigroup's recommendations were reflected in more than 70 lines of the House committee's 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word." The other Co-sponsors of the bill are on the virtual Citibank payroll. These Congressional members received nearly 17 times more money from the big New York bank than have other members of the House who have not signed on as co-sponsors, according to Forbes. The total Citigroup contributions to buy the financial policy is logged at $503,150 to current members of the House of Representatives, a band of harlots. The biggest recipient is Jim Himes (D-Conn) who has received $66,450 from Citigroup, a co-sponsor of the bill. The spin spouted to the American public is that the tweak to the FinReg Bill will fix the USEconomy.

The House Financial Services Committee chairman referred to the slow weak non-recovery recovery, like a bonafide moron and banker tool fool. He did not comment on any spurious benefits from the FDIC backstop to derivative losses. It sounds like the USCongress is sabotaging the USGovt finances. Just like with the FASB relaxed rules on accounting, the Wall Street banks will be left to their own judgment to declare new 'unusual or exigent circumstances' for bypassing the designed restrictions imposed by the original Frank-Dodd Bill, flawed though it was. It did place some gutsy restriction on the criminal big money center banks. To be sure, the USCongress is a wholly owned subsidiary of the bankers and the global elite. The so-called Dodd–Frank Wall Street Reform & Consumer Protection Act signed into law by Obama in 2010 was largely devised as a propaganda device to placate Americans outraged by the Too Big to Fail bail-out mantra, complete with swindles. The FinReg Bill has been largely ignored, awaiting some reform to make official its irrelevance and ignored status. As of June, 175 of 279 separate Dodd-Frank deadline provisions have been missed. Government regulators have neglected 70.1% of rulemaking deadlines and 99.6% of 280 rules with specified deadlines, according to Bank Credit News which monitors progress or lack of it. The FinReg Bill was a sham from the start, written by Wall Street lobbyists, weakened as it was sidestepped, begun to placate the incredibly ignorant public. See the Info Wars article (CLICK HERE).

Some final interpretation can be made. First the Financial Accounting Standards Board relaxed rules in April 2009, to enable the big banks to declare any value they wished for portfolio assets. A total sham has permitted dead banks to act like zombies, hardly lending armatures and certaintly not investment machines. Then the FinReg Bill was scribed so as to pull the big US banks all back in line. They have been operating as insolvent structures for four full years, deader than Jimmy Hoffa. Now in November 2013, the FinReg Bill is officially relaxed on both rules for derivative involvement, and the setup for derivative collateral. Translation:  THE BIG US BANKS ARE DEAD AGAIN, NOW DEADER. Why else make such sudden new provisions? The firm Jackass belief is that the strong move from 1.65% in May to 2.95% in September on the 10-year USTBond killed their derivatives, heaping gigantic losses. They can continue to sit in the casinos and to play some, but their accounts are drained from deep derivative losses. They are probably being replenished by the USFed on a weekly basis, from up to $200 billion per month in largesse off the Weimar printing press with no accountability and no limits.

◄$$$ A NEW MORTGAGE LOAN THREAT IS COMING VERY SOON, AFTER A 10-YEAR RESTRAINT PERIOD ENDS ON TERMS. PAYMENT HIKES TOWARD PRINCIPAL WILL KICK IN SOON, FORCING ANOTHER BIG WAVE OF FORECLOSURES. THE US-HOUSING MARKET IS STUCK IN A TERMINAL DECLINE AND FAILURE. THE BIG US-BANKS SEE THE UPCOMING LOSSES, AS DO THE DEBT RATING AGENCIES. THE USFED MIGHT RECEIVE A NEW APPEAL FOR A RELIEF PARCEL IN QE4. $$$

Home equity lines due for reset on payment terms present a looming financial disaster, yet another one. Many borrowers might no longer be able to afford second mortgages and credit lines, when the payment resets require that they begin paying both principal and interest on their balances. A new storm front has been identified, soon to be denied. At risk is $billions of home equity credit lines that were extended a decade ago during the housing boom, assuring a new wave of defaults for banks and homeowners. The details are simple. The loans work as credit lines, technically second mortgages with floating rates and flexible withdrawal terms, but they carry mandatory resets after ten years. The resets require borrowers to begin paying both principal and interest on their balances, not just the floated interest during the initial 10-year draw period. The impact seen on the monthly payment is around $300 to $400 in most cases for homeowners, but up to $600 for a significant slice. If borrowers cannot afford or choose not to make the fully amortizing payments that reduce the principal debt, the bank that owns the note can demand full payment and foreclose on the house. The merry-go-round continues to spin on defaults.

Next consider the volume involved. According to federal financial regulators, about $30 billion in home equity lines dating to 2004 are due for resets in year 2014, $53 billion in year 2015, and a staggering $111 billion in 2018. The looming wave of disaster, as Equifax describes it, will find the majority of borrowers unable to manage the higher payments. The banks will be forced to foreclose, refinance, or modify their loans. The refinance doorway will be blocked since the homeowners will not qualify under the more stringent rules. Loan rates might even rise, even a small jump making the difference to unapproved refinances. Equifax reminds that owners with high balances in their credit lines already have low credit scores, and elevated statistical risk of default after the reset. The phenomenon is not coming to the banks as a blind side. In October, Citigroup increased reserves on its nearly $20 billion in home equity lines, citing a major challenge ahead. The risk is highlighted by Fitch Rating agency for 2014, citing the backlash of easy terms years ago to produce many more defaults. See the LA Times article (CLICK HERE). Open the USFed doors to another parcel for QE4 support, one hard to refuse since urgent.

◄$$$ MUNICIPAL BONDS REPRESENT YET ANOTHER THREAT. THE USFED MIGHT RECEIVE A NEW APPEAL FOR A RELIEF PARCEL IN QE4. $$$

The wave of municipal bankruptcies cannot be avoided. Meredith Whitney cited the risk almost three years ago, dismissed. Yet the threat never went away, and has begun to appear in force as new floodgates have opened. See the Testosterone Pit article (CLICK HERE). The entire Muni Bond market has turned into a toxic bond swamp. Fitch downgraded the Chicago city bonds. Moodys warned of bankruptcy for Scranton Pennsylvania. See the Yahoo Finance article (CLICK HERE) and the Watchdog Org article (CLICK HERE). Puerto Rico cannot escape the news. Despite the financial networks portraying the island protectorate nation (US colony) as attractive from new lax legal angles, like with property tax changes, it is in deep trouble. The Puerto Rico debt is not manageable, likely to fail unless something extraordinary happens in the bond market. See the Business Insider article (CLICK HERE). Open the USFed doors to another parcel for QE4 support, one hard to refuse since urgent.

◄$$$ STUDENT LOANS ARE THE NEXT FOCAL POINT OF IMMEDIATE FAILURE, WITH HUGE VOLUME AND POOR UNDERWRITING. YET ANOTHER SUBPRIME PLANK HAS BEEN SPOTTED IN THE ROTTEN CREDIT PORTFOLIO. JPMORGUEN HAS JOINED HSBC IN EXITING THE STUDENT LOAN BUSINESS. THE USFED MIGHT RECEIVE A NEW APPEAL FOR A RELIEF PARCEL IN QE4, HARDER TO REFUSE SINCE THE USGOVT IS THE MAIN UNDERWRITER. $$$

The student loan bubble is starting to burst. The largest bank in the United States will stop making student loans. JPMorgan Chase had sent a memorandum to colleges notifying them that the bank will stop making new student loans in October. The reason stated officially is pure nonsense misdirection, the usual Wall Street fare. JPMorgue actually said they do not see significant growth potential in such loans as an ongoing business. The move is reminiscent of the subprime shutdown that happened six years ago, which triggered the global financial crisis, nowhere near ended. With over $1 trillion in outstanding student loans, it stands as the second largest source of household debt after mortgages. Only around $150 billion of the total amount is from private student loans made by banks and other financial institutions, leaving over 80% with the USGovt as the inept underwriter. The niche has made bubblicious growth spurts. Just 10 years ago, student loans stood at $240 billion. So they have grown four-fold.

A report issued by the Consumer Finance Protection Bureau last year indicated a small number of student loans were currently in default status. Two major threats are presented. Defaults will rise if interest rates go higher, either from the USFed withdrawing its QE bond support, or from foreign abandonment of USTreasurys generally. Unlike federal loans, student loans are variable rate loans linked to LIBOR or the prime rate. Also, defaults will rise since the USEconomy is stuck in a terminal recession, better described as a hidden depression which cannot be properly identified for political reasons. With few job opportunities given to graduates who must make loan payments, defaults will rise very rapidly. JPMorgan is the second big private lender to step away from the business. Last year US Bancorp exited the business. That leaves Wells Fargo, Discover Financial Services, PNC Financial Services, SunTrust, and various credit unions as the largest private student lenders. Lest one forget, the former USGovt slush fun Sallie Mae is another student lender, which was privatized in 2004. See the CNBC article (CLICK HERE) or Zero Hedge article (CLICK HERE).

Jim Rickards put some detailed color on this next subprime crisis. He called it a crisis in the making, due to the size of the debt and the poor quality underwriting. The USDept Education calculated the default rate on federal student loans rose to 14.7% from 13.4% the year before, the highest level since 1995. Rickards forecasts a few $100 billion in losses from student loans in the near future, with a twist. Their accounting is off budget currently. They will very soon be part of the budget calculus, and add a significant slice to the USGovt deficit, perhaps equal to other major deficit components. Others are debt service interest, SS/Medicare, Defense. The USGovt has openly stated its priority to grant student loans as part of a pump prime for the USEconomy generally. They support the colleges and universities. They support a class of consumer that does not save, pure spending. Students in Rickard's opinion are a virtual ATM machine who spend immediately, frequently for beer as he quipped. See the Yahoo Finance interview (CLICK HERE). Open the USFed doors to another parcel for QE4 support, one hard to refuse since urgent.

◄$$$ HARVARD SWAP TOLL TOPS $1.25 BILLION IN LOSSES AS AGREEMENTS ARE EXITED. THE INTEREST RATE DERIVATIVE LOSSES ARE MOUNTING. LARRY SUMMERS IS A NOTABLE MAJOR WRECKING BALL, A LOSER ON ALL COUNTS. ALSO, PIMCO SUFFERS FROM SIZEABLE BOND EXITS, AS CLIENTS WITHDRAWAL DURING AND FOLLOWING THE TAPER TALK USTBOND LOSSES. $$$

Harvard University is the world's richest educational institution. In recent years, it is debated whether it functions a casino, a criminal incubator, or a set of colleges. Last year, it lost $345.3 million as it officially terminated Interest Rate Swaps contracts, bringing its cost of unwinding debt derivatives since 2008 to more than $1.25 billion. Harvard made the most recent payments to exit derivatives linked to almost $1 billion in certain debt instruments. The data was disclosed in a report on the fiscal year ended June 30th. A major wrecking ball in the financial derivatives doled out damage to the venerable institution's once staggering endowment fund. The fund was on pace to lose more than a quarter of its value, mostly under the watchful eye of Larry Summers, the arrogant problem child from Wall Street. Since then, the school has raised cash and cut debt to stabilize its finances. The university endowment is currently worth almost $33 billion. One could with confidence say that Larry Summers enriched Goldman Sachs, while at the same time he screwed Harvard. See the Bloomberg article (CLICK HERE).

Let the record know that Harvard Univ was the laboratory that fabricated the Enron Ponzi Scheme. They laid out the schematics for the Enron game. Citigroup provided the Enron investment capital. JPMorgan designed the slushy secretive off-shore companies, calling them Special Purpose Entitites, otherwise known as shells for the sham. Harvard's Fund enjoyed profits on the way up, then was tipped off that the jig was up, the fraud exposed, the game over. So Harvard shorted Enron, and profited on the way down as well. They escaped all blame, as they benefited from the Wall Street blame pinned on Arthur Anderson amidst a grand hubbub. AA was hardly clean, but they had partners in Citi, JPM, and Harvard. So the recent derivative losses could not have happened to a more scummy rancid crew than the Harvard Crimson. In the wake of the Enron scandal, the ranking executive of the Endowment Fund escaped to PIMCO. The link is Mohammed El-Erian, currently co-CEO of PIMCO with Bill Gross. The Jackass opinion of PIMCO was tainted when El-Erian did the migration. Gross benefited from insider USTreasury Bond information, until Goldman Sachs left them out of the derivative generated bond rally in late 2010. PIMCO was short on USTBonds, and lost big money. So in the ugliness, Harvard lost several $billion also. Consider it a little blowback from the criminal Enron profits they reaped. In the latest quarter, hard times befall PIMCO still, as the big funds have suffered a hefty $39 billion in client withdrawals. The Taper Talk slammed the bond funds, causing losses. Gross is not a big derivative player, and never talks about them. The losses were seen on bond principal. Once again, PIMCO needs some insider information like Wall Street firms. See the Bloomberg article (CLICK HERE).

◄$$$ FRENCH GOVT DEBT WAS DOWNGRADED BY STANDARD & POORS, GIVING SMALL LIFT TO THE BROKEN USDOLLAR. BLAME IS GIVEN TO THE LUNATIC AUSTERITY MEASURES, IN BUDGET CUTBACKS. PRESIDENT HOLLANDE HAS HALTED ALL REFORMS, AS THE SINKING VESSEL IS OBSERVED IN HORROR. EXPECT BIG FRENCH BANKS TO BE DOWNGRADED SOON. SPAIN AND ITALY ARE EACH IN WORSE CONDITION. FRANCE FACES A STRANGLE FROM PUBLIC PROTESTS. $$$

Hollande is paying the price for kowtowing to demands made by the EuroZone bank czars for austerity in the French national budget. Hollande was told by French economists, including the prestigious Observatoire, that austerity cuts would lead to depression and deflation, which has indeed occurred. The Standard & Poors downgrade of France to AA (from AA+) is an indictment of Europe's entire contraction regime, the poison pill in Jackass parlance. S&P accused France of halting the entire reform movement. Francois Hollande has ordered a flimsy patchwork of reform measures, which are fading into obscurity. The French Economy is stuck in sclerosis. Its state sector comprises over 56% of GDP, in utter insanity embraced as socialism, which enables the earliest worker retirement in Europe. The budget deficit has remained above 4% of GDP. Industrial production fell 0.7% in September, the fourth decline in five months. The risk is certain for the French Economy to contract again in 3Q2013. The S&P agency stated that the slower economic growth is limiting the government's ability to repair public finances, and ongoing high unemployment has hurt political support for further significant fiscal and structural policy measures. The unemployment is accelerating, as 3.296 million workers are on the dole, as compared to 1.983 million in 2008, a hefty 66% rise. The latest event is thousands of trucks have blocked French roads in a nationwide tax protest. They object fiercely to the French Govt controversial plan for an tax on heavy vehicles. The police estimated 2000 trucks (organizers claimed 4000) lined motorways, driving slowly, and clogging up traffic into various French cities including Paris, Strasbourg, Toulouse, Bordeaux, Marseille, Lyon, and Lille. Consistently the inept leaders in Paris choose more taxes rather than a smaller state bureaucracy with absurd early aged pensions.

Ambrose added commentary. The heroic fiscal squeeze done by France, to reduce by 1.8% its deficit in GDP terms last year, did comply with EMU demands. But it was at best self-defeating, and more likely destructive. France earned a double-dip recession, with 370,000 people losing their jobs. Ambrose concluded, "There is a proper therapeutic dose of fiscal austerity, and it should always be offset by monetary stimulus. Both rules were violated. As S&P says, Hollande made matters worse by relying on taxes, not spending cuts. You do not have to believe in the Laffer Curve to see that a country with a Leviathan state should not keep raising the tax share of GDP." The insanity in Paris continues, expanding the socialist state network when it should be drastically reduced. Ambrose believes the solution is IMF debt relief in a bridge loan, combined with currency devaluation. The common Euro currency makes the solution impossible. Ditto for Spain and Italy. The entire European region with 300 million in population cannot retrench all at once, or else it woul dcause a vicious cycle in a downward slide for the whole system. That is precisely what is seen here today. See the UK Telegraph article by Ambrose (CLICK HERE). Expect more French bank downgrades. Expect a downgrade of Italy and Spain soon. The end game is accelerating.

◄$$$ CANADIANS HAVE ISSUED BONDS DENOMINATED IN YUAN CURRENCY, BROKERED BY HSBC BANK. VANCOUVER TAPPED THE RICH CHINESE AND HONG KONG ELEMENT WITH A 500 MILLION YUAN (=US$80 MILLION) OFFERING. THE BOND HAS A ONE-YEAR MATURITY. $$$

BC is a prominent Canadian province in the Western region on the Pacific coast. British Columbia has issued offshore Yuan-denominated bonds, the first time for any foreign government. Mike de Jong, finance minister of the thriving province, admitted a plan to raise only CNY 500 million, but the bond offering was largely oversubscribed. Upon completion, the BC Govt issued one-year offshore Yuan-denominated bonds, raising CNY 2.5 billion. Central banks and foreign institutions snapped up 62% of the issued bonds, with fund asset managers buying 18%. Along national lines, Hong Kong investors took 46% of the bonds, while 40% went to US investors. The bonds carry a yield of 2.25%, while HSBC is the lone broker. The bonds will be listed in Luxembourg. BC seized the opportunity to lock in lower costs, with more diversified financing and investment channels. In addition, the Chinese Ministry of Finance announced on November 5th that it will sell DimSum bonds worth CNY 10 billion in Hong Kong on November 21st, to mark the second issuance this year. The first issuance was in June, when CNY 13 billion in such bonds were sold. See the Caixin article (CLICK HERE). It should be noted that Vancouver has a very significant Hong Kong immigrant population. They came to BC in the last fifteen years, following the end of the British affiliation, and brought a tremendous amount of wealth with them. They are responsible for the bland eyesore high rise apartment buildings, and the nickname of Hongkouver for the beautiful city. No attempt whatsoever was taken to make them appear attractive, standing in sharp contrast to more attractive facades on the skyline. Regard the Yuan-based bond sale as an extension of HK local influence.

◄$$$ THE USGOVT DEBT CEILING HAS BEEN SUSPENDED. RATHER THAN ACTING RESPONSIBLY WITH REDUCED WASTE AND CUTBACKS IN WAR AND HALTED BANKER WELFARE, THE USCONGRESS SIMPLY ELIMINATED THE REQUIREMENT FOR THE USGOVT TO REMAIN WITHIN A LIMIT. NOTE THE WRITING ON THE WALL FOR TWO EVENTS. FIRST, HUGE NEW USGOVT DEFICITS ARE COMING AS THE RECESSION DEEPENS. SECOND, A SPLIT IN THE USDOLLAR COULD BE HINTED WITH THE MANNER OF USFED ACCOUNTING FOR ECONOMIC GROWTH. $$$

Signals are clear. Reckless management is obvious. Responsibility is nowhere. The USCongress took the low road, the cowardly road, in avoiding decisions. They voted to suspend the USGovt debt limit as a requirement that has stood as law for well over a century. A few more $trillion in debt can be tacked on without any obstacles or resistance, the fanciful business as usual to continue. Foreigners will read the signals better than the Americans, who are by this time numb by debt. Expect the foreign dumping of USTreasurys to likely increase substantially over the next few months, as the collapse becomes evident to everyone except those living inside the US Dome. Consider it the end game where most people are not even aware they are in. See the Before Its News article (CLICK HERE).

Curiously, the US Federal Reserve tracks the real domestic product in terms of chained 2009 USDollars among other indicators. Be sure to know that the pre-2009 USD and newer QE-driven USD are different in legal standing. There would be no purpose in tracking GDP on economic growth in the differentiated USD terms unless doing so had a meaning. Pressure builds, as foreign nations and powerful financial entities demand a resolution. They are deeply resentful of the USFed debasing their savings, whether in the form of national FOREX reserves or private USD-based accounts. The meaning could be made clear when the USDollar splits into a foreign (intact) version and a new domestic (devalued) version. The accounting distinction for economic growth was found on the StLouis Fed website (CLICK HERE).

◄$$$ THE USGOVT DEFICITS RISE WITH THE DEEP FESTERING RECESSION, THE BALL & CHAIN OF SOCIALISM, AND THE BURDEN OF WAR. THE USFED BALANCE SHEET GROWS AS IT DISPENSES EVERMORE TOXIC PAPER. BUT THE BENEFIT FROM THE CURRENT FISCAL AND MONETARY ACTIONS ARE NOWHERE. STIMULUS IS NOT HAPPENING, BUT RATHER A WET BLANKET THAT KILLS CAPITAL. $$$

Lance Roberts of STA Wealth Mgmt shows in the simple chart below evidence of the totally slipped transmission. It has taken $35.17 of government intervention to generate a single $1 of USEconomic growth over the past five years. More importantly, the rate of diminishing returns is increasing. In other words, it is taking consistently more volume in intervention to create any incremental increase in economic growth. The Jackass contention is that the economic recession is going worse, hardly a recovery, with no growth whatsoever. The great lie remains at least 5% on the price inflation deflator tool. See the John Williams work at Shadow Govt Statistics, which shows the true CPI for inflation at around 7% to 9% every year. The True GDP growth rate is between minus 3% and minus 5%, based in reality. The only true beneficial result of the current hyper inflation is that the systemic failure and bank system collapse have been delayed, hardly a notable item on Bernanke's resume.

Further criticism of the USFed blank check approach has surprisingly come from Larry Fink of Blackstone. He openly expressed concern that Bernanke has built a bubble in its own back yard, located on its own gigantic $3.7 trillion balance sheet. Fink advises the quack professor Bernanke to halt the bond purchases. Fink is joined by Carlo Giannone of T3 Trading Group, who calls the stock market a sequence of musical chairs, with outsized stock valuations. Also, Michael Shaoul of Marketfield Asset Mgmt expects a steep future price will be paid for the created bubble. The pain will come in the future in the form of higher inflation, higher interest rates, and more difficult business conditions. See the Bloomberg article (CLICK HERE).

## CENTRAL BANKS SUBMIT TO INFLATION

◄$$$ QE IS A GIGANTIC BACKDOOR BAILOUT WINDOW FOR WALL STREET BANKS. THE USFED BOND PURCHASE CONTINUES TO BE DISGUISED AS STIMULUS, WHEN NONE IS PRESENT. THE USFED HAS BECOME PLAGUED BY TUNNEL VISION IN DEVOTION TO WALL STREET BANKS. THE OVERALL BENEFIT TO THE USECONOMY IS 1% ON INVESTMENT, AT MOST BARELY A COUPLE GDP PERCENTAGE POINTS. THE COST IS CLEAR, IN A GRAND TOXIC BALANCE SHEET AT THE CENTRAL BANK, DISTORTED ASSET VALUES, FREE MONEY FOR THE ELITE, AND DEEP DEPENDENCE ACROSS THE ENTIRE SYSTEM. $$$

Andrew Huszar is a former USFed official. In 2009 and 2010, he managed their $1.25 trillion mortgage backed security purchase program off the Fannie Mae trough. He was also once a Morgan Stanley managing director. So assume he has some interest rate derivative awareness. He wrote a public apology article in the Wall Street Journal, a mea culpa piece. Huszar confessed that the QE bond purchase program is ineffective, and the USEconomy is fundamentally unsound. He had a direct hand for executing the centerpiece program of the central bank's first plunge into the ill-fated bond buying experiment known as Quantitative Easing. The central bank continues to spin QE as a tool for aiding Main Street businesses. He has awakened to recognize the program for being the greatest backdoor Wall Street bailout in history. It is hyper monetary inflation under thin disguise, designed to benefit the big insolvent banks, and help them to unload their still giant toxic bond portfolios. The initiative has not done anything to mitigate economic pain, nothing to prevent job loss. The bankers have built walls to prevent any money from reaching Main Street. They fear price inflation to rage. Besides, they want all the money for themselves.

From the start, USFed Chairman Bernanke sold the QE bond monetization plan to ease credit distress, to lower credit costs, to aid the USEconomy in the downturn. Huszar was tapped to serve the USFed in the wild program (as he described it) toward a project to purchase $1.25 trillion in mortgage bonds over 12 months. He has since lost his faith and exalted perception of the USFed itself. He regards its independence to be flawed and eroding, since devoted to Wall Street primarily. That it bought any mortgage bonds at all represented a change in its century of history, with no precedence. He believes the USFed did not know what it was doing. He saw no benefit to the credit market generally, and certainly none to the Main Street businesses. The banks were issuing even fewer loans. He concluded Wall Street firms were pocketing most of the extra cash from bond redemptions. His and other voices were raised that QE was not succeeding as planned, but their warnings fell on deaf ears. No cost versus benefit carefully weighed analysis took place, as in past decades by the central bank researchers. What overrode was concern over financial market expectations, not the benefit to businesses or to the USGovt deficits. The only benefits were to the Wall Street firms, in what Huszar calls an absolute coup. They saw gains on the bonds held in portfolios, as well as outsized gains (fees) from brokering most of the Fed's QE transactions themselves. Wall Street saw its most profitable year ever in 2009 in stark contrast to the nosedive in the general economy. When QE2 was launched, the German finance minister Wolfgang Schäuble called the decision clueless. At that point, Huszar returned to the private sector at the Rutgers Business School.

The report card on the collective projects is miserable. Over five years, its QE bond purchases have cost over $4 trillion. The supposedly free market advocate nation, the United States, has sponsored QE as the largest financial markets intervention by any government or central bank in world history. The aggressive QE run over five years has generated only a few percentage points of economic growth, a miserable outcome. By contrast, experts outside the Fed, such as Mohammed El-Erian at PIMCO, suggested that the USFed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP. At the estimated paltry pathetic $40 billion bump in USEconomic output, it comes to a 1% return in trickle down. Both of those estimates indicate that QE at best is not working, and at worst is a colossal failure. Neither the USGovt nor the USFed nor the Wall Street banks have provided any leadership, guidance, or solutions to what Huszar calls the structurally unsound USEconomy. A deep dependence has been fostered and institutionalized, where the financial system, its markets, the credit market, big businesses, and the economy are woefully dependent upon the USFed and its continuation of QE.

Huszar calls QE the Too Big to Fail monetary policy that cannot be taken offline. Then comes the global effect on the higher cost structure, a nightmarish dinner plate. Expect QE to Infinity to be endorsed and continued during and after the transition to a Yellen Fed. The dysfunction in WashingtonDC has resulted in dutiful service by the USFed, resulting in a gigantic and toxic central bank balance sheet. See the Wall Street Journal article (CLICK HERE). Also see the Before Its News article (CLICK HERE) on the mechanics of QE as policy, and the actual destruction of the USEconomy under its guidance.

◄$$$ NO EXIT AVAILABLE FOR THE USFED IS BECOMING MAINSTREAM NEWS. THE FED CAN ONLY FAIL, IN FULL VIEW ON THE GLOBAL STAGE. $$$

Numerous are the references to the USFed having no alternative but to continue, that the US financial structures are imbalanced, that the US financial market has grown dependent upon the central bank accommodation. The mainstream is awakening to the dilemma. Pater Tenebrarum is an independent analyst who writes under the pseudonym Acting Man. He has shown consistent wisdom, from the berm of the mainstream but with pathways at times on the sound money trail. He pointed out that Deutsche Bank argues no tapering will actually occur, while SocGen of France has gone one step further with an expectation of a QE volume increase. He gave emphasis to the futility of the Bernanke Theory, an obvious genuflection to the banker altar, for asset bubbles they create. The Acting Man highlights the production of capital versus consumer goods in the USEconomy, which reflect credit bubble distortions. See the Acting Man article (CLICK HERE) whose message is No Exit.

Tenebrarum wrote, "Even though new bubbles may be staring everyone into the face, central banks must not make the mistake to stop easing too early. It is held that that would endanger the recovery, similar to what happened in the US in 1937 and Japan in 1996. While it is true that the liquidation of malinvested capital would resume if the monetary heroin doses were to be reduced, the only alternative is to try to engender an eternal boom by printing evermore money. This can only lead to an even worse ultimate outcome, in the very worst case a crack-up boom that destroys the entire monetary system. One of the reasons why we remain convinced that the widely hoped for return to a Normal Expansion is not likely to occur is that we have some evidence, tentative though it may be, that the economy's production structure has been severely distorted again by the Fed's interest rate manipulations and the huge growth in the money supply it had to engender in order to keep interest rates below the natural level dictated by time preferences. As one of our readers frequently point out in the comments section, the policy is mainly a stealth bank bailout, as money is transferred from savers to banks in order to avert the liquidation of unsound credit. How much unsound credit is still clogging up the system after the 2008 crisis? We unfortunately do not know, as bank balance sheets have become even darker black boxes than they already were after mark-to-market accounting was suspended in April of 2009. No doubt people who have the time to study the hundreds of pages of bank earnings reports with their endless footnotes in detail could come up with estimates, but apparently nobody really takes the time to do that.

Once the economy's capital structure is distorted beyond a certain threshold, it will not matter anymore how much more monetary pumping the central bank engages in. Instead of creating a temporary illusion of prosperity, the negative effects of the policy will begin to predominate almost immediately. Given that we have evidence the distortion is already at quite a ripe stage, it should be expected that the economy will perform far worse in the near to medium term than was hitherto widely believed. This also means that monetary pumping will likely continue at full blast, as central bankers continue to erroneously assume that the policy is helping the economy to recover." The Acting Man describes a accelerating centrifuge that has slipped out of gear.

Doug Noland covers the field of blemishes. He sidesteps any discussion of the dependence upon Interest Rate derivatives to maintain the bubble that he identifies. But the Jackass believes he does not comprehend them, or is not permitted to discuss them. Some great depth is shown in his analytic summary of the trapped USFed, exposing its hubris and arrogance. He focuses on their deep broad delusions on effects and control. He wrote, "One of these days the Fed and its flawed doctrine will be held accountable. For now, the Fed and Wall Street can continue to pretend this massive ongoing monetary inflation makes sense. They can pretend that a) you cannot recognize a Bubble until after it bursts, that b) pegging short-term rates at zero for years does not foment massive financial distortions and economic maladjustment, that c) this is not a redistribution of wealth on an unprecedented scale, that d) central bankers should rely on regulation instead of monetary policy to address mounting financial excess, and that e) aggressive reflationary measures can always be employed to counter bursting Bubbles. They can pretend that 1) we are not witnessing the greatest financial bubble in history, that 2) trust in money, financial assets, and central banking is not at stake. And they can pretend that 3) they will retain effective tools for stabilizing the system the day this massive global bubble begins to really unwind. If there is historic precedent for aggressive inflationism employed over an extended period without catastrophic consequences, that would be news to me." Noland gives dire warning. Another gem graphic art work by Pawel Kuczynski to depict the banker elite class at the public trough, doing what they do best, eating and getting fat.

◄$$$ SLIPPED TRANSMISSION AND STRIPPED GEARS GO ALONG WITH EXCESSIVE DEBT NOT FINDING TRACTION. THE MISSING LINK IS A CORE OF US-INDUSTRY, NO LONGER PART OF THE USECONOMY. IT WAS SHIPPED TO ASIA, THE PROCESS BEGAN IN THE 1980 DECADE. IT NEVER STOPPED. $$$

Market analyst Chris Martenson argues in his new commentary, "The Fed Can Only Fail" that a debt explosion will lead to a failed system. The level of total debt in the United States is growing much faster than the USEconomy. Martenson expects the debt will result in a currency devaluation, which will involve a transfer of wealth from financial assets to real assets. Notice that since the United States broke the Bretton Woods Gold Standard in 1971, the explosion in debt followed. No controls have existed. See the Peak Prosperity article (CLICK HERE).

◄$$$ DEUTSCHE BANK BELIEVES YELLEN MAY ACTUALLY HAVE TO INCREASE QE BOND PURCHASE VOLUME. THE REASON EXTENDS BEYOND THE DAMAGED AMERICAN VESSEL. THEY EXPECT A BREAKDOWN IN CHINA WILL URGENTLY REQUIRE THE USFED TO AMPLIFY THE QE MONETIZATIONS IN THE FORM OF AID FOR CHINA. THE GLOBAL ECONOMY IS AT RISK. CHINA IS SLOWING DOWN SUDDENLY. AS FOOTNOTE, DEUTSCHE BANK REMAINS ON THE EDGE OF CORPORATE FAILURE, DUE TO ITS DERIVATIVE BOOK. $$$

Jim Reid of Deutsche Bank believes the next source of global economic contraction could result in an increase in QE bond purchase volume, seen in China. However, he expects the proximal cause will not be the United States, but rather China. Their economy is slowing down in a grand manner. Up until now, the USFed has based almost all decisions on US data and US markets. Recall that when the Lehman failure occurred in 2008, China was called upon to serve as the global dynamo on its marginal cylinder. If Deutsche Bank analysts are correct, it will be up to the USFed to offset the tremendous Chinese problems. Its export market customers are all in a grand stall. Therefore the New Normal Paradigm (queer to be sure) will dictate that the worse the news out of China, the better for stocks, since the USFed will be urged to prime the pump.

The Chinese Economy is slowing on activity, on industrial production, on retail sales, with a rising price inflation chaser. The much awaited Third Plenum meeting in China has begun. A wide ranging package of reforms will follow, in terms of industry deregulation, financial liberalization, reforms to land titles, reforms to state owned enterprises, and changes to social security. Despite hope and excitement for such reforms, the challenge on implementation will be difficult and slow. Watch the slowdown gather momentum in China. Then watch the reaction by Yellen and Draghi. The USFed and EuroCB will face enormous pressure. The only engine at work on the global stage is the series of Weimar printing presses, as very few capitalist engines are functioning. The sudden provocative thought could soon be that Yellen may actually have to increase QE. See the Zero Hedge article (CLICK HERE).

Dave from Denver pitched in. He wrote, "Deutsche Bank's derivatives holdings are melting down. Just got off the phone with a good friend of mine who worked at Bankers Trust when I was there. He stayed on DB after DB bought BT until about 2005. He spoke to an ex-colleague of his who was there even longer and who still talks to people there. My buddy was in a group that always seemed to know what was happening internally in the executive suite way, before it became general news at the bank. Apparently DB's derivatives mess is way worse than has been disclosed in public. The way it was stated: Anshu Jain's derivatives empire is collapsing. Jain took over the derivatives business when DB took over BT, [where] Jain eventually became CEO. He is one of the sleaziest dudes on Wall Street." The report confirms the forewarning given by the Jackass back in the summer months (three or four months ago) that Deutsche Bank, Barclays, and Citigroup were teetering on the edge of bank failure, each desperately bolstered and propped. Later, the legal troubles over derivatives accounting fraud by DBank further raised their risk. They have been focused on for pressure to increase collateral for their wrecked derivatives. Given the legal rope tied around them, and the many VPs flipping to cooperate with prosecutors, DBank remains the primary focus for bank failure. All the big Western banks are lashed together, so that when one fails, several will fail in unison, a grand chain reaction.

◄$$$ OCTOBER MORTGAGE APPLICATIONS COLLAPSED, DESPITE VERY LOW LOAN RATES. THE US-HOUSING MARKET IS GOING INTO REVERSE, WITH BADLY FALLING HOME SALES. THE RECOVERY IS NOWHERE. THE DEPRESSION IS TAKING HOLD OF THE USECONOMY. $$$

October mortgage purchase applications collapsed to decade lows. In the first week of November, home loan applications plunged at nearly the fastest pace in nine months, falling to their lowest since February 2012. The volume is running 20% below the May brief spurt. Worse, this is the lowest level of mortgage purchase activity for this time of year in a decade. The plunge has created a problem. Morons like the Bank of America CEO are on record saying home purchases, not refinances, boost the economy. Such nonsense is commonly heard, when any true boost comes from capital formation, value added production, and job creation, with actual income flows. Moynihan should stick to narco money laundering, his sidebar specialty. See the Calculated Risk article (CLICK HERE).

Three weeks ago, the National Assn of Realtors released its report on September existing home sales. It was dismal, showing a 1.9% decline on seasonally adjusted sales, on an annualized basis. As usual, a deeper look behind the adjusted numbers shows a much bigger decline. The US housing market is fundamentally in deep trouble. The August number was revised down substantially from the 5.48 million homes, whereas originally reported at 5.39 million. Thus the true decline from August to September was actually 3.5%, a great deal worse than reported. They choose to report the decline versus the unrevised level. Furthermore, the August sales were flat compared to July. The originally reported August 1.7% gain has vanished. The market was starting to slow down considerably over the summer despite reports that were released showing the contrary. The economic data tends to focus on the loan applications, when many are rejected or do not occur due to borrowers backing out. Each month the same story, it seems. The unadjusted data tells a horrendous story.  If one looks at the actual data, not the seasonally adjusted data, it shows a stunning 17.4% drop in sales from August to September. See the Seeking Alpha article (CLICK HERE). The bank cartel must pull the benchmark 10-year USTreasury yield down to 2.0% in order to further inflate the housing bubble. It is urgent to remove the 30-something year old kids out of their parent basements and into their own starter homes.

◄$$$ MARK FABER EXPECTS THE USFED COULD INCREASE QE VOLUME BY DOUBLE OR MORE IN THE COMING MONTHS, MAYBE EVEN TO REACH $1 TRILLION A MONTH. HIS VIEWPOINT IS NOT TO BE QUICKLY DISMISSED. BAILOUTS OF BANK DERIVATIVES COULD SOON BE OPENLY INCLUDED, SURELY HIDDEN NOW. EXPECT FOREIGN DIVERSIFICATION OUT OF USDOLLARS TO OCCUR SOON, LIKE IN THE WAKE OF A MAJOR SAUDI GUIDELINE CHANGE ON CRUDE OIL PAYMENTS. THE PETRO-DOLLAR IS TO SEE A SUNSET. $$$

Marc Faber is outspoken and a bit of a wild man with occasional exaggerations. His pronouncements lie in the same Jackass trajectory usually, but extended. He said, "The question is not tapering. The question is at what point will they increase the asset purchases to say $150 billion, $200 billion, a trillion dollars a month." See the CNBC Squawk Box interview, which CNBC chooses to present in order to claim that they are balanced (CLICK HERE). His estimation is entirely correct in the Jackass view, for two reasons. The bank derivatives must be factored in for the outsized but hidden USFed support. They are burning down the Wall Street bank books here and now. Also, foreigners will accelerate their diversification of USTreasury Bonds held in reserve. They object to the unilateral monetary policy (no foreign advice requested on important decisions that affect them). The Russians and Chinese are busily engaged in dumping of USTBonds in asset sales and large energy contract sales. It is the new liquidation currency of choice for the grand deals. The bonds are returned to sender, in New York and London, where they cannot be refused. Faber is wild in his numbers. He should have stopped at $150 to $200 billion per month, surely sensational still. Full agreement here, but a forecast of $1 trillion per month should never be put in print. Clearly the USFed must cover the derivative losses that are mounting and still hidden. One must wonder how much longer they will remain hidden. We are due for a group of London Whales sighted. The time has come for the Petro-Dollar to die its horrible death. It will deliver Wall Street a loud wakeup call.

EuroRaj pitched in with an opinion on the magnificent non-linear upcoming ramp-up in the USFed QE volume of monetization. He wrote, "It will not be a gradual and step function increase. That time has come and gone, seen over the last five years. The possibility of a sudden and overnight gigantic QE volume increase as part of the Global Reset is upon us. Another hunch here. The market is possibly moving towards a point whereby the Saudis will be forced to accept for their own survival the EUR [Euro] and CNY [Chinese Yuan] as well as USD as payment for crude oil. The rhetoric is certainly moving in that direction. If so, then foreign banking systems will shed USTBonds in a big way, as they diversify their reserves out of USDollars. My focus is on two markers to accelerate this process, a) the compromises Obama makes towards Iran in terms of lifting of sanctions, and b) talks on the Keystone pipeline final approval."

## DRAGHI EUROCB DEFIES GERMANY

◄$$$ IN A STUNNING MOVE, THE EURO CENTRAL BANK CUT RATES BY 25 BASIS POINTS. THE RECESSION IN THE EUROZONE IS UGLY. THE BIG BANKS ARE INSOLVENT. THE SOVEREIGN BONDS ARE AILING. THE PAPER MACHE SOLUTIONS ARE BEING CHALLENGED. THE DECLINE IN THE EURO CURRENCY COULD SHINE LIGHT ON THE MOTIVE, AS THE COMPETING CURRENCY WAR ADVANCES. THE EURO-CB IS ON PAR WITH THE USFED AND BANK OF ENGLAND IN USING THE DESTRUCTIVE MONETARY MACHINERY. THEY WILL RAISE RISK OF FURTHER ASSET BUBBLES, WHILE LIFTING THE COST STRUCTURE. THE STORM VORTEX WILL INTENSIFY. NO SOLUTIONS WILL COME, ONLY GREATER STORMS. $$$

Almost a uniform consensus of economists and strategists (67 of 70) predicted no rate cut by the Euro Central Bank, probably out of habit without benefit of thought. The EuroCB cut the official rate from near nothing to next to nothing. Analysts call it a stunning move, but the message is more bizarre. It cut rates for both the main REFI rate and the marginal lending facility by 25 bps, to 0.25% and 0.75% respectively. The new rates went into effect on November 13th. The new consensus belief is that the EuroCB reacted to Europe's encroaching deflation. The impact on the FOREX was notable but brief, and within several days a fizzle. The Euro had topped near 138 in the last week of October. With the USGovt shutdown having been pulled off the billboards and some form of new EuroCB easing made to seem likely, the Euro dropped quickly to 135 at the beginning of November. The surprise rate cut sent it on a downdraft to a 133 handle, but it returned almost to 135 on short covering. There must be a recognition that the Euro and USDollar are equally wrecked by currency debasement and ultra-low rates. See the Zero Hedge article (CLICK HERE).

The European Central Bank rate cut should be viewed as a confirmation that the EuroZone is equally crippled as the United States, both financially and economically. The major central banks are locked in a race to the bottom, but somehow when it is Draghi versus Bernanke, the game is described as cooperative monetary easing. But when Asian central banks do the same, it is competiting currency wars. The competitive debasement surely extends from the Asian export advantage sought and secured. Fears are growing that a long period of stagnation will settle into Europe, like what has afflicted Japan. The ECB cut reinforced a vow last year by Super Mario to do whatever it takes to preserve the EuroZone. Translate to mean whatever it takes to protect the big banks from a skein of failures, sufficient to cause a wrecking field. The buzz is that the central bank was reacting to a sudden drop in EuroZone inflation, which fell to an annual rate of 0.7% in October, well below its official target of about 2%. The decline raised the specter of deflation, which is a boogeyman not the least properly understood. Deflation is better described as widespread liquidations during business failure. The true threat has been transformed from falling asset prices to rising costs, neither beneficial. So the poison will be lost wealth or lost business profitability. It is a Sophie's Choice, just like in the United States.

Draghi insisted that the ECB was not expecting any catastrophic situation. He denied any grand fall in prices across a large category of goods, and across a broad number of countries. He denied the European situation resembles Japan. The absurd consensus is that the ECB rate cut will be stimulative for economic growth. It will not. Instead the rate cut will cause a rise in the cost structure, help to kill more capital, and result in more job cuts, even larger national deficits. Regard the rate cut as a beneficial bone tossed to the big banks on lending capital. So finally the USFed, Bank of England, and EuroCB are on the same ground with equally destructive inflation and equally ruinous ultra-low rates. Since the monetary spigot is extended easily across the Atlantic Ocean by means of the USDollar Swap Facility, the three central banks are on similar pillboxes floating adrift in a vast sea of liquidity. The low rates wreck financial markets and distort capital values. The easy money undermines the currencies and lifts the cost structure. No solution is to be seen. The many nations in the fractious 17-nation Euro Monetary Union cannot afford to stimulate their economies through more spending. The Western nations are trying to cut spending and waste, when they should attempt to attract industry back from Asia. It is called capital formation, the essence of capitalism, a concept long forgotten in the socialist camps that have come to dominate the West.

On the other side, the French finance minister Pierre Moscovici indicated that the rate cut provided needed support for the ongoing recovery by limiting the risk of deflation. The socialists are morons on all matters of the economy and monetary policy. The German banking group expressed displeasure, pointing out that savings will be harmed, and asset bubbles will become a renewed danger. They see no deflation threat. Given the enormous monetary expansion, the door is open both to asset bubbles such as the stock markets and to rising cost structure, which will intensify the economic recession. Thus the ZIRP stir and the QE swirl will continue to produce a combined low pressure and high pressure zone, a veritable destructive hurricane. Draghi has overruled the German objections, and will earn their anger. The dissenters on the ECB Governing Board were not identifed, but assume they were led by the Germans and their camp. The Voice expects the Germans before long to exit the Euro currency, but without a definition of what soon entails. Be sure to know he does not mean a couple more years. See the New York Times article (CLICK HERE). For another interesting perspective, check out the deflationary Southern Europe versus the inflationary United Kingdom with its own printing press. See the Business Insider article (CLICK HERE).

◄$$$ A HUGE NEW EURO-CB BOND MONETIZATION ROUND IS NEXT, WITH MAJOR FINANCIAL MARKET INTERVENTIONS. THE GERMAN RIFT HAS GROWN WIDER. THE LATIN NATIONS HAVE BEGUN TO DOMINATE THE DRAGHI EURO CENTRAL BANK. THE PRIORITY TO HALT THE DEFLATIONARY DECAY AND EXTREME ECONOMIC RECESSION IS SEEN AS A HIGHER PRIORITY THAN CORROSION TO GERMAN SAVINGS. THE ALTERNATIVE OF GERMANY EXITING THE EURO CURRENCY IS GROWING, MORE OPENLY SEEN AS AN OUTCOME. $$$

The strong nations were critical of the EuroCB rate cut. The weak nations approved of the decision. Strangely, as the Voice has pointed out, the wrecked South is led by Catholics, and the productive North is led by Protestants, something never noted in the press. Germany generally fears that looser money will lead to profligacy among the EuroZone's more financially troubled members. The major publications are ripe with negative feedback. The Financial Times has an op-ed piece by Hans Werner Sinn of the IFO Institute for economic research, harshly criticizing the ECB for cutting rates. The Bild Zeitung fired off tabloid anathemas over the destruction of German savings by the Goldman Sachs syndicated EuroCB. The Bundesbank's Andreas Dombret openly accused the ECB's near zero rates as posing risks for financial stability in Germany. The latest cover of a German business magazine Wirtschafts Woche pictured an arrogant Mario Draghi, not flattering. The EuroCB is preparing the way for another massive round of bond monetization, certain to bring a significant fracture with the Germans, perhaps a final fracture. A quick Jackass commentary, in response to Sinn, who speaks for a nation offended for thefts essentially of their savings. Pressure builds. When a nation has its savings ransacked by a Goldman Sachs stooge like Draghi at the EuroCB, it causes a reaction. When the German nation is given blank worthless assurance on the collateral, the reaction accelerates. When the process is repeated, the reaction approaches a critical level for significant change to occur. Germany will leave the Euro someday soon, the timing very uncertain. The event is a certainty. It will be closer to a few months than to a couple more years.

The ECB's Peter Praet, board member in charge of setting economic policy, gave a surprising interview to the Wall Street Journal. The central bank is opening the floodgates for bond purchases and market intervention. The gradual collapse and pathetic EuroZone economic stagnation have caused a revolt finally. The ECB's Latin majority refuses to accept the Bundesbank direction any further. Praet said, "If our mandate is at risk, we are going to take all the measures that we think we should take to fulfil that mandate. That is a very clear signal. The balance sheet capacity of the central bank can also be used. This includes outright purchases that any central bank can do. The rules do not exclude that you intervene in the markets outright. For some decisions it is easier than others [to gain consensus]. One thing is clear: the Governing Council has been able to decide. That is really the message." The Germans are openly angry. A conclusive final split is near.

Even Ambrose Evans-Pritchard foresees the eventual departure by Germany from the European Union in more ways than just the common currency. Ambrose concluded, "The North-South crisis goes on. It merely changes shape. German political consent for the EMU Project will be tested further. The nub of the matter is that any policy set at this stage for Club Med needs is destructive for Germany, and any policy set for German needs is destructive for Club Med. You cannot set a workable policy. The intra-EMU gap is already too wide. The levels of destruction are asymmetric. A bout of deflation for Italy is far more serious (for everybody in the end), than a bout of inflation in Germany. But that is a macro-economic analysis. This drama will be decided by politics. The German people have their own firmly-held view. As an amateur anthropologist, I respect the idiosyncratic cultures of Europe's historic nations, so I do not wish to join Romano Prodi in denouncing the Germans for being as obsessed with inflation, as teenagers are obsessed with sex. Mr Prodi should have thought about that a little harder when he took Italy into a currency union with Germany in the first place. Europe's peoples are what they are. That is precisely why we Euro-skeptics have always argued that forcing the pace of EU integration is a very dangerous thing to do. As for the looming civil war within EMU over monetary policy, there is an easy solution. Germany can politely withdraw from the Euro, and the South can politely agree that this would on balance be an understandable action. Everybody could be on best behaviour, seeking to demonstrate to the world that matters are under control." See the UK Telegraph article by Ambrose (CLICK HERE). The German split is becoming a mainstream item discussed, proposed, and argued.

EuroRaj added some astute commentary, his thoughts, my edits for prose. He pointed out that France, Italy, and Spain are all in the same dire situation, a predicament without solution for their economies and financial structures. If they threaten Germany with more amplified QE bond monetizations, Germany will tell them to keep their broken Euro currency, and depart from the common Euro fold. The choices for the Draghi EuroCB and the Bernanke USFed (soon the Yellen Fed) are identical. Either make the banks go through bankruptcy and clear out their fictitious inflated assets, or else hyper-inflate everything across the board. The former option means tremendous disruptions, but progress eventually like in Iceland. The latter option means the system continues with growing stress and strain until it explodes and collapse, with no progress and possibly global war. There is nothing new in these choices. They have been the same since mankind adopted fiat as a means of exchange and used gold as a means of savings. The widespread screaming for final difficult decisions has been heard since 2010, but practically it cannot be done. Draghi has been trying to corner Merkel and the Bundesbank in an ongoing skirmish, using various tricks, but has failed because he legally cannot print money. The strong Euro currency is making life miserable across Europe, while depression continues. The governments of France, Italy, and Spain are nothing but members of a puppet gallery to conduct US foreign policy.

## BANKS IN FINAL COLLAPSE STAGE

◄$$$ A BIG BOLD DEBT DOWNGRADE WAS MADE BY MOODYS OF SEVERAL WALL STREET BANKS. THE FALLOUT COULD REACH INVESTMENT FUNDS, WHICH MIGHT BE BLOCKED FROM HOLDING THEIR BONDS IN PORTFOLIOS. FURTHERMORE, THE PRESCRIPTION FOR RESTRUCTURING IS SUGGESTED, ON THE BACKS OF CREDITORS, NOT DEPOSITORS. ATTACK ON THE BANK FORTRESS. CARRY ON THE SPECULATION TOWARD THE JPMORGUEN COMMITMENT OF IRS-FUNDS AND THE DEPLETION OF THEIR GOLD INVENTORY. THE GREAT TIPOFF WAS THE SUDDEN DISCOUNTED SALE OF THEIR HEADQUARTERS TO A CHINESE PROPERTY CONGLOMERATE. SOMETHING BIG IS HAPPENING, AS SMOKE BILLOWS OUT OF THE MARBLED JPM HQ OFFICES. THE MORGUE IS COLLAPSING. $$$

The downgrade was bloody and very unexpected. The US-based ratings agencies must feel pressure to finally do their job well, and foretell of a bank failure. It would be very embarrassing (again) if a group of New York banks failed, but with rosy debt ratings. The news came suddenly. Bank of New York was cut to A1 from Aa3 (double hit), and Goldman Sachs was lowered to Baa1 from A3. JPMorgan was cut to A3 from A2, and Morgan Stanley was downgraded to Baa2 from Baa1. Subordinated debt ratings were also lowered for BNY Mellon, Goldman Sachs, JPMorgan, and Morgan Stanley. In contrast, Citigroup's Citibank NA subsidiary had its long-term deposits upgraded to A2 from A3 and short-term rating lifted to Prime-1. Bank of America's long-term deposit rating was raised to A2 from A3 and its short-term rating was upgraded to Prime-1. State Street Bank & Trust had its long-term deposit rating and subordinated debt downgraded.

The Moodys public statement was direct, and flies in the face of the entire Bail-in procedure being promoted in the West. It addressed bank failures and the procedure called in reaction. They stated, "We believe that US bank regulators have made substantive progress in establishing a credible framework to resolve a large, failing bank. Rather than relying on public funds to bail out one of these institutions, we expect that bank holding company creditors will be bailed-in and thereby shoulder much of the burden to help recapitalize a failing bank. See the Bloomberg article (CLICK HERE). That is a big WOW, a shot across the bank syndicate bow. The next impact could be rejection by pension funds, mutual funds, and financial firm managed funds, which cannot engage in investment in these NY corporate bank bonds when below investment grade.


The downgrade of JPMorguen and Goldman Sachs hints at a possible USGovt downgrade within three to six months, which would cause problems within the financial world. Imagine the impact if USTreasury debt securities lost their coveted pristine status of highest quality investment grade. EuroRaj calls the downgrade a major black swan alert. He went further in speculation, wondering if the downgrade indicates severe problems in the IRS funds and Gold Pool arena, whereby committed IRS income stream from income taxes is devoted toward the Interest Rate Swap derivatives. Also, the JPM/GS gold positions might finally be in dire straits from lack of physical gold inventory, with some major capital removal having occurred. The drainage of the JPM gold vaults, closely tied to the COMEX, has been going on for several months. The debt downgrade is a much bigger event than what most people might estimate. It received extremely little follow-up analysis and commentary. JPM might have suffered some giant derivative losses that are seeping through to the surface.

EuroRaj puts forth the theory that JPMorguen was forced to pledge the IRS income stream as collateral in a special past derivative trade. He reasons that China might have rejected usage of more USTreasurys as collateral in an IRS derivative trade, possibly the chain reaction begun with the USGovt shutdown. The aggregate income by US citizens has been reduced in the current ongoing severe recession that borders on depression. The JPM commitment with IRS income might have come up short to meet Chinese obligations. Also, and this is a long shot, from the Jackass (not EuroRaj), perhaps JPMorguen committed IRS income in the great gold lease in 1999 that came in the same deal for the Most Favored Nation trade status granted by the Clinton Admin. With the Wall Street renege to return the leased Chinese gold, perhaps an IRS income commitment might have come up short in resolution, and the Beijing bankers have refused more tainted USTreasury Bills. The confirmation to this hypothesis could possibly be formulated from the heavily discounted price the Chinese paid for the JPMorguen HQ commercial property complex in South Manhattan, which happens to house the world's largest private gold vault facility. Refer to One Chase Plaza. Curiously, Donald Trump might be in a similar pickle. He would only sell a $95 million mansion if there was a margin call on him, whereby a counter-party rejected USTreasurys as collateral.

A savvy colleague KevinF with extensive professional credit market experience added a comment. My tease to elicit a response came in the form of a theory that Moodys has sniffed out some big holes in the JPMorguen balance sheet from derivative losses of many types. KevinF does not believe Moodys has sniffed anything out. He believes the ratings agencies (all Big Three) exist as window dressing only, to belatedly point out problems with the big New York banks, after the fact. They come out with downgrades only after the entire financial community and even foreign governments already have a strong inkling, done in a late confirmation. They exist with a working charter 1) to maintain the illusion to the general public of valid credit market scrutiny, 2) to ward off potential rivals controlled by forces outside of the Wall Street club with a more critical eye toward transparency. The Jackass believes KevinF is correct in his perspective generally, except that JPMorguen has additional deeper troubles with high likelihood. The huge black swan that appeared on the South Manhattan pond was the sale of the JPM HQ, at perhaps half its value. Something big has gone wrong with their financial situation. The IRS income stream and the Gold vault depletion seem like areas of severe problems. In a recent Hat Trick Letter Money War Report, Rob Kirby explained how JPM has been using the IRS income stream commitment in its high risk leveraged derivative book management. The income stream provides the collateral for Interest Rate Swap contracts, used to control the USTreasury Bond yields, all overseen with the Exch Stabilization Fund run by the USDept Treasury.

◄$$$ JPMORGUEN HAS SOME FRESH NEW LEGAL FRONTS TO DEFEND AGAINST. INDICATIONS ARE THAT THE NEW PROSECUTION WILL BE LIKE A LIBOR EVENT BUT IN CURRENCY DERIVATIVES. THE LOSSES WILL BE HUGE, AND THE PUNISHMENT MIGHT BE MORE DRACONIAN, ENOUGH TO ALTER ITS FINANCIAL COURSE. $$$

Matt Taibbi in another strong editorial has pointed out that Chase is not the only bank in trouble. It looks like the houses of Wall Street banksters are blowing down. He cites JPM as the target of eight current official high profile investigations. He notes a sense of desperation as they even sold their home headquarter complex for a discount price recently. It was reported that European banks have over $3 trillion in bad loans on the books, in similar conditions. The instability of the Western financial structures finally is coming into view. Something big is near, such as a string of major bank failures. Confidence on a global scale is being eroded at a rapid pace. See the Rolling Stone article (CLICK HERE). As footnote, Forbes magazine, a prominent publication not prone to fiction or reckless claims, has made a formal rebuttal statement. They state that JPMorguen is not limiting financial transactions after all, either withdrawals or wire transfers. Colleague Roger Weigand is an account holder with JPM, and he personally confirmed by email that he received a formal notice about limited transactions. Strange sequence. See the Forbes article (CLICK HERE).

Taibbi reports multiple scandals blowing up in the next few weeks, including a fresh set of ominous legal cases that target several big New York banks. The outcome could result in punishments so extreme that the long-term future of the financial services sector might be significantly altered, in his words. If true, the situation is about to turn dire for these criminal pillars, as in the risk of survival might be openly debated, along with dreadful and hideous evidence. The loan loss reserves put aside for settlements will be grossly inadequate. The Jackass has repeatedly stressed how the big US banks have released loss reserves almost every quarter, in order to fabricate new earnings, the exact opposite of what they should do. They will need new reserves to handle losses that will be forced out into the open, off their accounting books.

Taibbi cited a huge case involving possible manipulation of the world currency markets, using FOREX derivatives. It would be extremely significant if some of the Wall Street banks are charged with the same multi-$billion FOREX derivative fraud activity, the same as Deutsche Bank. The scandal is already generally drawing comparisons to the last big financial scandal, the LIBOR frauds, called the largest in history. Even the Financial Times has wondered about a repeat LIBOR scandal. One and a half years ago, the manipulation of interest rates via the gaming of the London Interbank Offered Rate (LIBOR) made the big news. It never went away, but also never saw any severe legal implications like $100 billion lawsuits. The system shoved it under the rug effectively. Eclipsing the interest rate market, the foreign exchange market (FOREX) is the largest financial market in the world, with a daily trading volume of nearly $5 trillion. The tipoff of trouble has been the deep woes with Deutsche Bank, whose FOREX derivatives are under prosecution for massive fraud. Given all the flipped Vice Presidents on the DBank payroll, the prosecution has extended to New York.

◄$$$ CITIGROUP AND JPMORGUEN REPORTEDLY PUT SENIOR CURRENCY DEALERS ON LEAVE FROM THEIR LONDON POSTS. SOMETHING BIG AND UGLY IS BREWING, AS SMOKE STREAMS FROM LONDON CITY OFFICES. $$$

Citigroup and JPMorgan Chase have put some of their top London currency dealers on leave, after regulators began a formal probe. Under investigation are their alleged manipulation of foreign exchange rates in the FOREX market, a possibly louder echo to LIBOR itself. They came across usage by traders of an instant message service, according to the rumor mill. Two men have been identified as sent on leave, Rohan Ramchandani (Citigroup head of European spot trading) and Richard Usher (JPMorgan chief dealer in London). See the Bloomberg article (CLICK HERE). The story ties in well with the Taibbi story.

◄$$$ US-SENATORS HAVE INTRODUCED LEGISLATION TO STAMP OUT TAX DEDUCTIBILITY ON LIKELY JPMORGAN ACCOUNTING FOR LEGAL COSTS IN GRAND SETTLEMENT CASES. THE SPEARS ARE BEING TOSSED AT THE JPM FORTRESS, AS IT IS UNDER ATTACK. CRIME TURNED INTO A COST OF DOING BUSINESS MIGHT SOON HAVE NO TAX BENEFIT. $$$

Although JPMorguen rules the roost with Goldman Sachs on both Wall Street and the USGovt financial arm, it is under attack by a corner of the USCongress. To be sure, bribery goes a long way with both Senators and House Representatives. The strategy used by JPM, GSax, Citi, and others has been to use heavy campaign donations and basic bribes to control the committee heads and leading figures. However, they cannot stop the movement arranged by the minions with integrity, diligent motivation, and perhaps a risk acceptance that touches on danger, even naive noble risk. The entanglement between JPMorgan Chase and the USGovt has more fallout. Two senators have responded to the likelihood of JPMorgue receiving massive tax breaks as part of their possible $13 billion settlement with the government. They want the tax benefit removed.

The case centers on low quality mortgage securities, misrepresentation, and shoddy underwriting, whereby investors lost many $billions. Under the current law, firms can write off parts of a settlement that are not directly paid to the government. Of the reported $13 billion being reported, $5.1 billion of the settlement is with Fannie Mae (FNMA) and Freddie Mac (FMCC), which is eligible for tax deductibility. The benefit would come to about $1.5 billion from a write-off. Senators Jack Reed (Rhode Island) and Charles Grassley (Iowa) have introduced legislation  to shut down such accounting write-offs, thus to eliminate the benefit. Their Government Settlement Transparency & Reform Act, a bipartisan initiative, seeks to close a loophole that has allowed some corporations to reap tax benefits from payments to settle severe malfeasance. In almost all cases, the settlement involves egregious fraud but no admission of guilt. The Jackass has called the practice, as turning criminal activity into a business cost.

◄$$$ JPMORGUEN AND BANK OF AMERICA CONTINUE TO BLEED ON LEGAL CASES. THE MORTGAGE NIGHTMARE WAS NEVER EFFECTIVELY SHOVED UNDER THE RUG IN 2008 AND 2009. THE USGOVT NATIONALIZATIONS AND TARP FUND TREATMENT ARE COMING UNDONE. THE ROT AND STENCH FROM MALFEASANCE IS RISING TO THE SURFACE. MOREOVER, WITNESS MANEUVERING POSSIBLY BY GOLDMAN SACHS TO WEAKEN ITS RIVAL, IN ORDER TO GAIN A COMMERCIAL BANK CORE NUCLEUS. $$$

JPMorgan Chase has agreed to pay $5.1 billion to settle Federal Housing Finance Agency claims. They relate to home loans and mortgage backed securities the company sold to Fannie Mae and Freddie Mac. The payment resolves part of a $13 billion settlement pact being negotiated with the USGovt. The deal includes $4 billion to bring closure the FHFA lawsuit initiated in 2011, the charge being JPM sold a boatload of faulty mortgage bonds to Fannie Mae and Freddie Mac. The remaining $1.1 billion settles claims that the big syndicate bank sold their own defective loans later packaged into their own private label securities. There is more. JPMorgan seeks to settle state and federal probes into whether the company misrepresented the quality of mortgage bonds packaged and sold. To be sure, JPM did not admit any malfeasance or criminal fraud in the FHFA deal, and of course nobody will go to jail, certainly no corporate officers or board members. See the Bloomberg article (CLICK HERE).

Bank of America has been found liable for Countrywide fraud and malfeasance, a jury has found. The grand restructure of the Wall Street banks did not avert the the transferred liability, which is subject to prosecution. The wheels of justice grind slowly. The inner sanctum battle for survival continues among the big US banks, with Goldman Sachs likely doing much of the controlled actions from the perch. The shark tank is becoming rich with blood from the big banks. They have accelerated the process of eating their own in order to assure survival. It is very likely GSax is trying to weaken JPMorgue and Bank of America so that they can pounce on a few pieces. GSax lusts for a commercial bank core nucleus. Beneath the headlines, witness potential desperation on the part of GSax to use the USGovt and its tools to pursue banks in their own back yard. Witness desperation. GSax urgently requires a commercial bank structure and body, not just title. They are a king without a kingdom. See the Market Watch article (CLICK HERE).

◄$$$ THE USCONGRESS REPEATED WHAT THEY DID IN APRIL 2009 ON ACCOUNTING REGULATIONS. IN EARLY NOVEMBER THEY MOVED TO ROLL BACK THE DODD-FRANK FINANCIAL REGULATIONS FOR MAINTENANCE OF DERIVATIVE COLLATERAL. THE BILL WOULD ELIMINATE ONCE AGAIN THE REGULATORY OVERSIGHT OF DERIVATIVES. THE BIG US-BANKS ARE DEADER THAN DEAD, HOLLOWED GUTTED PILLARS. THEY WOULD NOT SEEK REFORM ROLLBACK IF NOT IN DIRE CONDITION. CONSIDER THE BIG US-BANKS AT DEATH'S DOOR, FIVE YEARS AFTER THE LEHMAN KILL. $$$

Congress just did a lulu, serving as signal of a deep desperation among the Wall Street banks. The Jackass speculates that they suffered as a group a tremendous capital loss in 2008, to become walking dead. But go further. The combination of reversed USTBond carry trade losses, plus amplified Interest Rate Swap derivative losses this summer, have served up a nasty enormous devastating capital loss cocktail. In 2008 they went insolvent. But in 2013 they lost their newly acquired capital from the carry trade as part of the USFed initiative to restore their capital replenishment. One must conclude that the USFed was ordered to do the Taper Talk Test, which rendered tremendous damage. One might conclude that the Chinese did much of the selling of USTBonds this summer. Regardless, the current status of the Wall Street banks stinks of desperation, open sweat that fills the air. It is also possible that the Bank For Intl Settlements ordered the Taper Talk, in order to start the collapse momentum that would bring about the long-awaited global fascist state.

In 2010, Congress passed the Dodd-Frank law (also called the Fin-Reg Bill) to clamp down on risky derivatives trading. It is often blamed for much of the financial collapse of 2008, set up by the housing bust that took down mortgage bonds. The Fin-Reg Bill was weakened by banking lobbyists from the start, with several rounds provisions included during the drafting of its original legislation. The final bill does not resemble the first drafted bill, before the bank lobby influenced the formal process. It has been under attack by those well-funded bank lobbyists ever since. Enter a new law written by Citigroup lobbyists in the last month, which exempts derivatives trading from regulation.

The reform bill HR922 was passed early in November by the House of Representatives with broad bipartisan support. It permits the banks to go back to the same set of rules that let them fracture the financial structures in the first place. They sensed a threat of systemic failure, and responded by rolling back the derivatives regulations. The USCongress easily buckled, tools to the syndicate. Appearances will be maintained, but the structural damage must be great. Their goal might be to avoid the visibility of failure, when they fail soon. See the Zero Hedge article (CLICK HERE). Notice a repeat of history, or rhyme. The USCongress repeated what they did in April 2009 on accounting regulations. The big US banks are on the verge of total annihilation, as in failure, not just insolvency. The derivatives must be draining their cash position, used to defend against bank failure using leverage. Regard it as ammunition used for cannon and artillery fire against their fortress.

◄$$$ AUSTRALIAN BAIL-IN LAWS ARE COMING SOON, ON TRACK WITHIN THE LEGAL SYSTEM. THE NEXT BAIL-IN EVENT MIGHT ACTUALLY OCCUR IN AUSTRALIA. THE SYSTEM IS READY. THE LANDLORDS ARE PART OF THE CARTEL. $$$

The ugly Bail-in is not due to occur immediately. Be sure to know that it constitutes confiscation of private account wealth, with no remote potential of restoring capital stability to the banks that perpetrate the thefts. The event could happen before the next G-20 Meeting of finance ministers in Brisbane, to be held in November 2014. Their Financial Stability Board, chaired by Goldman Sachs, has given full approval of Bail-ins to restore stability. The Australian Financial Markets Association (AFMA) made their position very clear, writing "The FSB's Key Attributes lays out its principles for executing a bail-in within resolution. We welcome the role of the bail-in tool for a resolution." Furthermore, the Bail-in of Australian banks is an FSB requirement, one that will be enforced by APRA as the Australian official resolution authority, under new so-called robust statutory powers. Apparently they even have the computer software in place to sweep accounts in New Zealand. Recall the NZ banks are owned by the Australian banks, as pointed out in a recent Hat Trick Letter report. See the Barnaby Right article (CLICK HERE and HERE).

## THANKS

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