MONETARY CRISIS REPORT
CLIMAX OF FINANCIAL FRAUD
COMPREHENSIVE GUIDE

* Intro Monetary Fragments
* USFed Surrenders to QE3
* Threat of Collapse Nears
* European Banks Lead toward Ruin
* Big Banks Caught in Vise
* USDollar Defense
* Iran in Pressure Cooker
* Saudi Turmoil & Instability


HAT TRICK LETTER
Issue #103
Jim Willie CB, 
“the Golden Jackass”
21 October 2012

"When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland. Financiers are without patriotism and without decency. Their sole object is gain." ~ Napoleon Bonaparte

"For a national currency to also be a reserve currency requires a country to experience a current account deficit, which over the long run undermines confidence in the currency. Ignoring the dilemma does not solve it." ~ Robert Triffin (economist)

"The crisis not seen by Fed observers is the true balance sheet condition of the losses on the trillions of dollar of worthless paper fraudulent paper because numbers are given but no independent mark to market audit has been or is likely performed. As QE3 to Infinity moves ahead, the balance sheet of the Federal Reserve continues to acquire worthless paper in exchange for dollars. Junk moved onto the balance sheet of the US Federal Reserve as the common share of USA Inc (the US dollar) continues to expand exponentially. The end game problem is an extended recessionary business conditions going into 2015 to 2017, wherein the supply of dollars continually expands, the US Federal Deficit grows, US state deficit spending continues to grow, and the quality of the Federal Reserve balance sheet proceeds to deteriorate further." ~ Jim Sinclair

"Without further reform of Money Market Funds, our financial system will remain vulnerable to runs and instability, which are harmful for retail and institutional investors, businesses that need a reliable source of funding, the MMF industry, and the financial system as a whole. We will seek broad input from the full range of stakeholders on how best to design further reforms." ~ Timothy Geithner (who will not return in 2013, regardless)

"The 1901 [Bull market] was a speculative demonstration based on the assumption that we were living in a new era; that the old rules and principles and precedent of finance were obsolete; that things could safely be done today which had been dangerous or impossible in the past. The illusion seized on the public mind in 1901 quite as firmly as it did in 1929. It differed only in the fact that there were no college professors in 1901 who preached the popular illusion as their new political economy." ~ Alexander Dana Noyes (1930, history repeats)

"The United States has not dealt with any of the nation's fundamental problems." ~ Mort Zuckerman (CEO of Boston Properties)

"It is not just the fiscal cliff; it is the fiscal abyss." ~ David Walker (former Comptroller General of USGovt and current CEO of the Comeback America Initiative)

"We now live in a world where doctors destroy wealth, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the press destroys information, religion destroys morals, and the banks destroy the economy." ~ Chris Hedges

## INTRO MONETARY FRAGMENTS

◄$$$ THE UNITED STATES PRESENCE IS GRADUALLY BEING REMOVED FROM IRAQ, EITHER BY INVITATION OR BY CONTRACT BOOT. RUSSIAN FIRMS ARE BEING INVITED TO EXPAND. THE AMERICAN VENTURES TO COURT KURDISTAN HAVE RESULTED IN RETALIATION BY BAGHDAD LEADERS. THE RUSSIANS HAVE CLOSED A BIG $4.2 BILLION ARMS DEAL WITH IRAQ. THE COLD WAR HAS RETURNED. $$$

The anti-US progression is happening quite rapidly, as the blow-back effect begins to work. The reality is that $trillions were wasted, the final chapter being ultimately thrown out of Iraq. Bombings in and around the Baghdad capital have returned, or really never ended. So much for nation building. Iraq wants Russian companies to replace Exxon at the West Qurna oilfield, a major insult. The decision appears to be in retaliation for the US making important gestures by venturing into Kurdistan, which angered the feisty Baghdad leaders. The northern Kurdish region has signed deals with major foreign oil firms, such as Exxon, Total, and Chevron. Sources state that Gazprom Neft has no plans to halt its projects in Kurdistan, which it pledged to develop in August. The company already has a project in Iraq, located near the Iranian border.

Iraq in response is considering a decision to replace Exxon with Russian Lukoil and Gazprom Neft, both of which are already involved in the country. A spokesman for Lukoil denies the expansion plans, reiterating the official line that it is satisfied with its portfolio in Iraq. Sources have told Reuters that the Russian top oil company Rosneft might join with Exxon in Iraq, following a landmark agreement struck to jointly tap Arctic hydro-carbon riches and oil & gas in North America. President Putin called for Russia to strengthen its presence in the OPEC oil producer state at a meeting with al-Maliki. See the Reuters article (CLICK HERE). Expect a lot of jockeying for position with Iraq, the bone of contention being Kurdistan.

The Iraqi stage has a military component, which should be equally shocking for a US rebuff. The Iraqi Govt has signed a deal to buy $4.2 billion in Russian weapons. The hapless hostile US State Dept says it is not concerned by the deal. The USGovt cites 467 newly initiated military hardware sale contracts with the United States. If completed, they will be worth over $12.3 billion. Disclosed in a Russian Govt document issued at a meeting between Prime Minister Dmitry Medvedev and Iraqi Prime Minister Nuri al-Maliki, the deal provides Russia a big boost at a time when its arms sales to Libya and Syria suddenly have turned uncertain. Russia lost about $4 billion in arms deals with Libya due to the fall of Qaddafi and his disemboweling in a culvert. Iraq had been off limits for Russia's defense industry after the US invasion of 2003 which ousted Saddam Hussein. The old Iraq had been one of the Kremlin's biggest weapons customers. The contracts will help Russia maintain its position as the world's second biggest arms seller after the United States. Regard the Cold War as returning, part of the blow-back effect. See the Reuters article (CLICK HERE).

◄$$$ MEXICO HAS INSTITUTED HARSHER CAPITAL CONTROLS, AS LARGE CASH TRANSACTIONS ARE BANNED. MEXICO AS A NATION SERVES AS A PRINCIPAL DRUG SUPPLIER TO THE UNITED STATES. THE FOREMOST IS THE CENTRAL INTELLIGENCE AGENCY THROUGH THE AFGHAN SUPPLY ROUTES. $$$

Outgoing Mexican President Felipe Calderon has signed into law a ban on large cash transactions. The ban will take effect in about 90 days and it is part of a broader effort to control monetary flows. Under the law, a specialized task force within the nation's top legal prosecution office will investigate financial operations related to resources of unknown origin. For real estate transactions, cash payments of more than a half million Pesos (=US$38,750) will be forbidden. For automobiles or items like jewelry, art, and lottery tickets, cash payments of more than 200,000 Pesos (=US$15,500) will be forbidden. The law carries a minimum penalty of five years in prison. The new law extends the laws put into enforcement in 2010. At that time, Mexico instituted strict limits on foreign exchange cash transactions to $1500 per person per month. The effect was felt on tourism, perhaps a desired change since internal drug cartel violence has ramped up severely in Mexico. Tens of thousands of drug war murders have occurred, many in public places and on highways, the number minimized and downplayed.

The USDollars in flow are a huge portion of the actual paper cash that this effort is aimed at. The Mexican Peso is the 12th most traded currency in the world, but has a clear lead as the most traded currency in Latin America. Reuters reported that, "Sales of drugs from marijuana to cocaine and methamphetamine in the United States are worth about $60 billion annually, according to the United Nations. About half of that amount is estimated to find its way back to cartels in Mexico." The reports always overlook the CIA narcotics flow from Afghan sources, which account for 70% of all US domestic supply. That figure was a mere 7% before 911. Payment systems are well hidden for the New York banks through Mexican financial institutions.

Two years in the making, the new law in Mexico requires notaries, real estate brokers, and other dealers to report the forms of payment for transactions above stated limits. Financial institutions will be required to report monthly credit card balances in excess of 50,000 Pesos (=US$3875). Witness the global trend among governments to control money, otherwise called capital controls. Mexico has a long way to go to catch up. Spain recently banned cash transactions above 2500 Euros and Italy banned cash transactions above 1000 Euros. Watch France impose strictures next. See the Forbes article (CLICK HERE). Seizures like the $207 million shown below are motive to remove a few police officials or key investigators by the drug cartels operating inside Mexico.

◄$$$ YET ANOTHER EXECUTIVE ORDER PERMITS THE CONFISCATION OF PERSONAL BANK ACCOUNTS. THE CURRENT PRESIDENT OBAMA HAS ISSUED 923 SUCH ORDERS, FOUR TIMES AS MANY EXECUTIVE ORDERS AS THE YOUNG BUSH, WHO ISSUED HIS FASCIST ORDERS OVER EIGHT YEARS. THE GROUNDWORK FOR THE FASCIST STATE AND MARTIAL LAW IS PREPARED. $$$

Recent imperial pronouncements by Obama give the USGovt the right to kill citizens on order, to arrest citizens without charges or due process, to confiscate citizen assets without cause, and to force citizens into no wage (slave) labor camps. In early October, President Obama signed yet another executive order that specifies private bank accounts as targets for seizure. The big banks require capital to survive. They will use yours. The MFGlobal and Peregrine Financial cases where private accounts were stolen did not awaken the nation. One must wonder if the nation can be awakened to the fascist police state that is taking shape. Perhaps so, but when too late. See the New American article (CLICK HERE) and the White House press release (CLICK HERE).

◄$$$ CRONY CAPITALISM CORRUPTS FREE MARKETS. A NICE NAME GIVEN TO THEFASCIST BUSINESS MODEL THAT PERMITS AND ENCOURAGES FINANCIAL FRAUD IN THE $TRILLIONS (WITH 12 ZEROS). THE INEFFICIENCY AND CRIMINALITY WORK TO DESTROY THE NATION. $$$

Former Reagan Admin budget director David Stockman is living in the fast but dangerous lane. He regularly provides information on the broken USGovt finances. But Stockman has taken a new tack to criticize USFed Chairman Bernanke for lunatic monetary policy. He criticizes the chairman for believing that hyper-active usage of the printing press to create new money can be done without destructive consequences. He calls Bernanke the most dangerous man in the nation, saying "The Fed is being run by the singlemost dangerous man ever to hold high office in the history of the United States." He offers the opinion that Bernanke is more dangerous than Geithner, Greenspan, Summers, and Hank Paulson all put together. When hearing crony capitalism, think Fascist Business Model. The cronies are the criminals given free rein for bond fraud, bond counterfeit, mortgage fraud, insider trading, obstruction of justice, and narcotics money laundering. The big banks have merged with the state, the definition of fascism. The lack of efficiency works with the criminal impunity to create a whirlwind of destructive forces. Not 5% of Americans can even define fascism, yet alone identify it. See the Zero Hedge article with Stockman speech video (CLICK HERE).

◄$$$ ATTACKS DIRECTED AGAINST VARIOUS GROUPS ARE ON THE RISE, IN DEFENSE OF THE FASCIST STATE. THE TARGETED GROUPS ARE LED BY THOSE ADVOCATING CONFORMITY TO THE CONSTITUTION. $$$

The law enforcement apparatus for the US nation is fast becoming a toolbox for the fascist leadership to defend their reign, ranks, and fortresses. Conforming to the Constitution has turned into a indictment against its advocates. The cases like the domestic phone call gone amok will be commonplace soon. See the Intel Hub article (CLICK HERE). What many do not observe is that fascist state violence appeals to the dark side of human beings. The police forces find no difficulty in recruiting men to beat heads with billy clubs and to spray mace in faces of people demonstrating against bankers or war. The Intelligence agencies have no trouble recruiting people given license to murder, the sociopaths among society. Fascism appeals to that dark side. Reporting on neighbor activities for reward will be an easy next step. Snitching on neighbors even when charges are false will be common. Various groups will be soon declared enemies of the state, like those who favor the Constitution, civil liberties, truth on 911 events, even capitalism and prosecution of banker crimes. The Syndicate dons have already redefined patriotism. Their official 911 Commission reads like a primmer to Reich Physics.

◄$$$ REVOLT OF THE SPOOKS HAS BEGUN, EMANATING FROM THE SUPPRESSED FLOW OF INFORMATION ABOUT RISING ISLAMIC COUNTER-INSURGENCY ACTIVITY. FOCUS IS ON LIBYA, WHERE A CAREER DIPLOMATIC WAS KILLED BY A MOB. ANGER OVER THE USGOVT FOREIGN POLICY IS SPREADING. $$$

Intelligence officials angered by Obama Admin have covered up the available information held on insurgent groups in Egypt and Libya. The administration faces mounting opposition from within the ranks of US Intelligence agencies over what career officers call a cover-up of intel information about violent insurgency in North Africa. Data held back from senior officials and the public includes numerous classified reports revealing jihadist activity throughout the tumultuous North Africa and Middle East region, as well as notably widespread penetration into Egypt and Libya. These preparatory actions took place in the months before the deadly September 11th terrorist attack on the US consulate in Benghazi Libya. The insurgents seemed to commemorate the 911 attacks, falsely blamed on Arab groups.

The intelligence officials pointed to the statement issued in late September by the Office of the Director of National Intelligence (ODNI) that raised additional concern about the administration's mishandling of intelligence. The attack began spontaneously following protests at the US embassy in Cairo, which seem like fair warning, but ignored. See the Ulsterman Report article (CLICK HERE) and the Before Its News article (CLICK HERE). The original statement from the White House was some lame story about reaction to an anti-Moslem film. The latest is the clowns at the US State Dept deny that an anti-Islamic film was the cause of the Libyan uprising against the US Embassy. They even say that no such claim was ever made. The last two US presidents seem equally pitiful in mental preparedness for the job, Obama a better public speaker, provided a teleprompter is in place. Bush Jr was helped along with a transmitter device located on his back that showed clearly. The debate performance proves that point very well.

◄$$$ BEWARE OF A POTENTIAL SUPER PLAN TO FORECLOSE ON AMERICAN PEOPLE, IN AN IMPOSITION OF MARXIST PRINCIPLES. THE HOUSING BUBBLE AND BUST PERMITS A FORECLOSURE THAT REMOVES PRIVATE PROPERTY RIGHTS, PUTS PROPERTY TITLE IN USGOVT HANDS, WHILE CIVIL LIBERTIES VANISH. $$$

Lindsey Williams is a former religious pastor for the big oil firms, given the privilege of hearing the Syndicate's important long-range plans from remote locations where the dons often met and shared thoughts openly. The information is permitted leaks by the arrogant. According to a story reported by Adrian Salbuchi, it appears Williams was given an opportunity to speak to a former CEO at Atlantic Richfield. The plan is to conduct the marxist confiscation of private property, using the USFed as the operator and bonds reeling off the press as the purchase weapon. The hypothesized plan makes sense. The many parts are in motion toward such an objective. Keep in mind that the following plan in steps is from Williams, taken from a conversation with an oil executive.

Here is what Lindsey Williams was told as for the blueprint plan in steps.

1)      Bernanke was sent out by the banker syndicate to ramp up the bond monetization without limit (QE to Infinity) with a focus on mortgage bond purchases. The goal is to dispossess Americans of their homes, a process well along with the spate of home foreclosures. Then the USGovt tool in Fannie Mae will rent the homes back to the public. Private property is to be killed off, in keeping with the marxist principles. The source of funds to purchase the homes, either directly from bank portfolios or via mortgage bonds, is obviously thin air. Wealth is to come from illusory sources, the banker arrogance, and their printing press under full control.

2)      The USFed will use the mortgage bonds to enter the derivatives market, geared at least to the fractional 10-fold, maybe more. Chairman Bernanke so forewarned in his speech explaining the details of QE3. Few however contemplate what the plan is though when hearing his Politburo words.

3)      Banks will use the proceeds from mortgage bond sales to buy USTreasurys. The QE3 really is USTBond monetization, but with a handoff from banks to assure the home titles are in the proper hands. This is a paper game in movement.

4)      The USDollar from the three steps will be placed in an accelerated death spiral. A precise timetable for the collapse was not revealed, if it exists. The ex-CEO did not say. In order to prepare the US pubic for the solution on property rights, a creeping hyper-inflation will be engineered prior to collapse. The public has a long history of accepting almost any lunatic or deceptive or destructive solution when offered during a crisis, almost without question.

5)      Upon the crippling fatal final chapter of the USDollar, a new world currency is unveiled, to be backed by Gold. However, in order to succeed from a banking perspective, from a solvency foundation, the Gold price must be at least $3000 per ounce and the Silver price must be at least $75 per ounce.

6)      The Syndicate expects the US population to remain subdued, in shock, and submissive. They are seen as indifferent, apathetic, while on their backs, in reaction to their own debt enslavement.

The postulated plan offers details on the indirect USFed monetization of  USTreasurys with some added twists to secure property titles. One must permit suspicions to be aroused for a large picture orchestration, as in multi-lateral participation. The Chinese leased the Mao era gold to Wall Street. The USGovt granted Most Favored Nation status to China in a prelude to industrialization for cheap manufacturing. The wreckage of the USEconomy occurred from depleted industry, a primary cylinder of wealth creation from added-value enterprise. The Wall Street banksters run their gold carry trade into the ground. Permissive USFed monetary policy opened the door to a housing bubble. The adoption of Fannie Mae was done under the USGovt roof, for safe harbor during criminal investigations. The usage of the MERS title database turned widespread, which enabled the brisk mortgage bond trade. The heavy mortgage bond purchase by the USFed in QE1 and QE2, mostly hidden from view, became a mainstay. The sweet settlement deals between states and Wall Street banks drew criticism but continued. The hopeless skein of USGovt home loan assistance programs turned vacant became a nuisance. The big banks cooperated to keep homes in inventory as REO assets following foreclosure, which will later be shoved into the USGovt channels that lead to the Fannie Mae vat. The Jackass does not subscribe totally to the Lindsey Williams account on the future, but it makes too much sense and fits with events well.

As one informed New York City subscriber said, "The actions are all part of the show, as these guys all look like scripted role players in the collapse of the dollar, which is fully designed by the Anglo-Americans themselves. An outbreak of war still looks good to solidify the chaos. Clearly this money will not be sterilized (as you the Jackass have argued well) if the bankers are going to buy up Treasurys issued by the USGovt to the Fed and then sold on. Circles of flow are assured as the new money enters into the system at a gigantic rate of speed, which will create massive inflationary pressure. Witness the foreclosure on the American people."

My view is shaped by observing the anti-USDollar movement going on. It is the fly in the milk, which dictates the end game in removing it from global reserve status and in shutting down the USDollar itself. Rather than disrupt the American foreclosure plan the foreigners led by China will merely dictate the timetable, as they fashion more non-US$ trade settlement vehicles. See the Iran oil to India and China, not settled in USDollars anymore. See the numerous Chinese swap facilities, known as barter. One must be curious what happens to folks who own homes free & clear like my father and sister. What also might happen to folks with low monthly payments on home loans, with only 5 to 7 years left on amortization schedules that proceed on course. My belief is that the plan is to capture at least 35% to 40% of American homes. Anywhere close to the critical mass of 50% will work for the Syndicate in creating a debt slave state. They can tolerate the valid homeowners and even some gold owners, since they will not be in the majority.

◄$$$ CANTOR FITZGERALD (THE SIGNIFICANT BOND FIRM) WAS DOWNGRADED BY MOODYS. BIG-TIME TROUBLE COMES FOR THE OFFICIAL BOND DEALERS, WHO FACE A TOUGH SQUEEZE FROM LOW YIELDS AND USFED BUYING. CANTOR PLAYED A KEY ROLE IN THE 911 ATTACKS WITH DEEP COMPLICITY TO DESTROY JPMORGAN BOND COUNTERFEIT RECORDS AND OTHER RUSSIAN BONDS DUE TO MATURE IN THE FOLLOWING DAYS. CANTOR IS A DEATH MERCHANT, NOT BOND MERCHANT. $$$

Cantor debt was cut to junk by Moodys on capital markets pressure. Their hiring expansion plan for 800 people has not halted the profit slide. The firm was downgraded from Ba2 to Ba1, the highest level of speculative grade. Moodys expects the capital markets operating environment to be challenging for all participants for the medium term, in their words. With struggles to diversify revenues and stubbornly high compensation expenses, the profit squeeze is harsh. Brad Hintz of Sanford Bernstein concluded, "It certainly makes it difficult to expand a company in the face of a significant downgrade. A non-investment grade rating for a broker is not a death sentence, but the lower rating will limit financing alternatives and reduce the willingness of counter-parties to deal with a firm." May the firm die!

Cantor Fitz sill holds investment grade rankings of BBB from Standard & Poors and Fitch Ratings. However, S&P lowered its outlook on Cantor to negative on January 27th, with no updates since then. The firm's brokerage arm plans to boost its staff from the current 1600 in the future, probably adding another 500 sales traders in the next two years with plans to build its investment banking and asset management units. Cantor Fitz lost 658 employees in the September 11th World Trade Center attacks. The upper echelon of the firm had direct complicity in the attack, according to several sources. Cantor Fitz colluded with JPMorgan to destroy extensive USTBond records on counterfeit of $2.2 trillion, as well as records for unique $240 billion in Russian Bonds due to mature in the following days. Typically JPMorgan would sell far more USTBonds than the USGovt would issue, with this scum bond merchant doing the dirty work, covering the trails.

Cantor Fitz was prepared for the mass murder and data destruction, having moved its backup storage to New Jersey in the previous summer. Do not credit luck but rather planning. Cantor also moved out of the World Trade Tower their valued workers, and set up for a horrendous death certain workers who were troublesome in cooperating with the bond deep six project, or workers deemed worthy of collateral damage. Moodys reports the firm has plans to diversify revenue sources aside from its inter-dealer brokerage franchise (BGC Partners) by adding sales, trading, and banking capabilities. See the SFGate article (CLICK HERE) and Reuters article (CLICK HERE).

The Jackass would like to see the firm fail and be plowed under, but not before exposure of their vast crimes in aiding the fascist takeover. The Cantor downgrade indicates something bubbling to the surface, deep distress for bond dealers. The intermediaries for USTreasury Bond sales are all suffering. The margins to the bond middlemen are tiny and their end buyers are gone. The ultra-low bond yields means skimpy profits for the dealers at a time when the main bond buyer is the USFed. Their purchases from QE1, QE2, Operation Twist, and QE3 severely limit the dealer profits. Witness more extreme bond structural damage from ZIRP and QE in bubble finance.

## USFED SURRENDERS TO QE3

◄$$$ THE QE3 BOND MONETIZATION PROGRAM WAS RAMPED UP RADICALLY AND ALMOST SECRETLY RIGHT AWAY. THE USFED ANNOUNCED RIGHT AWAY THE VOLUME OF BOND PURCHASES WOULD BE DOUBLED. THE USFED SOFT PEDDLED THE VOLUME OF THE PROGRAM WHEN INTRODUCED. LIKE USGOVT PROGRAMS, ONCE BEGUN THEY CAN BE VASTLY EXPANDED. THE STERILIZATION DEVICE WILL BE ABANDONED OUT OF SHEER URGENCY. LOOK FOR PURE INFLATION TO WARD OFF COLLAPSE. MY BELIEF IS THAT THE USFED IS IN PANIC MODE. THEY WILL CONTINUE NAKED SHORTING OF COMMODITIES AND GOLD, WHILE THEY SLOWLY ENGAGE IN ECONOMIC DESTRUCTION TO REDUCE FINAL DEMAND. $$$

The USFed is talking to the public with one voice, and taking more extreme action when behind closed doors. Perhaps the central bank reacted to the worst back-to-school retail sales chapter in decades. The data tells the story. On October 1st, the USFed doubled their bond purchase program, compared to what they announced at its inception, a significant even not mentioned in the financial rag press. Best to deceive on stage, and do what is urgently required when busy at the window. Any commentary about protecting the bond monetization with sterilized action is verifiable noise. Witness pure hyper monetary inflation of the worst kind. Michael Pento told King World News on October 1st, "The Fed doubled down on QE3 this morning and unofficially announced QE4. Charles Evans did not indicate that these new and additional purchases, which will start in January, would be sterilized."

The volume and missing sterilization indicates panic in bold terms. Pento believes the mainstream media does not comprehend the nature and extent of the next QE program. He expects it will have massive implications for the markets, including Gold and Silver. Pento has been highly accurate regarding his predictions of central bank moves. Pento has a good ear to the ground, noting that the propaganda behind the supposed ISM (rigged) number pushed many financial markets. Once more, the lift was due to the USFed and the monopoly money it will shoot into the markets from central bank fire hoses. It lifts all markets, but not in value, only in perceived nominal price. Money is rapidly being debased. Pento did not mince words. Pento interprets the actions as the USFed having doubled down on QE3 and unofficially announced QE4. They did this even when the echoes of QE3 are still reverberating around the room from the bond purchase plans being announced just days earlier.

Chicago Fed President Charles Evans is the right hand man to Bernanke, and the Chief Architect of QE3. The basis of the QE3 plan, as announced, is to purchase $40 billion of mortgage backed securities each month, until the unemployment rate shows a notable decline. Evans has stated his desire that the USFed should continue buying at least $45 billion more of long-term USTreasurys, even after Operation Twist ends in January. He will be a full voting member in the FOMC next year. Note the extreme importance in his most salient point. Evans did not indicate that these new additional purchases would be sterilized when they start in January. A key distinction, since the monthly $40 billion of QE3 is not to be sterilized, but the $45 billion in Operation Twist has steadily been sterilized. A footnote. By sterilized is meant that the central bank is buying long-date USTreasurys, but using cash from sold USTBills of shorter maturity. The cash from the sale is used to fund the new purchases, no new money infused. Evans avoided the sterilized topic entirely, since the new purchases will apparently use fresh money infused into the system. That is the most dangerous kind of action a central bank can take. They have run out of USTBills to sell, an inventory dry of short-term instruments with brisk liquidity.

The ugly factor is the USFed does not have many short-term Treasuries left to sell. Evans said the $45 billion a month should last at least a year. That's $540 billion worth of what he indicated would be a combination of mortgage backed securities and USTreasurys. The harried desperate central bank cannot sterilize $540 billion of new purchases, in addition to the $480 billion dollars already slated for action on the tail end of Operation Twist. The USFed balance sheet shows that they are almost empty of short-term USTBills. Their next heavy volume action will be an unsterilized, open-ended, double-down version of QE3. The pressure is on for rise in the precious metals market. The news is huge, not an official announcement, yet easily interpreted. Bernanke has not sanctioned this move in any official capacity. However, as architect behind QE3, regard Evans as fully indicating the decisions to become policy. In September, the USFed did precisely what Evans outlined earlier. He has credibility for its direction. Now he is laying out what QE4 (or QE3+) will become. See the Investors Hub article (CLICK HERE).

Keep in mind that we are being exposed to QE to Infinity, as defined by continuing without end. Watch as the total QE bond monetization volume will eventually surpass $3 trillion and work its way toward $4 trillion. The USFed is over halfway on the total potential. The criterion until a favorable economic response registers is prescription for ruin since a rising cost structure is assured, just like QE1 and QE2. The entire bond purchase initiative will harm business profitability, cause job cuts, and result in lower incomes. The monetary policy has turned global, in a queer attempt to undercut the Competing Currency War by adopting the monetary policy uniformly. The price paid will be uniformly rising cost structure imposed on global economy, from food to energy to materials. The only defense by the central banks is naked shorting of the commodity markets, and destruction of economic fabric so as to dampen final demand. They will do both, as they always have done. They are merchants of market corruption and economic destruction. See the recent effects of the QE programs on food and energy. Notice that food prices marched upward even after QE1 had come to an end.

◄$$$ THE USFED QE3 WITH $40 BILLION ON MORTGAGE BONDS IS DESIGNED TO COVER THE WORST BOND FRAUD AND MOST EGREGIOUS BOND CRIMES, IN ORDER TO ENABLE A CLEARING OF THE LOGJAM. THEY WANT TO ENGINEER A FLUSH OF FRAUD SO THAT THE HOUSING MARKET CAN REBOUND, AUGMENTED BY FOREIGN DEMAND. QUESTIONS REMAIN ON WHO OWNS HOME LOANS FOR PEOPLE STILL IN THEIR HOMES, AND CURRENT ON PAYMENTS. AT THE SAME TIME, THE PLAN IS TO CEMENT FEDERAL OWNERSHIP AND CENTRAL BANK OWNERSHIP OF HALF OF AMERICAN HOME TITLES. WITNESS A HIDDEN MARXISM MANEUVER THAT SHOULD BE EASIER TO NOTICE, EXCEPT THE NATIONAL INTELLECT IS LACKING. FITTS MAKES A POWERFUL INDICTMENT, AS A TRUE EXPERT WITNESS. $$$

Catherine Austin Fitts is the foremost expert on Fannie Mae, the mortgage fraud, and the full proper accounting of the agency, including the pilferage by past presidents Papa Bush and Bill Clinton of $1.5 trillion, stolen from its accounts with full protection. She has survived three murder attempts and a stripping of professional license. When she speaks on mortgage matters at a national level, people should pay attention. She is expert. The following are some of her thoughts. The housing market cannot recover, in part because of multi-$trillion fraud, a point the Jackass has made for over four years. Foreigners own a lot of fraudulent mortgage bonds. So do domestic pension funds. The QE3 plan focuses on mortgage bonds in order to clear the market of fraud-ridden mortgages, their toxic appendages, and related channels. She states her opinion that fraud was the original plan, hatched a decade ago by Wall Street, although she did not identify them. See the Solari article (CLICK HERE).

"The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud, not just fraudulent mortgages and fraudulent mortgage securities, but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith. On one hand, you could let them all default. The problem is the criminal liabilities would drive the global and national leadership into factionalism that could turn violent, not to mention what such defaults would do to liquidity in the financial system. Then there is the fact that a great deal of the fraudulent paper has been purchased by pension funds. So the mark down would hit the retirement savings of the people who have now also lost their homes or equity in their homes. The politics of this in an election year are terrifying for the Administration to contemplate.

Various court squabbles over the MERS [title registration] system for registering mortgages are also nipping at the Fed and Treasury heels. It is hard to win a presidential election in 3100 counties when multiple federal agencies are in the local courts trying to foreclose on half the county while supporting arguments that a national registration system is free to violate local property laws with impunity.

So, it looks like the Fed decision last week to buy $40 billion a month in mortgage paper is the ultimate plan to clear the market once and for all of fraudulent mortgages, mortgage backed securities, and related derivatives. This means Fannie and Freddie will be bailed out and winding down through the back door. This means the big banks may be paid in full for your mortgage. It also means your pension fund assets will not be marked to market, at the price of debasing the purchasing power of your assets and benefits.

The Fed is now where mortgages go to die. Thousands of mortgages on homes that do not exist or on homes that have more than one first mortgage are now going to the Fed to disappear. Thousands of multi-family and commercial mortgages will be bought up as well. As this happens, trillions of dollars that have been amassed offshore will be free to come back into the US to buy up and reposition land, farmland, residential, and commercial real estate and other tangibles. With documents shredded, criminal liabilities extinguished, and financial institutions made whole, funds can return without fear of seizure.

QE3 proves beyond any shadow of a doubt that the extent of the fraud was as bad as I said it was. You can count up the bailouts. The QE1, QE2, QE3 the numbers speak for themselves. The fraud was indeed in the many trillions of dollars. It was intentional. It was a plan.

The $64,000 question for those whose house is underwater or whose mortgage is in default is whether or not you still owe on your mortgage. Certainly, you still do as a legal matter. If the bank has been paid off, arguably in some cases several times, why not you? Let's see if Fannie Mae, Freddie Mac, and the big banks are under orders to quietly pass through a portion of their largesse to troubled homeowners in amounts sufficient to unfreeze the market. If you are in a workout situation, you need to take notice." Expect very little, a trifling amount, to filter down to the people, who are not a priority.

◄$$$ KAMINSKY CALLS BERNANKE A KAMAKAZI PILOT. MONETIZATION WILL NOT END WELL, BEGINNING WITH THE EXTENT THE PRIVATE FEDERAL RESERVE BANK CARTEL WILL FUND THE USGOVT DEFICIT. MY BELIEF IS CLOSE TO 100%. $$$

Gary Kaminsky is former managing director of Neuberger Berman. He offered a voice of reason on the latest insanity by the USFed that repeats on a much larger scale the reckless hyper monetary inflation that was conducted 70 years ago in war-torn Germany. Curiously, the US is also war-torn. The mantra assumes that given its American roots, the QE bond purchase plan must eventually be successful. They are pushing the same lever that has not resulted in any tangible positive effects in the two years. Yet they repeat its application, and will ramp up its volume. Kaminsky was succinct and devastating in his criticism. Against a backdrop of mind-numbing past bond monetization, gigantic central bank balance sheet expansion, almost total dependence upon the USFed to finance the USGovt deficits, and secretive heavy usage of derivatives to maintain the USTBond bubble, he states the obvious for the enlightened. His words would shock the dim bulbs that comprise one third the US population. His words are boring to the dimmer bulbs who are not interested in national finances or the great American downfall.

Kaminsky said, "We know this will end ugly! Bernanke is a kamikaze pilot, experimenting [in monetary policy] and is destined to fail." He went on to cover the many sides of the reckless lunacy that has become engrained USFed policy, not mincing words. From the lack of credibility of any USFed exit, despite the openly stated desire back in 2009 (which the Jackass dismissed immediately as impossible), to the explosion of the monetary base, which few analysts seem overly concerned about, Kaminsky compared the United States to Japan as an obvious template for our path to continue past the Keynesian endpoint, as in ruin. See the Zero Hedge article (CLICK HERE).

My view is that the final destination for the US will not be anything like where Japan finds itself. The US lacks industry like Japan, and a trade surplus. In fact, the Chinese presence depleted the famed surplus fixture. The US is fully dependent upon Weimar monetary expansion and bond purchase, unlike Japan. The US is fully devoted to war, unlike Japan. The US permits massive bond fraud and deep banker criminality, unlike Japan. The US fights to keep the USDollar value up due to its perceived toxic nature, while Japan fights to keep the Yen down due to its perceived attractiveness. For those unfamiliar with the term Kamakazi, it means suicidal. So Kaminsky claims that Bernanke is destroying the USEconomy and financial structure with reckless abandon and sheer desperation, pressing harder on the levers that do not work, while aware of the outcome.

For a quick analysis of winners and losers from the QE3 upcoming debacle, see the Zero Hedge article (CLICK HERE). For a summary on how the USFed strives to achieve a better cleaner inflation in their always destructive inflation management theme, see the Yahoo Finance article (CLICK HERE). Observe the travesty that is the USFed monetary policy. Welcome to Bernankville, the city of Jokernomics, where central bank policy could not be more errant, heretical, bizarre, and unavoidable given the corrupt members at the helm. See the Before It's News article (CLICK HERE). For another solid review of the mortgage bond aspect of the QE initiative, and the diminishing returns potential for housing market benefits, see the Financial Sense article by Charles Hugh Smith (CLICK HERE).

◄$$$ SYSTEMIC DE-LEVERAGING IS INDEED A MYTH, AS DOUG NOLAND STATES. BUT THE SYSTEM IS FAR MORE UNSTABLE THAN HE PERCEIVES IT. BUBBLE DYNAMICS TO BE SURE, THE DERIVATIVE MACHINERY HAS MADE THE ENTIRE USTREASURY BOND COMPLEX A GIGANTIC LEVITATED MONSTER. THE DESCRIPTION OF PONZI DOES NOT GO FAR ENOUGH IN THE CRITICISM. HE CITES ABSENT INTERMEDIATION FOR THE USTBOND COMPLEX, WITHOUT ACKNOWLEDGMENT OF THE INDIRECT EXTENSIVE DERIVATIVE ROLE WITH INTEREST RATE SWAPS. HE HAS SOME BLIND SPOTS, BUT THEY ARE OF MACHINERY WELL HIDDEN. $$$

Doug Noland of the Prudent Bear is a solid analyst. He offers a summary description of the bubble foundation for the US financial structure, complete with constant printing press operations. He stresses how the system is NOT in any way de-leveraging as claimed widely in the financial press. The central bank and the big US banks have not reduced leverage at all. The USFed has increased its own leverage and balance sheet many-fold. However, he does not mention a highly important gear system to maintain the levitation, the interest rate derivatives. They act as gigantic powerful intermediation proxy to maintain the ultra-low bond yields and bill yields, in the face of chronic $1.3 trillion annual deficits to securitize. He implies that the Ponzi scheme and bubbly foundation and hyper monetary inflation has a stable manifestation in the USTreasury Bond complex. Not at all!

Noland wrote, "A 100% increase in Federal debt and 200% growth in the Federal Reserve's balance sheet are surely not indicative of system de-leveraging. Such extraordinary credit developments do, however, have profound effects throughout the markets and real economy. The ongoing credit expansion has inflated incomes, spending, corporate earnings, and securities prices, in the process sustaining for now the US economy's bubble structure. And I would argue strongly that the data support the thesis that our system remains dominated by bubble dynamics. Also keep in mind that, in contrast to risky mortgage debt, federal debt requires little intermediation. The marketplace absolutely loves it just the way it is, conspicuous warts and all. For now at least, it is money and shares money's dangerous attribute of enjoying virtually insatiable demand. The only alchemy necessary is to keep those electronic printing presses running 24/7. It is, after all, the massive inflation of federal debt that is inflating incomes, cash-flows and profits, equities and fixed-income securities prices, and government tax receipts and expenditures, in the process validating the moneyness of the ever-expanding level of system debt (Ponzi Finance)." See the Prudent Bear article (CLICK HERE).

The situation is much worse than the dire description offered by Noland. It is utterly amazing to the Jackass that not 5% of the bond analysts even remark, not even passing comments, about the enormous Interest Rate Swap structures that maintain the near 0% short-term USTBills, the sub-2% yield in 10-year USTNotes, and the sub-3% yield in 30-year USTBonds. The bond analysts are either not aware (incompetent) or paid off to exhibit blindness. Much for the Jackass and Noland are in agreement. He paints an ugly face on the situation, when it deserves a nightmarish horror facade in description. The QE bluster has lifted bank sector earnings from their USTreasury carry trade, while their toxic bonds remain on the books at lunatic high values, and their derivative book losses are ruinous even as they strain to keep bond yields low. The strain is greater with each new month of added debt financed. The rest of the economy has suffered the consequences of rising costs and shrinking profits. Noland seems off his game, with a huge blind spot on the Interest Rate Swap strain that supports the USTBond complex. It is not stable. He does not see much of anything that is behind the scenes. Smart guy, but second level insights. Maybe in his favor, he is paid never to comment on the supporting derivatives.

Notice the immediate effect, by the way, on hourly wages when QE is put on. The damage is to profit margins, resulting in shorter worker hours and outright job cuts due to rising costs. Also, and much more importantly, notice how the Money Velocity slows down despite the extreme central bank activity with heavy Quantitative Easing programs. The bond purchase initiatives do not address any fundamental problems, except to provide a buyer of USTBonds, and the redemption of toxic bonds held by the big US banks.

◄$$$ BILL GROSS REGARDS GOLD AS THE SURVIVING ASSET DURING THE TEST OF FIRE. THE FISCAL SITUATION FOR THE USGOVT TRANSCENDS BONDS AND AFFECTS THE USDOLLAR. GROSS EXPECTS THE DEEP DEPENDENCE UPON THE USFED TO FINANCE THE DEBT TO BE A PRESCRIPTION FOR HYPER-INFLATION, FOR USDOLLAR DECLINE, AND FOR A RISE IN THE GOLD PRICE. $$$

Bill Gross of PIMCO has credibility. As preface, recall that he missed the big USTBond rally in 2010 and 2011. But he missed it because he failed to anticipate massive derivative abuse in Interest Rate Swaps to push down the long-term bond yields and thus create a false flight to safety. He overlooked the potential of a rigged corrupted USTBond market. My firm opinion is that he is forbidden to discuss this oversight. In fact, most big bond experts are forbidden. Gross wrote, "Unless we begin to close this [USGovt budget] gap, then the inevitable result will be that our debt/GDP ratio will continue to rise, the Fed would print money to pay for the deficiency, inflation would follow, and the dollar would inevitably decline. Bonds would be burned to a crisp and stocks would certainly be singed. Only Gold and real assets would thrive within the Ring of Fire. If the fiscal gap is not closed even ever so gradually over the next few years, then rating services, dollar reserve holding nations, and bond managers embarrassed into being reborn as vigilantes may together force a resolution that ends in tears. The damage would likely be beyond repair."

Gross does not expect the USGovt to step away from debt abuse. The federal deficit will continue to be outsized and dangerous, since the political apparatus is totally broken and the war is a new constant theater. The chronic abuse will be next to impossible to halt. However, expect the derivative levers to work overtime to support the USTBonds until they break in full view, from over-use, obscene volume, and reckless leverage. See the Zero Hedge article (CLICK HERE).

Notice how the US, the UK, and Japan each have worse structural fiscal gaps than the Spain or Greece, which grab much attention. The US and UK has joined Japan in the Zero Percent dead end corner. The US press networks prefer to deflect attention away from the similar fiscal mire at home. The USGovt fiscal cliff is totally unaddressed, like a pack of 800-lb gorillas lodged at the dinner table. The war costs are totally unaddressed also, like a cadre of Mafiosi also lodged at the dinner table. The USGovt spends $7 to $10 million per minute, with no respite coming, depending upon the liability definition. The total USGovt deficit is nearly $17 trillion. It will surpass the $20 trillion mark during the next Administration. Obama would not try to slow the deficit growth, but Romney would try. Neither will succeed. The American fiscal situation is fast turning into a combination of a Weimar tragedy and a Keystone cop comedy, with a Nazi meat grinder at work against wealth and ethics. See the YouTube video (CLICK HERE).

◄$$$ JAPANESE BANKING OFFICIALS ADMIT THAT MONETARY EASING DOES NOT WORK, WHEN THE MOTIVE IS TO PUSH DOWN THE YEN EXCHANGE RATE. THE COMPETING CURRENCY WAR DEBASES ALL CURRENCIES SIMULTANEOUSLY. THE ENTIRE SET OF MAJOR CENTRAL BANKS IS WORKING IN UNISON TO PUSH THE COST STRUCTURE HIGHER FOR THE GLOBAL ECONOMY IN A DESTRUCTIVE SEQUENCE. $$$

In Japan, the former finance minister Sakakibara is known affectionately and respectfully by a nickname. Mr Yen admitted that Japan and other major central bankers have reached the limit to stimulate growth through monetary easing. He said, "the impact of competitive monetary easing among leading industrialized nations is diminishing." Compared to 1995, the policy strategy has no effect. His view was expressed in futility, as Japan cannot succeed in pushing its currency down when the United States will push back harder in turn. Witness the primary piston stroke of the Competing Currency War machinery that has been adopted worldwide, one to cause uniformly higher cost structure in a global destructive dance. He made indirect reference to the how the Bank of Japan should not bother to purchase foreign bonds. He made some vapid comment about accepting slow growth. He has tacitly joined the crowd that suggests the only way out of the mess is to allow the economy to clear itself.

The Japanese should be listened to by the American monetary witch doctors. Tokyo wrote the book on Quantitative Easing, zero percent rates, and confirmed their futility. They are experts on the lame tool that creates zombie structures. They have been stuck for over 20 years in the 0% corner, a fact the US bankers ignore. Neither Japan nor the United States will ever leave the 0% corner, since no exit strategy exists. The Japanese could sit on a stable stool in that corner, but the US cannot. It is the Keynesian Paradox that nitwit Western economists ignore. It is the chapter in the Keynesian Economics textbook that was never written. If written, it was torn out and removed, with deep prejudice and bias.

## THREAT OF COLLAPSE NEARS

◄$$$ INTEREST RATE SWAPS ARE BADLY AFFECTED BY MOVEMENT IN THE USTBOND YIELDS. ANY MEASURABLE MOVEMENT UP OR DOWN IS DESTABILIZING. THE T.N.X. YIELD INDEX HAS NOT BEEN STABLE SINCE EARLY THIS YEAR. GREAT STRESS FROM SWINGS IS RACKING THE INTEREST RATE DERIVATIVES IN THE MACHINERY ROOM. LOSSES ARE BEING HIDDEN. $$$

The hidden Interest Rate Swaps do not receive much of any attention, even by the experts. They are responsible for keeping long-term bond yields down when foreign creditors have left the market, when chronic $1.3 trillion debts are the mainstay, and when AAA-rated sovereign debt is globally sold off. The IRSwaps suffer damage when rates move much, either up or down. Since early in 2012, the 10-year yield (TNX) has not been stable. It has thus caused great strains and losses to the derivatives that support the USTBond complex. In March the TNX was at 2.4%, then in July 1.4% (to register a correct Jackass forecast), then in August 1.85% in a rebound, then in early Sept 1.57% for another rally, then in late September 1.9% even though the USEconomy showed no strength. In the last couple weeks, it has hovered around the 1.7% to 1.8% level.

The movement swings this year is playing havoc with Interest Rate Swaps, the controlling machinery largely funded by Morgan Stanley, but operated by JPMorgan. Some deep damage is occurring in the JPM basement. The losses so far are well hidden, with grand deceptions on quarterly earnings statements. My guess is the losses are hidden with the USFed help, or else tossed around from one Wall Street firm to another via swaps in a hot-potato exercise to avoid detection. These firms have already been caught swapping their losses at quarterly end on a regular basis.

The TNX chart looks like it is preparing for a move up. Pressure is building from a rising channel trend evident since June after the big corrected forecasted drop. The 50-day moving average has shown some upward bias, with momentum. The unresolved USGovt deficits are providing constant pressure on the long-term bond yield. The swings could be causing major damage in the Interest Rate Swap basement, where the bonds are defended by leveraged over-used machinery. The many-sided assaults on the big US banks make for USTBond defense more difficult. Watch for a handoff in some responsibility from JPMorgan to Citigroup, which in my view is being prepared as the bagman to suffer major losses, if not a restructure buyout.

◄$$$ CENTRAL BANKS ARE BUYING STOCKS, AS THE FINANCIAL PLATFORMS ARE COLLAPSING. THE BIG US-BANKS CANNOT EARN A HEALTHY BOND YIELD, JUST LIKE AMERICAN PENSION FUNDS. THE EXCHANGE STABILIZATION FUND IS ON HYPER-DRIVE, WITH NO DISCLOSURE IN OVER FIVE YEARS. A FULL DISCLOSURE WOULD CAUSE GREAT DISRUPTIONS AND CONTROVERSY, WITH DEBATE ON THE TOXIC UNDERPINNING TO THE UNITED STATES FINANCIAL STRUCTURE. $$$

Those who criticize the conspiracy nuts for their steady claims of printed money being used to purchase stocks should really shut up. Reuters reports that foreign central banks are buying more stock shares because of the paltry returns from top-rated sovereign bonds. The USGovt openly admits reliance upon the Working Group for Financial Markets (aka Plunge Protection Team) to support the US stock market for many years, to keep America strong and to ensure liberty. The Israeli central bank is investing 2% of its FX reserves in US equities and plans to raise this to 10%, up to US$8 billion. The South Korean central bank has lifted its equity weighting to 5.4% last year from 3.1% in 2009. The Czech Republic bank has increased its holdings to 10%, openly criticizing the poor bond yields. Fully 60% of official reserve managers consider that equities are more attractive than a year before, according to a unique survey of 54 central banks. They control 49% of global reserves. They cite the most dangerous word for American ears, diversification. They see the USTBond as toxic and dangerous, as alarm bells go off following the QE3 initiative resumption.

Missing in action is any formal disclosure or public statement that reports on the giant fund that manages the USTBonds and USDollar, keeping them stable and strong. The Exchange Stabilization Fund balance sheet has had no update in disclosure since March 2007, and for good reason. It would obviously show some dubious and embarrassing details for the props to the major US$-based vehicles. For guttural laughter, recall that the NYFed is their execution trader. From their last statement as of end March 2007, the Exchange Stabilization Fund total assets were $45.9 billion which included $20.8 billion in foreign currencies, $9 billion in SDRs (unit of Intl Monetary Fund major currency basket), and $16.1 billion in USGovt securities. See the New York Fed document (CLICK HERE).

◄$$$ $15 TRILLION DOLLARS MUST BE PUT INTO PROPER PERSPECTIVE, IN STACKS OF $100 BILLS. THE USDOLLAR IS FAST BECOMING A ZIMBABWE LOOKALIKE. $$$

Observe $100 million on a palette of $100 bills, the height of a man. See the Daily Cognition pictorial rendition of stacked paper money (CLICK HERE).

Observe $1 trillion, otherwise stated as $1000 billion. Its size is over four football fields of stacked $100 bills on an array of palettes, the height of a man.

Observe $15 trillion, the former USGovt debt limit. The size resembles the volume of a few city blocks, including the height from some skyscraper buildings. The unit is still the stacks of $100 bills.

Observe a $100 trillion Zimbabwe bill, where the USDollar is heading. The Jackass is the proud owner of one of these weighty ZBills.

## EUROPEAN BANKS LEAD TOWARD RUIN

◄$$$ DRAGHI'S NEXT STILLBORN BABY IS THE ERRANT OUTRIGHT MONEY TRANSACTIONS PROJECT, WHICH HAVE BEEN DECLARED ILLEGAL ALREADY IN SOME CIRCLES. THE DRAGHI BETTER BOND DREAM SEQUENCE IS FAST FIZZLING FROM LACK OF CREDIBILITY AND SIGNIFICANT WORTH. TO SEE HIM REVERED SHOWS THE LOWEST LEVEL OF AWARENESS OR INTELLECT. $$$

Call it the Draghi power play, but the Outright Money Transactions violate the EU charter directly. Designed as a program of conditional bond buying targeted at specific countries to restore their sovereign bond stability, and to repair a broken monetary policy transmission mechanism, the OMT has no limits, complies with the ECB price stability mandate, and contains the required flexibility to interrupt funding for certain countries for non-compliance with imposed conditions or failure to meet performance guidelines. However, the OMT is much more than stated. On its face it is illegal, in clear violation of the Treaty on the Functioning of the European Union. For the last two years, the frequency of basic violations has turned common in expedience, like for the EuroCB to enter into primary market sovereign debt purchases. See the Zero Hedge article by Blankfiend of Fibs & Waves (CLICK HERE). The following arguments attack the OMT for its deficient integrity.

OMT is a Eurobond equivalent, which target specific countries, but which shares the potential losses on bond purchases among the member central banks according to their capital key. The scheme revisits the rejected red versus blue concept, for participants versus the others. The OMT life support could quickly kill the bonds outside the corral with wrong color label.

OMT is a banking license for the European Stability Mechanism. Behind the official window, the Euro Central Bank would be free to purchase potentially unlimited bonds on the secondary market, which extends greatly the resources of the ESM without a formal banking license or leverage scheme. It also by-passes any safeguards countries would put in place to limit their bailout losses. A legal clause forbids the EuroCB from creating a credit facility. An official banking license for the ESM has been declared in violation of Article 123(1) of the TFEU by no less than the ECB itself.

OMT is a sham, since the system players would not have the resolve to halt or reverse bond purchases if a target country reneges or falls short on its commitments. Enforcement of compliance is an empty threat. Consider it an OMT methadone program as no discharging of patients for abuse would be possible or viable.

OMT is fiscal policy by Central Bank fiat. Bear in mind that Eurobonds, ESM banking licenses, and ESM leverage schemes have all been previously rejected by various European political leaders, from Germany to France to Finland. OMT is a clever way to skirt all of those objections and concerns in order to restore confidence in sovereign European debt markets. The maneuver is a bold power grab by Draghi. OMT embarks Europe on the treacherous path of fiscal policy by unelected, unaccountable central bank elite dons.

◄$$$ THE DRAGHI BOND DREAM HAS BEGUN TO FIZZLE BEFORE IT IS FULLY HATCHED. THE BOND BUYING PLAN HAS CIRCLED THE DRAIN AS ECB/BUNDESBANK BRINGS IN THE LAWYER TEAM. $$$

As preface, Draghi's first project was the Long-Term Financial Operation that provided ample funding to redeem impaired sovereign bonds from Southern Europe. The project turned into a wrecking ball quickly, causing sudden disasters that fanned out across Spain and Italy. The problem was that the Euro Central Bank had spent a couple months buying up the Spanish and Italian Govt Bonds, thus lifting their values artificially. So when the big banks from the two nations, and other nations like France began to purchase the same type of bonds, they overpaid. Before too many weeks, almost all of them were not only contending with paper losses, but their banks were suffering worse than before. The lesson was that the central banks distort markets to the point that they cannot remove the training wheels easily without causing nasty falls and deep bruises from the broad impact. The market interference is constant.

In a stunning development, the Outright Money Transactions were challenged for legality. If not a still-born baby like the LTFO just a few months ago, perhaps the OMT is best described as a bastard child brought to enforce a power grab. The lawyers at the EuroCB and Bundesbank lawyers hastily gathered to examine the legality of the new bond purchase program. Obviously, they are illegal. So the challenge was how best to present them, to exert pressure on the system, and to sidestep the law. The entire Draghi EuroCB has conducted an illegal operation for almost a year's time. Make expedient the rules, not the law. Unlike the US Federal Reserve, the EuroCB is constrained. It cannot print money, cannot buy bonds, cannot legally do much of anything. The EuroCB can process the tainted money printed by the USFed and channeled across the Atlantic, but Draghi wishes to possess equal power to the USFed. These central banks are toxic paper factories, bond undertakers, and money laundering criminals.

The German Bild newspaper reported that in-house lawyers were reviewing the features of the OMT project to determine what volumes were necessary and the extent of time in order for it to break EU treaties. The ECB is specifically banned from financing state deficits. The heretic high priests will find a way to declare that bond purchases do not finance deficits, as long as an intermediary works as middleman and as long as days pass on the calendar. Mario Draghi is insufferably arrogant, a typical Goldman Sachs elite stained rectal pore. He went public with a statement to the effect that inversion in the Spanish yield curve was urgently in need of reversal. Nothing like market interference to halt the message of recession or the low value of cash. The Bild noted the entire case could be referred to the European Court of Justice. Both the ECB and Bundesbank were preparing for such the event. Much consternation has come over leaked disinformation of false nature, in order to further the German anti-Europe agenda. The floating continental consensus is misplaced and ugly, that central banks can solve every problem with a wave of the magic money printing.

ECB President Mario Draghi announced earlier in September that the central bank stood ready to purchase unlimited amounts of bonds issued by EuroZone member nations. However, the nations had to submit a formal request for aid and fulfill strict domestic policy conditions. As head of the Bundesbank, Jens Weidmann was the sole dissenting voice in the ECB decision. The plan is designed to lower the borrowing costs of EuroZone nations such as Spain and Italy by buying their bonds, a massive liquidity enhancement device. But it has stirred anxiety in  Germany where some people are accusing the ECB of venturing beyond its mandate and potentially exposing taxpayers to billions of Euros in risky debt. Obviously, as buyer of last resort, or provider of rich liquidity, the ECB will be a $trillion loser. Being the liar and deceiver he is, from elite roots, Draghi has stated the plan is strictly within the ECB mandate. Clearly it is not. See the Zero Hedge article (CLICK HERE). For a wider update on the European debacle, check out Ambrose Evans-Pritchard and his latest essay with analysis. Observers need a program bill like for a play on stage to keep up. See the Zero Hedge article (CLICK HERE).

◄$$$ THE SWISS NATIONAL BANK IS IN A BIG PICKLE. CAPITAL FLIGHT FROM THE ENTIRE EUROZONE CONTINUES TO HEAD TO SWITZERLAND. THE CENTRAL BANK CONTINUES TO DEFEND THE EURO 120 PEG VERSUS THE SWISSY. THIS UNIQUE RESERVE CURRENCY WILL LEAP HIGHER IN TIME, TO SIGNAL THE END OF THE EURO COMMON CURRENCY. $$$

The tireless but foolhardy defense of the Euro currency by the Swiss National Bank is resulting in a bloat of reserves. The SNB is holding a growing mountain of dodgy and toxic bonds from throughout the EuroZone. Some suspect it is largely German Bunds. Much of it will be written down in losses. The Swiss Franc exchange rate stands at 107.70 versus the USDollar, but the Euro stands at 120.92 versus the Swissy. This all important Swiss currency represents the lever or trigger for breaking the Euro Monetary Union, or its indicator. The Swiss Franc will jump higher to indicate the ruin of the Euro currency and the imminent grandiose losses for the big European banks. It is not stoppable. The Swiss Franc will move 20% to 30% higher.

 

◄$$$ SPANISH GOVT DEBT WAS CUT TO BBB- IN RATING. NEXT ON THE DOCKET IN SPAIN IS THE EXPLOSION OF HIGH END MORTGAGES. SPANISH FINANCIAL FIRMS ARE GOING BUST. SPAIN ISSUES LOONEY TUNE LOTTERY BONDS AS A CARNIVAL ATMOSPHERE HAS TAKEN OVER. THE SECESSION MOVEMENT CONTINUES TO STIR AND RUMBLE IN THE SOUTHERN REGION OF CATALONIA. SPAIN IS LOSING ITS CONNECTIVE TISSUE AND INTEGRITY. $$$

Standard & Poors downgraded the Spanish Govt debt to BBB- and gave it a negative outlook. The cut moves Moodys and S&P to the same level. The cut came as a surprise, piling on the woes. Another cut would cause major problems. If both agencies downgrade Spain to BB+, which could happen soon, Spain will leave all the major bond indices, creating some major volatility. The event might come after US elections and after Spain formally seeks EU assistance. The dimwitted commissars at the EU insist that Spain proceed with austerity, whose aggressive nature starting from Q4 would surely cause a worse economic tailspin. However, Spain must contribute EUR 3.8 billion to the EU fund, better known as the Exchange Stabilization Mechanism. Maybe Super Mario will lend Spain the funds under the table!

The ripples from the rating cut have come with further downgrades by Standard & Poors of covered bonds for banks, like for Banco Santander and Banco Bilbao Vizcaya Argentaria (BBVA), the largest lenders in Spain. But more could come like with Telefonica and the Utilities. The firm also cut the ratings of nine other banks and placed six on credit watch negative status. The savvy anticipate that Spain will soon impose capital controls, recommended by the Intl Monetary Fund. See the Zero Hedge article (CLICK HERE) and the Bloomberg article (CLICK HERE).

Some big financial firms have gone bust. More will follow. See the Spiegel article (CLICK HERE). A big fat long powerful fuse has been lit in Spain. Once the elite are directly affected, phone calls are made, high ranking jobs are lost, and disruption to the system accelerates. The home foreclosure process has been a delayed fuse not lit for a few years. It is being lit. The wealthy are going through the foreclosure meat grinder. The final accounting to the housing bubbles has at long last begun. See the Zero Hedge article (CLICK HERE).

Against the backdrop of deterioration and liquidity stress, Spain has resumed issuance of looney tune lottery bonds to help in the bailouts. A carnival tone cometh, requiring only the barkers and toll takers at the egress. See the Zero Hedge article (CLICK HERE). Although attempts for Catalonia to achieve secession from Spain will be extremely difficult, the movement continues. At first it does not succeed, try try again. The Spanish Military threatens to prosecute its proponents for treason. Few realize the region does not speak Castillian Spanish. The mere fact that a critical mass is behind the movement to give it significant momentum and credibility is horrible news for Spain, whose connective cultural tissue is being torn at a time when its social integrity is challenged. See the Zero Hedge article (CLICK HERE).

◄$$$ SPAIN IS IN THE PROCESS OF PARALYSIS FROM THE CONSTANT OCCURRENCE OF PUBLIC DEMONSTRATIONS. EXPECT NEW LAWS TO LIMIT PEACEFUL PROTEST, WHICH WILL SURELY CAUSE VIOLENT REACTIONS WITHIN THE PROTEST MOVEMENT WELL ALONG. $$$

A shocking 2500 demonstrations occurred in Madrid Spain last year. That is 9 per day, with important disruptions to businesses, truancy to workers in offices, and heavy costs of cleanup. The Spanish Govt is considering limitations of demonstrations, similar to laws on the books in the United States, the leading fascist nation to emulate. The US already limits free speech, peaceful assembly, and taking photographs of police abuse. Spain has proposed new laws of a similar nature, to prohibit the video recording or the snapshot photographs of local police doing their dirty work. The beatings, mace sprays, and worse might soon be illegal to be gathered in evidence. The fascist state moves along apace. See the Zero Hedge article (CLICK HERE).

◄$$$ THE FRENCH ECONOMY IS ACCELERATING IN COLLAPSE. CAR AND TRUCK SALES ARE PLUMMETING. THE NATIONAL MANUFACTURING INDEX FELL HARD. CONFIDENCE IS DYING. MUCH FOCUS IS ON NEIGHBORING SPAIN, BUT FRANCE MIGHT BE THE FALLING PILLAR THAT TRIGGERS A MAJOR FINANCIAL EVENT. PRESIDENT HOLLANDE HAS SOME TRULY STUPID PLANS TO RAISE TAXES, AS THE WEALTHY ARE VACATING. MORE DISTRIBUTED MISERY (AKA SOCIALISM) LIES DEAD AHEAD. TOTAL COLLAPSE IN CONFIDENCE IS HAPPENING BY BUSINESS AND THE POLITICAL ESTABLISHMENT. $$$

Major French Economic indicators are flashing loud sirens and glaring red lights. Few appear to be paying heed. A reliable barometer of their tangible economy crashed in September. New car sales via registrations collapsed by 18.3% from September last year over the twelve months. Year to date for the nine months, car sales were down a whopping 13.9%, signaling an acceleration downward. The year 2012 is on track to be the worst year for the car industry since long before the financial crisis. Of the French brands, market leader Peugeot Citroen declined only 5% in sales, buffeted by the introduction of its new sub-compact Peugeot 208. But year to date, French brand car sales were down a hefty 18.4%. Renault was wrecked, no other words fit, as their sales plummeted by a stunning 33.4% for the month and 19.8% year to date. The German brand cars also were also hit hard in French sales. The parent Volkswagen (VW, Audi, SEAT, Skoda) fell 17.4%. BMW and Mercedes saw declines. GM (Opel, Chevrolet) tumbled 20.8%, but Ford crashed by 31.5%. Fiat was crucified, with sales careening down by 38.4% in a wreck. The pattern is confirmed by light utility vehicles, an ominous sign for the private sector and its investment environment. As defined by under 5 tons in weight, their sales in France fell 12.5% for the month, while industrial vehicles (over 5 tons) did worse, suffering a 20.1% fall. Look for Italy to be in the news soon for massive economic declines.

The Manufacturing Purchasing Manager Index (PMI) in France declined to 42.7 in September, the lowest reading since April 2009. Only Greece was lower, which lost 20% of its economy over the last five years. France has not garnered much attention over Southern Europe and its PIGS basket case. The Jackass has been warning about the mire in France for several months. Even crippled Spain outperformed France. New orders were particularly hard hit, a harbinger for pain to come in the French Economy. Lacking new orders, manufacturers have reduced their backlog at the fastest rate since March 2009, when it last seized. The associated PMI employment component fell for the seventh consecutive month. Heat is rising in France within the labor market.

The French Govt has proceeded to impose a harsh tax increase on all dividends, incomes, and capital gains. No wealth is safe, as it is needed to finance the welfare state and the failure that surrounds it. The nation combines brain-dead socialist policy with the background bank insolvency to create a nightmare. The misery will surely be spread far and wide, and evenly across the society, which is what socialism is best at doing. The jobless rate is at 10.6%, but youth unemployment is at 25.2% and rising fast. Over three million people are out of work for the first time since 1999. The confidence barometer of small and medium businesses, which create most new jobs, crashed in September to 84, the lowest level ever recorded for the series, going back to 1992. It has plummeted quickly, once at 129 in April. The national economy in France is falling off a cliff. Watch the harmful effects of raising taxes next, which could ignite riots in Paris. Austerity is no solution. In fact, there is no solution except installing a Gold Standard and liquidating the big banks, while hunkering down in pillboxes. See the Zero Hedge article (CLICK HERE). Numerous top French properties have suddenly shown up on the block for sale. The rich business community is pulling out. See the France24 article (CLICK HERE).

◄$$$ GREECE HAS VAST RESOURCES STILL, LOCKED IN GOLD AND ENERGY RESERVES. AS THE EUROPEAN ELITE CONTINUE TO BAIL THEM OUT, THEY WILL SEEK COLLATERAL FOR THE LOANS. MUCH ARE NOT YET TAPPED OR COLLATERALIZED, BUT THEY WILL BE. GREECE MUST EXIT THE EURO, RESTRUCTURE ITS DEBT, DEVALUE ITS CURRENCY, AND EXPLOIT ITS RESOURCES BEFORE FOREIGNERS ATTACH THEM AS COLLATERAL. THE RACE IS ON. $$$

Greece actually has massive untapped reserves of gold, oil, and natural gas, few people realize. The nation of Greece is sitting on absolutely massive untapped commodity reserves of various types. If the Greeks were to fully exploit the natural resources under their feet, they would no longer have any debt problems. Greece is projected to become the leading gold producer in Europe by 2016. In addition, Greece is now opening up exploration of their massive offshore oil and natural gas deposits. According to industry reports, Greece is sitting on hundreds of millions of barrels of oil and gigantic natural gas deposits that are worth $trillions. The nation has riches. What it lacks is active working capital and freedom from its debt.

Since the depression began in Greece, the Greek Economy has contracted by more than 20%. In April 2010, the unemployment rate in Greece was only 11.8%, but since then it has skyrocketed to the 25.1% level. The Greek Govt debt to GDP ratio is projected to hit 200% this year. The nation needs to exit the Euro, default on its debt, restructure that debt, then devalue the Drachma currency, and attract a gigantic swath of development contracts that earn significant royalty and employ hundreds of thousands of people. The process begins with the Euro exit and debt default. The process begins by turning on the wheels of capitalism, turning off the reverse gears of socialism, removing bureaucrats that obstruct progress, and arresting bankers that cut yet more deals to gut the national wealth.

Massive gold deposits lie in Greece. The approval process of mining activity has been reformed and fast tracked. Industry analysts expect Greece will soon be the number one gold producing country in all of Europe. The Canadian and Australian companies involved claim their projects will add about 425,000 gold ounces by 2016, worth $757 million at a mid-$1700/oz price. In year 2011, the country produced a mere 16,000 ounces. Greece is also putting on the fast track some state property sales where deposits are located. It is set to overtake Finland as the continent's largest gold producer within four years. Due to urgency, the regulators in Athens have signed off on mine deposits kept on hold for more than a decade by red tape and environmental rules.

Greece is also awash in crude oil and natural gas. The nation sits on a massive undersea oil and gas field which is gradually being estimated in size. Also, sizeable energy deposits have been identified in the western parts of the country. Several foreign firms are rushing to exploit these tremendous resources. The Greek Govt has received eight bids by companies in recent months to begin test wells. Currently the nation produces almost no oil or natural gas. Early estimates suggest that the Gulf of Patra might have 200 million barrels of crude oil, and that another 80 million barrels of oil lie in Ioannina, and nearly 3 million off the coast of Katokolo. Furthermore, according to the United States Geological Survey, in the sea between Crete, Cyprus, Israel, and Egypt, there are about 15 trillion cubic meters of natural gas and oil awaiting exploitation. The resources are sufficient to manage their national debt load, especially if restructured.

Tulane University oil expert David Hynes believes that Greece could solve its entire public debt crisis through development of its oil and gas discoveries. He conservatively estimates that exploitation of the reserves already discovered could bring the country more than EUR 302 billion over 25 years. The last might be first, far more promising than either Spain or Italy. The key is to exit the Euro before the foreign banker grappling hooks tie a hold on these great assets. Look no further than their natural resources for a reason to explain such hesitation to push Greece out of the EU. Many leading politicians and bankers in Europe probably are well aware of their gold, oil, and natural gas. See the Economic Collapse article (CLICK HERE).

◄$$$ ONE THIRD OF ATHENS BUSINESSES ARE CLOSED DOWN AND SHUTTERED. THE GREEK GOVT DEBT IS TWICE WHAT WAS PREVIOUSLY ESTIMATED AT EUR 20 BILLION. THE BREAKDOWN CONTINUES UNABATED AND UNADDRESSED. A FULL COLLAPSE WILL FORCE THE EXIT FROM THE EURO COMMON REGION AND BEGIN THE DEBT FAILURE CHAIN. $$$

An absolute economic collapse in Greece is in progress. The description of depression is too light, too soft, too minimizing to describe what is happening in this globalist vassal colony. One third of Athens businesses have been shuttered. The banker elite in Europe seek to retain their Euro currency usage, and to attach more properties, thus making preparation for a greater disaster in collapse. The unemployment rate in Greece rose another 1% to 24.4%, which is only 2% higher than in the United States. The state revenues are further inhibited from tax collection, made worse by the tax collectors themselves on strike. A new report by  Kathimerini confirms that almost a third of all business in Athens have now shuttered. It read, "The number of shuttered shops on the capital's busiest commercial streets, Panepistimiou and Stadiou, also hit a record high in August, reaching 34.7% on Panepistimiou and 42% on Akadimias, up 14% in the last six months." A vicious cycle continues as fewer businesses operate to hire fewer people, generating less state revenue, encouraging less businesses to open and so on, until the entire country collapses in a heap of worthless debt. To cap off the story, the Greek Govt deficit hit the reality wall, at double the expected amount. It stands at EUR 20 billion. See the Zero Hedge article (CLICK HERE).

◄$$$ EXITS FROM EURO MONETARY UNION COULD COST $17 TRILLION IN FULL RIPPLE EFFECT TO THE EUROPEAN ECONOMY EN MASSE OVER THE REMAINDER OF THE CURRENT DECADE. THE RIPPLE EFFECTS WOULD BE POWERFUL AND PREDICTABLE. ADD TO THE LETHAL BREW THE AVALANCHE OF CREDIT LOSSES FROM BOND DEFAULTS AND WRITEDOWNS. BOTH CREDITOR NATIONS AND PRODUCER NATIONS WOULD BE HARMED BADLY IN IMPACT. HOWEVER, THE REAL WORLD OPERATES IN A DYNAMIC MANNER. THE EXITING NATIONS WOULD REVERT TO THEIR FORMER CURRENCIES, DEVALUATE THEM, AND ENJOY THE GREAT STIMULUS, TO BE SURE AMIDST SOME CHARRED RUINS AND TRAMPLED FIELDS. $$$

There is no solution except to exit the Euro currency, a true albatross that prevents any semblance of recovery and restart. However, the cost is being more accurately assessed in view of its inevitability. The German think tank Prognos, an economic research group, was commissioned by Bertelsmann Stiftung to conduct a study on the impact of a string of exits from the Euro Monetary Union. The conclusion was stark ugly and devastating, but one-sided. The study estimated that a Euro exit by Greece, Spain, Portugal, and Italy would cut global GDP by EUR 17.2 trillion ($US$22.3 tn) and plunge the world into recession, with France suffering the biggest loss. The cut to economic activity was calculated in forecasts through year 2020. A Greek exit alone would be manageable, but must be avoided to forestall a domino effect that would ensue. A chain reaction would be unavoidable, leading to the departure of other Southern European nations from the single currency. My quick addendum is that depression would be a certainty, since the current recession already borders on depression in Western Europe and North America.

The researchers arrived at the bleak assessment after calculated losses of bank creditors were included which are deeply exposed to the nations mired in crisis. They included in the analysis the potential impact of a Euro collapse on economic growth in the 42 most important industrial and emerging economies, which comprise over 90% of the world economy. The chain reaction would reach all Southern European nations, and numerous global players in trade. The extent of the eventual damage ironically grows with each month, since defense of the Euro and propping the big bank increases the commitments into a losing situation. This is the classic toss of good money after bad. Aart De Geus, Chairman of the Bertelsmann Stiftung's executive board, warned "In the current situation we have to make sure that the crisis in Europe does not turn into a wildfire." It will eventually turn precisely into a wildfire, and when it does, the damage will be much worse since Greece was not permitted to default in 2010. In the United States, the big banks are considered too big to fail. In Europe, the Southern peripheral nations are considered too big to fail. Same concept, same exposure, same incremental commitments, and the same outcome assured, with the same added losses later. Kick the can down the road until it turns nuclear and the road runs out.

A Greek exit from the common Euro system would lead to a loss of gross domestic product (GDP) totaling EUR 164 billion, equal to EUR 14,300 per capita by year 2020. They calculated the impact through devaluation of the new currency, unemployment, and a sharp fall in domestic demand. It would cost Germany EUR 64 billion in credit writedowns and EUR 73 billion in lost economic growth between 2013 and 2020, the study said. But that only amounts to 2.9% of German GDP. One must question as forecast analyst if they included any added boost to the Greek Economy from a currency devaluation of the Drachma once reverted. My guess is that is ignored.

The impact of other countries leaving the currency union would be more dramatic. If Portugal exited, Germany would lose EUR 225 billion by 2020 from credit writedowns amounting to EUR 99 billion. Global losses in growth would add up to EUR 2.4 trillion, with the US lost sharing EUR 365 billion and China EUR 275 billion. If Spain were to exit as well, Germany would lose EUR 850 billion in GDP by 2020 after writing down EUR 266 billion of credit. The US would lose EUR 1.2 trillion in GDP, and the 42 countries under review would lose EUR 7.9 trillion. If Italy, the EuroZone's third largest economy, were to exit, the researchers concluded that the situation would run totally out of control. It estimated that Germany would lose EUR 1.7 trillion in GDP with EUR 455 billion in credit writeoffs. German unemployment would increase by more than one million by 2015. The biggest losers would be France, followed by the United States, China, and Germany. These are respectively the creditor nations and the producer nations. See the Spiegel article (CLICK HERE).

Again as critical footnote, the research appears to ignore the stimulus effect from the reversion to the devaluated Greek Drachma, Spanish Peseta, Portuguese Escudo, Italian Lira, and French Franc. The principal is basic in econometric analysis, called dynamic scoring. The Western economists are mostly hired harlots. They do not wish to promote the benefit of dynamic reaction to reverted currency devaluations. Consider the Prognos research to be a worst case analysis with no positive reaction to currency devaluation, whose arrival would be obvious and basic. They would enjoy new export business growth from the lower currency rates, obvious amidst charred ruins in the Southern European nations, matched by damage in the producer nations who might purchase much cheaper Greek wine (plus tambourines), much cheaper Italian clothes (plus Lambourghinis), much cheaper Spanish farm output (plus castinets), and much cheaper French pharmaceuticals (plus arrogance).

## BIG BANKS CAUGHT IN VISE

◄$$$ THE WALL STREET BANKS ARE UNDER TREMENDOUS ORDINARY BUSINESS PRESSURE, WITH REDUCED INCOME AND HIGH COSTS. THEY WILL BE PRESSURED TO BREAK UP, CONSOLIDATE, AND FOLD. $$$

Chris Whalen is a solid brave analyst who makes statements that reflect the reality of the banking sector crush. In a recent Bloomberg interview, he spoke on stark terms of survival pressures for the big Wall Street investment banks. Whalen believes no Wall Street firm is earning money on its bond inventory, since bond yields are so puny. Ironically, Wall Street is an important victim of the USFed monetary policy, the destructive Zero Interest Rate Policy. They must ordinarily rely upon fees from investment banking, which have dried up. Even trading profits are down, as high frequency trading schemes dominate, and private investors are not so available to fleece in controlled swings. The large banks will be forced to break up from internal stress and absent income. The driver to the process is cost, as the missing piece is income. They will reduce the wages paid to executives, fund managers, and trading desks, or else they will suffer from the usual process of dried vines. They will shut down entire business segments. Half of Wall Street profit used to be derived from the USTBond carry trade in the past, which has been severely reduced now that the 10-year yield is steadily under 2% and the 30-year yield is steady under 3%.

My choice is to point to the irony, how Citigroup suffers from direct impact of ZIRP. They dismissed Victor Pandit as CEO. A great consolidation is coming to Wall Street that must be disguised. So do the other big banks suffer, one after the other report strained on earnings. They must hide their derivative losses and wrecked mortgage assets. The JPMorgan profit was engineered with more skill, more deceit, like showing positive positions but not losing positions. No details will be offered here since only my deep instinctive reaction from their past pattern.

The bigger question is whether the new top executives will preside as caretakers until Citigroup is dissolved, with major parts taken by Goldman Sachs and JPMorgue. The biggest banks might soon start to act like undertakers. My suspicion is that Citigroup is being set up to undergo a metamorphosis that is exploited, like with a black hole created on some derivative losses, like some vanished private accounts. It might merge portions of its vast sprawling unmanageable business segments with other big banks. The firms are shifting their risk and hiding their losses in a grand shell game. Wall Street urgently needs a garbage can to fill with toxic paper and vast derivative acid. The opportunity is there to steal private accounts. It is not just Morgan Stanley that is likely to steal private accounts, but Citi and even Merrill Lynch. To wit, notice that the Morgan Stanley quarterly statement did an ugly swing to a $1 billion dollar loss from a respectable $2 billion profit a year ago (3Q2012 versus 3Q2011). Net revenue was cut almost in half, from $5.3 billion down from $9.89 billion in the third quarter last year.

◄$$$ MORGAN STANLEY CONTEMPLATES PAY CUTS FOR ITS BLOATED OVERPAID STAFF. THE INVESTMENT BANKING BUSINESS IS DRYING UP LIKE A LAKEBED IN AN ARIZONA DESERT. $$$

The investment bank will examine a further round of retrenchment next year. In a surprising bout of frank honesty, CEO James Gorman admitted, "There is way too much capacity and compensation is way too high. As a shareholder, I am sort of sympathetic to the shareholder view that the industry is still overpaid. The current Wall Street management is a little tougher minded about [keeping compensation strong to retain good workers] and shareholders are certainly tougher minded." The investment banking business has largely dried up. The stock brokerage business is dormant, although a few million private accounts lie around waiting to be stolen, whose owners are fully asleep to the aggravated risks made known by the MFGlobal thefts. The extreme drag is painful and obvious from the entrenched USEconomic recession and the European debt collapse. Hard hit is the trading volumes in bonds and stocks. The industry is also grappling with new regulations passed in the US in the wake of the financial crisis, forcing less leverage and more accounting for derivatives. Wall Street banks have cut over 20,000 jobs so far this year, according to recruitment firm Challenger Grey & Christmas. Look for those cuts to continue unless revenues pick up. The main revenue source for the big banks is the carry trade from USTreasurys, which needs a few computers and a handful of humans, not a big staff. See the UK Telegraph article (CLICK HERE).

◄$$$ A CLIENT REPORTED STRANGE ASPECTS FROM A GREATER SAN FRANCISCO BRANCH OFFICE FOR BANK OF AMERICA. SOME ASTUTE OBSERVATIONS WERE MADE. STRESSES ARE GREAT, SO IS SECURITY. MORE ACCOUNTING FRAUD IS BEING DONE, AS FUTURE AMORTIZED PROFIT FROM ADJUSTABLE RATE MORTGAGE ORIGINATION POINTS IS BEING BOOKED AS IMMEDIATE CASH PROFIT. $$$

A Hat Trick Letter went recently to a Bank of America branch with a friend who wanted to refinance his mortgage. He left with more than a few observations. Armed guards are now posted outside the branch, the first time ever seen. The company providing the security is G4S, a foreign company. The Silicon Valley community is not strewn with abject violence, as the average house price is about $700k to $800k and the gross income could be at a minimum $150k. Palo Alto is tranquil. The curious wonder what risk is perceived on the inside. The population mix is 50% white plus 50% Asians, composed of Chinese, Indians, and Koreans, the usual Silicon Valley crowd. The heightened security measures indicated a threat perceived but not yet visible, a surefire sign of things to come.

The business side was equally alarming. Bank of America (BAC) is still offering adjustable rate mortgages (ARM) tied to LIBOR, subjecting clients to the same nasty risk as a few years ago. This begs the question whether the offering is even legal. Here is the juicy part. The bank is making money via refinance, not by dumping the mortgages to the USFed or on the Fannie Mae doorstep, but rather via upfront points. Most fixed or ARMortgages require a 1% origination point paid upfront. However, the twist is that the point is not paid in cash at closing like in ordinary times, adding to the closing cost of lawyer fee and title tax, etc. The point is added to the principal, and surely booked as profit. BAC for a $500k loan would record the loan as $505k, and book the $5000 as present income, even though it is amortized. If the home loan does not perform, then BAC must back out the recorded present profit later.

This is accounting fraud. Bank of America is recording forward amortized cash flow as income which carries with it extreme risk. The home loan underwriting it not lunatic like before. The loan to value is set at least 80% and thus not subprime lending. At other big banks, such might not be the case throughout the country. Hence, BAC is putting people back into ARMs. If the housing market prices drop or mortgage rates rise, a lot of people will land themselves in trouble again. If the homeowner loses the job with income, again the loan will enter the foreclosure track and the 1% point must be backed out. The bank will return to a sudden acid reflux event, all over again.

◄$$$ IN ITS FINANCIAL FILING, FANNIE MAE SHOWED IT IS TAKING FEWER LOSSES ON R.E.O. SALES ON ITS BOOKS. BUT THE SHORT SALES CONTINUE TO RACK UP MULTIPLE $BILLIONS IN LOSSES. LESS THAN HALF THEIR INVENTORY IS EVEN ON THE MARKET FOR SALE. VERY FEW HOMES ARE PULLING IN RENTAL INCOME. BANKS ARE LOSING MONEY AT A RAPID RATE STILL. $$$

The Fannie Mae snapshot is evidence of continued distress, but portrayed as a minor success. Any financial firm that recovers only 65 cents per dollar on loans is in desperate shape. And it on a widespread basis, the firm will surely go bankrupt. The Govt Sponsored Enterprise announced an improvement from disastrous to horrendous in its recovery of home loan balances. Fannie Mae & Freddie et al (includes the gaggle of ruptured FHA agencies) recovered an average 65% of the unpaid principal balance from REO sales in 2Q2012. That is an improvement from the low of 59% at the beginning of 2011. But even this metric varies widely across the country. It was able to recover an average 78% of the unpaid principal through REO sales in Texas, but only 50% of the original mortgage balance in Nevada sales. Their recovery rate reflects directly the wreckage of the regional housing markets. Be sure to know that whatever is revealed for Fannie Mae on the home inventory processing, also occurs for the big banks. The Fannie Mae window offers a glimpse at the rotting big bank book of portfolios of mortgage assets held more widely across the big banks.

Only half of the previously foreclosed homes held under the Fannie Mae warehouse are on the market for sale or prepared for sale. The remaining properties are currently stuck in some step of the foreclosure system. Some are surely in such bad shape as not to be sellable. Fannie officials said 23% of its more than 109,000 repossessed homes are currently available for sale. Their inventory is actually down by 28% from the end of last year. Some homes are pending in sale. An offer has been accepted on another 19% of homes in FNM inventory, and 11% have an appraisal in progress. But 47% of its inventory is unable to be marketed (think nasty sabotage, disrepair, neglect).

Consider that a large slice cannot be sold due to improper titles, absent titles, duplicate titles tied to mortgage bonds, and more corruption. In the Fannie back yard they will be buried, but not without the opportunity to gather rental income later on. Fannie officials said another 13% of its properties remain occupied by the borrower, the holder of the home loan. The eviction process just had not been completed. The rental phenomenon has not expanded much, not yet. Only 8% of its inventory, fewer than 9000 homes, are being rented as part of its piloted Tenant in Place Program or the Deed for Lease Program. These programs enable the homeowners to rent their own homes, not leave, after handing over title to Fannie Mae, but probably a broken heart. See the Housing Wire article (CLICK HERE).

◄$$$ BARCLAYS HAS MADE AN ASSET GRAB. THE NEW PATTERN IS BECOMING CLEAR, TO SEIZE THROUGH ACQUISITIONS THE AVAILABLE DEPOSIT BASE IN ORDER TO STAVE OFF GROSS INSOLVENCY. THE BOLSTER TO THE EQUITY BASE IS NOT ATTRACTING ANY ATTENTION. THEIR INSOLVENCY IS AN UNNOTICE UNADDRESSED CANCER. $$$

Barclays has set the stage to acquire ING Direct with GBP 10.8 billion (=US$17.4bn) in assets and GBP 5.6 billion in mortgage assets. They pursue deposits while risking more mortgage losses in a gamble. The ING online segment is a losing business. The added 1.5 million clients will shore up the Barclays client base, while also improving funding for its consumer operations. Andrew Lim is a London-based analyst at Espirito Santo Investment Bank. He said, "The deal is more about the acquisition of a deposit base which reinforces the funding of the UK retail operations, which will subsequently be ring-fenced." He calls the deal is an attractive bolt-on acquisition, in his words. The Barclays pampered staff is probably overpaid, adding to costs, requiring income. The acquisition is the first since Antony Jenkins, the former head of Barclays consumer bank, took over as CEO in August from Robert Diamond, who departed in disgrace. Hidden from awareness by the analyst community was the grab of a sizeable swath of depositor equity. The insolvency of the big banks is never discussed. This deal will soothe that insolvency by adding to the deposit base, like fresh blood infusions to a gaunt debilitated patient.

Barclays has fortified its conglomerate segments by acquiring assets from rivals at a discount, since the onset of the financial crisis. It acquired the banking arm of insurer Standard Life out of Edinburgh Scotland for GBP 226 million pounds in 2009. In March 2011, it acquired the credit card assets of online lender Egg from Citigroup. These moves add to the income and cash flow. These moves also address the insolvency of Barclays, and soothe the condition. Yet the process assumes new operational losses. Recall that insolvency plus illiquidity means bankruptcy. The Barclays acquisitions are forestalling pressures of bankruptcy by adding to liquidity in cash flow.

The ING Direct business lost GBP 89 million pounds before tax in 2011. It will be folded into the Barclays retail and business banking division. Some 750 employees will transfer from the Dutch firm as part of the deal. ING said the transaction frees up 330 million Euros in capital on their end. The lender has been selling assets as it seeks to repay the Dutch state aid received during the financial crisis. The Dutch company claims the sale will not affect its core Tier-1 capital ratio, a measure of financial strength. Barclays expects that in order to make ING Direct profitable, substantial investments must be made in transforming it into an internet bank with a full product range. Usually that means cash spent, unsure where from. Research from JPMorgan Chase indicate that a clash could come with the firm's current priorities of strengthening its capital buffers ahead of stricter regulatory demands and repaying state aid.

Another asset sale took place early in 2012. In February, the Dutch financial services company sold its US online bank to Capital One for about US$9 billion to meet European Union conditions for accepting state aid. ING received a EUR 10 billion bailout in 2008, and has repaid EUR 7 billion, plus EUR 2 billion in interest and premiums. Last month, ING sold its Canadian online bank to Bank of Nova Scotia. Their online banking operations in Australia, Austria, France, Germany, Italy, and Spain will continued unaffected. One must wonder if bad judgment is being exercised, since ING generally is a rotting derelict at sea with holes in most every compartment, adrift in the global financial crisis seas. Barclays is taking a big risk, a seemingly bad risk. See the Business Week article (CLICK HERE).

◄$$$ ALLEGATIONS OF SYSTEMIC FRAUD HAVE COME TO ROYAL BANK OF SCOTLAND. WITH THE PUBLIC FOUNTAIN TIED TO THE UKGOVT NO LONGER AVAILABLE, THE BANK HAS RESORTED RECENTLY TO ATTEMPTS TO SWINDLE LARGE PROPERTY BORROWERS. LAST SUMMER THEY USED PHONY A.T.M. GLITCHES TO SKIM ON CASH FLOW. THE R.B.S. FIRM IS NOT SO MUCH A BANK AS A CRIME SYNDICATE NEXUS. THE BIG STATE-OWNED BANK HAS BECOME A CENTER FOR FRAUD OF MANY TYPES. WATCH THE COURT CASES, WHICH WILL MAKE GREAT THEATER. $$$

RBS is being accused of swindling large scale property borrowers in rather obvious glaring attempts to haul in properties in not so complex paper shuffling games. The tactics are more successful in Central America, but not in London. RBS is trying to conduct shell games and title thefts, using classification devices that are almost in plain view. Two separate civil high court actions and one on-going criminal action are on the verge of revealing powerful evidence of concerted efforts within RBS to defraud their own customers. Sources report that at least 15 RBS staff are the subjects of a surveillance operation by the City of London Police, to detect the fraud and to gather admissible evidence. In one or more cases soon to find the courts, RBS is accused of actively working to defraud retail clients with easily visible schemes. The case documents outright systemic fraud within RBS, aided and abetted by local property agents and administrators. Being under UKGovt ownership, the managers might believe they are immune to prosecution, within the shadow of the Fascist state. My contention is that the UKGovt bought a major stake in RBS because it was both bankrupt and the source of deep fraud. RBS is like JPMorgan, Bank of America, and Fannie Mae rolled together, reeking of comparable corruption, but smaller.

Another high profile case involves a hotel redevelopment project using an RBS credit line of GBP 5 million. The project was abruptly halted when suddenly RBS used the opinion of an independent property agent (plain collusion) to massively undervalue the property. RBS used the bogus assessment to designate the hotel a distressed asset, thus declaring the project insolvent. Administrators then colluded to sell the property to the RBS distressed assets division at West Register for the dubious sum of one British Pound. The biggest odor emitted came from the procedure that approved the assessment, reclassification, and move to then seize in sale.

In November last year, entrepreneur developers Innes Berntsen and Chris Richardson initiated High Court proceedings against the NatWest subsidiary of the Royal Bank of Scotland. The plaintiffs claimed wrongful termination of its RBS bank facility for the development of a four-star Kent hotel. The funding was withdrawn nine days before the hotel (built in the 1880s) was due to open after redevelopment. Clearly RBS wishes to seize the hotel ready for business after all the heavy work was completed.

Just two months ago, financial blogger Ian Fraser reported that Royal Bank of Scotland had shifted billions of British Pounds of commercial property debt from its banking book into West Register, its subsidiary repository. With this blatant accounting ruse, the bank avoided declaring losses on toxic loans decreed to have gone bad. With sleight of hand, the bank converted liabilities into assets. Such commercial real estate con games and document shuffling appears to be a primary strategy used by RBS chief executive Stephen Hester in the recovery project to bring the big bank into solvency. Recall the summertime ATMachine glitch (reported by the Hat Trick Letter), which enabled RBS to grab a considerable amount of interest from cash that sat unavailable to its depositor owners. The skim glitch was never fully identified, but it was profitable, or at least generated significant cash flow.

The Slog has posted endlessly about the devious activities in bank accounting by the big London banks. RBS has been fingered several times by the Slog website over the last two years as the most dodgy, toxic, and suspicious banking asset taken on by the UKGovt after the 2008 disaster. Regard the motive for the property fraud, accounting fraud, and customer fraud as being deep insolvency and sitting on the edge of ruin. For every dastardly fraudulent deed caught, expect four or five not detected or brought to light.

◄$$$ MONEY MARKET FUNDS POSE AN IMMINENT RISK. APPARENTLY THE DRAIN CONTINUES ON BANK SECTOR EQUITY. EXPECT THE STRICTURES ON MONEY MARKET REMOVAL OF FUNDS TO TIGHTEN. DEPOSITS AND MONEY MARKET FUNDS ARE THE LAST REMAINING SLAB OF EQUITY SITTING IN THE WRECKED BANKS. THE RISK IS FOR THEM TO BE STUCK, THEN STOLEN, OR CONVENIENTLY VANISHING. QUICK REMOVAL OF M.M.FUNDS BY CUSTOMERS WOULD EXPOSE BOTH THE INSOLVENCY AND CORRUPTION OF THE BIG US-BANKS. THUS THE URGENT NEED TO STOP WITHDRAWALS. $$$

Again, the mass of over $3 trillion in customer money markets has an awkward classification, not bank equity, not invested funds, but important asset for the firm. Some level of desperation is apparent by the Secy Treasury Geithner. Before the meeting of the Financial Stability Oversight Council of regulators, Geithner told members to prepare for harsher money market fund (MMF) reforms even if the SEC remains inactive on the issue. The USDept Treasury and the SEC are at odds. He indicated the likelihood that the largest of the funds could fall under closer USFed supervision if necessary. By that he meant if the bank runs occur from rapid MMF withdrawals. Geithner issued a formal letter to the council member agencies, comprised of the Securities & Exchange Commission, the Commodity Futures Trading Commission, the US Federal Reserve, and other firms involved in financial or markets supervision. In it he asked council staff to begin drafting a formal recommendation immediately, which would be voted on in November. An inner battle is being waged, as SEC Chair Mary Schapiro is moving somewhat aggressively to publish reform proposals. The full SEC commission is not supporting her every wish, thus denying her a majority.

SEC spokesman John Nester revealed the conflict and desperation building. He said, "The Chairman [Shapiro] has long believed that addressing the susceptibility of money market funds to destabilizing runs is a critical piece of unfinished business from the financial crisis. That is why she has advocated for reforms to bolster the structure of these funds. She is very pleased that this important reform initiative is moving forward." The money market funds are situated in big investment banks and mutual funds, subject to SEC directives since not in commercial banks. They are not ordinary bank accounts or certificates of deposit. The SEC will repeat their initiatives. The Investment Company Institute is the trade group that speaks for the mutual fund industry. In late August, Schapiro was forced to back down and concede defeat, but expect it to be temporary. The ICI commented at the time, "We have strongly opposed the structural changes to money market funds under consideration at the SEC, because of the adverse consequences of these proposals for investors, issuers, and the economy."

However, Geithner will press onward since the Syndicate prefers power games not in the public interest. He believes that further reforms to the MMF industry are essential for financial stability. My view is that fast removal of MMFunds would expose the banks for insolvency and corruption. The keyword indicates the desperation to avert a bank run, since the big banks are hollow insolvent dry timber laced with fraudulent vines. He is urging the full council to take action. He wrote, "The Council has both the responsibility and the authority to take action to address risks to financial stability, [even if the SEC] fails to do so." Geithner has often reminded the financial markets generally that the USTreasury guarantee of more than $3 trillion of MMF shares, along with a series of liquidity programs by the USFed, and support from many mutual fund companies, prevented a panic marred by a raft of withdrawals during the ongoing financial crisis. He is full of feces, since narco money laundering saved the big banks during the climax of the crisis. The Financial Stability Oversight Council must decide on the measures directed at non-bank financial institution risk, and whether any large insurance funds should be designated as systemically significant. The firms are not eager to be classified as part of institutional risk, since they had little if any role in the crash of the banking system. Also, such designated firms would require expensive additional safeguards such as additional precautionary reserves and frequent reports, even on-site examinations, by regulatory authorities.

Geithner is relentless, which reveals the urgency in desperation. He regards the MMF industry can potentially pose a threat to US financial stability. This view reinforces the notion that the financial sector is insolvent, and MMFund runs would undercut liquidity, resulting in quick bankruptcy failures. The MMFunds are the last remaining slab of equity. He pursues supervision of such firms by the Federal Reserve, which would give the USFed board authority to impose enhanced prudential standards. He talks of reforms, of protection to investors, of safeguards to the economy. But he is a skilled liar. He wishes to avoid a bank run that results in exposure of deep corruption within the US big banks. See the FOREX Live article (CLICK HERE).

◄$$$ THE NEW F.D.I.C. RULE REVERTS TO $250K IN DEPOSITOR INSURANCE, FROM UNLIMITED CURRENTLY. THE BURDEN WILL FALL ON THE USFED AND ITS VAST BOND MONETIZATION TO FILL THE GAP, OR ELSE NEGATIVE USTBILL RATES COULD ARRIVE. THE NEW RULE WILL PUT MORE PRESSURE ON THE LAST SLAB OF MONEY MARKETS. THE US-BANKING SYSTEM IS STUCK IN A VISE ABOVE A PRESSURE COOKER. $$$

The new banking rules present a small glitch. On December 31, 2012 the unlimited FDIC insurance expires on non-interest bearing transaction accounts. It will then revert back to $250k per account. Currently there is about $1.6 trillion in deposits that fall under this category. The irrepressible Tyler Durden expects virtually the entire amount in new deposit liabilities will have to be created from the QE box, the fountain of bond creation to infinity. The challenge is to foresee how those account holders will react, and whether they will the exit the deposits, once they realize the assets are unsecured bank credit risk. For sure, great pressure will sudden be placed on the money market funds. Durden wonders aloud if a possible consequence might be negative USTBill rates as far as the eye can see. That would cause quite the commotion and controversy, as the massive bank warts would be impossible to conceal. The chart below shows that notional of deposits backed by FDIC unlimited insurance, which would be affected. See the Zero Hedge article (CLICK HERE).

## USDOLLAR DEFENSE

◄$$$ THE UNITED STATES NATION, THE USGOVT, AND THE USECONOMY ARE STUCK WITH THE USDOLLAR THROUGH THE COMPLETE IMPLOSION. ADVANTAGE AND PRIVILEGE HAVE BEEN REPLACED BY BURDEN, BALL & CHAIN. $$$

By virtue of its global reserve status, the USDollar is engrained in international contracts, foreign accounts, medium for savings, and more across the world. The United States as a nation will have greater difficulty is moving away from the USDollar than Greece will in abandoning the Euro currency. The US wishes to create a new Treasury Dollar, a new Republic Dollar, whatever the name. But it cannot. The currency is entrenched across the world in jurisdictions the USGovt cannot begin to control. The extent of US$ lacing within global contracts is broad, extensive, deep, and uncontrollable. It is the great credit card, the device for consumer excess, the great privilege of counterfeit, the open credit line to wage war, the business card of newfound fascism. The USDollar has become a noose and millstone around the nation's neck. It cannot escape its own once dominant currency, due to external factors. Foreigners will not permit the US to make a new better dollar. The American Empire will be strangled by the USDollar, with no opportunity to escape, and eventually suffer a debt default. The Third World awaits the nation, with painfully pathetically little awareness. Within the Dome of Perception, all that is seen is power, strength, and reflections of the past glory days. Not reality.

◄$$$ DEVOTION TO WAR AND CONSISTENT WAR COSTS KILLED THE USA AS A NATION IN A POWERFUL PROCESS THAT BEGAN IN THE 1970 DECADE. THE INTELLIGENCE AGENCIES HAVE THE DOMINANT HAND IN DESTROYING THE NATION. THEY DO NOT SECURE THE NATION, BUT RATHER EXPLOIT THE NATION, EXPAND A PRIVATE SYNDICATE, AND ASSURE THE CERTAIN DOWNFALL. THE ECONOMIC IMPACT IS DEVASTATING FROM GUTTING ITS INCOME SOURCES. DEPENDENCE UPON ASSET BUBBLES AND INFLATION HAS TURNED INTO A WRECKING BALL. THE NATION IS LOST, DECEIVED, BLIND, AND POOR AS IT FORCED TO ACCEPT MONETARY HERESY AND AGGRESSION. $$$

This costly theme is not popular, nor is it even recognized by supposed financial experts. Too many have been co-opted, with purchased brain stems, compromised thought, and accepted dogma. The problem that led to the demise of the American Empire began with the Vietnam War. It was started by the CIA, when the Boyz assassinated Diem and then set up the false flag Gulf of Tonkin event. The Vietnam War was launched, producing a meat grinder of a war where over 50,000 men died, in a war that was not waged to be won. See the Sam City story where warehouses of missiles could not be attacked, on orders from the Chief of Staff. The elite wanted military sales, contract kickbacks, and to capture the Cambodian Triangle narcotics ring. As the years pass, the Jackass opinion is that capture of Asian narcotics was a primary objective in the war. Bear in mind that more bombs were dropped in Laos and Cambodia than in Vietnam, an astonishing fact. The list of extreme ugly events almost all involve the CIA.

The most recent egregious event was the bomb incident in Oslo Norway in early 2011. My research indicated that refusal by the Norwegians to invest their $1.5 trillion sovereign wealth fund in London banks prompted vengeance by the CIA and MI security goons from London, followed by a typical lone gunmen story that reeks of Lee Harvey Oswald deceptions all over again. The US Intelligence groups had a hand in the overthrow of Libyan dictator Qaddafi. The target was the Libyan 144 tons of gold bullion held in London banks, which was stolen and will never be returned. The CIA has grown to become the largest and most dangerous vile criminal organization in modern history. They operate under protection of the USGovt, USMilitary, USBanks, USPress, USPharma, with no checks & balances, no enforcement of law, in a complete orgy of violence, influence, and flexed power.

On an economic slant, the inflation problem started with the Vietnam War impact from USTreasury Bond finance, in monetizing the war costs. The Jackass remembers full well the first $1 trillion in debt after numerous annual deficits were racked up, during my college days. The nation was rocked by the sudden conversion from creditor nation to debtor nation in the 1970 decade. The trickle down from destructive enterprise within the supply chain halts quickly, unlike for constructive enterprise. The job growth and economic development from war (defense) spending is a fleeting illusion. War is often the great infrastructure agent of change. In the US case, it is the cause of capital hemorrhage that has contributed mightily to the ruin of the nation. In the last decade, the Fascist Business Model has spawned the concept of endless war, motivated by endless defense against an exaggerated enemy, that has racked up at least $3 trillion in costs. The benefits are difficult to cite. The ravaging costs are simple to detect. Tens of thousands of paraplegics move around the US without arms or legs, even in special sport events. The trickle down benefit could be that the medical prosthetic industry is doing a banner business. The Jackass is a patriot from the older definitions, based on love of country, devotion to free enterprise and free markets, and conformity to the Constitution. Such direction is now considered terrorist.

The consequences on the economic front were profound and irreversibly damaging. The inflation led to the offshore outsource of US industry, starting with Intel in 1984. Then came important labor union victories, for cost of living raises. Then came the lunatic notion of clean industry directed by the mature advanced sophisticated financial sector. Its only true ingenuity was shown in the ATM machine, certainly not in leveraged exotic contracts. During this time, the environmental movement imposed new costs to maintain clean air. Industry left for Asia. The United States desperately required income sources, but was stuck with the financial fascination that turned into speculation. Individuals began to own retirement accounts, when the USGovt offered tax benefits. The entire movement led to dependence upon asset bubbles. The bust was seen in 2000 with the tech telecom disaster, followed by the housing and mortgage wreckage in 2007, followed by the fatal decline of the US banking sector. The fatality was evident with Lehman, Fannie Mae, and AIG, which gave the TARP fraud and recently the endless Quantitative Easing. The nation is dependent upon Weimar printing press of worthless baseless money, with little realization of its toxic and destructive nature. The nation celebrates free money, having lost industry from devotion to war.

The Wall Street frauds are in the $trillions, but are sustained with no significant prosecution. The wars continue to assure crude oil supply and narcotics production and control in a magnificent display of vertically integrated business in global monopoly. The big US banks are heavily dependent upon narco money laundering to survive, perhaps the dirtiest of secrets kept from the US public.

In summary, the pervasive actions by the US intelligence agency and longstanding devotion to war killed the United States of America. Half of the entire $16 trillion in USGovt debt accumulated since 1960 is from war. The main effects have been inflation, lost jobs, forfeited industry, gutted households, weakened labor unions, constant blather of propaganda by the US press, subservience of the USGovt officials to Wall Street and the Intelligence community, exported bond fraud, global instability, and the flourished enterprise of narcotics monopoly controlled by Langley. The 911 events solidified the power seizure by the US Intelligence helm, in a bloody coup d'etat still not widely recognized. The nation is deceived but awakening. The nation is encouraged to hate whatever enemy is convenient for the day. The ethical and moral fiber of the nation has been lost, a reliable fascist trait. What awaits the vast sprawling security agencies in their ascendancy to power is a fascist state with marxist threads in a martial law atmosphere, better described as a modern sophisticated Third World nation. Next comes the nightmare.

◄$$$ CHINA OPPOSES THE USDOLLAR GLOBAL RESERVE STATUS. CHINA'S CURRENCY FORAY AUGURS GREAT GEOPOLITICAL STRAINS. THE UNITED STATES HAS ABUSED ITS PRIVILEGE. GLOBAL REACTION IS WELL ALONG IN DEVISING A NEW GLOBAL FINANCIAL FOUNDATION. THE CHINESE STRIVE TO GAIN RESPECT AS LEADERS, BUT MUST ENDURE THE RISK OF INTERNAL INSTABILITY THAT COMES FROM A CONVERTIBLE YUAN CURRENCY. THEIR POLITICAL SYSTEM IS AS OUTMODED AS THE USDOLLAR. $$$

How 40 years turns the tables. Let the Jackass state that THE USDOLLAR IS THE GLOBAL RESERVE CURRENCY, BUT IT IS THE NOOSE AROUND THE AMERICAN NECK ON THE GLOBAL GALLOWS. In 1971, then Treasury Secy John Connally famously said "It is our currency and your problem." The quote went down in history, and spawned huge resentment. The comment marked recognition that the United States was fully willing to abuse its position and privilege as custodian to the global reserve. The indulgent nation converted the USDollar into a reckless consumer credit card, and worse, a line of credit for expansive aggressive war in grotesque misadventures.

Frustrated with what it sees as the USGovt malign neglect of the USDollar, China has been effectively promoting the cross border usage of its own Yuan currency, also known as the renminbi (people's money), in trade and investment. The motive is two-fold, both commercial to reduce transaction costs for Chinese exporters and importers, and aggressively strategic. The Beijing leaders have been openly vocal, claiming that the displacement of the USDollar will reduce volatility in energy costs and commodity prices, as well as more importantly removing the exorbitant privilege the United States enjoys as the issuer of the reserve currency. The Chinese strategists consider the post-war international financial architecture China as hopelessly outmoded. It is being scrapped, without much global awareness.

Zha Xiaogang, a researcher at the Shanghai Institutes for International Studies, said Beijing wants to see a more balanced international monetary system consisting of at least the Dollar, Euro, and Yuan and perhaps other currencies such as the Yen and the Indian Rupee. He believes that true competition among major currency issuers and a wider menu of options when investing, trading, or seeking a store of value would better serve the world economy. Zha argued, "The shortcomings of the current international monetary system pose a big threat to China's economy. With more alternatives, the margin for the United States would be greatly narrowed, which will certainly weaken the power basis of the US." The comments by Zha were delivered in a white paper prepared for a seminar in Bahrain this month in the study of currency geopolitics organized by the Intl Institute for Strategic Studies, a London think tank.

The enduring global financial crisis, the existential threat to the Euro currency, the USGovt facing the fiscal cliff, all against the backdrop of the Chinese ascendancy and continued development of other emerging markets, is prompting policymakers in the West to question the current monetary order. Change is in the air for relations with the USDollar. The supposed analytic experts claim no obvious alternative to the USDollar exists for now, but a new trade settlement system is evolving outside the sphere of American and British influence. These experts have their eyes closed to developments.

The Chinese leadership finds itself in a grappling bind. Opportunities clearly exist in using the Yuan currency beyond its borders. The powerful industrial advent of China enables the many bilateral trade deals with major partners across the world. However, change can cause instability within China. The relaxing of capital controls is the main precondition for reserve currency status. Foreigners must be able to reinvest their accumulated Yuan in China's securities markets. They must be able to convert freely to other currencies as needs dictate in other nations. Yet allowing market driven money flows to drive exchange and interest rates would weaken the tight grip held by the ruling Communist Party on main economic levers, potentially sowing the very instability internally to the Middle Kingdom. The financial system has become complex, with abused privilege from lack of US derived income, with consequence to loose monetary policies, with resentment against US hegemony (as seen with Iran), and with accommodated bond fraud in global export. See the UK Reuters article (CLICK HERE).

◄$$$ PANAMA HAS MADE NOISES TO USE THE EURO CURRENCY. THE TINY NATION IS CRITICAL IN THE AMERICAN HEMISPHERE FOR BANKING AND CANAL COMMERCE. IT IS WHERE THE NARCO BANKERS ENJOY DETENTE. $$$

Panama wishes to introduce the Euro as legal tender alongside the USDollar, President Ricardo Martinelli told German Chancellor Angela Merkel during a visit to Europe last week. The leader strives to broaden the currency used in legal circulation, which at present is exclusively the USDollar. The greenback faces competition, as it slowly is isolated before global shun and rejection. My belief is that Panama will abandon the USDollar, revert to the Balboa currency, but widen the Euro usage in banking functions. It will be interesting to observe how the USDollar loses ground in this key spot in the Americas, so close to WashingtonDC and New York, but so far. See the Reuters article (CLICK HERE).

The United States gave up control of the Panama Canal in 1999. In order to create peace among important powerful factions in conflict, the bankers of Panama made decisions to use the USDollar in commerce. Part of the compromise was sending Noriega to prison, not to the execution chamber. Their banks use multiple currencies widely. Look next for the beleaguered USDollar to compete against other currencies in the Latin American banking haven. This is no slouch country, although tiny with 3.5 million people. The city of Panama in the Republic of Panama, as it is referred to by the interior inhabitants, serves as the Swiss banker of Latin America. It contains hundreds of banks, ten times as many as Costa Rica. Panama is where the US Narco money meets the Colombian Narco money, which meets the Import-Export Market money from the Canal.

## IRAN IN PRESSURE COOKER

◄$$$ IRAN IS NOT A THREAT TO THE WEST, AS THE PROPAGANDA HAS HIT HIGH PITCH ONCE AGAIN. ALL PAST CLAIMS HAVE PROVED INCORRECT. ALMOST NOTHING WAS LEARNED FROM THE PREVIOUS DECEPTIVE CHAPTER CONCERNING IRAQ. THE CRIME BY IRAN IS SELLING CRUDE OIL OUTSIDE THE USDOLLAR, WHICH UPSETS THE US-BRITISH EMPIRE. $$$

Iran is not Iraq or Afghanistan. The nation of Iran has 72 million people and a land mass greater than three times that of Alaska. It has three times the population of Iraq, and would be impossible to control from the interior. Its terrain is far more mountainous than Iraq, again a factor in any war maneuver. The alliance with Russia for Sunburn and Onyx missiles makes Iran a more formidable threat, as it can defend itself. Many military analysts believe in the first days of a war with Iran, the USMilitary would suffer a shocking loss of an aircraft carrier group, with thousands of sailors lost. Such view is widely held.

Not that Iraq has been controllable by the USMilitary efforts. History repeats itself in Middle East policy. The accusations against Iran tend to be short clips, flippant remarks, and base accusations with absurd superficiality attached. Few seem to realize that USGovt efforts destroyed democracy in Iran in 1953, as Mosaddegh was deposed and the Shah of Iran was installed, called Operation Ajax. The Peacock Throne permitted broad Western oil firm investment and cooperation until he was in turn deposed. Shah Reza Pahlavi held power for 26 years as the Iranian people forced to suffer under his murderous CIA-trained and supported SAVAK secret police. They extended their reach into Western Europe on a routine basis, murdering Iranian citizens seeking sanctuary like in Germany. The blowback climaxed with the mullahs and ayatollah assuming their own clerical fascism, a direct response to American interference. That interference continues.

The USMilitary working with the USDept Treasury is attempting to economically strangle the nation of Iran, and to isolate them from every other country in the region. The USGovt attempts to take punitive measures against any nation doing business with Iran or its banks. The USMilitary floods Iran from the northern border with heroin, often distributed free, sometimes subsidized, in order to dull the senses of the Iranian nation. This seems like terrorism on its many faces. Past projects have been to cut vital communication lines on the Persian Gulf floor, in order to disrupt Iran. The United States strives to force the world to take the USDollar currency for the oil in Iran. The US spends more on defense, offense, and military activity than the rest of the world combined. The best estimate shows Iran spends 0.8% of what the US and its Allies spend on defense. The Tehran threat is to augment the undercut on the USDollar, little more. Collateral damage to the entire Iran sanctions project is with Israel, which has been running a public and private conflict with the US for several months. The blowback (always to be seen) will be to further isolate and erode the strength and acceptance of the USDollar itself. Damage to the USEconomy will be vast. The Iran sanctions have done more to encourage a global alternative to the USDollar, a movement led by China, than any single action in 20 years.

A seemingly endless stream of unchallenged statements made by politicians and financial leaders contains many media reports awash in misleading narratives, incomplete histories, and outright fiction about Iran and its nuclear program. The American public has a history of being easily manipulated, like that Saddam Hussein had weapons of mass destruction. Nothing was learned, as the same ploy is repeated on a still dullard US population. Either they are dumber than 2003 or do not care, both an indictment aimed at their cerebral powers. If the US enters a hot war with Iran, it is likely to be shocked by the much bloodier, much costlier, and more fierce defense than over-running the helpless Iraqis defenses in the famed Shock & Awe of a Third World nation. The comedy in the US press back in 2003 included a false story of recovered yellow painted bricks, immediately following the actual theft of the entire Iraqi central bank gold supply by the US Intelligence agencies. A contact in Costa Rica named Brian told me his personal on the ground account, as employee for Halliburton, given in detail. The disastrous effects of the $3 trillion Iraqi War against imaginary Islamic extremists and Al Qaeda boogeymen continue like economic lifeblood followed by drivel. Challenge to the propaganda is obviously regarded as being unpatriotic, a nazi trait.

Intellectual self-defense is the way to go, a call to informational arms. The only way to rebuff and dismantle propaganda is to be aware of the truth on which it claims to comment. Jeff Wright of the Christian Stork offers eight postulates to counter the propaganda by the fascist US merchants. See the Who What Why article (CLICK HERE).

1)      Iran is not building nuclear weapons. US Intelligence has concluded that Iran has halted its nuclear weapons program. Several senior Israeli officials admit that no final decision to build a bomb has been made by Iran. These findings echo reports from the International Atomic Energy Agency (IAEA), which has also concluded that Iran is not building nuclear weapons. The US deliberately distorts the IAEA report findings in media accounts. A civilian nuclear energy production program is not easily converted into a weapons program. As a signatory to the Nuclear Non-Proliferation Treaty (NPT), Iran is entitled to enrich uranium to low levels for domestic power consumption and medical treatment, such as radiation therapy for cancer patients.

2)      Iran is not a threat to the United States. The nation of Iran spends 80 times less on defense than the US. In fact, Iran spends 5 times less than the amount allocated by the six sheikdoms of the Gulf Cooperation Council, the major nations of the Persian Gulf.

3)      Iran is not an existential threat to Israel. Their Defense Minister Ehud Barak is on record as admitting that Iran does not constitute an existential threat against Israel, as reported by Reuters. Echo the absent threat perception by Dan Halutz, former Chief of Staff of the Israel Defense Forces and Commander of the Israeli Air Force. Third that position by Tamir Pardo, Director of the Mossad.

4)      The leadership in Iran is not fanatical or suicidal. The US General Martin Dempsey, Chairman of the Joint Chiefs of Staff, regards the Iranian regime as a rational actor, in his words. The Israeli Defense Forces Chief of General Staff, Major General Benny Gantz seconds the view that the Iranian leadership is composed of very rational people. The Christian Science Monitor reported that Israeli Army Chief doubts Iran will build a nuclear weapon, as recently as April 2012. The portrayal of a vicious Iranian theocracy studded with suicidal regiments is pure bluster.

5)      Politicians and media stenographers have been claiming Iran is on the verge of developing nuclear weapons since the mid-1980 decade. The call is repeated every several years, never proved correct. Nobody seems to care about the string of errors. See the USHouse Republican Research Committee in 1992.

6)      The American and Israeli security establishments are against any new military front. The US Secy State Hillary prefers to watch Iran actions, not words, as she rejects Netanyahu calls to set red lines (lines in the sand to defend). Former Internal Security Chief Yuval Diskin believes any attack would encourage Iran to develop a bomb all the faster. In other words, they do not own the bomb now. Former Mossad Chief Meir Dagan calls any future Israeli Air Force strike on Iranian nuclear facilities the stupidest thing he has ever heard, as reported by the Haaretz.

7)      The American and Israeli people are against any new military front. In the United States, a poll concluded that 70% of Americans choose diplomacy over military force to end any potential Iranian nuclear ambitions, reported by Christian Science Monitor. In a Haaretz poll, 58% of Israelis oppose a unilateral strike on Iran. In fact, a similar Haaretz poll indicated that only 27% of Jewish Israelis are in favor of a unilateral strike on Iran. Although a majority of Israelis view Iran nuclear program as more immediately dangerous than their American counterparts, polling indicates they are opposed to a unilateral strike initiated without American support.

8)      An Iranian nuclear weapon would be assured if the US or Israel attack Iran. The Former CIA Director Michael Hayden within the Bush Admin stated that even a brief bombing campaign would guarantee that which we are trying to prevent, an Iran bent on building a nuclear weapon. With so much evidence solidly against their position, US and Israeli hawks have become increasingly strident in their appeal to violence as a means of ending the Iranian nuclear threat. They dominate the news networks, not reason, and surely without facts. The Israeli Air Force raid on the Iraqi Osirak nuclear reactor in 1981 is cited as a precedent to emulate. The comparison is strained if not distorted. What is left out is the conclusion made by US Intelligence, that the 1981 attack did not stop the Saddam nuclear weapons program. It accelerated it.

◄$$$ SANCTIONS ARE TAKING THEIR TOLL ON IRAN, THEIR ECONOMY, THEIR SOCIETY. THE IRANIAN RIAL CURRENCY IS DROPPING LIKE A ROCK. HYPER-INFLATION HAS HIT IRAN. LOOK OUT ZIMBABWE FOR A RIVAL IN MODERN HISTORY TO THE WORST INFLATION ON RECORD. $$$

Using new data from Iran foreign exchange black market, the national monthly inflation rate in Iran has reached almost 70%. This qualifies as hyper-inflation of the most viral order. The Rial currency death spiral is wiping out the its purchasing power. Steve Hanke and Nicholas Krus of the Cato Institute report that 57 documented cases of hyper-inflation have occurred in history. The most recent struck North Korea in 2009-2011. However, nothing came close to the devastation in Zimbabwe, where the magnitudes reached orbit level in the second highest hyper-inflation ever recorded in the world. The worst on record is Weimar Germany preceding the World War II. See the Zero Hedge article (CLICK HERE) and the UK Guardian article (CLICK HERE).

◄$$$ THE SWISS FIRM VITOL HAS CONTINUED TO TRADE IRANIAN FUEL OIL, SKIRTING SANCTIONS IN DEFIANCE. THE SWISS GOVT DID NOT SIGN ANY DEAL ON SANCTIONS. SO FAR NO RETALIATIONS. $$$

Vitol is not a household name, but it is the world's largest oil trader. Vitol continues to buy and sell Iranian fuel oil, undermining the US efforts to choke Iran. Last month the firm purchased two million barrels of fuel oil from Iran and sold it to Chinese traders. The transactions were confirmed by Reuters interviews with 10 energy industry sources in Southeast Asia, China, and the Middle East. A spokesman for Vitol issued a curious statement that explained its complex circumvention with a Bahraini subsidiary company and a non-Iranian counter-party. The Swiss-based Vitol is not obliged to comply with a ban imposed in July by the European Union on trading oil with Iran. The fiercely independent Swiss Govt did not join the EU and US sanctions against Tehran. The company earlier in the year stopped trading Iranian crude oil from its main European offices before the July 1st embargo deadline. However, they are crafty. They switch off tanker tracking systems. They transfer cargo from ship to ship. They blend the oil with fuel from another source to alter physical specification. The movement continues.

The elusive measures taken by Vitol occur under the guidance of CEO Ian Taylor, a Briton. He has close ties with the British Prime Minister, who is a stern critic of Iran and their mythical multi-lateral nuclear program. As a result of the European Union ban, the four largest Iranian oil buyers (China, India, Japan, South Korea) have reduced their imports by at least 20% to avert sanctions. The backside risk is from insurance coverage. Vitol uses Ticen Ocean to store Iranian oil, whose vessels are insured by the North of England P&I Assn. The EU oil embargo bans EU insurers who underwrite around 90% of the world's tanker fleet to cover ships carrying Iranian oil. So far, Vitol is skipping along free of insurance cutoffs. See the Yahoo Finance article (CLICK HERE).

◄$$$ FINGER POINTED CONTINUES AT IRAN FOR HACKING BIG US-BANKS. THE HAND DOING THE POINTING IS MORE LIKELY THE US-INTELLIGENCE AGENCIES. THEY HAVE GONE WILD WITH BANK ROBBERY ACROSS THE WORLD, INCLUDING THE UNITED STATES. SET UP FOR NEXT BIG BANK EVENT AND FALSE FLAG PAINTED. $$$

Nobody seems to challenge wild accusations and charges that Iran is hacking the large US banks. The charges are being made by the US Intelligence agencies. When stories fingering the blame on Iran for the bank hacking emerge, the news networks are hardly a source of objective investigation, since under the dominant thumb of the intelligence community. My best sources indicate that the hacking and private account thefts are being done by the US Intelligence agencies themselves. They have had numerous successes in the disruption of Middle East banking systems. They had a leading hand in the Stuxnet virus injected into the Iran nuclear facility systems, with a strong second hand by the loyal feisty small ally located on the Southern Mediterranean. See the Finance Yahoo article (CLICK HERE).

More bank hacking has taken place on US shores. The client account websites of Wells Fargo, PNC Bank, and US Bancorp were hit by long drawn out slowdowns in late September of the same type cyber attacks that hit JPMorgan Chase and Bank of America in the previous week. The symptom was unusual and coordinated high traffic volume designed to slow down the system. So the event was more like a mudslide than a robbery. Perhaps it was a test of system defenses. The lightest volume of delay reports came for PNC. The result was widespread denial of service. The origin of the attacks is not clear, a symptom of their sophistication. The attacks are part of a larger game that has turned into a global security arms race. A group called Izz ad-din Al qassam Brigades supposedly claimed responsibility for the attacks on Bank of America and Chase last week on PasteBin, a forum commonly used to boast or threaten. See the Fox Business article (CLICK HERE). My personal guess is that with likelihood under 5% an Islamic outfit did the deed. Naming an Arab brigade is incredibly easy. They might have blamed the Easter Bunny or the Grinch just as easily. It is an insult to one's intelligence.

By far the leader in this arena is the US Intelligence agencies, along with the security agency for the small ally nation on the Southern Mediterranean. Two different sources inform the Jackass that the source is Langley and the CIA, which are preparing to steal US private accounts with full impunity. They will do it because they can, and furthermore, they enjoy the challenge and are having fun, much like a video game challenge by sick bastards. The story is that the security agencies are working on a grand plan to cause a systemic bank shutdown, during which private accounts will be stolen, bank holiday will be declared, and vast restructure will occur, with blame given to those dastardly mean Islamic guys. The evil personified is within the US shores methinks.

## SAUDI TURMOIL & INSTABILITY

◄$$$ AN ISLAMIC REVOLUTION IN SAUDI ARABIA IS A SUREFIRE WAY TO SEND OIL PAST $200 A BARREL. A GERIATRIC SHAKY ROYAL FAMILY, INTERNAL EXTREMISTS, THE RISING COST OF LIVING, AND AMPLE INFORMATION FLOW COMBINE WITH A GROWING POPULATION THAT USES MORE ENERGY DOMESTICALLY TO MAKE FOR AN UNSTABLE SITUATION. THESE FACTORS STAND APART FROM THE RECENT ASSASSINATION OF PRINCE BANDAR. THE SAUDI REGIME HAS MANY THREATS, THE BIGGEST BEING THE GROWING DESIRE FOR REFORM INTERNALLY. THE CROWN PRINCE SALMAN IS MORE LIKELY TO ESCAPE FOR A MANSION IN SPAIN THAN LEAD THE REFORM MOVEMENT. THE VICTIM WILL BE THE PETRO-DOLLAR AND THE CRUDE OIL PRICE, USED AS A WEAPON. THE LATEST NEWS IS A SHAKEUP INSIDE THE SAUDI MILITARY. $$$

The oil world would be shaken to its core by a revolution in Saudi Arabia. A coming leadership crisis is becoming all too likely in the shaky Saudi kingdom. The nation faces major economic challenges as dramatic increases in social spending and domestic fuel consumption devour the innate wealth of the kingdom. Saudi Arabia represents the heart of the Middle East, which has suffered shocks of instability as the Arab Spring continues to challenge longstanding autocratic crusty leadership. A reality check shows the king and his successors are aging rapidly and incapacitated in a royal chambers that is full of competing contenders. The seculars eye warily the Islamists, who wait outside the door. Any failed succession battle in the House of Saud would end up destroying the regime, ushering in an Islamist age in Saudi Arabia. The price of crude oil would shoot to $150 per barrel, then to $200 per barrel, maybe higher if radical Islamics become greedy and wish to show their power.

The succession to the throne is fraught with problems and challenges. The geriatric successor would be both weak and soon ready to pass on. Although Crown Prince Salman is next in line to the throne, at 76 years of age he lacks experience. No doubt he would be challenged by regime opponents. He is next in line, not because of ability or experience, but because his older brothers all died. Hardly a prescription to stabilize the nation under new assaults. The remaining runt of the litter is least trained, least educated, least groomed, least prepared to lead. Saudi holds the key to the Petro-Dollar, which is the key to the USDollar. Salman would lack the energy or savvy to enact significant reforms necessary to keep the regime in power.

Some tough endemic problems challenge the world's biggest oil producer, namely high unemployment, a corrupt bureaucracy, a crippled economy, a weak education system, and a society full of frustrated youth. The Saudi royals kept the money mostly for themselves in foreign bank accounts, rather than to lift their society with education and wide opportunity. The nastiest theme in the last decade has been young royals appropriating business property under threat of imposed illegal taxes or outright threats, offering 10% of property value to buy in blatant extortion. The three primary pillars that have long supported the royal family are also weakening. 1) Significant oil revenues, which have long been used to foster public support, are being depleted by increased domestic demand. 2) The Wahhabi Islamic establishment that supported the House of Saud is increasingly fractious and is losing credibility. 3) And the royal family struggles to maintain its sturdy facade after losing two crown princes to old age in recent years.

The Middle East is in turmoil, with stress on foreign relations with its neighbors. Lastly, the Saudi Arabian longstanding alliance with the United States is in distress, shaky at best and crumbling at worst. The curious new ingredient toward instability is the freer flow of information. No longer can the regime control information, as the internet connects young Saudis with the rest of the world. They question the rules of their society and regime, demanding reform. See the Safe Haven article (CLICK HERE) on the summer of Saudi Discontent.

A quick update, as the Saudi Army has suddenly done a quick reform to avert an internal revolt. The USGovt calls it a soft revolution. Things are moving quickly in Saudi Arabia. This is just one more signal of the ground shaking in the sand kingdom. The House of Saud is seeing its final days. See the PressTV article (CLICK HERE).

◄$$$ THE CHARADE OF THE SAUDI COVER-UP FOR THE BANDAR ASSASSINATION CONTINUES. PRINCE BANDAR WAS ASSASSINATED BY HEZBOLLAH. THE HOUSE OF SAUD MUST BE VERY TENSE INSIDE, WITH NOBODY SAFE. THE HOUSE SHAKES BEFORE IT FALLS. WITH IT WILL GO THE PRIZED PETRO-DOLLAR STANDARD. THE SAUDI REGIME IS CONCOCTING A NICE STORY ABOUT A SMOOTH TRANSITION FROM THE DEAD MAN. A DECEPTIVE TRANSITION APPEARS IN THE WORKS. $$$

What a charade is taking place inside Saudi Arabia! The obedient Western press networks are nowhere to be seen scooping the true story. The influential and shrewd Prince Bandar Bin Abdul-Aziz (minister of security) has been dead well over a month. He was killed in retaliation for the Syrian royal family murders. He is being relieved and replaced in the staid House of Saudi. Next look for Prince Bandar reported to have died of a heart attack or slipped with a fatal accident in his shower, or while entertaining a harem. It should be noted that he served as Chief of General Intelligence as well as Secretary General of the National Security Council. The drawn out cover-up of Bandar's assassination shows clearly that no member of Saudi royalty is safe, that HezBollah has an extensive reach, that the foundation of the Petro-Dollar is indeed fragile, and that the Western press is a pathetic tool for the Syndicate. See the Tactical Report (CLICK HERE).

The Ghost of Prince Bandar is replaced in Saudi theater. The official statement by the rattled House of Saud is as follows, "Saudi King Abdullah issued on October 5, 2012 a royal decree whereby he relieved Prince Bandar Bin Abdulaziz of his position as Deputy Chief of General Intelligence for Intelligence Affairs and appointed General Yusef Bin Ali Al-Idrisi as Deputy Chief of General Intelligence in his place. The following 501-word report sheds light on the subject and tells what about the position of Chief of General Intelligence Prince Bandar Bin Sultan Bin Abdul-Aziz." A key error since Bandar was not deputy chief, but rather chief. Amateur hour in Riyadh. Keep the deception going until the royals can relocate elsewhere in the Persian Gulf, perhaps even on the Spanish coast for retirement.

Another official Saudi press release read, "Chief of the Saudi General Intelligence Prince Bandar Bin Sultan Bin Abdul-Aziz, who also acts as Secretary General of the Saudi National Security Council (NSC), is said to be working to reinforce the role of his half-brother Prince Salman, who acts as his Assistant for Security and Intelligence Affairs at the NSC." They are preparing the stage to announce the passage of security power to the surviving half brother. Neither Bandar nor his half brother are of the geriatric Saudi type. The top leadership in the House of Saud is aging, frail, and losing their grip. Since Prince Bandar was assassinated in August, Saudi Arabia continues to plant stories that he remains alive. However, the new Saudi game plan appears to be the transition to Prince Salman with Bandar having been removed due to some yet undetermined incapacity or natural death.  See the Tactical Report (CLICK HERE).

## THANKS

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