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

* Monetary Shrapnel
* Organized Direction of Ruin
* Desperation among Central Banks
* Big Banks in Unstoppable Collapse
* Morgan Stanley Canary
* USEconomy in Recognized Recession


HAT TRICK LETTER
Issue #91
Jim Willie CB, 
“the Golden Jackass”
16 October 2011

"Unrestrained financial exploitations have been one of the great causes of our present tragic condition." ~ President Franklin D Roosevelt (1933, so history repeats)

"Long term interest rates have nothing to do with economics and nowadays have everything to do with mathematical quant models and the creation of phantom demand for USTreasury Bonds from interest rate swap contracts." ~ Rob Kirby

"The US economy is tipping into a new recession. You have wildfire among the leading indicators across the board. Non-financial services plunging, manufacturing plunging, exports plunging. That is such a deadly combination. We at least have a couple of quarters of worsening economy in front of us. So if you think this is a bad economy, you have not seen anything yet." ~ Lakshman Achuthan

"This will be the last bailout for Greece, of course." ~ Jean-Claude Juncker (Luxembourg Prime Minister)

"Almost always, when someone wants to focus on the short-term and not the long-term, it is because he does not want to be held accountable. The United States has a problem with accountability." ~ Lawrence Summers (former Treasury Secy, contributor to the systemic failure, and arrogant playground bully)

"[Imposing trade sanctions on China] could be terribly dangerous if we turn into a trade war. If America does put tariffs on the Chinese, they have various weapons at their disposal. They can stop buying USGovt bonds. They can sell American government bonds. If they did that, interest rates in America would go through the roof. Whenever people get slapped in the face, they always think they have to slap back. [Worse than Europe,] the US as a whole is the largest debtor nation in history. A lot of independent states, Illinois, California, New York to name a few, are in very dire straits, like Greece, Portugal, and Ireland. So all of us in the West have serious problems." ~ Jim Rogers

"The isolation of the USFed and its sole role of bidders for USTBonds is taking shape. Foreigners are hitting the exits, their moves obscured by Operation Twist. The hyper-inflation dependence for sustaining the USTreasury complex will be clear soon, at least to the watchful. But to the public, that realization might take a great many months. The framework is taking shape, and with it a coiled spring for the Gold price." ~ the Jackass

"Ten years ago we had Steve Jobs, Johnny Cash, and Bob Hope. Now we have no Jobs, no Cash, no Hope." ~ clever American

MONETARY SHRAPNEL

◄$$$ THE ACTUAL U.B.S. STORY CONTAINS INTRIGUE AND OFFERS HOPE TO THOSE WHO SEEK JUSTICE, IF NOT VENGEANCE. IT COMES FROM MY GREAT SOURCE. THE SWISS INVESTMENT BANK WAS TARGETED AND CRIPPLED TO THE EXTREME. IT COULD BE COMPLETELY OUT OF THE GOLD GAME, ITS GOLD BULLION REMOVED. THE POWERFUL PLAYERS ARE WAGING WAR. THE TWO LEADING AMERICAN BANKS ARE TARGETS IN GOLDMAN SACHS AND JPMORGAN. THE WALL STREET FIRMS ARE BEING BADLY DAMAGED. SMALL INVESTORS SHOULD AVOID LEVERAGE AND REMAIN WITH PHYSICAL. $$$

My excellent gold banker source provided reliable word that Union Bank of Switzerland was targeted, and the damage has essentially killed their firm (rest in peace). The UBS officials have made some important enemies among the powerful, the double cross betrayals too numerous. The official story was an obvious total fabrication that placed blame on a rogue trader, a story the Jackass never believed from the start. The real story is that UBS took some big bait and lost over $5 billion, AND ALL THEIR GOLD BULLION, as in almost totally cleaned out. They are left a crippled hollow entity. The trades all came from VP level staffs, the top officials fully aware, all approved, not low level guy at all who cannot defend himself. My source cites key players involved out of Hong Kong, as in angry billionaire clients. Apparently, the HK clients had some important brokers working with them from London, who took advantage with peeks into the UBS positions. The timing of the loss coincides exactly with the powerful 1000 basis point drop in the Swiss Franc, which occurred soon after the Swiss central bank announced they could not support the intervention that would push the Franc currency down. It went down big soon afterwards. The bait is not entirely clear to me, but UBS did not expect a giant swoon in the Franc versus the Euro. The UBS cross rate position of Franc-Euro was hedged with Gold bullion posted, all of which was forfeited. The UBS folks too the bait and bit hard, trapped into massive losses.

The source said, "Word has it that the next target is Goldman Sachs" which would surely be sweet for those who crave for justice. He went on to describe how GSax has made a great many powerful enemies the world over, from heavy handed market activity out of Wall Street offices, from abuse of its USGovt position in the USDept Treasury, even in collusion to conceal government debt levels in Southern Europe. He also said "JPMorgan has been extremely damaged in the last couple months, and stands on fewer legs" in line for possible mortal wounds. Look for some big events to unfold soon as the targets are roaming in the open fields arrogantly. He described crosshairs aimed at GSax, with the backdrop being painted, so that when the beast enters the gunsights, the trigger will be pulled, the net dropped, and the damage assured. It just required time and continued arrogance. He would not say what vehicle ridden by GSax would be subjected to the targeting devices.

The enemies of the Gold Cartel are making their presence known. They have allies in almost every important financial node, in every continent. A wrinkle to the story is that unfortunately, the price of Gold & Silver might be taken down intentionally and temporarily in order to inflict deep damage to the dark side Boyz. Enemies to Wall Street and London and Switzerland, the gold hegemony axis, might indeed push down the Gold price in order to kill a cartel member, like they did with UBS. That means the investors had better avoid leverage in order to ride out ambushes and storms. To repeat, my source told that Gold was taken down because UBS and others indirectly went long in Gold within a hedge tactic that backfired. It seems the Enemies to the Powerz have decided to embark on a short-term or mid-term mission that must be done in order to render harm to the Wall Street firms and make them more toothless. A last point, other sources confirm that Wall Street firm executives are buying very heavily physical Gold & Silver in the last month. One must suspect that they are moving toward a climax where their firms die, while enriching themselves via personal accounts. Plenty of intrigue and subterfuge to go around, but as the biggest players do battle, the smallest players had better avoid leverage and defend from storms.

From the vantage point in the bunker, outside of the battles waged by the players, hardly with a wide perfect view, limited to quick glimpses into the trenches, the slaughter of the bad guys is not visible. But an important source assures that almost on a weekly basis, one key bank or trading desk at a major bank is being ruined, with extreme damage done. Their insolvency is being attacked and pressured, which results in focused losses and an exit to the gold arena entirely. To be clear, Bank of America is weakened. Morgan Stanley has some mysterious disease. My catch phrase is that Europe has 20 Lehmans lurking. See Dexia in Belgium, Societe Generale, Credit Agricole, BNP Paribas in France, then Intercredit and Intesa in Italy, even Commerzbank, DeutscheBank in Germany. Also, the United States has at least two fresh new Lehmans lurking. See Bank of America and Morgan Stanley. The stories will not be properly told, since they are written by the Syndicate tools in the financial press. An honest account would offer deep encouragement, solid hope, and even recruit new soldiers among the unwashed masses. The UBS story is typical of the egregious distortions. Imagine the impact of a correct rendition that the investment bank angered its clients by not delivering gold from allocated Swiss accounts, was targeted in the FOREX market, and forfeited a raft of gold bullion from hedges gone wrong. Instead, the financial press spouted garbage stories about the challenge of monitor the rogue traders, the mind of a trader suffering addiction, and the history of other singular losses without supervision. Do not expect honest reporting on the huge losses suffered by big bank in direct acts of vengeance and sting operations like UBS.

◄$$$ C.F.T.C. COMMISSIONER CHILTON RIPPED INTO THE CORRUPT SYSTEM, ACCUSING IT IN QUIET TONES OF FRAUD AND MANIPULATION. HE HAS ATTACKED THE BOYZ IN THE OPEN FRINGES, EVEN THOUGH HE IS MARKED BY THE SAME BRAND. CHILTON WANTS A WELL FUNCTIONING MARKET THAT MANAGES RISK EFFECTIVELY. HE CITES ECONOMIC DAMAGE FROM ABSENT REFORMS. $$$

Bart Chilton comes from Goldman Sachs pedigree, is head of the Commodity Futures Trading Commission, the equivalent of the SEC for commodities. He has publicly criticized CFTC colleagues over permitted position limits in violation, and the stall tactics imposed by officials. Commissioner Chilton harshly criticized the CFTC over using a silly Cost-Benefit analysis as an official stall tactic for delaying the proper implementation of position limits in commodities mandated by Frank-Dodd legislation, the so-called Financial Regulatory (Fin-Reg) Bill. The Chilton mouth has resorted to use the fraud and manipulation words when describing the current markets. He stated that he will do what the USCongress so orders. But he barked back that Cost-Benefit analyses should not be used as a delaying tactic, even in a partisan manner. He urged enacting regulations in a common sense manner in keeping with good government. President Obama has initiated a broad review of federal regulations, to streamline overly burdensome rules, and to conduct Cost-Benefit analyses. Chilton actually said, "To use this good requirement of doing a Cost-Benefit analysis as a bludgeon to impede the promulgation of necessary financial market regulatory reform is, at best, shortsighted and, at worst, inimical to the future safety and soundness of our financial system. In a word, I believe it irresponsible. It may be a successful artful dodge and it may achieve the intended goal of slowing down necessary rulemakings, but it is unwise. I am focused on the end game, getting these rules in place, as Congress instructed us to do, so markets can function freely, openly, safely, free from fraud, abuse and manipulation, so business can effectively manage their risks, and so consumers can be assured of fair prices for the goods and services they purchase. We have already seen the great costs, with a capital C to our society of not having these reforms in place, lost jobs, lost production, lower GDP, lost tax base. Let's not let the Artful Dodger focus on their cost issue derail us on getting these good rules in place for American markets, business, and consumers." Wow!! He might be sincere, worried about his own brief legacy. Maybe Chilton will resign in protest. See the Silver Doctors article (CLICK HERE).

◄$$$ MARKET INTERVENTIONS, STABILITY FUNDS, AND OTHER CONTROL MECHANISMS ARE EVIDENCE OF STATISM AND CENTRAL PLANNING, IF NOT FASCISM, BUT NOTHING LIKE CAPITALISM. THE FASCIST BUSINESS MODEL IS IN A CLIMAX MODE WITHIN THE SYSTEMIC BREAKDOWN. $$$

Independent analyst Dan Norcini provides wisdom and excellent perspective. Consider portions of his quotes pieced together. He gives an indictment to the system gone amok. He wrote, "Once again, just about the time every technical indicator on the planet turned to the sell side in the S&P500 stock index, with headlines flashing the official entry into a bear market, up goes the S&P as if nothing happened, punishing all the short sellers for their impertinence in daring to sell stocks in the US financial markets. Such activity is unpatriotic at best and treasonous at worst. Truth be told, the monetary authorities of both Europe and the US are terrified of the price charts and probably watch them more closely than we traders. They simply cannot have them casting off belittling signals as to the health of the economy. The Dollar retreated from the 80 level once again on the USDX, but that will not matter if Europe fails to come through and deliver on their stability mechanism. By the way, I love the fact that we have an Exchange Stabilization Fund here in the United States and they have a Stability mechanism over there. Call me a purist but since when did the government have the right to interfere in any markets to make them more stable?

My view is that all of the instability currently in these markets is being caused by the government. If they got the hell out of the way, we would actually have a trend and it would be a stable one. The only problem for them is that the trend would be down. That is where the instability is coming from. So whatever you do, do not call the current system in place in our financial markets Capitalism. This has nothing to do with Capitalism and everything to do with Statism and Central Planning. I bet we would have already seen this entire mess cleaned up by the market if the central planners and meddling busybodies had not stuck their noses into it." He describes the ill effects and rotten machinations of an imposed Fascist Business Model, without identification.

◄$$$ THE OCCUPY WALL STREET MOVEMENT IS A SLOW GATHERING STORM. PUBLIC SENTIMENT IS TURNING. CONSTRUCTIVE DEMONSTRATIONS DIRECTED AGAINST THE BANKER CLASS COULD ERUPT INTO SOMETHING UGLY, IF THE USGOVT MISTREATS THEM AND LABELS THEM WRONGLY. SO FAR THEY HAVE BEEN OCCASIONALLY CALLED COMMUNIST OR SUBVERSIVE, LIKE A BUNCH OF DISORGANIZED HIPPIES ALMOST. SADLY, THE MAJORITY OF AMERICANS CAN SYMPATHIZE WITH THE CALL FOR JUSTICE AND ACTION. THE MOVEMENT HAS GONE GLOBAL (IN THE WEST) AND HAS RECEIVED AMPLE FOREIGN PRESS COVERAGE. THE WORLD IS WATCHING!! $$$

The Occupy Wall Street is beyond the scope of this report. But some comments are warranted. Calling it a disorganized bunch of hippies is an insult to the motive and effective organization of the movement. Calling it communist is stupid and shallow. The movement has already been subjected to mace in New York City, where one must wonder if the police remember several dozen of their finest killed in the World Trade Center. They might not be too aware of banker culpability, but the Jackass digresses. The OWS movement is a gathering storm potentially. Students from at least 100 college campuses around the country have shown some sort of solidarity. In my view, the principal directives of the movement are to show outrage and demand action against the Wall Street bankers for three misdeeds. 1) Bond fraud in the $trillions that has not yet been addressed for indictment and prosecution. 2) Favored treatment in USGovt aid that has seen 99 cents of each $1 sent to the big money center banks, perhaps more, and nothing but bread crumbs and deceptive programs on home loan aid to the people. 3) Gross inequality of income and wealth accumulation in the last one or two decades, while the middle class has been slowly vanishing. The OWS is about out of control greed, grandiosity, and entitlement. Some reports indicate a secret $300 thousand donation was made by a corporation to further the cause.

Displaced workers join since angry that job prospects are dim. Displaced home owners join since angry of a lost dream and ransacked savings from home equity. Students join since angry about the lack of career opportunities, coupled with the unlikely road to student loan repayment. The people are banding together, making their voices a collective roar. See the Ritholtz article (CLICK HERE) about the movement spreading like wildfire. The movement is much bigger than what the mainsream media says, and is different from how the media portrays it. See the Ventura County article (CLICK HERE). Some analysts go so far as to say that the demonstrations against Wall Street behavior, activities, and corruption are natural extensions of the Arab Spring that has swept an entire continent. My view is that it is also an extension of the anger directed in Southern European capital cities against the austerity budget measures, the banker asset grabs during popular job losses, and the extreme economic deterioration underway. See the Yahoo Finance article (CLICK HERE). See a more sweeping editorial by Lee Adler from the Wall Street Examiner (CLICK HERE) where he covers several important aspects of the movement, with a direct economic perspective and impact on society. Sooner or later, a Kent State moment is likely. Some very unfortunate deaths are likely to occur, and martyrs will be made. This is not my desire, only my expectation. The tension and pressure from grotesque fraud, favoritism, and injustice is too great. The pressure points are too numerous. The official response will be out of proportion, the perceived threat too great.

A sharp subscriber from a US Plains state pitched in with some excellent perceptions. BobO wrote, "The Tea Party was hijacked from its inception by conservative Republicans, maybe even FoxNews. This movement may be much harder to co-opt. The mainstream media has done their best to poopoo this as disorganized rabble and whacko anarchists with no clear set of demands. But that is the most dangerous kind! Polls indicate some media coverage has backfired. The protests keeps growing and gaining popularity with wider support. It has now gone global. Any overt use of force will backfire. There is no individual leader they can buy off, blackmail, or demonize. The interests and individuals represented are so diverse, they cannot all be tarred with the same brush. They are not located at a fortified compound in the middle of nowhere. So the ever popular mysterious fatal fire is burning in full view. The unearthing some diabolical plot or conspiracy by the USGovt, or perpetrating a false flag attack are always popular fall-back options. However, again there is no real leader, no clear leadership, or even dominate philosophy. People are understandably angry. They have witnessed the greatest destruction of wealth in history. They have undergone the greatest bond fraud ever committed. They watch as both their country and way of life are destroyed. They watch the middle class being decimated. No one has been punished and nothing is changed with the power structure. Some press commentary mentions the disorganization of a movement that begins to gather momentum at the winter onset. Wait until next summer, when things are worse and scattered seeds germinate. This has the potential to be much bigger than the Vietnam War protest of the 1970 decade. As things go from bad to worse, expect an epidemic or plague, even locusts perhaps."

At least 14 Wall Street protesters were arrested in Lower Manhattan in New York City last Friday during scuffles with police as they marched towards the city's financial district. The confrontation came after activists averted a showdown with authorities. They claim the official plan to clean Zuccotti Park base had been a ploy to make an eviction. At issue is an attempt to clean the park area, the site of a camp for weeks. The people has clung together as a human chain in an attempt to resist eviction from occupation. Some complained that the sanitation ruse has been relied upon in the past by Mayor Bloomberg to disrupt the demonstrations. The events are receiving global press coverage. See the BBC article (CLICK HERE). For a Matt Taibbi interview on Rolling Stone with Imus in the Morning (CLICK HERE). Below area scenes from New York and Zurich. By the way, Italian students stormed the Milan offices of Goldman Sachs and the offices of Fininvest run by Berlusconi.

 

◄$$$ THE US-STATES ARE STIRRING IN WITH DEFIANCE TOWARD THE FEDERAL GOVERNMENT. THEY REACT TO RUINOUT USGOVT FINANCES, A BANKING SYSTEM IN A WRECK, AND AN ECONOMY FACING YET ANOTHER DECLINE. IT IS UNCLEAR HOW THE PATHS WILL TURN. A DECLARATION HAS BEEN ISSUED. THE UTAH CONFERENCE WAS ATTENDED BY SEVERAL OTHER STATES. $$$

Ron Hera of Hera Research provides an account on location. In late September, he attended the Utah Monetary Summit in Salt Lake City. The state of Utah passed a Legal Tender Act earlier this year, which authorizes the usage of federally minted Gold & Silver coins as money in the state of Utah. Many legislators from other states are evaluating similar legislation, many of whom attended the Monetary Summit. Interpret events to mean the United States is approaching a Constitutional crisis because states are beginning to financially make distance from the USGovt, a veritable battle for independence by the States. The Utah Monetary Declaration outlines a financial declaration of independence whereby states are beginning to opt out of the Federal Reserve System. A major confrontation seems inevitable, even as serious intractible problems confront the economies of the 50 US States. Most are deeply insolvent and in cutback mode. The individual states are taking action to ensure their continued functioning in the increasingly likely event of a breakdown in the USGovt and USFed system. Notice within the Declaration appears an urgent requirement for an alternative currency to the privately issued Federal Reserve Note, which is erroneously referred to as the USDollar. In fact, the current USDollar is in violation of the Constitution, a mere piece of paper according to a past president who swore to uphold it. The following reveals impressive knowledge of the US financial system rotten underbelly. Notice the common ground overlap with the Occupy Wall Street movement. See the Before Its News article (CLICK HERE).

The Utah Monetary Declaration stipulates:

1)      The unsound condition of large US banks, which have inaccurate and crumbling balance sheets along with $250 trillion in high risk OTC derivatives contracts.

2)      The unstable nature of the United States and world financial systems, characterized by unworkable levels of sovereign debt and private debt, and by over $600 trillion in OTC derivatives liabilities.

3)      The excessive levels of federal government debt and unfunded liabilities combined with falling federal tax revenues prior to the start of the double dip recession that began in the second half of 2011.

4)      The radically inflationary monetary policies of the federal government and of the Federal Reserve, which promise high inflation or hyper-inflation in the future.

5)      The worsening condition of the real USEconomy outside of large banks, multi-national corporations, and Wall Street firms, where federal government bailouts and Federal Reserve monetary easing (aka money printing) transfer wealth from the denied Main Street to the entrenched Wall Street.

6)      The rapidly escalating polarization of the distribution of wealth, which threatens not only the economic stability of the United States but also its social and political stability.

7)      The current highly inflationary monetary system is plainly unfair and fundamentally immoral.

◄$$$ WEALTH TO BE ATTACKED BY THE SYNDICATE THAT CONTROLS THE USGOVT. AS DEFICITS MOUNT, BEWARE OF THE RAMPUP IN THE WAR ON DRUGS, WHICH WILL BE USED AS A COVER FOR BASIC WEALTH CONFISCATION IN FOREIGN LANDS. THE USGOVT MUST FUND ITS BLACK HOLE, USING DEVICES OTHER THAN THE PRINTING PRESS, LIKE BASIC THEFT. $$$

One is left to wonder whether before long all wealth will be attacked as illegitimate unless attached to the ruling Syndicate. They might accuse it of being dirty and therefore might try to confiscate it, the burden of proof being on the owner, the decision of demonstrated proof by the Syndicate itself. All money outside the sanctioned Syndicate system might be accused with a broad paint brush of being part of illegal enterprise, money laundering, illegal gambling, support of terrorists, whatever. Wealth inside the US might simply die a slow death like home equity, pension funds, mutual funds, and bank certificates of deposit. All investments might decay from price inflation and the dwindling value of the USDollar. A cool $1 million in bank CDs held in 2000 lost over 50% to inflation but earned about 10% in cumulative interest. That is not progress. Money held outside the US might be subject to confiscation, stirred into movement by the USGovt, and eventually not welcome by host nations fearful of retribution or lost US agency bribery. Some nations might be accused of harboring narcotics traffickers and laundering their money in the domestic banks. Gold will eventually be targeted. In a few years, one can see the pattern in development. The only safety might be in the non-US/UK sphere. That means the sphere centered in Germany, Russia, and Chinese that includes the Persian Gulf desert satellite. In the last several years, the Persian Gulf has undergone a remake with a definite Chinese imprint on corporate purchases, property purchases, and shipping distribution centers. My source tells that China has offered security protection for the Persian Gulf region, and plans to use the United Arab Emirates among other nations as the hub for distribution and trade to Europe and Africa. Let's hope the Jackass is just paranoid without justification. Keep in mind that the Qaddafi funds were frozen, a ripe $90 billion held in New York, London, and Europe that might never be returned. Also, the Mubarek money from Egypt totals $60 billion, mostly held in London, might remain by the Thames River. The trend is clear.

Latin America is an ongoing battleground. Doug Casey believes Argentina is the sanctuary, but that remains to be seen. Kidnapping for ransom is still a sport in Argentina. A new powerful friend believes Argentina and Northern Chile will offer safety. Any truly safe country from the US/UK influence will be threatened as a Chinese satellite or as a drug trafficking center. The duplicity and irony is thick, since the core of the USGovt security agencies is centered upon narcotics and arms deals. My main concern is that the nations with $trillions from narcotics will begin to control the world. The Vatican assets were purchased a few years ago. There might be little if any safe havens except on the other side of the world. Watch Thailand for a hint, Hong Kong and Singapore too. Much of Asia does not cooperate with the Anglo Bank actors. Look for Australia and New Zealand to be deeply challenged on safe haven locations since increasingly they are transforming into Chinese trade colonies.

◄$$$ THE USTREASURY BOND HAS BECOME A MONSTER SPLEEN, DRAWING CAPITAL AWAY FROM PRODUCTIVE DESTINATIONS AND PURPOSES. THE DISTORTION IN THE COST OF CAPITAL IS REACHING A CLIMAX, AS THE USTBOND BUBBLE CONSUMES THE FINANCIAL MARKET. THE USTBOND IS THE APPROVED ASSET BUBBLE, THE LAST BUBBLE SINCE IT CONSUMES ALL. ITS PEAK SUCCESS SIGNALS RUIN. $$$

They must feed the USTreasury Bond asset bubble, the great black hole. The USTBond will in my opinion lead to the destruction of the US financial markets, since its appetite will grow, as USGovt deficits continue. In Q4, expect another $1 trillion to pile in new deficits. The USTBond monstrous black hole will consume all capital in its path. The housing & mortgage twin bubbles yielded way to the USTBond bubble, the last bubble in my expectation. The systemic failure is assured, the wreckage in finances guaranteeing the outcome. The further growth of the USTBond bubble will result in tremendous denial of capital formation and neglect to their credit needs. It is perhaps the least understood financial market development, as the US situation is far worse than simply Japan Revisited, and actually like an extreme PIIGS monster version. The USEconomy has woefully inadequate industrial capacity, puny compared to Japan. The Wall Street masters are intentionally depriving (if not killing) the USEconomy in order to feed the USTBond beast!!

Interest rates will stay low because the USGovt debt must be financed. It is that simple. The masters on the helm wish to permit the USEconomy further degradation in order to promote bond demand. It is that risky. The trumpeters and mavens are celebrating the USTBond rally that they claim contradicted the USGovt debt downgrade. They do not realize the USTBond rally is a gigantic canary in a lethal coal mine. Excuse the many metaphors, but the disaster underway has so many sides and faces. The investment community might figure it out and flee, when the TNX hits 1.5% on the 10-year yield. Maybe not. See the Jackass article entitled "USTBond: the Monster Spleen" from early October (CLICK HERE).

◄$$$ A GALLUP POLL SHOWS HISTORIC LOWS FOR TRUST OF USGOVT. CONFIDENCE AND TRUST ARE FAST VANISHING, WHEN THE SYSTEM DEPENDS UPON THEM. THE USECONOMY SLIDES INTO ANOTHER OFFICIAL RECESSION. THE FINGER OF BLAME IS BEING POINTED AT THE USGOVT AND THE USCONGRESS, WHERE INEFFECTIVENESS, CORRUPTION, AND PARTISAN BEHAVIOR ARE REPLETE. $$$

The Gallup Poll was from the annual Governance survey, updated in September 2011. The results show near record criticism of Congress, elected officials, government handling of domestic problems, the scope of government power, and government waste of tax dollars. Majorities of Democrats (65%) and Republicans (92%) are dissatisfied with the nation's governance. National governance is highly correlated with attitude toward the USCongress, where confidence hit a new low this month, with only 31% of Americans saying they have a great deal or fair amount of confidence in the legislative branch. The level is lower than the percentage confident in the executive (47%) or judicial (63%) branch. Notice the last decade showing a sharp deterioration. See the Gallup Poll article (CLICK HERE).

Key Findings:

  • 82% of Americans disapprove of the way Congress is handling its job
  • 69% say they have little or no confidence in the legislative branch of government, an all-time high and up from 63% in 2010
  • 57% have little or no confidence in the federal government to solve domestic problems, exceeding the previous high of 53% recorded in 2010
  • 43% have little or no confidence in the government to solve international problems
  • the federal government wastes 51 cents of every tax dollar, similar to a year ago, but up significantly from 46 cents a decade ago (three decades ago, it was 43 cents)
  • 49% of Americans believe the federal government has become so large and powerful that it poses an immediate threat to the rights and freedoms of ordinary citizens. (in 2003, the ratio 30% held such belief)

ORGANIZED DIRECTION OF RUIN

◄$$$ THE EUROPEAN MESS MARCHES ALONG. AN INTRIGUING FOCAL POINT WAS SEEN IN SLOVAKIA. THE SMALL NATION (THE SIZE OF COSTA RICA) SAID NO AND WAS THEN BULLIED AND CHASTISED. THE STORY THAT FLOWED SEEMS FALSE AND LOADED WITH KLAPTRAP. THE SLOVAK EPISODE SERVES AS PROLOG TO WRITE THE THE FINAL CHAPTER FOR THE EUROPEAN UNION AND ITS CRIPPLED POORLY DESIGNED EURO CURRENCY VEHICLE. $$$

The minority Slovak political party leader is Richard Sulik. He is steadfastly opposed to the European Financial Stability Facility, the bailout fund abused to rescue big banks. He has been quoted across the Western world with sharp pointed comments that reek of truth. He said, "The opposite is actually the case. The greatest threat to the Euro is the bailout fund itself. It is an attempt to use fresh debt to solve the debt crisis. That will never work. But, for me, the main issue is protecting the money of Slovak taxpayers. We are supposed to contribute the largest share of the bailout fund, as measured in terms of economic strength. That is unacceptable." Tiny Slovakia actually stood in the way of the bank bailout steamroller that has momentum in Europe, which has remedied nothing, but which assures monetary ruin. The political, banking, and economic pressure is sure to be delivered, much in secrecy, by the European Union bullies in charge, reinforced by their henchmen. After the rejection of the stability fund infusion proposal, their government in a breathtaking stroke reversed their decision. At least that is what the press reported, although with scant coverage of details, like who changed his or her mind, and under what horse trade. What appears to have happened is that Slovakia followed the German popular lead and said NEIN (translation NO). They might have said YES at the point of a gun, but important damage has been done. In effect the political and banking leaders have been pulled into the open field as targets, exposed first for the unworkable bailout approach, and second for the pressures to win the required consensus approval. This might serve as a flash event that could very well become a tipping point.      

The Slovaks deserve an embrace of gratitude from the 83 million Germans for their refusal to fall in line and rubber stamp the passage of the EFSF funding provisions as prescribed by the gaggle in Brussels. It is nothing but an EU financial fraud package and death warrant for the Euro currency. Chancellor Angela Merkel would have hinged the Bundestag vote on a confidence vote if she had the spine. But such a vote would have cost her job. Expect the Slovak counterpart to be collateral damage cast to the side of the European Appian Way. The Slovaks acted like the true Europeans. The banker apparatchiks from the European Union surely went after the Slovaks, to bully and crush with tremendous pointed subtle pressures. However, the Slovaks made a point, which carries great significance.

A contact from the German banking community made a quick comment that spoke volumes. He wrote, "The Slovak rejection might mean the beginning of the end of the Euro currency, but also the end of the European fascism stronghold in Brussels, with their appointed commissars and all the undemocratic mayhem that goes on there day in day out. It could be the game is over. The EU jack boot boys got castrated on stage. They still can piss but they cannot reproduce any longer, having lost their virile powers. This act by Slovakia took more courage and will accomplish ultimately a lot more to trigger change then all the street protest will ever do. Hats off to the Slovaks and Slovakia. Well done! The EU bullying the Slovaks into a second vote was expected. However, the will of the people will prevail. The politicians and their bankster friends are now fair game. The point has been made. Once the German people take to the streets, things will get tight for the polito banksters in charge. The situation is highly explosive. There are two big banks on the brink of collapse. One EU and one US. If only one goes down it will take ALL the others down with it." My guesses are Morgan Stanley, which he has mentioned as on the brink, and Dexia, or possibly a major bank in Italy or France. These European banks are like a grand scatter of dead pigeons resting on a telephone wire stretched for 100 meters. It will be interesting to see which pigeon falls first.

◄$$$ THE GERMANS REJECT THE AMERICAN LEVERAGED SOLUTION METHODS, WHICH FOCUS ON REPEATING THE WRONG MEDICINE IN AMPLIFIED DOSAGES. THE RIFT GROWS, FIRST WITH THE EURO CENTRAL BANK, AND LATELY WITH THE GERMAN BANKS. THE SEQUENCE OF BUSTS HAS TAUGHT THE LEADERS OF THE UNITED STATES NOTHING. ITS DEBTS ARE KILLING THE NATION. ITS FINANCIAL PRODUCTS ARE UNWANTED. IT DOES NOT PRODUCE SUFFICIENTLY TO EARN FOREIGN INCOME. $$$

The Der Spiegel is a major German magazine. A recent article focused on why the European bank bailout approach is right and the Obama Admin approach is wrong. It centered upon the fundamental differences between American and German thinking on fiscal and monetary stimulus. The leading German magazine editorial concluded that in the United States, despite the prescriptions being wrong, the doctors want to increase the dose. Bank policy toward monetary management has always been more sound and cautious in Germany, led by the Bundesbank. The Germans accuse the Anglos of falsely interpreting the works of British economist John Maynard Keynes. They focus upon the disputed concept that government spending is the best way to counteract a serious economic downturn, since it has been tragically turned into a permanent prescription. The American application of kick-starting the stalled economy with lower interest rates (monetary stimulus) and with USGovt jobs & tax initiatives (fiscal stimulus) has become a fixture. In good years, the federal deficits rise, but in bad years they take huge jumps. Then war costs add on top in giant chunks.

In the opinion of the German brain trust, the methods used and abused in the United States lay the groundwork for the next crash, since they fail to address fundamental problems, fail to remedy structural imbalances, and simply lift the debt burden. The applications from the abuse to stimulus have not succeeded in stimulating the USEconomy in recent years. Instead, it has put the nation on a crash course. From the Asian economic crisis to the tech telecom bust and subprime mortgage bubbles, economic stimulus programs by monetary and fiscal policy makers have regularly created a reckless environment loaded with risk, leveraged by kooky devices often hidden, that have directed the herd toward the next crash instead of encouraging sustainable growth. In the last decade, the volume of credit in the United States grew five times as fast as the real economy, a horrendous litmus test on the success of credit deployment. Cheap money created the fertilizer for the excesses of the US financial industry. Low interest rates seduced mortgage providers into granting mortgages without proof of income, even approving mortgages for some the homeless people. The low interest rates enabled investment banks and hedge funds, by means of increasingly risky loan structures, to transform the stodgy insurance and bond markets into casinos. Hidden underneath the stage is a complex network of derivatives that is dissolving. The bubbles have burst, with more to come, the last being the USTreasury Bond itself, whose climax will be a USGovt debt default paved as a forced restructure. However, contrary to logic, the sequence of visible busts has not prompted the USGovt to conclude that its prescriptions could have been wrong. Rather, the officials wish to increase the dosage.

The Obama Admin plans to follow the unsuccessful 2008 economic stimulus program with another new program of similar ilk, and equally likely prospect of failure. The USCongress might not even permit it to come to a vote. On the other side of the abused Keynesian helm, the US Federal Reserve plans to flood the economy with cheap liquidity in heavy volume for years, under a promise. We are told that Chairman Bernanke is an expert of the Great Depression. His actions assure another larger depression. The ultimate problem is mainly insolvency, of the government operations, of banks, of households, in addition to inadequate industry to produce legitimate income. The USEconomy does not lack money. It surely lacks solvent structures. It lacks economic wisdom. It needs a currency that is not a piece of debt posing as money. The US also lacks products that can compete in the global marketplace. No longer are its financial products deemed of value. Its investment bankers are shunned. Instead, the trade of debt paper has been replaced with court cases seeking restitution. The country has a chronic large trade deficit, since it does not produce finished products with sufficient global demand.

The United States resembles the PIIGS nations in debt ratios, and increasingly a Third World nation. The US is Greece times one hundred, and the world is realizing that fact. Those in rebuttal of the Third World direction should examine the high debt level, the high corruption within USDollar and financial market management, the emphasis on war, the rickety infrastucture, the 47 million long dole on food relief, the rising ranks of homeless, heavy dependence upon imports (energy & finished products), and the vanishing middle class. See the Zero Hedge guest article by Gary Evans of Global Macro Monitor (CLICK HERE).

◄$$$ DAVID STOCKMAN PUTS BLAME ON THE USFED FOR MUCH OF THE SYSTEMIC FAILURE AND ECONOMIC RUIN. HE WENT ON A TIRADE, ACCUSING THE USTREASURY BOND MARKET IS ISSUING THE WRONG SIGNAL OF FREE MONEY WHEN MANAGING THE FEDERAL DEBT. HE IDENTIFIED A BETRAYAL OF SAVERS, GIVEN A HIDDEN $350 BILLION ANNUAL TAX GIVEN TO THE BIG BANKS. HE BELIEVES THE WEST IS PUSHED TOWARD A GOLD STANDARD, AND PEOPLE SHOULD PROTECT THEMSELVES WITH GOLD. $$$

David Stockman, former Director of the Office of Mgmt & Budget in the Reagan Admin, pointed out that the global monetary system is breaking down. Stockman places blame on central planners in a misguided effort to spur growth with risk badly judged, and savings levied a hidden tax. He wrote, "I blame it on the Fed. I blame it on the 1971 decision by Nixon to close the Gold window and let the dollar float. Because out of that has evolved (or morphed) a central banking policy in the world that absorbs unlimited amounts of government debt. And so we went on the T-Bill Standard or the Federal Debt Standard. The other central banks of the emerging mercantilist Asian economies, Japan, Korea, and now, especially, the Peoples Printing Press of China, have absorbed this massive emission of debt that otherwise would have created powerful negative consequences and thus forced politicians to act long ago. In other words, higher interest rates, pressure for inflationary monetary policy, and the actual appearance of price inflation. But because all the bonds on the margin were being absorbed by the central banks, we got away for twenty or twenty five years with deficits without tears." Now is time, as the jig is up. He implies systemic failure.

Stockman has credibility from his insider roles in public sector economics. He went on a tirade. He calls USFed Chairman Bernanke the monetary Darth Vader, the man who destroyed the bond market. Few besides Rob Kirby and the Jackass declare that fundamentally, in a healthy capitalist system, the interest rate in the capital market is the price of money. Since the price of capital is distorted as ultra-low, capital is destroyed and retired from commission. Stockman declared that if the pricing system is not working properly, then the ability of the capital market to function has been destroyed, and false signals are given in every direction.    He claims the bond market has been crushed, disabled, manipulated, rigged, and medicated, during the charades known as QE1, QE2, zero interest rates, Operation Twist, and the rest of the insanity. He called the USEconomy a leveraged buyout gone bad over the last 30 years, dragged down by $52 trillion in total debt. An extra $30 trillion of debt must be reduced and liquidated, before the nation is back on track.

The politicians have been granted essentially free money in new deficits financed at 18 basis points on 2-year TBill debt. No incentive is given to make difficult choices, since the signal from the bond market is all wrong, no longer forcing the issue. The savers of the nation have been betrayed by a low reward. Stockman estimates the suppression of interest rates on depositors, who bring $7 trillion of deposit base currently, amounts to a $300 or $400 billion short change per year. That is equivalent to taxing the public by $300 or $400 billion and redistributing it to banks based on the distribution of their deposit base. Atop the ripoff to savers, the entire cost structure has risen without matched income rising. He called Gold de-facto money, as the crisis has forced the Western world back to the Gold Standard, one way or another. He believes its return is only a matter of time, since the central banks are dominated by the ritual incantation of dying Keynesian theory as he called it. The individual people must protect themselves, and Gold is most effective. Such advocation puts him at odds with most USGovt policy. See the Zero Hedge article (CLICK HERE).

◄$$$ JOHN HATHAWAY ATTRIBUTES THE GOLD DEMAND TO CONCERNS OVER AN INTERNATIONAL BANKING SYSTEM COLLAPSE. THE CONTINUED EXCESS FROM MONEY PRINTING TO SAVE THE DOOMED SYSTEM WILL DEBASE MONEY MUCH MORE. HE CALLS THE LOWER GOLD PRICE A GIFT TO THOSE WHO MISSED THE OPPORTUNITY. HE HAS DECLARED A MARKET LOW PRICE, STATING THAT GOLD IS A POPULAR TRADE, NOT A CROWDED TRADE LIKE HOUSING AND DOTCOMS IN THE RECENT PAST. $$$

King World News interviewed John Hathaway on the day of a big announcement by the Bank of England of their GBP 75 billion infusion into the financial markets. He is the veteran manager of the famous Tocqueville Gold Fund. Extreme monetary growth is the attempted solution, but with horrendous results to date. New money must rescue the banking system on a repeated basis. He disputes the shallow claim that the gold trade is crowded, meaning too many people are involved. That is an absurdity, since under 3% of Americans own any gold, even in the form of paper certificates in stock funds. He remains devoted to the mining stocks, since that is his book. See the King World News article (CLICK HERE).

"[The infusion of unlimited funds] is just more of the same. There was not a whole lot of warning that the Bank of England was going to do this, but they are just trying to bail out a leaky boat. We will see the same thing here in the United States. Europe is going to print the Euro and we are going to print the Dollar. We had a bank go down today [in Dexia] and France is making contingency plans for a couple of more banks to fail. This is contagion that certainly will give new life to Gold. That is why the gold market has started to come back from this correction. Bernanke has painted himself into a corner because he does not want to print money. Bernanke is trying to get Congress to do some work on the fiscal side, but if I were advising him I would say, DO NOT HOLD YOUR BREATH.

[The timing of] our previous interview was in all of the years and markets I have observed, it felt like a low and that it was a buying opportunity. Before we had this swoon in September, these valuations in gold stocks were a gift to anybody who had missed the bull market in gold. This swoon that we have had in September, as long as we can believe that gold belongs at least at the $1500 to $1600 level, has made this an even greater gift than what we had seen before. The gold stocks have stabilized and they are starting to show real signs of life. Just based on my own gut instincts, sentiment is on the frightened side. The market vane readings for Silver are down in the 50s (for bullish sentiment). That is about as low as they have been in many years. So that is very positive. The gold trade is NOT crowded. It has not been crowded during this bull market. It can get popular from time to time, like anything. But popular is one thing, crowded totally a different thing. Popular means it is on the front pages and lots of people are talking about it, but crowded is like what we saw with housing or dotcoms. We are nowhere near that and never have been frankly." Regard all talk of gold in a bubble as utter desperation backed by fear, from the establishment. The asset bubble is the USTBond.

◄$$$ GERALD CELENTE NEVER MINCES WORDS. HE ARTICULATES THE FUTILITY OF SOLUTIONS. MONETARY PRINTING WILL FIX NOTHING. ALL THE RULES IN EUROPE ARE BEING VIOLATED IN BOND BUYBACKS. A GAME OF CHICKEN IS BEING PLAYED, AND INVESTORS HAVE FLINCHED. THE AMBUSH OF THE GOLD PRICE WAS ORCHESTRATED.PEOPLE ARE BEING SCARED OUT OF THEIR PRECIOUS METALS. GOLD PREVAILS OVER FIAT PAPER. $$$

Gerald Celente of Global Trends Research Institute is always worth watching or hearing. "The Europeans are going to do the same thing the United States did about the deep problems, throw money after bad debt. There is no solving it and the big lie is that if only the brilliant people put their minds together and work as a unified force, and speak with the same propaganda, that it is all going to be fixed. This thing is going to continue to collapse, just as in the United States following the panic of 2008. When things should have collapsed a lot quicker, they pumped it up by all of this phony money. They are doing the same now in Europe. We are leading into the greatest depression. There is no way out of this. The nerve of people of like Timothy Geithner, our USTreasury Secretary, telling the Europeans that they have to get on this and fix it when we cannot fix our own problems. This is a great unraveling. It has only been held up again and made to look like there is a recovery from the continuing dumping of dollars and Euros into failing banks and institutions. In Europe they are going against the Lisbon Treaty, the Maastricht Agreement, every piece of paper that they put together to design the European Monetary Union. The European Central Bank is not supposed to be buying bonds of failing countries. They are not supposed to be covering the debt of failing banks. They are doing it, just like they are doing here in the United States. Apparently, the investors have flinched first [from the Fed playing a game of QE3 Chicken with the markets] and we saw what happened. Last Wednesday when they announced [no QE3], you saw the world equity markets tumble, but Gold & Silver and other precious metals along with it. Gold & Silver should have gone in the opposite direction, which leads me to believe that this was all pre-planned. Central Banks are dumping gold. We also understand that the higher the price of Gold goes, the less people want to buy their fiat currency. To us, it was an engineered move on many different levels. They are trying to scare people out of precious metals." See the GoldSeek interview (CLICK HERE).

◄$$$ HARBINGERS OF NASTY TIMES AHEAD. SOME SHOCKING QUOTES IN PLAIN LANGUAGE ABOUT THE WORSENING ECONOMIC CRISIS. THE ECONOMIC, BANKING, AND INVESTMENT LEADERS RECOGNIZE THE RUINOUS SITUATION EVEN IF POLITICIANS CANNOT OR WILL NOT. THE MAJOR CRISIS WILL NOT GO AWAY, BUT INSTEAD WILL INTENSIFY. THE FUTURE WILL LOOK DIFFERENT. $$$

Numerous insiders testify to the horrific economic and financial crisis that will not pass. Almost all measures to treat it have made it worse. The insolvency and economic quicksand have become constant features. A financial collapse in Europe seems clear, an inevitable event with catastrophic implications. All across the Western world, governments and major banks must contend with insolvent conditions that worsen. The amplified flow of bailout funds manage only to suspend the day of reckoning. But lately the political will is drying up, as the benefits seem illusory. Therefore, the collapse is gathering momentum. The Western world is facing a debt crisis that is absolutely unprecedented in world history. Several larger European countries are on the verge of joining the financial crisis that to date had been relegated to the southern periphery. In addition, a growing number of very large financial institutions all over the Western world are rapidly approaching a breakdown. The banking system in Europe is coming apart at the seams. Because the global financial system is so interconnected, when major European banks start to fail it is going to have a cascading effect across the United States, London, and Asia as well.

The financial crisis of 2008 plunged the global economy into the deepest recession since the Great Depression. The current financial crisis could potentially hit the world even harder. No longer does it seem feasible to bail out dozens of sinking financial firms. They authorities realize that the bailouts will require over 100 financial firms to be rescued with deep funds. A gaggle of top financial insiders know a breakdown is nigh, that a worse economic crisis is assured. The global financial system rests on a foundation of debt, leverage, risk, and hidden structures. The house of cards has begun to crumble and tumble. It seems vividly clear that the detonation for the next chapter of the financial collapse is going will emanate from Europe. It will have a powerful impact on United States, which never recovered from the last recession. Actually the recession never came to an end. Another major recession will be much more crippling. The global financial crisis centered in the West is about to ramp up significantly into a new more intractible economic crisis that fails to respond to any policy. See the Economic Collapse article (CLICK HERE). The following remarks are surprisingly candid. Take note of some shocking quotes.

  • George Soros: "Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation."
  • Mohammed El-Erian (PIMCO): "These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to de-lever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy."
  • Attila Szalay-Berzeviczy (UniCredit of Italy): "The only remaining question is how many days the hopeless rear-guard action of European governments and the European Central Bank can keep up Greek spirits. A default will trigger an immediate magnitude 10 earthquake across Europe."
  • Stefan Homburg (Germany Institute for Public Finance): "The Euro is nearing its ugly end. A collapse of the monetary union now appears unavoidable."
  • Nigel Farage (EU Parliament): "I think the worst in the financial system is yet to come, a possible cataclysm. If that happens, the gold price could go higher to a number that we simply cannot at this moment even imagine."
  • Carl Weinberg (High Frequency Economics): "At this point, our base case is that Greece will default within weeks."
  • Alan Brazil (Goldman Sachs): "Solving a debt problem with more debt has not solved the underlying problem. In the United States, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth. Can the US continue to depreciate the world's base currency?"
  • Juan Somavia (Intl Labor Org): "[The total unemployment could] increase by some 20 million to a total of 40 million in G-20 countries by the end of 2012."
  • Josef Ackerman (Deutsche Bank): "It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."
  • Alastair Newton (Nomura Securities): "We believe that we are just about to enter a critical period for the EuroZone. The threat of some sort of break-up between now and year-end is greater than it has been at any time since the start of the crisis."
  • Ann Barnhardt, (Barnhardt Capital Mgmt): "It is over. There is no coming back from this. The only thing that can happen is a total and complete collapse of everything we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly mistaken."
  • Lakshman Achuthan (Economic Cycle Research Institute): "When I call a recession, it means that process is starting to feed on itself, which means that you can yell and scream and you can write a big check, but it is not going to stop."

Some excellent future insight was provided by a global consultant involved in several continents and in some key platforms under construction. He wrote, "Inevitably all these banks will go bankrupt. The system replacing the current one will be based upon barter, using 21st century technology. Banks for the day to day transfer of funds will become public utilities. There will be no more investment banking as we know it. The countries with strong manufacturing industries and countries with commodities will ally and plow the road. The Berlin & Moscow Axis is a prime example of such cooperation. China is playing along since they have the market, and in Africa the neo-colonialists are given a run for their money. These are extremely challenging and dangerous at times." The implication is that deeply indebted nations that run big deficits and lack either industry or commodities will be relegated to an economic backwater. Those nations might degrade into Third World territories.

◄$$$ THE CLINTON-RUBIN EFFECT CONTRIBUTED MIGHTILY TO THE SYSTEMIC RUIN. IT SET THE STAGE. AIDED AND CHEERED BY GREENSPAN, THEY ALL REMOVED THE PROTECTION FROM SYSTEMIC RUIN BUILT INTO THE GLASS STEAGAL ACT. PERHAPS IT WAS JUST GREED, BUT PERHAPS RUIN WAS THE PLAN ALL ALONG. A CONCERTED EFFORT TO DESTABILIZE AND THEN TO EXPLOIT THE GREAT ASIAN IMBALANCE HAS TURNED ON ITS ARCHITECTS. THE BUSH REGIME MERELY CARRIED THE WRECKAGE TO CONCLUSION, REPLETE WITH EGREGIOUS EXPLOIT. $$$

The Rubin-Clinton cabal had a big hand with the assistance of the Greenspan Fed in wrecking the financial system. They brought the full power of Goldman Sachs exploitation to the helm, altered the economic meters, pilfered the national gold, and enabled the great imbalances that persist. At best they permitted, but at worst they caused the Asian collapse in 1998. These architects of ruin exploited a plan to create imbalances in the world economy and in currencies toward the favor of the United States. The clean industry of trading stocks and debt supplanted industry and production, with ruin the reward. They worked to create a free ride for the US, with lost factories and debt security mills running overtime for export. The unbalanced world has not been able to right itself. The United States basically printed infinite amounts of cash, imported tangibles cheaply, exported debt, and was content to send its factories overseas. The Asian nations participated in the ruinous system by recycling the export surplus into USTreasury Bonds, following the lead of the Arab oil exporters since the 1970 decade. The last decade saw the disappearance of the bond vigilantes, killed by the Interest Rate Swap weapon of mass destruction. It backfired and killed capital resident on US soil at the same time. The last major canary in the coal mine was removed as a warning device.

The Gold market by this time had been suppressed enough to turn off the inflation warning device as well. Fort Knox gold bullion was drained under Wall Street lease programs at 0%, set by Rubin. An abnormally low interest rate environment and unusually strong dollar environment prevailed, but it was phony. The recycling of exported extra USDollars acted to sterilize the massive dollar creation. The process was self-feeding during a time when tremendous imbalances were created in an unsustainable fashion. The final piece put in place at the end of the 1990 decade when Lawrence Summers, a Rubin protege, took down the Glass Steagal protective fence. The glue that fastened banks, brokerage, and insurance together was the derivative contract, in an unregulated industry. What followed was infinite leverage, the new wave of derivatives, and the new decade of bond fraud. All these important events took place during the 1996 to 1999 timeframe. America had been gutted. The magnificent secretive salvo that enabled a caravan of trucks loaded with hand grenades into the US system was the lease of the Chinese Gold & Silver hoard from the Mao Tse Tung era. The US promised to build shiny factories in China. They in turn promised more of the same destructive recycling of exported debt into USTBonds. The Wall Street gang promised to return the precious metal by 2008, but betrayed the Chinese. Therefore, the trade war has escalated into a hot financial war. Beijing is angry and motivated to punish the USDollar.

Huge blame belongs with Greenspan. The egotistical bank maniac wanted another term as USFed Chairman. But Clinton withheld the appointment until the Rubin plan was adopted and put into action. A mere one week after re-appointment, the myopic chairman completely reversed his hard money policies. He called it the Irrational Exuberance, but basically it compromised on monetary growth as long as the Consumer Price Inflation gauge was tame. That was when the CPI was redesigned and corrupted with motive. The bond market rally was supported by lower perceived inflation, as was the stock market. Lastly, the Social Security and other USGovt pensions realized lower annual increases, for significant savings. A hidden act was the sanitized interest rate rises in 1996 that accompanied grand increases in the money supply. Hence the interest rates had no impact. An entire inter-related system of levers was recalibrated by Rubin and his expert stat rats, but it was laden with deception. As the spigots opened completely, and the control room was rigged, Voodoo economics took life.

A comment on the Glass Steagal removal is worthy of note. Sandy Weill (CEO Citigroup) boasted on camera interview that he spent $200 million in lobbying fees to the USCongress over two years to have the law overturned. Afterward, the Travelers Insurance merger with Citigroup was completed. When it was stripped away, systemic ruin offered little protective gear for the nation, but big bank conglomerate profits were paved. Add regulatory control by Wall Street, and the corruption avenue was prepared. In my view, the initial pulled plug date is 1996 with the Irrational Exuberance speech by USFed Chairman Greenspan. That was an intentional motivated attempt at the time with full knowledge of the consequences. The USFed announced they would no longer manage the monetary aggregate growth. Instead they would manage the CPI. But back then the USEconomy was exporting inflation and importing cheap Asian products. So the slam bang crash during the Asian Meltdown was perversely seen as beneficial to the US. It was a motivated economic mass murder event on the economic field, akin to the trade wars preceding World War II. Add a decade and the pendulum swung against the US. Add China and the forfeiture of 300 factories, and it is GAME OVER for the United States. Chalk it up to staggering economic mismanagement and over-influence by the bankers. They meddled to the point of killing the national economy and its banking system. Those who regard such words as exaggerated need some cold water of reality splashed on the face. Do not overlook the fact that American pre-occupation with war is not mentioned in the above destuctive sequence. It is the icing on the cake of ruin.

DESPERATION AMONG CENTRAL BANKS

◄$$$ THE USGOVT DEFICIT WILL TOUCH $2 TRILLION NEXT YEAR, A VIRTUAL LOCK. THE DEBT HIT $14.790 TRILLION AT END OF FY2011, RAMPING UP IN SUDDEN LARGE JUMPS. NOTHING HAS BEEN ADDRESSED OR REMEDIED. THE DIFFERENCE IS ZERO ATTENTION PAID TO THE DEBT GROWTH. SOCIAL SECURITY HAS TURNED NEGATIVE, AND ADDS TO THE DEBT. THE ENTIRE USECONOMY IS BOUND TO A PERVERSE ENGINE THAT RUNS ON INFLATION. THE WORST ELEMENT IS THE USGOVT DEBT, WHICH OVERWHELMS ALL ELSE. ALMOST EVERYTHING IS UP 4-FOLD IN PRICE SINCE 1980. $$$

The United States has officially closed the books on the 2010-2011 fiscal year. The yearend saw the settlement of all recent auctioned debt, the result for which registered a surge of $95 billion in total USGovt debt on the last day. The fiscal year closed with a debt of $14.790 trillion. The benefit of added debt is an illusion wrapped in an empty box. The USEconomy packed on over $3 trillion in new debt in the past two years, but a fresh official recession is taking root ready to dole deadly damage. The US stock market is almost back to where it was two years ago. The benefits are not examined, as new debt issuance is demanded and approved. The next year began, and the pattern continued. On the first day of this fiscal year, Geithner added another $47 billion in debt. Therefore in just two work days, the USGovt has officially settled a staggering $142 billion in debt. The recently expanded debt ceiling of $15.194 trillion has under $400 billion of additional dry powder remaining. In no way will it last until the end of the calendar year. See the Zero Hedge articles (CLICK HERE and HERE).

The graph included data after chronic Social Security Trust Fund raids. Exclude such raids and no surplus would register in Q4 of the Clinton Admin, and all quarters would be higher. The year 2010 ended with the tables turned, as the Social Security factor has turned negative. The deficit will be aggravated, as SS raids have ended. Trouble brews from another front. Check the rise in price for a number of key items over the last 20 years of the millennium. The rise in USGovt debt eclipses them all. In fact, it is a key reason for the price inflation, along with the abuse to produce the next asset bubble such as housing & mortgage finance. The process of inflation began with the Vietnam War and the first $1 trillion in debt. Military contractors and US Senators enjoyed the largesse.

◄$$$ FOREIGNERS FLEE THE USTREASURY BOND MARKET, PROBABLY WITH USFED COVERAGE IN OPERATION TWIST, WHICH FILLED THE VOID. THE INTERVENTION HAS BECOME MORE DEVIOUS AND SECRETIVE. THE TWIST PROVIDES DEEP COVER FOR SOME VERY BIG MACHINATIONS. THE USDEPT TREASURY MIGHT HAVE OPENED A DOOR FOR FOREIGN EXIT THAT WILL BE DIFFICULT TO SHUT. $$$

Two months ago a very sharp colleague mentioned that Operation Twist would probably provide cover for hidden dumps by foreign creditors of significant USTreasury Bond holdings. In particular he mentioned China, which might have threatened to dump USGovt debt in heavy volume as part of the financial trade war. The argument made sense, as the Jackass is ever suspicious. Numerous creditors are disgusted by the entire Quantitative Easing damage, which served as unilateral debt writedowns from USDollar devaluation and exported price inflation. They are motivated to exit USTBonds. Some data has come forth to validate that angle of suspicion. The data shows a tremendous outflow by foreign creditors in USTBonds held since August, when incidentally the Operation Twist was first cited in the press and confirmed later by USFed Chairman Bernanke. If foreign sovereign wealth fund managers wished to exit the USTBond bubble asset at a profit from an elevated principal bond value tied to near 0% yield, now is the time. The US$ value is not likely to continue its bounce from the second death dance, and bond yields cannot go negative. If the foreign managers wished to exit USTBonds but not redeem into local currencies, which would lift their own currency exchange rate, then they could swap into US Stocks with no currency impact. The maneuver makes sense. Later they might exit the stocks and purchase some farmland or port facilities or telecom companies or railroads or toll roads.

To be sure, something curious happened in recently reported weeks. Before 2011, the foreign central banks had bought 25% of new USTreasury issuance on a regular basis, effectively providing a subsidy of US financial markets. Perversely, the US bond market had been rescued by the European sovereign debt and bank meltdown. Change has come. For the first time in modern data gathering, the USGovt saw a record $25 billion worth of USTreasury Bond outflows from the official custodial account in the week ended September 28th. Refer to the Treasury International Capital accounts, also known as TIC Reports, where preliminary data has been made available. Foreigners took the USFed announcements as a sell signal, selling at the heaviest pace in a decade. Operation Twist might be in high gear, with a foreign back door built. Equally curious is the sizeable outflow in the past five weeks. From the week ended September 7th through last October 12th, foreigners appear to have dumped a massive $74 billion worth of USTreasurys. This is the biggest outflow in history. The opposite effect is being seen when compared to the so-called Quant Crash in early August 2007 that marked the recent stock market high.

The recent move in the last few weeks is in direct contrast to the custodial account reaction to the Lehman implosion in 2008. Three years ago, over the course of 20 weeks, massive inflows took place in USTreasurys during the Wall Street meltdown. The stock market plunge in 2008 was accompanied by a shift into USTreasurys. This time here and now, the most unstable market volatility since Lehman has seen a record sequential exodus out of bonds, the opposite. THE MELTDOWN IN 2011 IS THE OPPOSITE OF 2008 IN USTBOND FLOW, LEAVING THE UNITED STATES HIGHLY VULNERABLE. One is left to suspect that Treasury Secretary Geithner made some arrangement for foreigners to dump USTBonds with the expectation that Operation Twist would purchase the entire raft. The USFed would backstop the entire curve. The data in the chart shows through September 9th. The foreign purchase of stocks prevented the next relapse. See the Zero Hedge article (CLICK HERE and HERE).

◄$$$ OPERATION TWIST HAS CAUSED SOME UNINTENDED CONSEQUENCES. DAMAGE HAS BEEN DONE TO PRIMARY BOND DEALERS. THEY ARE DUMPING BOTH USTBONDS AND CORPORATE BONDS. THEY ARE KNOWLEDGABLE VETERAN PLAYERS. THE BOND MARKET IS BADLY WOUNDED. BANK FAILURES COULD OCCUR VERY SOON. $$$

The Primary Dealers are supposed to be devoted USGovt finance soldiers, building inventory, aiding the system, acting as buffer. They have become massive sellers of USTreasurys and Corporate Bonds recently, the data through September 28th. A trend is stark clear. The dealers appear to be in trouble. Observe wholesale dumping of both USTreasurys and Corporate Bonds. They are either in deep distress themselves, or abandoning ship during Operation Twist, the opportunity presented. They are experienced with intimate knowledge of corporate finances. Bond yields are turning upward from their record rally in troubling developments. Implications for the bond market are dire, and reflect badly on US financial system health. Lee Adler of the Wall Street Examiner said, "About the Fed's Primary Dealer network. If the Fed is the head, these guys are the spinal cord. Isolating on just their corporate bond holdings, the picture becomes even more troubling. If major corporations are supposedly doing so well and their balance sheets are in such great shape, why did the Primary Dealers not accumulate their fixed income securities throughout the equities bull market of 2009 and 2010? And especially why have they been frantically dumping their corporate holdings since June? Something is rotten here. These are signs of major systemic stress." See the Wall Street Examiner article (CLICK HERE).

◄$$$ THE USFED MONETARY POLICY HAS SCREWED SAVERS AND BIG BANKS TOO. THE BANKS CANNOT EARN MONEY ON THE MULTITUDE OF SMALL ACCOUNTS. THE EXTRA FEE CHARGES HAVE ENRAGED CUSTOMERS. THEY MUST CHARGE NIGGLING FEES SO AS TO COMPENSATE THE BROAD LOSSES IN EVERY PART OF THE BANKING BUSINESS, EVEN TO COVER F.D.I.C. INSURANCE. THE LOW RATES PAID ACTUALLY DAMPEN THE USECONOMY FURTHER. $$$

Harm done to fixed income savers is well known, but damage done to banks of all kinds is less publicized. The problem has come to light only after the big US banks have announced debit card fees and checking account fees that have enraged customers. The banks cannot make money except from accounting fraud. Ultra-low interest rates have backfired into a run on Bank of America assets, as customer frustration grows. The bank plans to charge $5 per month on debit fees. The customers are organizing through petitions, gaining ranks well over 100 thousand strong. Smaller rival banks are seeing a flood of new accounts opened. Banks cannot make money on deposits, but BOA customers cannot even access their accounts. Senator Durbin from Illinois went so far as to urge BOA customers to abandon the bank for its vile practices, speaking from the USCongress floor. Wells Fargo and Citigroup have joined the movement to hike fees. The giant Citigroup has notified many of its customers of extras fees unless significantly higher balances are maintained.

The new Financial Regulatory Bill has tightened conditions for the banks. Revenues have been reduced from several controversial fees by $billions. At the same time, lending income has declined notably, due to both the sluggish economy and low interest rates. The biggest banks have numerous other locations for heavy losses, like with mortgage bonds, and leveraged assets related. They have big derivative losses hidden from view. Notice that midsized banks are subject to the same new FinReg guidelines, but they do not enrage their client base. Worse, the giant banks have structural problems. They are so bloated with multiple layers of fat, and redundant businesses, that they must hike fees in order to make a profit. The major banks are much more capital impaired, a nice way of saying deeply insolvent from the wreckage wrought from 2007 through 2009. Witness the backfire from USFed policies. Low rates harm savers, and slow the economy further. The USGovt cutbacks also slow the economy. The states & local government cutbacks slow the economy more still. The Black Hole that is the USTreasury Bond bubble must be supported.

The accounting fraud by JPMorgan is typical. Instead of taking a loss on their own declining corporate bonds, they posted a queer profit in a Debt Value Adjustment of $1.9 billion, equal to 29 cents per share. The JPM bond yield spread has widened by 200 basis points versus the USTBond. They paid out $1 billion in legal expenses for bond investor lawsuits. They raided $96 million from Loan Loss Reserves, which will be needed later. They cut 1100 in bank staff. They posted a $700 million decline in investment banking profit. Their biggest line item of profit was the fiction of a $1.9 billion profit from their decaying corporate bonds. If they default, the accounting profit could be maximized. Only in American bank accounting!! JPMorgan is a wreck!!

◄$$$ THE EURO CENTRAL BANK DID NOT CUT INTEREST RATES. ALMOST THE ENTIRE EURO CURRENCY DECLINE, AN OVERSIZED 1000 BASIS POINTS, WAS PREDICATED UPON THE EXPECTED RATE CUT TO ACCOMMODATE A SLOWER ECONOMY. THEY ANNOUNCED EXTENSIONS TO BOND PURCHASES INSTEAD. THE EURO CURRENCY IS RISING, OVER HALF DONE ON ITS RECOVERY. $$$

An important reversal of focus, expectation, and direction has taken place in Europe. Put aside the sovereign debt mess that will not go away. It will not be fixed, despite all the effort and talk and deal making. They must prepare for a string of bank failures and a Greek default. Every solution executed or proposed or pending involves the same lunatic device of creating more debt or more money to solve a problem caused by too much credit creation and unchecked monetary creation. All concomitant austerity plans on budgets will worsen the deficits and debt picture. For 18 months the Euro had traded on the back of the European Central Bank monetary policy, on interest rate judgments and expectations. To be sure, the PIIGS sovereign debt situation has dominated the news. However, that disaster has played out in the member nation bond yields, like Greek yields shooting toward 100%, like the bigger southern periphery nations jumping over the critical 5% level. During all the maelstrom of the wrecked bonds, arguments over bank bailouts, haggling over funding the stability fund facility, and political foot dragging, the Euro had maintained above the 140 exchange rate for a long time. The impetus for the rise from 130 to 147 in the Euro currency from the beginning of year 2011 had been the clear move by Trichet of the Euro Central Bank to break ranks with the US Federal Reserve. Trichet hiked the official rate by 25 basis points several months ago, attempting to make distance from the USFed. He made defiant comments implying a reckless pattern at the USFed. He cited rising price inflation threats and the lack of desire to continue to stimulate on the monetary side. The rate hike was criticized widely for its direct impact on PIGS nations. Their mortgage rates and other related internal bank mechanisms caused damage to the southern banks. They were already teetering.

All changed at the end of August. The outgoing chief Trichet responded to the Western plunge in stock markets accompanied by vivid economic slowdowns. In recent weeks, the Euro Central Bank has indicated a greater emphasis on paying attention to growth issues, a policy direction change. The profound bank distress has grown into a contagion, as the big French banks came under the spotlight, also capturing his attention if not causing shock. Then suddenly Dexia had a near death experience, aided en route to the morgue. The EuroCB seems now trapped by two equally unsavory and undesirable policy directions. It had been giving all the signals of an official rate cut. But the European Central Bank did not cut rates last week, an event of extreme importance. Trichet cited intensified downside economic risks, words which matched the Bernanke language of extreme economic weakness. The clumsy Euro Central Bank instead decided to announce another round of bank loans and massive bond purchases. While the bond plan is more of the same expansion of money, much bank backstop activity has curiously been US$-based, as the big European banks have a boatload of US$ obligations to meet, actually raising USDollar demand. The ugly little fact in the last month has Wall Street banks filling the void with extended bailout-like loans in the inter-bank market to big Euro banks. The harsh reality is that when Greece inevitably defaults, a string of bank failures will occur that hit Europe, London, and the US simultaneously. It will be very rapid. The great posturing is underway prior to the big event. Clear the smoke and dust, and the fact remains that the official EuroCB interest rate was not cut by 25 basis points. They did not even remove their hike from several months ago.

The Euro is in recovery from its tumble down the staircase in late summer. The currency began quickly to gain strength on the usual speculation that another round of fresh loans to deeply distressed banks by the European Central Bank would buoy the financial markets stuck in crisis mode. The Competing Currency War will not quit until its logical conclusion of comprehensive ruin of paper currencies. The Euro rises from fading faith in interest rate cuts, the key to leveraged bond speculation that has dominated the FOREX markets for two decades. The British Pound is falling from the expanded official bond purchase plan by the Bank of England, in unexpected uncharacteristic style. The Brazilian Real surged after price inflation rose more than forecast, raising belief that the central bank will bring an end to official interest rate cuts.

EuroCB officials left their benchmark rate at 1.5%, as expected after strong hints by Trichet made since September in reaction to widespread evidence of economic slowdown. The EuroCB announced no change on rates, but big change to credit. The EuroZone price inflation is still at 3%, for which they have a clear single mandate. The outgoing ECB head announced a resumed covered bond purchase plan that reintroduces year-long loans for banks. They are badly threatened as the sovereign debt crisis has frozen money markets. Trichet will step down at the end of October, to be succeeded by Mario Draghi from Italy and of Goldman Sachs pedigree. The financial markets found relief, as they believe amplified support from stronger liquidity measures mean much more than the toothless stimulus from lower interest rates. Talk continues of the interruption to recovery, a 1984-like mantra. The reality is that the US and UK and Western Europe have been stuck in a powerful recession for three years, as near 0% interest rates since early 2009 have done nothing to accomplish the anticipated heretical Keynesian lift from phony stimulus. Insolvency has gripped the entire Western world, and no amount of liquidity flood can fix it. All austerity measures imposed on budgets will worsen the problem. It is like a deeply indebted person going on a hunger strike to improve his loan payback. See the Bloomberg article (CLICK HERE).

◄$$$ REVERSAL OF THE EURO CURRENCY IS IN FULL GEAR. THE FOREX MARKET IS TREMENDOUSLY LEVERAGED AND ACTIVE. IT TRADES OFF ARBITRAGE OF INTEREST RATES AND THEIR EXPECTED DIRECTION. THE EURO SHOULD CONTINUE TO SLOWLY RISE UP TO THE 141 LEVEL IN A SLOW RUN, AT WHICH POINT A BIG TURNING POINT WILL BE REACHED. $$$

The Euro has begun to rise. Just this past week, it registered a 140 basis point rise on a single day. Yet another big upward move was recorded, as the Euro has risen 160 basis points more, touching the 138 level. One more hefty upday occurred over 100 bpts last week, its third, keeping the pressure with a near 139 touch. Observe the reversal of the Euro currency decline. It has a thinly defended gap between 136 and 140 which will be filled. The reversal in underway. Momentum is building. Talk of the absent rate cut is loud and reverberating. Whenever the official stability bailout fund is replenished, or expected, the Euro tends to rise from inertia and continuation, nothing more. Short covering process is well underway, buyers hastily closing out big positions. The MACD momentum swing indicator shows a reversal in progress. The potential for FX trader profit is suddenly on the upside. The fundamental defense in the form of narrowing interest rate differential versus the USDollar did not materialize. The FX currency market is dominated by leveraged bond speculators who prey and trade off the differential. They are extremely active suddenly. The Euro will try to rise above 140, but a big battle will occur. If the USGovt budget turns into a hornet nest again, with heated controversy and nasty debate over still more debt limit increases, the Euro will easily surpass 140, and re-enter into the previous 141 to 145 range.

Bankers across the Atlantic are actively printing money, buying bonds, and otherwise debasing their currencies. A big announcement by the Bank of England about their GBP 75 billion (=US$115 billion) infusion into the financial markets came in rapid fire after the Euro Central Bank left their 1.5% benchmark rate. The ECB announced it will resume covered bond purchases and reintroduce important loans for banks. The ruin of major currencies will resume in force. Massive futures contract bets had been placed that the Euro would fall versus the USDollar. Short covering has begun in earnest. But the justification from a pending expected rate cut did not happen. The reversal is in progresss, with some momentum. A shift is vividly clear in risk sentiment for the USDollar to weaken from here. It has made a run on Euro weakness, not US mainland strength. The American problems remain enormous and intractible.

◄$$$ THE SWISS NATIONAL BANK BALANCE SHEET HAS BALLOONED TO A DANGEROUSLY HIGH LEVEL. THE INTERVENTIONS ARE EVIDENT. THEIR SUCCESS SEEMS APPARENT, BUT IT MIGHT NOT LAST FOR LONG AS RENEWED INFLOWS COULD ARRIVE DURING THE EUROPEAN BANK WRECKAGE. THE SWISSY WILL RISE QUICKLY IF A PIGS NATION IS SET TO DEFAULT, A CERTAIN EVENT. $$$

The Swiss National Bank released its balance sheet on activity through August. The Swiss reserves rose by CHF 115 billion, a huge monthly 50% increase. Domestic liquidity (sight deposits) rose a staggering 390%, from CHF 49 billion to CHF 191 billion. This is monster data!! This data includes the period when the SNB made giant bets to stabilize and later to weaken the Swiss Franc. The sharp increase in the balance sheet from newly created money in the form of bank reserve sight deposits puts the Swiss central bank in direct competition with the US Federal Reserve and Bank of England. They are all three debasing the monetary system rapidly. In the United States, the central bank has so far printed $1.35 trillion during QE programs, which comes to 9% of GDP. The Swss National Bank by contrast has printed an amount of liquid funds equal to 25% of GDP in only one month. This is without precedent in modern history. The excess is outrageous and steeped in desperation.

Up to now, the actions by the SNB have succeeded in keeping the Swiss Franc under wraps, down from a peak 140 in August to a stable 110 in October, killing off their favorite son UBS. The key Euro/Swissy cross rate has been steadily above the 1.20 level. Although the bankers in Zurich tout the SNB intervention as a success, it might be early to conclude the battle has been won. The European bank crisis is begging for a climax. The Greek Govt debt default is an assured event, the timing not clear. That is an important trigger for vast floodgates to open again for to seek safety in Swiss mountains. The Swissy will rise again, attempt to fill the 117-124 gap, and cause more big problems for the savvy, resourceful, but increasingly desperate Swiss bankers. They are potential victims in the Competing Currency War, along with their well balanced economy. As the European Union breaks, it could render deep damage to Switzerland in the fallout.

BIG BANKS IN UNSTOPPABLE COLLAPSE

◄$$$ DOUG NOLAND OF THE PRUDENT BEAR CALLS THE SITUATION UTTERLY HOPELESS IN PLAIN TERMS. HE FOCUSES UPON CREDIT EXCESS, CONTAGION, LACK OF SOLUTIONS, AND UNCERTAINTY. OVERLOOKED ARE INSOLVENCY, PERVASIVE FRAUD, AND RISING COSTS. CONFIDENCE HAS VANISHED FOR BOTH CENTRAL BANKS AND THE INTEGRITY OF THE MONETARY SYSTEM, AS IN MONEY ITSELF. $$$

Doug Noland in plain terms calls the Situation utterly hopeless, the edge of the cliff approaching. He usually tempers his words, but no longer. Below are excepts assembled into brief form, a subset of his longer essay. They are his words in condensed form. See the Dollar Collapse article (CLICK HERE).

"It has been my long-held view that, in the grand scheme of major Credit busts, calculations of necessary additions to depleted bank capital basically become meaningless. The critical issue is not some quantifiable (and pluggable) hole in banking system capital, but instead the overall Credit needs of maladjusted Bubble economic structures and inflated system-wide prices levels and spending patterns. This is a critical distinction. In the United States, for example, a period of prolonged Credit excess created a financial and economic structure requiring in the neighborhood of $2.0 trillion annual net non-financial credit growth, to keep the economic wheels rotating and (speculative) asset markets levitating. Post-2008 crisis bailouts threw hundreds of billions (trillions?) of dollars at the financial sector, although this changed little with respect to the economy's requirement of massive Credit creation on an ongoing annual basis. This is an enormous festering problem that goes unnoticed with attention fixated on European carnage.

From the European experience, we now appreciate that the little, almost inconsequential Greek economy is quite an impressive financial black hole. And as things have progressed, critical Credit Bubble Dynamics have been illuminated for all who want to see. The market has witnessed how the money from Greek Bailout One was soon vaporized. Dexia's 2008 bailout, vaporized. Greek Bailout II, when it arrives, will be similarly vaporized. European bank capital, poof. The potential amount of money to be vaporized if Italy succumbs to the highly contagious path of Greece, Portugal, and Ireland: an unfathomable black hole. Seeming at times in lonely isolation (refer to either their AAA debt rating or manufacturing-based economy), the Germans appreciate the unfolding financial black hole and monetary slippery slope nature of how things are progressing. Despite stringent austerity measures, Greece will run a deficit this year of at least 8.5% of GDP. Without a massive and open-ended commitment from a rapidly depleting European core, the situation is utterly hopeless. As much as policymakers will never admit it, impaired economic structures are at the heart of an unquantifiable global Credit crisis of confidence. And as de-risking and de-leveraging empowers contagion effects worldwide, the scope of the unquantifiable grows only more unfathomable.

It all seems to boil down to how Credit cannot be stable within a backdrop of such extraordinary uncertainty. And no amount of central bank liquidity (money) and bank capital is going to engender sufficient certainty to stabilize global credit, financial flows, and asset markets. Not with the large number of dangerously maladjusted economies. Not with such well-entrenched global economic and financial imbalances. And not with today's unbelievable credit, derivatives, and speculative leverage overhang. The issue is certainly not a lack of money, but rather a lack of confidence and trust, the bedrock of credit."

Noland for some reason does not mention what might be the biggest problem, as he overlooks systemic insolvency. To be sure, confidence and trust in the system are sorely lacking, but the over-arching magnificent problem pertains to the widespread insolvency throughout many important structural areas in the USEconomy and other economies in the West. The persistent condition prevents solutions from taking root no matter what volume the bailouts and stimulus. The cause is both the love affair with the sanctioned asset bubble of the year and the advent of Chinese cheap labor from the globalization movement. Noland might have chosen intentionally not to emphasize the insolvent banks and households, and reduced industry that has been trimmed down and forfeited to the extreme. He could have extended emphasis to the theme of lack of confidence and trust. These psychological cornerstones are not only the bedrock of Credit but the foundation of the monetary system. That system is crumbling and giving rise to Gold.

◄$$$ THE INTL MONETARY FUND HAS WARNED OF A MUCH DEEPER CRISIS UNFOLDING. THE EUROPEAN STABILITY FUND IS TOO SMALL BY A FACTOR OF 5-FOLD, BUT ADMITTING SUCH SIZE WOULD FURTHER UNDERMINE SYSTEMIC CONFIDENCE. THE POSITION IS SECONDED BY STRATFOR. $$$

The IMF has gone public with their expectations of another powerful round for the financial crisis. An IMF advisor issued a report stating a forecast for major bank runs, market crashes, food shortages, government shutdowns, and most important systemic failure. As the crisis grows much worse, they cite a risk for the entire financial system to collapse. What comes should eclipse what occurred in 2008. Pockets of the population will lose life savings and entire businesses. Many people will lose everything in this mess. Expect the USGovt to default on its debt, and for paper currencies around the world to suddenly be challenged in value. The IMF advisor warns that the world faces a major banking system meltdown. See the YouTube video (CLICK HERE).

Stratfor is a geopolitical think tank with a spotty record. The do well on economic matters, and poorly on military matters. However, they recognize the depth of the global financial crisis and its unfixable nature. The research outfit estimates that the bailout necessary to manage the fallout from a Greek removal from the Euro Monetary Union, and a debt default, would require EUR 2 trillion. My estimate is more like EUR 4 trillion minimum, when all PIIGS plus France are engulfed. The formal bailout mechanism, the European Financial Stability Facility, is in place, but it is woefully inadequate. Nobody seems willing to admit that it is grossly under-funded, like by a factor of five. Soon attention will come to the Italian Govt debt needs. Rome was under the spotlight, but Greece and the delayed funds for its bailout took over that focus. Italy would require close to EUR 1 trillion alone, but over three years perhaps. Stratfor estimates that upon a Greek rejection, EUR 400 billion would be quickly needed to cover the contagion and another EUR 300 billion needed for the banks. The IMF is not prepared to offer a huge slice of that bailout aid. It could provide at most EUR 150 billion. Even with enormous bond redemption and bank aid, Europe will stumble along while their great structural, financial, and organizational challenges remain. The plans discussed serve as mere patches and tourniquets for a couple of years, and no solution whatsoever. Neither the United States nor Europe are on the path to any solution, and not London either. No plans involve big bank liquidations.

◄$$$ THE EUROPEAN BANK SITUATION AND SOVEREIGN DEBT LOOK DIRE BECAUSE THEY ARE AN UNFIXABLE DISASTER. BANK DOWNGRADES WILL CONTINUE. INTERNAL SQUABBLES ARE TURNING UGLY. THE LEADERS ARE PERPLEXED AND FRUSTRATED, SINCE NO SOLUTIONS ARE WORKING. THE BANKS ARE READY TO TOPPLE. THEY ARE PRESSURED BY THE WRETCHED SOVEREIGN DEBT PROBLEM, THE BANKS TEETERING FROM INSOLVENCY, AND THE BANKS KNOCKED DOWN BY SLAPS OF RATING AGENCY DEBT DOWNGRADES. REALITY IS HITTING HARD AND REPEATEDLY, AS LEADERS DENY, DITHER, AND DELAY. $$$

IMF chief Christine Lagarde held talks two weeks ago in France with President Nicolas Sarkozy, the topic being the EuroZone debt crisis. The meeting was part of a skein set up by Sarkozy, as he shuttled to Germany for talks with Chancellor Angela Merkel. They accomplished nothing except to raise the concerns and lift awareness of an intractible problem. They all avoid the first step of a solution, big bank liquidation and sizeable bond writedown losses imposed. They are apparatchiks to the bankers. The systemic ruin will proceed since the power structure is not to be disturbed or altered, certainly not reformed and replaced. The topic of discussion at the meeting was the heavy exposure by banks to sovereign debt. The European Commission has urged member states to draft a bailout plan to restore confidence in banking. It is starting to take shape. As EuroZone dominant economic powers, Germany and France are stuck, unable to agree on the way to proceed. The string of bank downgrades by Fitch and Moodys has complicated matters, but the splash of reality is justified, even overdue. Moodys downgraded 12 banks in the UK and nine in Portugal. Fitch echoed with more of their own downgrades that include US banks. Plans to expand the regional bailout fund have met with obstacles, not ratified by most national parliaments. Most plans are seen as inadequate, but paving the way for a bigger broader bailout rescue strategy. The climax for announced new measures will be at a G-20 meeting in Cannes at the beginning of November. An important conflict has emerged as thorny. A German source told the Reuters news agency that Paris wanted to be able to tap the EuroZone bailout fund itself, first in line to recapitalize its own banks, which have the largest exposure to peripheral eurozone debt. They again wish for privilege, probably since the dominant PIGS creditor. However, Merkel interfered with such preferential treatment and hog behavior. The perception that France is a PIGS nation is becoming clear from its bank exposure. The European Financial Stability Facility is to be used as a backstop for broad continental usage, not as a French private slush fund.

Against the meeting backdrop, Fitch cut the Italian Govt debt rating by one notch, from AA- to A+, to match the Moodys downgrade one week earlier. Fitch cited the intensification of the debt crisis that "constitutes a significant financial and economic shock which has weakened Italy's sovereign risk profile." The agency also cut the Spanish Govt debt rating by two notches, down to AA-. Fitch raised concerns about the strength of Italian banks, and cited the "small but no longer negligible risk that a further worsening of the EuroZone debt crisis and volatility in the value of Italian Govt bonds will further erode confidence in the banking system." The agencies keep mentioning confidence and refuse to stress solvency. The agency identified a vicious cycle (in their words, matching the Jackass theme) that could emerge from lack of confidence in Italian banks and resulting lost confidence in government debt. Concerning Spain, Fitch cited the deepening debt crisis generally, and raised questions about their ability to reduce deficits effectively. Their fragile economic condition has made Spain especially vulnerable to external shocks. Spain has the highest unemployment in the EuroZone, at more than 20%, equal to the United States. See the BBC article (CLICK HERE).

Fitch did a laundry list downgrade, and sent shock waves through the financial markets. They gave long-term issuer default grade cuts to UBS, Lloyds Banking Group, and Royal Bank of Scotland, as well as putting more than a dozen other banks on negative watch as part of a global review. Fitch removed the UBS benefit for close association with the Swiss Govt. But Lloyds and RBS were lowered two steps to A from AA- as Fitch pointed to the UKGovt unlikely to provide future support. They also put on negative watch seven global banks including Goldman Sachs and Morgan Stanley, due to new regulations and economic developments. Credit Agricole was put on watch based on sovereign debt concerns. Bank of America was put on watch for mortgage litigation risks. Adrian Miller is a fixed income strategist at Miller Tabak Roberts Securities in New York. He said, "Fitch systematically, like many of the rating agencies, seems to be working its way through the European banking community from the standpoint of raising awareness of potential capital inadequacies. This is more or less a macro call on the sector. It is a continuation of a developing theme that has been going on since July that, since that point, has intermittently sent shockwaves throughout the market." See the Bloomberg article (CLICK HERE) and the Zero Hedge article (CLICK HERE).

◄$$$ THE WESTERN MONETARY SYSTEM IS CRUMBLING. HOWEVER, A CRITICAL POINT IS BEING REACHED WHERE THE PLATFORM WILL COLLAPSE. PILLARS OF SUPPORT FOR THE BANKER PLATFORMS ARE BEING REMOVED. THE PATHOGENESIS WILL NOT BE A CONTINUED SLIDE WITH INCREMENTAL DAMAGE. SOONER OR LATER, THE IMPACT WILL BE SIGNIFICANT AND SUDDEN QUANTUM DAMAGE THAT WILL BE CONSTRUED AS THE ACCELERATION TOWARD COLLAPSE. AS RESISTANCE IS BEING QUIETLY AND EFFECTIVELY REMOVED BEHIND THE SCENES WITH IMPORTANT EXECUTIONS OF CORRUPT AND HOLLOW PLAYERS, THE PRECIOUS METALS PRICE WILL SURGE IN THE NEAR FUTURE. $$$

As Jackass, a certain disappointment has come in seeing the Gold & Silver performance during obvious ambushes like with margin hikes in a falling market. The declines cost time, erode confidence, but important developments are hidden. My best internal gold source has assured that huge executions (like firing squads) are taking place against mid-level bankers and their corporate trading offices. Inside the arena of control UBS was killed, all its gold removed, no longer a player. He said Goldman Sachs is being targeted now just like UBS was earlier. He described crosshairs between constructed toward the target, and the backdrop being painted, even with some deception, and how when the beast enters the gunsights, the trigger is pulled. The enormous crippling loss will be guaranteed for the bank beast, but the story told will contain some creativity in its deception. What a wonderful day it would be if GSax is indeed dealt a massive loss in such a trap, weakened badly, to become a marginal reduced player operating with impunity but much less power. He discussed justice. Since it is not served by the USGovt legal authorities, some big well financed billionaire players are delivering old fashioned justice within the market, but also with carefully designed traps and stings that reverse the tactics. He assured that every Friday a major player (company or executive) is being killed off. He calls it nailed to the cross or nailed to the wall, often with a nailgun. He called it brutal and very much hidden from view. He emphasized the cause for optimism from the clear path being constructed. The financial press will never provide proper coverage for these stories, where corrupt players are removed, their resistance muted. Notice how the UBS story was a weeklong truckload of dumped manure that never mentioned their total loss of gold. The oust of the Oswald Gruebel as CEO on September 24th was a hint of major damage. The Societe Generale CEO did not resign from their rogue trader loss. The UBS story is very big but not told except by the Hat Trick Letter, thanks by my gold trader source who has kept lines of communication open for 3-1/2 years. Much gratitude, Mein Herr!

The importance of such brutal doles of justice has been to remove the resistance for future surges in the Gold & Silver price. It is like cutting down trees to permit a herd of buffalos to run more freely when gates are overrun. Eventually he claims the surge will be to $3000 quickly for Gold and to $100 quickly for Silver. He repeats "They will both go through the roof." He has been urging patience in the last couple months, since important work is being done to eliminate the resistance, even though not visible. My comment in reply was that the monetary system rests atop a stage with 40 pillars. The stage lost half its pillars in late 2008 with the climax that commenced officially the global financial crisis. Lately the stage has lost more, down to 13 pillars in the last year. He agreed with the analogy and concluded that the stage cannot support the system after some more damage. He put a timetable of late autumn 2011 for the platform to beginning showing evidence of collapse. He expects the collapse to occur after April 2012. It will not simply see some players slide off. The real impact will be the collapse of the stage itself, from lack of strength, from lack of sufficient bank fiber and vitality, otherwise known as capital and solvency. Perhaps some victims like Morgan Stanley and Societe Generale of France and Dexia of Belgium might be victims to fall off the stage first.

◄$$$ THE BELGIAN BANK DEXIA IS IN RUINS, A SKELETON PAINTED WITH PAPER MACHE, PROPPED BY BAILOUT FUNDS. IT IS THE NEXT BASKET CASE PROJECT. BEWARE OF DERIVATIVE BLOWUP RISK AND DIRTY LAUNDRY PREVENTED FROM BEING SEEN IN THE OPEN. THE SIZE OF THE REQUIREMENT PATCH JOB WILL LIKELY BE MISJUDGED. THE BAD BANK SETUP REVEALS THE COMEDY IN THE SOLUTION. THE ENTIRE EVENT SIGNALS A RASH OF BANK FAILURES SOON TO OCCUR. RECALL THAT BELGIUM HAS HAD NO GOVERNMENT FOR ALMOST A YEAR. CHAOS MOVES ALONG AND GAINS SPEED. $$$

In no way can my analysis of Dexia be complete. That would be a project unto itself. The information regarding the dead bank reads on like an ongoing obituary. The Belgian bank cannot be permitted to fail anymore than Bank of America or Citigroup, but it will, all in time. Dexia was given a giant bailout relief three years ago, lest one forget. Those funds have been eaten up like by on a table of acid. Rumors were thick of creating a bad bank to stuff their toxic paper assets. The rumor had some value only in that it sparked a phony US stock market rally, nothing more than vapor. Reports emanated that the Belgium Govt, which suffers from disarray on budgetary lifelines, will take a 100% stake in the Dexia Bank. The price was reported to be a lowly EUR 4 billion, pocket change. Yet the bank would receive EUR 90 billion in guarantees from the governments of Belgium, France, and Luxembourg. The home country Belgium will provide 60.5% of the guarantees. The Belgian fnancial minister claimed feebly that the country's debt/GDP ratio will remain under 100% in the 2012 budget even with the purchase, a notion based in total nonsense. All kinds of violations of the EU charter are to come, but no matter. In the midst of all, ratings agency Moodys placed the Belgium Govt debt ratings on review for possible downgrade, as its undeserved Aa1 rating is in jeopardy. They cited ongoing funding risk (gaping budget deficits), fragility in the wholesale finance environment (locked up inter-bank lending), deterioration of public debt trajectory (chronic unfixable deficits), and uncertainty toward the already pressured balance sheet (ruin from debt burden).

The entire discussion and construction of the Bad Bank epitomizes the futility and broken nature of the situation. Dexia apparently is in possession of EUR 120 billion (=US$120 billion) in US, Italian, Spanish, and Belgium loans at risk. Belgium and France may guarantee 60% versus 40% of the loan refinancing built within the Bad Bank. Calls were made for the Bad Bank design to receive some legitimate infusions, like from the sale of profitable Dexia assets such as its Belgian retail bank chain, so as to mitigate its losses. The official pronouncements discuss refinancing, but never default or payment. Nowhere is addressed the fundamental imbalance in the economy. The loans granted could never be repaid by the borrowers. The architects continue to pretend that shifting the unpayable to governments is going to make everything alright, while not degrading the fiscal deficits. What nonsense! The future will be ransacked and ransomed in order to prevent the power structure from changing, just like in the United States. The prime directive is not to alter the power structure, meaning the big banks in charge of many key government functions. Finally, recall that over the course of the last three years, not one single bad bank has ever been built, except of course the toxic repositories like Fannie Mae and AIG held under the USGovt roof and auspices. The lesson learned has been that if a bad bank is constructed, it is not described as such, but rather a financial firm is nationalized and then turned into a toxic dumping ground no different than a chemical dump with hundreds or thousands of leaking barrels and dripping hoses. There is no need to construct bad banks, since the USFed, the Bank of England, and the EuroCB all bad banks already!! They are badly insolvent, but never lack liquidity since they print it readily.

A German banker contact provided some added perspective, starting with some historical light. Dexia is or at least used to manage the Gorbachev Foundation monies. They were also deeply involved in the Clear Stream & Euro Clear clearing trade transactions fraud. Both are equivalent to SWIFT. The French were also neck deep into this. So the Dexia dirty laundry is not to be revealed on the news lines dried publicly, upon a bank failure. It is all coming full circle. Dexia will be nationalized, much like Fannie Mae, then be broken up. That would succeed in keeping the rotten stench from being reviewed by prying eyes. On top of the government guarantees given by Belgium, France, and Luxembourg, the French banks Caisse des Depots and Postbank will have to shoulder nearly EUR 70 billion that Dexia had dispensed to French municipalities. Although the press prefers to mention a deep French affiliation, Dexia does not have a single office in France. It is more like a corrupt French playground. The mere EUR 8 billion in Greek Govt bailout for the next installation is all the buzz, but it is chump change compared to Dexia and two dozen other large important European banks. He concluded with a warning, "Just wait and see when the trillion dollar banks go bust. That will crush whatever government stands in the path of such a calamity."

The other important issue with a potential Dexia failure is exposed derivatives and the many weak counter-parties. A Dexia failure and liquidation conducted by a market morgue might expose the derivative counter-parties in bold fashion. The PIGS sovereign default is unavoidable. It is almost comical to watch the desperate attempts to place bandaids and tourniquets on the Euro bank structure. With no claim of complete reference coverage, consider the following for some background and battleground information. For the bad bank rumor and partial nationalization stories, see the Zero Hedge articles (CLICK HERE and HERE). For the rationale of the structure for the bad bank as well as division of assets and proceeds from their sales, see the Market Ticker article (CLICK HERE). Be sure to know that Dexia could serve as the fuse for the Euro banks to blow up. That fuse will be a sufficiently large and totally rotten bank. The ignition will be for some misjudgment of the risk, the consequences, or the recognition of its asset condition. It could also be the market moving much faster than the politicians and bankers who decide reactively to plug gaping bank holes.

◄$$$ THE BIGGEST US-BANKS HAVE ENORMOUS LEVERAGE. THEY ARE RIPE FOR FAILURE. AS THE USECONOMY ENTERS A DEEPER RECESSION, LIQUIDITY DRIES UP, AND PRESSURE TO ADD TO CAPITAL INCREASES, THEIR RISK RISES RAPIDLY. THE FOCUS OF ATTENTION IS ALTERNATING. THIS SUMMER IT WAS THE UNITED STATES. LATELY IT HAS BEEN EUROPE. THE EPICENTER OF THE GLOBAL FINANCIAL CRISIS IS THE UNITED STATES, FOR ITS SANCTIONED ASSET BUBBLES, ITS SPEW OF CANCEROUS MONEY, AND ITS BOND FRAUD. $$$

It is a Jackass belief that when the USFed doled out $16 trillion in late 2008 and in 2009 in the wake of the credit crisis eruption, most of the money went to cover staggering derivative losses that would have caused massive seizures throughout the Western financial system. That includes both bond markets and big banks. Domestic banks and large corporations received the hidden money, right along with foreign banks and companies, in what appears like from a gigantic slush fund of fresh money. THEY BOUGHT UP GLOBAL ASSETS. It was dirty money in that it came from the Syndicate tower at the USFed. In effect, the Federal Reserve bailed out the world financial system and acted as creditor in a grand carpetbagger exercise. The system has not been remedied or reformed. Instead it has deteriorated further, inviting the next important stage, a repeat of the financial seizures. Another financial meltdown is in progress, this time centering upon European banks and sovereign debt.

Shock should hit the observer, that $16 trillion was nowhere near enough to put the financial system on strong footing. The banks are still insolvent, losing capital at a faster rate than their obscene bailouts. The dark pools of unregulated derivatives are something the bank officials would prefer the public not learn about. It has shrunk to a $600 trillion exposure in Over-The-Counter size, but with no public market for monitoring values of contracts. The exposure could be much more. These are basically big bets placed on debt securities between two entities on items such as credit risk, currency movement, interest rates, and commodities. According to the Comptroller of the Currency, the four biggest US banks have $235 trillion of OTC derivative leverage, 94% of the US total. As a nation, all US banks have a total OTC derivative exposure of $250 trillion. They boast a 47:1 ratio of exposure versus assets, since they combine to hold only $5 trillion in assets. That is very unstable and untenable. Bear in mind that the listed asset base is subject to their own fictional judgment. Their assets such as real estate or mortgage backed securities can be held on the books at whatever value the banks think they can sell them for in the future. Accounting is a work of hope and fiction. The banks are listed below in order of size and approximate OTC exposure:

1)      JPMorgan Chase with $78.1 trillion OTC derivatives

2)      Citibank with $56.1 trillion OTC derivatives

3)      Bank of America with $53.15 trillion OTC derivatives

4)      Goldman Sachs with $47.7 trillion OTC derivatives.

The banks play a game of minimizing risk. They argue about the net exposure is not so great because the banks have hedged their bets. Remember we were told by Greenspan in 2006 and early 2007 of systemic risk offloaded, which was nonsense. The banks argue that these debt bets will cancel out or back up one another in what is known in the banking world as bilateral netting. The best example of the flawed reliance upon bilateral netting is the failure of American Intl Group, which was the insurance giant that supposedly secured the system. AIG was nationalized in order to avoid making $trillions in derivative contracts worthless in an instant. Be sure to know the USGovt Printing Pre$$ operated by Goldman Sachs has been very active covering the losses. The USGovt essentially makes the mortgage guarantee and the derivative guarantee, with full abuse of the USDollar as victim. The system is ruined. The bilateral netting actually assured the destruction of both counter-parties, not their insurance to be made whole by the other. Instead, it puts them both in the black hole together.

The Western banking system is still in trouble. Focus is currently on Europe, whereas in August it was squarely on the United States. London has eluded much focus of attention. To be sure, the sovereign debt crisis in Europe will tear the European Union apart apart and bring an end to the Euro currency. The big banks are over-leveraged, almost all of them. That end might involve the PIIGS holding some form of Euro currency alone. If the big European banks suffer direct damage from a Greek default, or an Italian or Spanish shock wave, the ripple effects will spread to the highly leveraged London and US banks. The American banks will demand another TARP to avoid a death experience. The distrust in Europe among inter-bank lending resulted in Wall Street banks providing very large bridge loans from hidden lending facilities set up by the USFed. Their heavy usage (abuse) assure that big US banks will fail alongside the big Euro banks. The United States remains at the epicenter of the ongoing credit crisis, since it was the cause on the housing & mortgage bubbles, and it is the source of the tainted money that floods the global system. The unchecked bond fraud adds credence to the US being the center. America and Europe will alternate in looking dreadful and emanating the strong stench of death.

John Williams of Shadow Govt Statistics summarized well. He wrote, "The root source of current global systemic instabilities largely has been the financially dominant United States, and it is against the USDollar that the global markets ultimately should turn, massively. The Fed and the USTreasury likely will do whatever has to be done to prevent a European area crisis from triggering a systemic collapse in the United States. Accordingly, it is not from a Euro-related crisis, but rather from within the US financial system and financial authority actions that an eventual US systemic failure likely will be triggered, seen initially in a rapidly accelerating pace of domestic inflation, then ultimately hyper-inflation." The Jackass is in agreement with Williams on the inflation call only in that commodity prices will lift the entire cost structure much more. In no way will incomes rise to meet the costs. Instead business failures and household bankruptcies will come like a firestorm. My view has been consistent since early 2009, that the systemic failure and banking sector disintegration has resulted in a rising USDollar from the Dollar Death Dance. That dance has begun to play on the second song on stage since the summer. The USDollar might gain in value for a brief period of time, in absence of the Euro as a competing currency. However, ultimately the USDollar will crash, along with the USeconomy and some very big US banks. All major currencies will crash, in an alternating chorus line on stage. See the USAWatchdog article by Greg Hunter (CLICK HERE).

◄$$$ BANK OF AMERICA OFF-LOADED YET ANOTHER RAFT OF MORTGAGES TO FANNIE MAE, THE TOXIC VAT. THE USGOVT CONTINUES TO GATHER TOXIC PAPER. THE US-HOUSING MARKET IS STILL DEATHLY SICK, AND ACTUALLY GROWING WORSE. $$$

Bank of America is in deep trouble and growing worse. Their loans have a 13% delinquency rate, over half of the loans coming from the chronicly troubled US real estate market. The bank sold a large loan portfolio back to Fannie Mae, the nationalized entity under USGovt conservatorship. How convenient that the toxic loans continue to fly into the Fannie Mae vat, and the derivative obligations continue to fly into the AIG vat. The USGovt financial orphans operate at the vortex of the Black Hole. The pool of BOA mortgages shows an unusually high default rate. The housing market has entered a second phase down. The details are big. Bank of America sold mortgage servicing rights on a large loan pool of 400,000 loans to Fannie Mae for a price of for $500 million. The unpaid principal on the loans totals $73 billion, now shifted to Fannie Mae. That is a pitifully low package price. Many other banks are likely to be caught in similar bind with their mortgage portfolio, given the problems in the housing market. Calls of a housing market recovery are the total opposite of reality, as it is slowly imploding again. The bear market will be endless, a Jackass call made four years ago. It will feed on itself as the USEconomy goes into recession, as job security erodes further, as costs continue to rise. See the MyBudget360 article (CLICK HERE).

◄$$$ THE CORPORATE BOND MARKET IS DRYING UP. IT IS A WESTERN WORLD PHENOMENON. BOND ISSUANCE VOLUME IS ON THE DECLINE. BOND SPREADS ARE ON THE RISE. SOVEREIGN DEBT RISK REMAINS LIKE A NIGHTMARE. THE USTREASURY BOND IS THE MONSTER EATING THE BOND MARKET. THE DAMAGE TO THE BOND MARKET IS BAD IN EUROPE, BUT WORSE IN THE UNITED STATES, WHERE USTBONDS ARE THE MAIN GAME IN TOWN. $$$

Global bond issuance and sales are plunging amidst the deep distress in the sovereign bond and mortgage bond market. Witness the USTreasury Bond market black hole consuming the rest of the bond market. Corporate bond offerings worldwide plunged in 3Q2011 to the lowest level since the autumn months of 2008 when the Lehman Brothers failure occurred. Investors have once again shunned all but the safest securities. Two big bond auctions went off, but many are puny. The Hewlett-Packard and Intel Corp bond deals worth $543.2 billion took place in the past three months, according to Bloomberg. The rest of the market is drying up. Corporate bond issuance fell 41% from the second quarter and 38% from a year ago. Bond offerings by financial firms and companies have evaporated. The after effects of the Standard & Poors downgrade of USGovt debt are being felt, as many corporate bond ratings have also been lowered. Their bond spreads are rising, since unlike the USTreasurys, which rally on deadly news, the corporations operate in a world of reality. The USTBonds are taking in funds like no crazy, feeding the asset bubble, sucking in capital precisely like the monster described by the Jackass. All else is left at risk of wanting. The sovereign debt crisis in Europe contributes to the lost confidence.

The corporate bond offerings in the United States fell to $192.5 billion in 3Q2011 versus $314.7 billion in 2Q2011. Issuance rose to $71.3 billion in September after declining in August to the lowest level since May 2010. Banks worldwide issued $280.2 billion of debentures this quarter, the least since they sold $204 billion in the final three months of 2002, Bloomberg data show. The Markit CDX North America Investment Grade Index decreased 2.4 basis points to 138.8 basis points as of Friday close, October 7th. Investors use the index to hedge against losses on corporate debt, to monitor against the benchmark, and to speculate on creditworthiness, The Markit iTraxx Europe Index of Credit Default Swaps linked to 125 companies with investment grade ratings fell 3.7 to 189.6, another blow. One basis point costs $1000 annually on a contract protecting $10 million of debt. A similar Japanese index dropped 8 basis points to 198.5 basis points. The Markit iTraxx Asia index of 40 investment grade borrowers outside Japan fell 6 basis points to 232. CMA also provided this data.

Consider two big bond deals of recent completion. Hewlett-Packard raised $4.6 billion of debt on September 13th in a four-part offering. Its $1.3 billion of 5-year notes at 3% went off with a spread of 215 basis points versus USTreasurys. The HP bond yield compared badly against a similar bond maturity sold in May that had a 90 basis point spread. Intel sold $5 billion of bonds with 5-year, 10-year, and 30-year maturities on September 14th. It was their first offering of non-convertible debt since 1987. In all, the total US junk bond (high risk, high yield) issuance fell 72% to $25.1 billion in 3Q2011, the lowest amount since the $12.2 billion in 1Q2009. Offerings of the junk debt almost completely froze in August, which registered a tiny $1 billion. The S&P agency cut of the USGovt credit rating by one notch from AAA had quite a pronounced effect. Companies sold off $18 billion of high yield bonds in July. One month later junk bonds vanished from auction. The big damage was done with the junk yield paid off, as risk has been shunned. The spreads on US speculative grade bonds expanded 261 basis points by the end of the third quarter to 803, the widest since 811 in October 2009. Relative yields on safer investment grade debt widened 90 basis points to 254.

Bond yield spreads are rising in Europe also, but with a lesser jump. DeutscheBank sold EUR 1.5 billion (=US$2.04 billion) of 2-year floating rate Notes at end September. They were priced at 98 basis points above Euribor, their first sale in over two months. Their last big bond sale came in July, when the giant German bank raised EUR 118.6 million by selling floating rate securities to domestic investors with zero premium to Euribor. Turmoil has hit Europe, but not as badly as the United States. The European investment grade corporate bonds have suffered more damage, as less appetite for risk is evident. Their yields widened by 144 basis points, to a level highest since May 2009. Bank of America Merrill Lynch maintains a Euro-based Corporate Bond Index. By end September its yield stood at 307 basis points. Simon Ballard is a credit strategist at RBC Capital Markets in London. He said, "We are still very much in the middle of an illiquid broken corporate bond market. Cash and capital preservation are still some of the key driving strategies behind investment and for that reason issuance has been very muted." Volume of investment grade bond sales dropped to EUR 55.7 billion in the July through September quarter, a whopping 58% decline from the previous quarter and 62% down from the third quarter last year. The downgrades deeper into junk territory continue for the PIGS nations of Southern Europe, adding insult to injury. See the Bloomberg article (CLICK HERE).

◄$$$ THE COST TO INSURE US-BANK DEBT IS RISING, A STRONG SIGNAL OF IMMINENT PROBLEMS. THE BIG US-BANKS ARE EQUALLY VULNERABLE AS THE FRENCH BANKS THAT HAVE GATHERED NEGATIVE ATTENTION. SINCE BROADLY EVIDENT, THE RISK IS BROADLY APPLIED, AS IN SYSTEMIC RISK OF FAILURE. $$$

Take a snapshot in the first week of October. The cost to insure US bank debt against default is rising quickly as alarms go off. In some cases, US bank debt insurance is more expensive than for their European peers, presented at the forefront of the global debt crisis. The 5-year credit default swaps on Morgan Stanley rose to 462 basis points on a Friday from 449, which means 4.49% for default insurance cost on the corporate debt. Other big banks have seen their debt insurance rise also, the contract being Credit Default Swap. For Goldman Sachs, the CDSwap climbed to 323. For Bank of America it increased to 412. For JPMorgan Chase it rose to 155. By comparison, for Societe Generale the CDS was at 347 and for BNP Paribas it was at 259, according to Markit data. Morgan Stanley and Bank of America are higher than both French banks. GSax is higher than BNP Paribas. The big French banks are in the news over their vulnerable condition. The big US banks are equally vulnerable. They are all connected. They all suffer from similar exposure, the Americans from mortgage debt and the Europeans from sovereign debt.

MORGAN STANLEY CANARY

◄$$$ MORGAN STANLEY MIGHT ANNOUNCE A PROFIT FROM ACCOUNTING CHICANERY AND SHIFTY CREDIT ALLOWANCE IN A BUYBACK OR OTHER PLOY ON THE BALANCE SHEET. THEIR BIGGEST ASSET IS POTENTIALLY THEIR OWN DEBT. THEIR BUSINESS IS TANKING BADLY. THEY ARE ON THE ROPES. $$$

The FASB accounting rule change in April 2009 lives on, enabling vast fraud. A commonly used deceitful practice was employed through 2009 and early 2010. Big banks pretended to buy back their own ruined debt securities, but instead of declaring a loss, they simply called it a profit (on paper). Nobody is to dispute, surely not the Securities & Exchange Commission. The practice is called a Debt Value Adjustment, a practice as corrupt as a June day is long in Saskatchewan. The investment bank Morgan Stanley is on the ropes. The firm has $187 billion of public debt. Charlie Gasparino of CNBC has been doing intrepid work, shaking a finger at the Syndicate, defying them. They have apparently threatened him, and he publicized the incident defiantly. Call the average maturity 3 years conservatively. The 2014 MS bond serves as benchmark, on a $2 billion issuance. A November 2014 USTreasury recently yielded 0.47% on September 30th, which brings a 5.1% spread. Look back to June 30th to see the same USTreasury yield spread on this bond was just over 2% at the end of 2Q2011. Hence the MS 3-year bonds widened by over 300 bpts during the quarter. Banks should account for spread widening on their balance sheets with writedowns, but instead they corrupt the process by sometimes declaring a posted paper profit gain, a stunning fraud that does not capture enough financial press attention. The press simply calls it low quality earnings. Even a writedown on discount from par on the bonds, rather than the full move, would mean a $80 million loss.

Stories are circulating that Morgan Stanley is buying back their own bonds, a great move if they have the funds to do so. They do not though. Watch to see if MS actually takes a massive gain on a fictitious buyback on their own bonds, rather than marking them down for loss. Goldman Sachs has about $178 billion in debt, but their corporate bond spread widened much less. In the latest quarter, the GS 2014 maturity bonds moved from 180 bpts to 308 bpts on yield. This is a black eye to GSax, but to MS it is much worse. Rumors have come that Morgan Stanley will post a surprise profit. It might come by taking accounting gains on their own debt. The stock market might punish their stock quickly on low quality earnings. Carry the practice to the extreme. A debt default would enable a credit allowance equal to the entire original value of the corporate bond, instead of a total loss declared. Only in America, land of bond fraud and accounting fraud to match!! The basic business for MStanley is way down. Volumes are way down. Stock issuance is way down. In fact, the Morgan Stanley exposure is way up from Interest Rate Swaps and inter-bank loans to dead European banks. MStanley is whistling in the cemetery. See the Zero Hedge article (CLICK HERE).

Check out the Morgan Stanley Credit Default Swap chart. Its debt insurance warrants an MS death watch. The steep inversion signals perception of extreme distress, implying no trust into the near future. Insiders smell death. Not even partner Mitsubishi UFJ Financial Group can pull this pig out of the barbeque pit. The Japanese giant is attempting to rescue the dying Morgan Stanley. The following CDSwap chart was taken in the first week of October. A reliable banker source informed that MStanley was likely to be killed on a Friday session very soon. The traders are privy to the death process.

◄$$$ THE MORGAN STANLEY CANARY IS SCREECHING. ITS CDSWAP FOR DEBT INSURANCE IS SOUNDING LOUDER THAN THE LARGEST WOUNDED ITALIAN BANKS. IT COMPARES BADLY TO FRENCH BANKS TOO. WHILE EUROPE RECEIVES NEWS COVERAGE, WALL STREET IS GIVEN A PASS. THE BANK HAS BECOME DEPENDENT UPON THE CREDIT MARKET AND NOT TO DEPOSITORS, A WARNING SIGNAL. THE BUCKET SHOP BAGHOLDER OF INTEREST RATE SWAPS IS DOOMED. JUST A MATTER OF TIME BEFORE IT IS PLOWED UNDER DEAD. $$$

Morgan Stanley (MS) owns the world's largest retail brokerage. Its corporate debt is being priced in the debt insurance market as less creditworthy than most American, British, and French banks, but as risky as Italy's biggest banks, all of which are badly wounded. The Credit Default Swap cost for debt insurance against a default on Morgan Stanley debt for five years surged to 456 basis points, or $456k for every $10 million of debt insured, in the first week of October. That is very expensive, and quite a rise from 305 basis points on September 15th, according to London-based CMA. From the stable of wrecked Italian banks came Intesa Sanpaolo with a CDSwap at 405 basis points, and UniCredit at 424 bpts, higher than the French troubled banks. While the price of their CDS is the highest since March 2009, it is well below the peak reached in 2008. On October 10th of that fateful year, the annual price for 5-year protection rose to 1300 basis points, or 13%, triple the current cost. Rising CDSwap spreads are making investors and creditors nervous about Morgan Stanley, a small Wall Street firm deeply abused. It plays a key role, like with the added $9 trillion in derivatives tacked on in 1Q2011, most being Interest Rate Swaps. That started the USTBond rally to contradict the Standard & Poors debt downgrade of USGovt debt. The stock (symbol MS) has taken a beating this year, down from a peak 32 per share in February to a lowly 15 or 16, after a bounce off the 12 floor. It is a component in the S&P 500 Financials Index.

Moodys Analytics, an independent arm of Moodys Investors Service, issued a report that stated the Morgan Stanley CDSwap price implied a bank credit rating as having declined to Ba2 from Ba1 in the last month. The company is absurdly rated six grades higher at A2 by Moodys, a gift and fraud. This opens the door to shorting the stock on a death watch. By comparison, Bank of America and French Societe Generale have CDS trading at 403 basis points and 320 basis points respectively, which imply a higher rating of Ba1. Morgan Stanley was the biggest recipient of emergency loans from the Federal Reserve during the financial crisis and also benefited from capital provided by the USDept Treasury and Mitsubishi UFJ Financial Group, its largest shareholder. Another warning signal is the fast rise in trading volume for the MS debt insurance. Their CDSwap volume has risen to 257 contracts in early October, compared with 187 for Goldman Sachs Group, according to the Depository Trust & Clearing Corp data. That compares with a weekly average of 73 contracts in Morgan Stanley and 91 in Goldman Sachs in the six months that ended on August 26th, over triple for MS and double for GS. The credit market is in turmoil. Supply is scant. Many banks are on death watch, subject to shorting sharks. Few market participants are prepared to sell debt insurance protection to meet the demand for hedges, given the European Union is in shambles. So the CDS insurance cost rises.

The rise in Morgan Stanley CDSwap prices is linked to an expected decline in 3Q2011 trading revenue and to big exposure to French banks. The MStanley fixed income trading in Q3 was worse than 4Q2010, when they posted the lowest debt trading revenue since the 2008 crisis. The investment bank had $39 billion of exposure to French banks at the end of December, offset by sizeable hedges and collateral. The result is a claimed net $2 billion exposure to French bank firms. As of June 30th, Morgan Stanley also had $5 billion of funded exposure to Greece, Ireland, Italy, Portugal, and Spain. That was reduced to about $2 billion when offsetting hedges were accounted for. Do not believe the strength of the hedges, since the counter-party will probably fail with them in the domino effect. Curiously, the Morgan Stanley CDS spreads are wider than French bank CDS spreads. Implied is that MStanley has other significant problems that the insiders are aware of. Point the finger to Interest Rate Swaps. Some analysts suspect that MS has grown too dependent upon the debt markets, instead of depositors, in order to provide funding for its assets. This might be one cause of concern. MS is in a race to ward off death. See the Bloomberg article (CLICK HERE).

USECONOMY IN RECOGNIZED RECESSION

◄$$$ MAINSTREAM ECONOMISTS RECOGNIZE THE SLIDE INTO RECESSION FOR THE USECONOMY. THE MEDIA IS NOT PERMITTED SUCH AWARENESS. THE BROADER VIEW THAT INTEGRATES NUMEROUS FACTORS IS FLASHING SIGNALS OF RECESSION. IT IS HERE. THE E.C.R.I. WEEKLY LEADING INDICATORS SIGNAL RECESSION. $$$

The USEconomy is entering into recession, according to Lakshman Achuthan of e Economic Cycle Research Institute. He cited numerous leading indicators, the widening bond yield spreads, and the balance of data together. He said the following. "This is a done deal. We are going into a recession. This is not based on any one indicator, but rather a broad range, dozens of indicators for the United States. There is a contagion among those forward looking indicators that we only see at the onset of a business cycle recession. These leading indicators, which are objective, have a certain pattern that they present in front of a recession. A recession is a process. A lot of people do not understand that. They look for two negative quarters of GDP. But it is a process where sales disappoint, so production falls, employment falls, income falls, and then sales fall. That vicious circle has started. The Weekly Leading Index is saying unequivocally, this is recession. The Long Leading Index, which has a longer lead, is saying recession. Service sector indicators, non-financial services, where five out of work Americans work, are plunging. Manufacturing, going into contraction. Exports, collapsing. This is a deadly combination. We are not going to escape this. It is a new recession." See the Bloomberg article (CLICK HERE) and the Yahoo Finance article (CLICK HERE).

John Hussman summed this view up well. He said, "In contrast, good economists think about the economy as a system, where multiple sectors interact. We tend to use words like equilibrium and syndrome when we talk about economic data, emphasizing that the best signals involve a whole conformation of evidence, not one or two indicators. The data in combination captures a particular signature of recession or recovery."

Kenneth Rogoff is a former IMF chief economist. He believes the US never exited the last recession in 2009. He calls the current chapter the Second Great Retraction. He talked about months of applying plaster layers to the ailing global economy, how world leaders have failed to come up with an effective long-term treatment. He pointed to a EUR 2 trillion stabilization fund in Europe, and a managed default for Greece. In the United States he cited endless talk from the Obama Admin of half baked plans to deliver job creation and deficit reduction. He believes it is too late to avert a prolonged recession in the industrialized world. See the radio interview by BBC (CLICK HERE).

◄$$$ RETAIL SALES ARE DOWN HARD. THE OFFICIAL REPORT IS A GRAND LIE, USING AGAIN THE DISTORTION FROM SELF-DESIGNED HANDY SEASONAL ADJUSTMENT THAT CHANGE EACH MONTH. $$$

The entire gain for US retail sales and services reported by the USGovt was from the overly used seasonal adjustment. In dollar volume, no increase in retail sales was realized, nothing. In fact, the true story is much worse. The September data shows a net decrease in retail sales by 5% from the previous month, without annualization, basic month to month in raw numbers with no seasonal adjustment and no price inflation adjustment. That is a far cry from the official story that was presented to look good. See the Financial Armageddon article (CLICK HERE).

◄$$$ INCOME HAS TURNED LOWER DURING THE SUPPOSED RECOVERY. $$$

Median annual household income has fallen more during the recovery more than it did during the recession, according to the Census Bureau. Their officials Gordon Green and John Code posted a research report to that effect. Between December 2007 and June 2009, during the officially recognized economic recession, a decline of 3.2% was seen in income. However, during the recovery between June 2009 and June 2011, a bigger decline of 6.7% was realized in income, the study found. So the Jackass claim that the USEconomy never exited a recession is confirmed by yet more data, from the USGovt itself. Over 80% of Americans believe the recession is an ongoing problem, according to a Gallup poll.

◄$$$ CHALLENGER DATA INDICATE A BIG UPTURN IN ANNOUNCED LARGE SITE CORPORATE JOB CUTS. THE MAIN HOPE IS FOR DELAY IN ACTUAL JOB LOSS. THE JOBLESS CLAIMS SHOULD RISE VERY SOON, AS CUTS SERVE AS RELIABLE LEADING INDICATOR. REGARD THE NON-FARM JOBS REPORT TO BE WELL DESIGNED TOILET PAPER, DESPITE NICE UPWARD REVISIONS. THE JOBLESS RATE IS 16.5% ON U-6 AND 23.1% ON THE SHADOW GOVT STAT. $$$

◄$$$ LOW HOME MORTGAGE RATES SEEM IRRELEVANT AS HOUSING PRICES CONTINUE TO DECLINE WITH POWERFUL DESTRUCTIVE MOMENTUM. $$$

Operation Twist is designed to lower mortgage rates, but no impact on housing sales has been realized. Someone should tell the hack USFed Chairman sitting in the marble office. His operation is a deception. The average rate on the 30-year fixed mortgage hit a record low of 3.94% in the week ending October 6th. By the five regions in Freddie Mac data, the rate hit 3.87% in the West, 3.92% in the Northeast, 3.97% in the North Central area, 3.99% in the Southwest, and 4.02% in the Southeast. The average rate on the 15-year fixed mortgage also hit a record low of 3.26% in the same week. The 1-year Adjustable Rate Mortgage linked to the USTreasurys rose to 2.95% from 2.83%, a small rise. Vacant homes grew rose to 11.4% of all housing units, up from 10.4 million in 2000. See the Market Watch article (CLICK HERE).

◄$$$ PRIME MORTGAGE BONDS HAVE BEGUN TO DECLINE AND CAUSE A RENEWED CRISIS FOR BANKS. THE RECENT STOCK AND COMMODITY DECLINE SPREAD TO THE MORTGAGE MARKET, PUSHED OVER THE EDGE BY A FITCH REPORT UPDATE. DEFAULT NOTICES HAVE RAMPED UP, AS THE FORECLOSURE PROCESS HAS RETURNED AFTER THE SUSPENSION OF ROBO-SIGNER FRAUD. $$$

Barclays traders are in trouble on the prime mortgage bond market, along with a small additional army of other traders. The PRIMEX sold off hard in the first week of October. That index monitors the prime mortgages in securitized bonds, the lowest risk. Something big is brewing. Barclays and many other dealers are caught on the optimistic long side, and will suffer losses. The day before, Fitch ratings agency released an eagerly anticipated report entitled "US Prime RMBS Performance Declines Continue,  Negative Equity Drives Weak Performance." Some believe it might have been the nail in the RMBS Prime coffin. The report prompted real estate expert Mark Hanson to release a note to clients in which he said, "Digging a little deeper into yesterday's Fitch jumbo sweep (initially thinking it would not be too significant), the PrimeX ARM-1 took a much bigger hit than expected. The biggest hit by a decent margin in term of notches in a long time. This morning the profiled ARM-1 and Fixed 1 are the hardest hit by Fitch. This was big. But we just discovered the ARM-2 had its recovery ratings torn apart. This is not as big as the downgrades on the ARM-1 bonds but it means ARM-2, already the weaker of the two ARMs, is just am Alt-A disaster." The Alt-A mortgages were marginal securities that were deemed more safe, but turned out to be as rotten as Subprime mortgages.

That time has come. See the PRIMEX ARM-1 chart and its plunge. The ARM2 chart is similar. The main problem is California private label jumbos. They are composed of 50% third party originated, 55% based on stated income, and 60% with second liens. Translated, the data means that much more than 33% of homeowners are suffering from negative equity, under-water on their home loans with balances in excess of the home value. When Fitch catches up to this market reality, the Prime mortgage bond market will turn into a wrecking field, and likely go No-Bid. That is a repeat of the summer 2007, when the Asset Backed Mortgage market dried up and went dead. The Prime market has been given its inflection point catalyst. The bond dealers are facing a big wrecking ball. They are scrambling in confusion. See the Zero Hedge article (CLICK HERE) and the complete Fitch report (CLICK HERE). Thanks to Craig McC for the story. Greenspan warned 18 months ago that another 10% decline in US housing prices would tip a huge swath of US homeowners underwater, in other words, to turn them into negative equity insolvent entities.

Default notices were filed on 195,878 properties in 3Q2011, up a hefty 14% from the previous quarter, the first increase in five quarters. Bank seizures of US homes fell in the third quarter but an upswing in default notices assures foreclosures should start to rise again, according to RealtyTrac. Foreclosures fell 4% to 196,530 homes and were down 32% from the 3Q2010. Despite the national trend, some states were hit hard like Massachusetts, whose foreclosure cases surged by 62% from Q2 to Q3. The entire FC activity never went away, only suspended. Banks and other lenders were forced to halt the use of Robo-Signers for evictions and seizures. See the CNBC article (CLICK HERE).

◄$$$ THE USGOVT HAS SHUT DOWN 20% OF AMERICAN CEMENT PLANTS, DUE TO ENVIRONMENTAL CONCERNS. $$$

The Obama Admin seems to have its head up its ass on priorities. Hypocrisy is ripe with the demagogue. A spokesman stated that cement demand can be filled by Mexican producers. Their emission standards are five times lower. Apparently emissions from cement plant smoke stacks on US soil are considered worse than emissions from dead economic planks and rotting capital.

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.