## EUROPE CAPTURED CONFRONTS USGOVT
◄$$$ EUROPEAN UNION MOTION TOWARD TRADE UNION GOES COUNTER TO THE POPULAR DESIRES, ACCORDING TO ELITE PLANS... THE TTIP IS A FASCIST STRUCTURAL PLAN. $$$
A recent meeting with officials of the European Commission were highly revealing, extremely informative, and disturbing beyond words. On the main agenda is the Trans-Atlantic Trade & Investment Partnership (TTIP), the controversial treaty currently under negotiation between the EU and the United States. As Trade Commissioner, Cecilia Malmstrom occupies a powerful position in the apparatus of the EU. She heads up the trade directorate of the European Commission, the post previously given to Peter Mandelson of the UK. This puts her in charge of trade and investment policy for all 28 EU member states. Officials under her command are currently trying to make final the TTIP deal with the United States. When put to her, Malmstrom admitted that a trade deal has never inspired such passionate and widespread opposition.
Yet when asked how the commissioner could continue her persistent promotion of the deal in the face of such massive public opposition, her response came back icy cold. "I do not take my mandate from the European people." Cecilia Malmström takes her mandate from EU commissioners. They are supposed to follow the elected governments of Europe, but they do not. The European Commission is carrying on the TTIP negotiations behind closed doors without the proper involvement of European governments, surely not members of Parliament or representatives of the public. No debate is permitted. Over 50,000 British and over 3 million Europeans oppose the trade union, with demonstrations having been organized and carried out in dozens of European cities. The EU Commission has been a mini-dictatorship in design and practice, from its inception. The trade union pact is a fascist plan to seize control of resources, governing bodies, and conflict resolution. All resources would be put under corporate command. This is an Elite Fascism Foundation in progress that will subjugate the masses as debt slaves. It must be interrupted. See the UK Independent (HERE).
◄$$$ GERMANS ARE GROWING VERY ANGRY, FEELING BETRAYED BY THEIR LEADERS... THE EVIDENCE IS IN VITRIOLIC DEBATE, AND NOT IN CARTOON EDITORIALS BUT IN ACTUAL GALLOWS IN FRONT OF GOVERNMENT BUILDINGS. $$$
A Hat Trick Letter client from Germany wrote, "This is a very dangerous trend and political movement that is developing there, fueled by stupid politicians who have made a series a damaging decisions. They follow the USGovt lead, to the detriment of the German nation." Two leaders targeted in the photo are Siegmar Gabriel and Angela Merkel. The latter is well known as the German Chancellor. Gabriel has served as Vice Chancellor of Germany since 2013. He is also the minister for Economic Affairs & Energy. The popular sentiment inside Germany is turning emotional with heightened anger. The industrial sector is already in firm opposition to the ruling politicians, who are in the banker cabal pocket.
◄$$$ THE GERMAN FOREIGN MINISTER IS ACTIVELY WORKING WITH PUTIN... GERMANY WILL BE WORKING WITH RUSSIA ON REMOVING ISIS STRONGHOLDS... IT IS A MAJOR TWIST ON THE GEOPOLITICAL STAGE, WITH NEW DANCE PARTNERS... THE JEALOUS AMERICANS EYE THE DANCE, AS THE OFFICIAL DECLINE OF AMERICAN MIGHT IS IN PROGRESS... THE CRITICAL EU SANCTIONS AGAINST RUSSIA ARE UP FOR RENEWAL VERY SOON, AND MIGHT NOT BE CONTINUED (SYRIAN FALLOUT). $$$
Following news of the initial Russian Military air strikes in Syria to clean up the ISIS strongholds, EU President, Jean-Claude Juncker declared "It is becoming more apparent the United States is either unable or unwilling to stand up to their promises in the war against terror. This raises questions to all of Europe,like what is their end game? Why such outright deceit? What have the Americans been doing in Syria for the past four years?" The rhetorical questions make a statement that the US is seen as the primary terror merchant in the Middle East, and has been engaged in deep deceptions and deceit with its European allies. In Germany, Juncker stated that Europe must treat Russia with more decency, improve the relationship, and not let EU policies be dictated by Washington. He actually claimed the US needs to keep its influence out of EU relations with other countries. He urged the building of a more practical relationship with Russia, and an end of the new status quo of hostility. These are extremely defiant words by a top EU official. The EU-Russia relations have deteriorated since the EU imposed sanctions on Russia for its alleged role in the Ukrainian conflict, under the direction of the United States. Curiously, the USGovt and Israel were the key players behind the Kiev coup d'etat, admitted by Victoria Noland. The withdrawal of weapons is part of the Minsk agreements, which was agreed upon by the leaders of the Normandy Four, namely France, Germany, Ukraine, and Russia, the truce accord forged in February. The deal required a ceasefire, a weapons withdrawal, constitutional reforms, legislative recognition of a special status for the unrecognized republics, and release and exchange of prisoners on an all-for-all basis.
The USGovt has not participated in any resolution from the Minsk Agreements. Any lasting truce was only reached in late August. Kiev and the self-proclaimed Donetsk and Lugansk republics maintain the armistice has been holding since September 1st, although both sides accuse each other of sporadic violations. The Kremlin continues to stress the importance of direct dialogue between Kiev and emissaries from the Donetsk and Lugansk Republics. President Vladimir Putin told CBS 60 Minutes at the end of September that all countries need to respect Ukraine's sovereignty. "At no time in the past, now or in the future has or will Russia take any part in actions aimed at overthrowing the legitimate government. Moscow would like other countries to respect the sovereignty of other states, including Ukraine. Respecting the sovereignty means preventing coups, unconstitutional actions, and illegitimate overthrowing of the legitimate government." His comments are directed at Washington, the central HQ of the exceptional nation and home of the global war room aimed at destabilization. The EU sanctions against Russia are up for renewal at the end of 2015, although opposition has been heard in numerous locations. The reverse sanctions imposed by Russia on agricultural items has been brutal on Europe. In the aftermath of the Syria-ISIS deceptions by the United States, Europe might abandon the US destructive path on sanctions and seek renewed repaired Russian relations. See All News (HERE).
◄$$$ RENOWNED GERMAN JOURNALIST BREAKS RANKS, SLAMS MEDIA PORTRAYAL OF RUSSIA... THE UNITED STATES STRIVES TO PROMOTE FRICTION, WITH A STATED OBJECTIVE TO PREVENT A COOPERATIVE RELATIONSHIP BETWEEN EUROPE AND RUSSIA... WINDS ARE SLOWLY SHIFTING WITH MORE GUSTO IN THE GERMAN NATION... THE PRESS BIAS HAS BECOME A POINT OF DEBATE... GERMANS SEEK RENEWED POSITIVE RELATIONS WITH THE RUSSIANS. $$$
Gabriele Krone-Schmalz is a German broadcast journalist and author with an academic background in Eastern European history and political science. She is the author of several books on Russia and currently works as a freelance journalist. She is a highly recognized and renowned intellectual, a public figure. The scene was a recent launch in Hanover of her book, "Understanding Russia: The Battle for the Ukraine & the Arrogance of the West." The focus came to the endless demonization of Russia in the German media, with implied loss of democratic values in the German media industry. Krone-Schmalz argued in favor of a more moderate and understanding position on the country, while calling for higher professional journalistic standards in Germany. The journalist was especially critical about the coverage of international topics. The people are frustrated, since their views are not reflected in the media landscape. They object to claims of armed Russians on every corner. She warned of extremism, which is what the Jackass regards fascism to foment consistently.
Krone-Schmalz stated, "Increasing numbers of people no longer see their views represented in the pluralist media landscape. Should it remain like this we will soon be reduced to viewing our system in a museum. What are we then supposed to make of voting decisions in the Kiev Parliament, subsequent to it being stormed and taken over by armed gangs? What kind of impression does this create on people in Russia and the Ukraine? It then always annoys me how people here in Germany complain about the supposed lack of press freedom in Russia. Today, German foreign correspondents often spend more time judging instead of reporting. Due to technical advances they can now, unlike in the past, produce fast and unsophisticated contributions. Unfortunately there is now less time to conduct thorough research and interview people. It is insufficient to only conduct research on Google. I also miss hearing critical questions from colleagues. Many questions are simply not being asked any longer. We [in Germany] moved very quickly from Gorby-euphoria to Putin-phobia.
The demonization of the current Russian President has a lot more to do with playing politics than it has to do with explaining politics. The German media wants to collectively present a one-dimensional picture of Russia. They criticize it to maintain an image of a Cold War enemy. All the corners of the world are burning. It would be intelligent to involve Russia internationally. The war in Eastern Ukraine could have been prevented had Moscow been consulted early on. Instead we now have a Western sanctions regime in place against Russia in which the German government is complicit. The EU urgently needs Russia as a partner, otherwise Europe will be crushed between the major world powers. However, it is not in the US interest that a prosperous cooperative relationship between Russia and the EU exists. The US makes no secret of this fact, as it is written in their official documents. The media have quite an opportunity to mend relations again." The reality is that Langley and the CIA control the German press networks, dictate its content, and exercise censorship. Recall the Jackass reported story from a year ago, where colleage Donald Pato met a German man who worked as fictional writer for the German press networks. He admitted (even laughed) at conjuring absurd stories with no basis under instructions from his employer at Langley. This is propaganda.
In Russia, the biased attitude from the German media is widely recognized. Krone-Schmalz is often asked why Germany allows itself to be used as an instrument of US foreign policy. During discussions with German media participants, the writer analyst heard how upset they were upon seeing how their contributions were edited and reconstructed. A vast manipulation of words is ongoing, basic censorship. She cited the flight MH-17, where media headlines screamed that a Russian BUK was responsible before any investigation. The combination of many such deceptive subtleties have an impact, the journalist noted. The onslaught is constant. Every week a new negative or misleading article about Russia tends to appear in the German media. The writer analyst personally experienced in her own interviews in which she participated, as they were blocked from appearing in German newspapers by media executives. She claims far more objective reporting with live broadcasts and critical interviews are presented in Russia. Such programming would never be shown in Germany.
Krone-Schmalz prefers cooperation with Russia to solve problems. The global state of political affairs makes cooperation with Russia even more urgent. Previous Federal German Republic politicians such as Konrad Adenauer (visited Moscow in 1955) or Willy Brandt and Egon Bahr (change through rapprochement) did not cave in to pressure from Washington. Past German leaders acted in the German national interest. No longer, as the EU dominates, surely under the US thumb. She calls for a thaw in political relations. Unfortunately repair is very difficult because Russia has been thrown out of many institutions such as the G-8. The NATO-Russia Council was suspended. The platforms for resolution are being broken, not mended. See Russia Insider (HERE).
The Voice added some brief comments. "The only nation the Chinese trust are the Germans. Important change will surely come to Germany. It is all about timing. The Russian-German link will eventually be re-established. It will happen by default. Ever since 1945, the United States has strived to make Germany their prison bitch." The Jackass has some thoughts. It is horrendous deplorable and unconscionable to see Germany turned into a US whore house, a USMilitary staging ground, a US narcotics depot, and an Arab shit-hole. It is surely an occupied nation, with the vast Ramstein Air Base as the nucleus of NATO stations. The Germans are not of a defeated mentality. They are an energetic dynamic indefatigable innovative irrepressible fierce type. They always seek win-win relationships in the last three decades. They will rework the Russia link, then the total Eastern link. They will dismiss the leadership crew, when the failures hit more broadly. The main question is how much damage the German people and their industrial captains will permit by the banker-led politicians. The banker cabal is observable in their press, their military defense contractors, their security apparatus, and even in their pharamaceutical industry. It is a cancer that must be removed.
## TURKEY AS UNSTABLE HINGE SWING NATION
◄$$$ TURKEY IS CLOSE TO ABANDONING ITS USGOVT SUPPORT OF ISIS AGAINST SYRIA... TURKEY FINDS ITSELF ALONE AS RUSSIA'S PLAN CONTINUES TO JOIN FORCES WITH THE SYRIAN ARMY, IRANIANS, IRAQIS AND KURDS AGAINST THE RECOGNIZED TERRORIST ENEMIES... TIME IS RUNNING OUT FOR ANKARA AND ERDOGAN. $$$
"If you are not at the table, you are on the menu." This sharky Wall Street expression seems applicable to the situation of Recep Tayyip Erdogan today. The Turkish leader, often regarded as a US puppet, is in precarious shape as isolation grows. Some sharp analysts predicted he would become the fall guy for the demise of ISIS, which was supported by Erdogan's Islamist Turkish Govt. He is merely an actor on stage, a hired hand for the super-terrorist group's true patrons in the Persian Gulf Arab capitols, London, Paris, and Washington. The Western control rooms created ISIS, and Erdogan was convenient, since closely located to Syria on its border. The Turks and Kurds in Northern Iraq are age-old adversaries. The leader is destined for a fall. He was once a useful globalist dupe with neo-Ottoman delusions of grandeur fueled by the Muslim Brotherhood. The departure of Erdogan might be from the domestic voter ballot box, but chances are rising it will be from a Turkish Military coup.
For many reasons, Turkey could not afford a direct conflict with Russia over ousting Assad from Syria. The Ankara leaders would likely seek a face saving exit. At risk are Turkish industries and power grid, which rely upon 20 billion cubic feet of annual gas imports from Russia. The myriad Turkish farmers, tour operators, and resort owners are not prepared to sacrifice their lucrative trade with the Russians for the sake of the USGovt NeoCon belligerents. The Turks have a recent history of accommodating the Russians, even though providing lip service to Washington. The Turks had not managed to impose a single safety inspection on Russian Military cargo along passage through the Bosporus en route to the Russian Naval base in Tartus. In fact, the Turkish Military has been trying to diversify the country's weaponry to include Russian and Chinese armaments for some time. The Jackass was not supplied with the source of this article, but it was valuable.
◄$$$ UNSTABLE TURKEY STANDS RIPE FOR A MILITARY COUP, AS RUSSIA RESHAPES THE MIDDLE EAST ON THE NORTHERN FRONT... THE TURKS ARE PRACTICAL AND WILL CHOOSE TO CONTINUE TO ENJOY THEIR REGIONAL NEXUS ADVANTAGE... THEY WILL TURN EAST, FASTER IF ERDOGAN DOES NOT WIN RE-ELECTION... THE SCATTER OF ISIS GUERRILLAS MAKES FOR A SAUDI NIGHTMARE, SINCE MANY RETURN TO THEIR SAUDI HOMES... THE FALL OF BOTH SAUDI ARABIA AND TURKEY WOULD CREATE MONUMENTAL GEOPOLITICAL CHANGES, ALTERING THE GEOPOLITICAL BALANCE... TURKEY IS THE NEXT FAILED STATE IN THE MIDDLE EAST. $$$
Russia has assembled the Coalition of the Righteous and is directly fighting terrorism in the region. The Saudis and other Gulf Emirates face the prospect of the US cutting off ISIS support, for fear of greater exposure. Their patron abandoned them as sitting ducks on the battlefield, the slaughter ensuing. A few thousand guerrillas have fled Syria for Jordan, a back door for return to Saudi Arabia. Trouble could lie ahead for the Saudi Royals, who have in the recent past suffered terror hits by the ISIS group. In perverse manner, some analysts are starting to call ISIS the Arab NATO, but all hidden from open view. Support by the Gulf Emirates has been enormous, now suddenly tenuous. Their paranoid fantasies of Iranian-Shia encirclement are probably kicking into high gear right now, as the map confirms the threat as creeping reality.
Already stretched to the limit, the Turkish Military cannot manage an emboldened Kurdish insurgency that is strengthened by Russian, Iraqi Kurdish, and Iranian support. An independent Kurdish state might be in the offing, a payoff benefit from the Russian action. At risk are Turkey's territorial integrity, the Eurasian energy nexus plans, and even Turkish statehood itself. The Russians forced the USGovt war planners to find something credible on the ground to support, and Washington turned to the Kurds. They are the only effective fighting force not linked to ISIS or al-Qaeda. The move was precisely the result Turkey had wanted to avoid. It has left Turkey far more vulnerable. Furthermore, Russia humiliated Turkey by challenging Turkish fighter aircraft inside Turkish airspace, leaving NATO to protest loudly. Nonetheless the US and Germany have deactivated Patriot missile batteries inside Turkey, ostensibly at Incirlik. The missiles are the only weapon system that represents a threat to Russian fighters. The decision was made despite urgent Turkish requests to leave them in place.
The Turkish leader Erdogan sees his final days of his awkward wayward regime. In summary, Erdogan now contemplates American heavy weapons in the hands of Syrian Kurds at their border. He foresees the end of Turkey's ability to provide air support for Sunni rebels in Syria. He watches a Russian campaign to lay waste to the Sunni opposition, including Turkey's assets in the field. Erdogan observes a collapse of his majority in Parliament. It seems Turkey is as vulnerable as it is expendable.
Prudence dictates that Turkey avoid provoking Russia by prompting it to play out this dangerous scenario. They play an extremely dangerous game by supporting the US-led ISIS entire front and strategy. Therefore, the Turkish Military could realistically be pushed towards acting on shelved plans for a coup, in the event that the unreliable maniac Erdogan continues to press ahead with his provocations against Russia. In fact, a post-coup Turkey might actually be very beneficial for Russian-Turkish relations, since the country would finally have a capable enough leadership in power that understands the essence of the bilateral partnership working toward maximum mutual advantage. The post-coup Turkey would include a nexus for the Gazprom pipelines, even a de-facto disengagement from NATO. Be sure to know that the Incirlik Air Base serves as the primary heroin depot for the USGovt's Afghan supply route. It would be forced to rely upon Germany to a greater extent.
The reader must never fail to remember that Turkey is already very close to a military coup here and now, but that the anti-Russian agenda being pushed by the Erdogan government might very well be the point that breaks their patience and pushes it to carry out its plans. The regime change in Ankara would be entirely self-inflicted and with no external party to blame, only policy towards Russia and ISIS. The future could actually feature Turkey as a main cog in the multi-polar community of Eurasia, and the Eurasian Trade Zone. See Oriental Review (HERE) and Asia Times (HERE).
EuroRaj offered some excellent comments, since this region is his home area. The following are his thoughts, my edits. The above analysis is spot on and accurately reflects the internal situation of Turkey. The Turkish Military by itself has had no role to play with the assistance being provided to ISIS out of Turkish territory. All such ISIS support was a misguided private adventure undertaken by Erdogan and his cabalist supporters. They have been permitting the USGovt to use their Ankara Embassy as ISIS control center, the war room. The military could possibly step in, if they cross a few red lines. They prefer the natural process to unfold. There are elections slated for November 1st. If Erdogan wins, he will turn East in small steps from popular mandate. If he loses, the new leadership will turn east much faster. The Turks are not stupid. They realize the geographical location that they have been blessed with and how energy and trade routes flowing through Turkey can be vastly beneficial for them. To undertake a military adventure is folly. On the other side, the Saudis have only one savior in waiting, namely China. The Pakistanis and Egyptians, the other two armies who can protect them, are leaning with China and Russia already. Once the Turks desert the Saudis, they will be left hanging in the wind and will be forced into China's arms. A black swan is coming to the land of the black gold, and it flies onto a hot Turkish pond.
## CHINESE RMB GOES INTERNATIONAL
◄$$$ THE CHINESE RMB CURRENCY WILL CHALLENGE THE USDOLLAR AS A TRADE PAYMENT STANDARD... THE ROLE WILL SERVE AS A TRANSITIONAL STEP, SINCE THE ULTIMATE GOAL IS THE HARD ASSET WITH NO DEBT ASSOCIATION (THINK GOLD)... THE CHINESE WISH TO INSTALL A GOLD CURRENCY AND FINANCIAL STANDARD, BUT ARE PREPARED TO USE THE RMB IN A MORE SMOOTH TRANSITION. $$$
It is really a sort of zero-sum game. The more inroads the Chinese RMB makes in global trade and banking reserves placements, the less the USDollar will be used for trade and banking. The integration of the RMB goes hand in hand with removal of the USDollar as global reserve currency. The RMB in the Jackass view is a key transition tool toward installing the Gold Standard in its full glory. The toxic USDollar has destroyed the banking system, the economic capital structure, and the confidence in money. QE is the most destructive monetary policy in recent history.
◄$$$ BEIJING ISSUED ITS FIRST GOVERNMENT BONDS OUTSIDE CHINA, THE LANDMARK EVENT OCCURRING IN LONDON... THE RMB WILL ENJOY A RISE IN LIQUIDITY, THE SEEDING PROCESS MOVING ALONG GLOBALLY... THE LONDON CENTRE IS LAGGING BEHIND FRANCE AND GERMANY IN RMB TRANSACTIONS. $$$
The People's Bank of China (PBOC) has issued its first offshore Yuan bonds in London. The bonds are expected to raise CNY 5 billion (=US$787 mn), offer an interest rate of 3.1% and mature in 2016. Industrial & Commercial Bank of China (ICBC) and HSBC are joint global sponsors for the deal. It is the first time Chinese Govt notes have been issued outside China, a significant event. The bond yield has attracted attention, since far higher than US, UK, and Euro sovereign bonds. The step is expected to aid in the internationalization of the RMB currency, to further seed the offshore currency market, and to facilitate cross-border trade and investment. The event demonstrates the confidence Beijing leaders have in the City of London as a leading RMB hub for future activities. It also demonstrates how Beijing will use London to further bring the US into line on reform initiatives of global importance. Expect the RMB to enjoy a boost in liquidity. The central bank's announcement coincides with the first state visit ever by Chinese President Xi Jinping to the United Kingdom. See Russia Today (HERE).
The growth of these RMB transactions is imposing in Europe. The continent represented 10% of the world transaction volume in RMB between July 2013 and July 2014, outside China and Hong Kong. In fact, four European countries have moved into the Top 10. According to SWIFT, during the same time period, the RMB European hubs located in Britain, France, Germany, and Luxembourg grew respectively by 123%, 43.5%, 116%, and 42%. Individual banks are also forging higher. In 2014, the RMB transactions processed by the French branches of the Bank of China reached CNY 177 billion (=US$28 bn), while the volume of clearing reached CNY 1 billion. Actually despite the hoopla over London, the UK is lagging behind its European competitors, which are gaining ground. Consider the RMB trade offshore, excluding Hong Kong. In all, only 26% of such trade took place in the UK early in 2014. But in 2013, the share was 60%. The UK might be the first Western country to issue sovereign bonds in RMB and the first G-7 country to have signed a swap agreement in RMB. The UK is playing catch-up. Germany and France, the two other major financial hubs in Europe, realized their own success. For example, Germany is the first European country to sign a Memorandum of Understanding to launch a RMB payment clearing center in Frankfurt, although only three days before the UK. The progress is more engrained in France, where one quarter of French companies have used RMB in cross-border commercial transactions, which is the highest level for a European nation. The data comes from a study published in 2014 by the British bank HSBC. See Xinhua Net (HERE).
◄$$$ SWITZERLAND IS THRILLED TO BECOME NEW OFFSHORE RMB HUB IN EUROPE... THE RMB INTERNATIONALIZATION MOVES APACE... THE GOAL IS TO IMPROVE VOLUME, REDUCE COSTS, ACHIEVE EFFICIENCY. $$$
Switzerland claims delight to become a new offshore RMB center in Europe, said Heinrich Siegmann, senior international advisor of Swiss Bankers Assn last week. The Swiss Financial Market Supervisory Authority (FINMA) has authorized China Construction Bank to establish a branch office in Zurich. This authorization is considered to be an important step for Switzerland to become a new RMB offshore hub in Europe, following London, Frankfurt, and Luxembourg. Siegmann stated, "It was very clear to us that Yuan would become more important as an international currency in the trade area. Given the Chinese Govt's commitment to internationalize the renminbi, it is pretty clear to us that Switzerland as a leading financial center should be able to use this currency for its wider possible service. As the leading center for international wealth management, we believe that many clients of Swiss banks and also Chinese banks coming to Switzerland would like to be able to use Chinese currency, for diversified investment purposes."
Many important commodity trading firms have offices in Switzerland, which will enable efficient shipment to the Chinese destinations. With payment service in RMB more available, with greater invoice of exportation in RMB from China and Switzerland, it would also reduce the cost of transactions and improve the bilateral trading volume between the two countries, so it is expected. Last January, China and Switzerland agreed to set up the first branch of a Chinese bank in the Swiss financial hub of Zurich for future RMB clearance. The establishment of the offshore RMB market in Switzerland is considered to mark a crucial step in the internationalization of the Chinese currency. The Chinese and Swiss central banks already signed a bilateral currency swap agreement worth CNY 150 billion (=US$24 bn) in July last year, which was intended to provide liquidity support to economic and trade exchanges between the two countries. See Xinhua Net (HERE).
◄$$$ CHINESE RMB SURPASSED THE JAPANESE YEN IN TRADE PAYMENTS WORLDWIDE, TO TAKE THE #4 SPOT... AN ACCELERATION IS IN PROGRESS... IMF BASKET INCLUSION WOULD BE A HUGE STEP, AS WOULD GULF EMIRATE OIL PAYMENTS IN RMB TERMS. $$$
The Chinese Yuan (RMB) continues to gain stature on the world financial stage, overtaking the Japanese Yen to become the fourth most used currency for global payments. The leaders are the USD, Euro, and British Pound in that order. The RMB is at its highest rank ever. It was ranked #35 way back in year 2010, #13 by mid-2013, and #7 by mid-2014. The ascending rank is being used to justify its claim for reserve status. The proportion of transactions denominated in RMB terms climbed to a record 2.79% in August, up from 2.34% in July, according to SWIFT data. Curiously the RMB ranks second for global issuance of letters of credit by value with a 9.1% share, compared with 80.1% for the USDollar. The Chinese currency has skyrocketed up the rankings, rising from a lowly 35th in 2010 to its current spot.
The Beijing leaders want the respect and open door that comes with Intl Monetary Fund inclusion in the important SDR basket, currently comprised of the USDollar, Euro, Yen, and the British Pound (the Club of Four). It is significant that the RMB overtook the Yen, which is in the IMF basket. Standard Chartered estimates inclusion of the Yuan in the basket could trigger as much as $1 trillion of inflows into the currency. The big zinger in the Jackass book is Gulf region oil payments done in RMB terms, a step that comes soon. The RMB devaluation in August has not driven people away from using the Chinese currency in commerce. China has been going to great lengths to elevate the stature of its currency, to increase its international footprint, to gain prestige. China seeks to reduce the USD dominance of global trade. In the past year, more progress has been made by the Peoples Bank of China. It has appointed Yuan-clearing lenders in 10 countries including South Africa and Argentina in the past year. Furthermore, it has opened the local bond and currency markets to overseas central banks, a huge step. See Schiff Gold (HERE).
◄$$$ CHINA HAS LAUNCHED CIPS, THE MAJOR YUAN-BASED INTERNATIONAL PAYMENT SYSTEM... REPRESENTATIVE BANKS HAVE BEGUN TRANSFERS... THIS IS A MAJOR STEP AND MAJOR SWIFT CHALLENGE. $$$
On October 8th, China launched the first phase of its China Intl Payment System (CIPS) in Shanghai, allowing cross-border transactions in the Chinese national currency. Up to 19 major banks were named as direct participants in CIPS, with 38 Chinese banks and up to 140 foreign financial institutions named as indirect participants. The CIPS will arrive as a platform to rival SWIFT in steps in order to assure efficacy, integrity, and protection from official US hacking nuisances. The CIPS first phase provides clearing and settlement services, reducing transaction costs and processing times. A competition is on, as CIPS seeks to overtake SWIFT in the Asian region. With a small amount of celebration, the Beijing media reported that ICBC cleared its first transaction of CHY 35 million (=US$5.5 million) using the CIPS system in Singapore. Another direct participant, Standard Chartered Bank cited clearance of its first transaction through CIPS with the Swedish home furnishing retailer IKEA. In addition, China has adopted the IMF Special Data Dissemination Standard (SDDS), a step seen to further internationalize the Yuan currency. See Sputnik (HERE).
◄$$$ CHINA'S OFFICIAL STATISTICS WILL CONFORM TO THE SPECIAL DATA DISSEMINATION STANDARDS (SDDS), A STATISTICAL SYSTEM CREATED BY THE INTL MONETARY FUND IN ORDER TO IMPROVE TRANSPARENCY... THE DOOR IS OPENING FOR CHINA ON GLOBAL MARKETS, AND INCLUSION IN THE IMFUND CURRENCY BASKET. $$$
With approval from the State Council, the Peoples Bank of China (PBOC) Governor Zhou Xiaochuan informed IMF Managing Director Christine Lagarde of their decision to adopt the SDDS standard system designed to improve transparency. Since 2002, China has used the General Data Dissemination System (GDDS), which the IMF set up in December 1997 to provide a basic framework on statistical system tracking. The distinction is simple. The GDDS applies to all the full group of IMF members, while the SDDS applies to member countries that have or are seeking access to international markets. See the step as movement to win IMF currency basket approval, meeting the requirements one by one. The adoptions honor a Xi promise made last November at the Brisbane G-20 Summit, aimed at lifting their integrity and credibility, for which the USGovt and USEconomy has almost none.
Last week in Lima Peru, PBOC Deputy Governor Yi Gang and David Lipton, first deputy managing director of the IMF, attended a ceremony to celebrate China's adoption of the SDDS. Lipton called the SDDS another milestone in their collaboration. He expects the move have the benefit toward a better understanding of the Chinese Economy by the outside world. The IMF lauded the move as an important advance, showing Chinese commitment to transparency best practices in statistics. China recognizes the importance to successful RMB internationalization by meeting the transparency standards of other major reserve currencies. The consensus in these areas was one of important results arising from President Xi's state visit to Washington late last month. Compliance in standards and practices is critical for the Chinese RMB to win inclusion in the IMF currency basket, which will unleash tremendous investment in Chinese Govt Bonds by global banks. See Shanghai Daily (HERE). Next for the USGovt to begin honest statistics and accounting, since it is the worst offender among all major nations. Lies and gimmicks are standard fare in the US, the exceptional nation.
◄$$$ USGOVT HAS FORMALLY APPROVED YUAN SDR BASKET INCLUSION AFTER CHINA ORDERED 300 BOEING PLANES... NUMEROUS THORNY TOPICS WERE COVERED IN DIRECT NEGOTIATIONS WITH THE XI TEAM IN WASHINGTON... POLITICAL HORSE (WHORES) TRADING STILL CONTINUES IN THE IMPORTANT ARENAS... THE EX-IM BANK UNCERTAINTY LED TO BOEING PLANS FOR CHINESE SITE FABRICATION... RMB INCLUSION COULD LEAD TO $1 TRILLION IN BANK RESERVES CONVERSION, ALTERING THE EQUILIBRIUM. $$$
After reassuring the United States that its economy will be propped up by China, Obama has given approval for the inclusion of RMB into the SDR basket of currencies managed by the IMF. Expect more Chinese Govt Bonds in the global banking system, less USTBonds, and more Gold bullion, after the inclusion is formally approved and completed. Recall the USGovt never seeks win-win deals, hence a tough pill for the USGovt fascist leaders to accept. Plenty of platitudes were cited, but it is important to cut through the maze and fog. Earlier, the White House was also trying to raise the stakes using the cyber-security and hacking issue. Both countries are guilty of such dastardly deeds. After extended bargaining, both parties reached an understanding on cyber theft issue, among others matters.
The Chinese have instituted many new steps, which could be called reforms, or else enhancements. The USGovt has backed off on further financial reform demands, and is prepared to support China's bid to have the RMB recognized as a global reserve currency. After US President Barack Obama and Chinese President Xi Jinping met in Washington, the two sides issued a statement saying the United States supports the inclusion of the Yuan "provided the currency meets the IMF's existing criteria in its SDR review," a point Xi stressed in his press conference with Obama. The USGovt has been seen as a weak bully in recent months. The shift in the official US position follows the Obama Admin's failed attempt to prevent allies from joining the China-led Asian Infrastructure Investment Bank (AIIB) earlier this year, a strategy that was openly criticized by former policy makers including ex-Treasury Secretary Henry Paulson. The Obama Team is full of amateur hacks and dumb strategists. Winning the IMF endorsement would validate efforts by Xi to push through policies toward making China more market oriented, and less planned. In a Shanghai speech, the UK Chancellor of the Exchequer George Osborne approved of the RMB inclusion since the currency has become increasingly important in global markets and meets existing IMF criteria. His post is counterpart to the USTreasury Secretary. French Finance Minister Michel Sapin stated in Beijing that France favors including the RMB in the SDR basket, provided China meets the IMF technical requirements. The Beijing leaders have their Western support lined up.
At least $1 trillion of global reserves will convert to Chinese assets if the RMB joins the IMF reserve basket, according to Standard Chartered and AXA Investment Managers. This volume would be colossal and enormous, weakening the USTBond primary position. The vast conversion has been a key Jackass forecast for several months, close to actual occurrence. The IMF seems favorable to accommodate the Chinese finally, and to approve of their meeting requirements. The IMF executive board will make a decision on the RMB reserve currency issue as soon as November. Approval requires 70% of the fund voting shares. The US controls 17% of votes. Approval is expected this time around, after explosions in Tianjin and massive USTBond dumping. Such is real politik. If not approved, China will ramp up its undercutting activities like USTBond dumping in massive volume.
In the backdrop, not obscured from attention, was an important deal struck. Boeing announced the gigantic sale of 300 aircraft to China, the largest ever order by a single country in history. The deal was made without the Ex-Im Bank to finance it. The US flagship plane builder disclosed that Boeing would be building its first assembly line in China. A notable portion of planes off the construction factories will be rolled off Chinese locations, and not just in Washington State. It seems the uncertain fate of the US-based Export-Import Bank figured in the decision to establish offshore production in compromise or concession. The USEconomy lost some plane construction business, with jobs related, due to the failure to keep the Ex-Im Bank going. See Event Chronicle (HERE).
## SILK ROAD EXTENSION TO BRITAIN
◄$$$ THE NEW SILK ROAD, BY CHANNEL NEWS ASIA. $$$
This series is especially interesting for its rather complete content and breadth of projects reported on. It includes a few key regions of the East, which are being joined to the West. The types of projects are truly impressive and cover many different industries, bringing them to market. The series has been given a 4-star rating by the Voice, who highly recommends viewing the videos. See Channel News Asia part 1 (HERE) and part 2 (HERE) and part 3 (HERE). Special thanks to SharonT in Singapore for providing the valuable information, and write the helpful comprehensive synopsis. The global market is undergoing profound change. The Silk Road & Belt will bring a new infrastructure, linking three billion consumers in Central Asia and China to the West. The banker cabal cannot control this development, and therefore attempt to obstruct it. They cannot, no more than obstructing the sunrise. The Silk Road Fund to date has collected US$40 billion to be devoted for projects. The Asian Infrastructure Investment Bank has an additional US$100 billion for projects. Investments in Silk Road participating countries is over US$112 billion in other funds.
Episode 1: As Xi Jinping has made it clear, the Belt & Road initiative is for win-win, is open and inclusive, not exclusive. It is China's Economic lifeline. China does not use force. It uses soft power. Featuring the city of Chongqing in southwest China. It is China's biggest city, double the population of Beijing. Currently there are already freight train routes from Chongqing to Duisburg Germany as part of the Silk Road economic belt. The route passes through Kazakhstan, Russia, Belarus, and Poland before arriving in Germany. Train Departs five times a week, giving the shipping industry a run for its money. It is said to be more time efficient. An ocean freight route takes 30 days from Europe to China ports. Via the Silk Road train route, cargo time is cut short to just 14 days between Germany to Chongqing China. The train nation of China plans to further improve on the speed of their freight trains. Current guaranteed speed is 1000 km per day. In terms of freight cost, they will close the gap with the shipping industry. In this video, the documentary host meets with Chinese government officials to talk about the railway project.
Featured also is China's push for revival of ancient Chinese history and culture. The ancient city of Xi'an, formerly known during ancient days as Chang'an, was the capital of ancient Silk Road. Today China is developing Xi'an to be the cultural capital of the modern day Silk Road. Documentary host refers to cultural diplomacy. He also investigates the controversy concerning western China's province of Xinjiang, as per the Uyghur population. It seems that the unrest in Xinjiang is not about religious tensions as portrayed by most Western mainstream media, but is politically motivated. The largest Muslim population in China are not even the Uygurs, but the Hui ethnicity. Bear in mind the Chinese population have over fifty ethnicities. All make up China. The Hui Muslims live harmoniously with their Chinese neighbors. China sponsors foreign students to study in Chinese higher institutes of learning. Most of the foreign students are from central Asia such as Kazakhstan and Uzbekistan, for example. The Chinese Govt pays for their school fees and accommodation, including a generous stipend of US$600 per month. In these central Asian nations, many people are studying Mandarin because it is seen as a very important language.
Having the skill of Mandarin is seen as needed for their future and to realize their dreams. Getting jobs would be much easier and promises higher pay if one is able to speak language. There is demand for good Mandarin speakers across the board, in both government jobs and private companies. The youth of central Asia believe that their future is tied to the Silk Road vision. Consider a side note. The Belt & Road initiative will extend to London, and possibly even out to Alaska, and down to southwest Canada. The challenge to build a tunnel or bridge across the Bering Straight is no small feat, but it is believed strongly that the Chinese, together with Russian expertise, can complete the arduous task. China will not have a problem to overcome the challenge. Their technology and manpower, along with finances can possibly be equal to the task. The main obstacle to achieve this would be as they said in the video, a political one.
Episode 2: The host brings us to the city of Lanzhou in northwest China. He investigates the current rather empty city that sits along the Silk Road belt. The Chinese Govt is pouring money into development into this city. It will not be seen as a ghost town in the near future, once the Silk Road really starts to gain momentum. A visit is made to the home of a former farmer. It seems the China Govt compensates and takes care of these former farmers quite well. He also interviews oil companies. Later he takes us into Xinjiang to investigate more on the province's troubled atmosphere. Basically the Beijing officials are going all out to improve and build Xinjiang into a prosperous and stable province, because the Silk Road has to pass through Xinjiang. It is indeed vital to the Belt & Road initiative. Not only that, China cannot afford to have extremists and terrorists carry out spates of violence, resulting in mass deaths on occasion. Most of such incidences have their roots in Xinjiang. The Chinese Govt belief is that from peace will follow prosperity. You will find it interesting how China is building up this troubled region and is handling the situation. Think soft power along with some much needed military presence in a province with extremist elements. All the other Chinese provinces have to contribute to a building fund, for the betterment of Xinjiang. This is a shared national endeavour with all Chinese having a stake in it, in my opinion.
Episode 3: The host goes to Kazakhstan and checks out the climate of ups and downs regarding Chinese companies working with Kazakh oil companies. The Belt & Road initiative is not just about trade, but oil as well. China needs a lot of it and is investing much in oil companies in Kazakhstan. The Iron Silk Road obviously has to pass through this huge country. The host exhibits the laying of tracks, to go along the vast desert stretch. He also interviews an Uyghur who chooses to reside as a refugee in Kazakhstan rather than live peacefully with the Chinese in China, all for a political dream of achieving separatism. All in all, the Silk Road economic belt initiative will be a win-win for the nations involved. Small time traders in once isolated regions will see their business boom as the development flourishes.
◄$$$ BELT AND ROAD INITIATIVE OPENS OPPORTUNITIES FOR CHINESE GOLD MINERS, AS COUNTRIES ALONG THE ENTIRE ROUTE HAVE A COMBINED NATURAL GOLD RESERVE OF 21,000 TONS. $$$
The China's Silk Belt & Road Initiative will bring an historic opportunity for the country's gold miners as low gold prices are expected in the coming years, claims Song Xin, general manager of China National Gold Group Corp. Addressing a mining industry conference held in the Tianjin region, he said the next few years will see pressures from global gold prices remaining low while costs for the gold mining industry rise. The Belt & Road will provide an alternative platform for growth, as countries along the route have a combined natural gold reserve of 21,000 tons, accounting for 41.5% of the global gold reserve, in his estimation. The world's six largest active gold mines are located in countries along its extensive pathways. Chinese gold miners have an edge in exploitation. The Belt & Road Initiative refers to the Silk Road Economic Belt and the 21st Century Maritime Silk Road, which were proposed by Chinese President Xi Jinping in 2013 with the aim of reviving the ancient trade routes. The network passes through more than 60 countries and regions with a total population of 4.4 billion. See China Daily (HERE).
◄$$$ LONDON SEEKS TO BECOME WINDOW TO THE EAST WITH LINKAGE TO CHINA IN AMBITION... FUTURE TIES ARE BEING BUILT... IT WILL BE INTERESTING TO SEE TO WHAT EXTENT CHINA IS GIVEN CONTROL OF CERTAIN LONDON CENTRE FINANCIAL OFFICES AND WINDOWS, AND HOW DEEPLY THE BRITISH SELL OUT THE AMERICANS... CHANGES OF HISTORICAL MAGNITUDE ARE IN PROGRESS, AND THE BRITISH ALWAYS FIND A WAY TO TILT THEIR SAILS TO THE PREVAILING WINDS. $$$
The leaders will draw a blueprint for China-UK relations and work toward starting a golden era of cooperation between the two major nations. The meetings generate more questions than are settled. To be sure, the United Kingdom is embroiled in the center of the Global Financial Crisis. They share responsibility for the mess, both financially and economically, since the USFed and Bank of England are closely knit partners. It can be argued that the USFed conception a century ago was designed in order to enable British control of the American colony. The Chinese have a century of payback vengeance to deliver on. It began with the Opium Wars, one of the most shameful displays of deplorable human avarice and exploitation in mankind's history. The Chinese never forget and never forgive. They wait patiently and act to correct the wrongs, sometimes seen as vengeance or better yet, wresting control.
It is the Jackass opinion that the Chinese will coopt London, turn it into a Chinese coulee financial outpost, urge on their agenda, and win eager British support. If the British disobey, betray, object, squeal, or fail to show proper fealty, they will be dropped like yesterday's newspaper in favor of Germany or France or Switzerland. The French and Swiss tend always to be eager whores, but the Germans will seek a mutually beneficial arrangement since they have much to other the Chinese. It is said by many well informed players that the China trusts Germany, never have been betrayed. Their relationship with Russia has been strained over the millenium under the common communist umbrella, competing over ideology and global status.
Several very big challenges loom, each of enormous magnitude and importance
- LBMA for China, control room shared with Shanghai
- RMB Hub Centre development for bond issuance and currency exchange
- cooperation as USTreasury Bond dumping ground, linked with EuroClear
- adoption of Gold Standard through trade, banking, currencies
- end point on Atlantic to Silk Road from Pacific origin
- US trade union cooperation or obstruction
- opposition to European Union Commission objectives
- integration with Russia and Eurasian Trade Zone ultimately
- move away from Rothschild regime toward White Dragon Asian regime.
The big issues front and center loaded with questions are the upcoming cable control lines from China to the London Bullion Market Assn (LBMA) where gold is sold. Over time the Shanghai gold market will be joined at the hip with London, coordinating policy, contracts, practices, and prices. Another question is whether the Chinese will set up UK windows for clearing house functions on both the USTreasury Bond sales and Gold Trade Note letters of credit used in trade across the Eurasian Trade Zone. Adoption of the Gold Standard return means huge trade for bonds, currencies, gold sourcing, and trade note acquisition. London will want its share of activity. The Jackass suspects full speed on all cited functions. No doubt lingers over the London function as an RMB Hub Centre for sovereign and corporate bond issuance in RMB terms, in addition to massive RMB exchange for Western currency.
The Jackass must admit something big and important, strategic and crucial. The smell is thick and acrid for the British to sell out the USDollar and the American Elite for the benefit of their own survival. Expect the transition to create one more piece to the US Isolation. It seems inevitable that London will wish to participate in the grand exodus trade from USTreasury Bonds, linked with the EuroClear weigh station in Belgium operating as a temporary bond warehouse. Almost all nations of the world will be diversifying out of USD into RMB but then Gold bullion in banking systems as those systems are recapitalized, replenished, and revitalized. The British banks will not wish to see that brisk trade render heaping profits for competitor bank centers.
The rest of the major concerns run along trade lines. The British have never been a part of the European structure in any great manner, resisting integration for several decades. They have bickered with the EU Commission on a regular basis. Such dispute will continue. A firm test will be the British position with respect to follow through on the Trans Atlantic Trade Investment Partnership (TTIP), which mirrors the Asian TPP pact, each a fascist power grab of deep control. China opposes the TPP vigorously. The future lies with the Eurasian Economic Union, which the Jackass has been calling the Eurasian Trade Zone for a couple years. Unless the UK wishes to be excluded from the biggest trade zone ever hatched in human history, they must hitch their wagon to the Russian and Chinese economies, businesses, platforms, windows, and norms. What could come next is for the United Kingdom to turn its back in part or entirety on the Rothschild Family syndicate, and embrace the White Dragons and their fair trade systems emanating from Asia. The Satanist Western Elite are on the run, for crimes against humanity and the earth's integrity. The Rothschilds and Rockefellers share the blame, each to be dealt with in an uncertain manner. A new sheriff has been in town for over three years, hailing from the East with better priorities.
◄$$$ XI VISITED LONDON TO USHER IN NEW GOLDEN ERA FOR BRITISH RELATIONS... THE VISIT WILL SET MORE FIRMLY THE STRATEGIC ROLE IN FUTURE TIES BETWEEN BEIJING AND LONDON... THE BRITISH WANT TO REMAIN CONNECTED AND NOT BECOME A DERELICT NATION... THEY WILL ADJUST THEIR SAILS TO STRONG EASTERN WINDS. $$$
President Xi Jinping is to pay his first state visit to the United Kingdom from October 19th to 23rd. The British only permit two state visits per year. Cui Hongjian, an expert on European studies at the China Institute of Intl Studies, said the visit will play a strategic role in future ties between Beijing and London. Observers believe this UK trip, the first by a Chinese president in a decade, will usher in a Golden Era in China-Britain relations and lay a more solid foundation for China-EU ties. Be sure to know that the British do not enter the meetings from a position of strength. The FOREX currency system is in tatters. The central bank inflation policy known as QE is a global plague on working capital. The British support all US foreign predatory wars. The UK Economy is in harsh decline. The big London banks are mostly insolvent, accused on a wide basis of corruption and market rigging. British dentistry is the joke of the West, something shared by Mainland Chinese but not by Hong Kong natives.
Against the backdrop of a very weak global situation beset by debt burdens and skirmishes, China is a recognized engine of global economic recovery. The Silk Belt & Road initiative proposed by China and the Asian Infrastructure Investment Bank (AIIB) have offered new platforms for bilateral cooperation. The United Kingdom was the first Western developed country to join the AIIB, the multi-lateral development body that will finance infrastructure building in Asia and elsewhere in linkage. With 57 founding members, the AIIB is due to be formally established in function by the end of 2015.
Chinese President Xi will meet the Qeeen at a welcome ceremony, with informal lunch and formal dinner. Xi is scheduled to hold talks with Prime Minister Cameron and to meet with leaders of opposition parties and the Parliament. In Manchester, the Chinese president will attend a banquet and visit research projects and local businesses. According to the Chinese Ministry of Commerce, Xi's visit will see a number of deals signed between governments, financial institutions, and enterprises in fields ranging from finance, real estate and energy, to medicine and automobiles. As the backbone of bilateral ties, their economic and trade relationship has enjoyed rapid development in recent years.
Great Britain is China's second largest trade partner in the EU. Over 500 Chinese enterprises have set up shop in the UK in some location. Bilateral trade in 2014 exceeded US$80.9 billion, up 15.3 percent year on year. China's direct investment in Britain has grown to US$12.8 billion by the end of 2014, compared with $1.35 billion in 2010, almost a 10-fold rise. The two countries plan to firm their investing relationship by stepping up cooperation in high-speed railway and nuclear energy projects. The meetings are a continuation of past progress. During the seventh China-Britain Economic & Financial Dialogue in September, the two sides reached 53 agreements ranging from nuclear energy, high-speed railways, to an expanded currency swap line. Deals will continue to expand. China wishes to become more involved with Britain in European matters, in problem solving, in diplomacy, and technology sharing. In short, China wants respect and inclusion. Beijing leaders also called for an early signing of the China-EU investment agreement and an early start of feasibility research on a China-EU free trade area.
The London Centre has witnessed strong growth as an RMB Hub for currency trade. Complementary roles are at work, since Britain is strong in financial services, while China has strength in infrastructure with adequate capital, technology, trade relationships, and experience. Xi's visit will also create an opportunity to upgrade the cultural exchanges for the two countries, marking a highlight of the first China-Britain Cultural Exchange Year this year. There are over 150,000 Chinese students studying in Britain and about 29 Confucius Institutes established there, more than in any other EU country. Since the founding of the China-Britain high-level cultural exchange mechanism in 2012, the countries have seen vigorous exchanges in such areas as education, technology, media, sports, public health, tourism, and youth activities. See Xinhua Net (HERE & HERE).
◄$$$ IT APPEARS THE BRITISH WILL SUPPORT FORMALLY THE RMB INCLUSION IN THE IMF SPECIAL DRAWING RIGHTS BASKET OF CURRENCIES... ONLY MINOR CONDITIONS REMAIN, LEFT TO THE IMF TO DECIDE. $$$
Only the Americans resist. The British support the inclusion, subject to meeting existing criteria in the IMF's upcoming review, said a China-Britain joint declaration issued last week. Both sides urge members who have yet to ratify the 2010 quota and governance reforms to do so without delay. They wish to further enhance the voice of Emerging Markets and developing countries. The joint statement was signed during Chinese President Xi Jinping's state visit to Britain. See China Org (HERE).
## GOLD SNAPSHOT AT THE CUSP
◄$$$ GOLD & SILVER CHARTS LOOK NEARLY IDENTICAL, BUT THE SILVER CHART HAS A BIGGER STRONGER BASE UPON WHICH TO STAGE A STROING RECOVERY AND REBOUND... THE RESTORED PRECIOUS METALS MARKET IS COMING SLOWLY INTO VIEW. $$$
The Gold & Silver charts warrant inclusion in the report. Although corrupt to the core, the official COMEX precious metals are seeing an important reversal. For the last three years, the Hat Trick Letter has not featured regular chart depiction, since they are not markets. They are crime centers with no bearing on a equilibrium-based free market. They are markets in shackles. The rationale this month is that lost control by the COMEX paper merchants, murderers, and crime bosses who do not deal in metal, is extremely evident. The longstanding opinion by the Jackass has been that silver gains will be much greater than gold gains, after the breakout and restored equilibrium arrives. To further this point, expect the Moving Average crossover to occur first in silver. It will be exciting to see market integrity restored, surely by the Chinese and Russians, not the Western Elite merchants of death, destruction, and ruin.
◄$$$ BANK OF AMERICA EXPECTS A MASSIVE POLICY SHIFT IN 2016 WHICH WILL BEAR DIRECTLY ON GOLD... THE RESET IS ABOUT THE PRIMACY OF GOLD, NOT THE ADJUSTMENT OF TOILET PAPER VALUES AMONG THEMSELVES IN THE BATHROOM CABINET... FURTHER REFLATION INITIATIVES ARE EXPECTS, AS DESPERATION LOOMS FOR REMEDY. $$$
Analyst from Bank of America Michael Hartnett is a rare bird on Wall Street. He counts among the very few strategists who comprehend the depth of the global financial morass. He issued a report warning investors to anticipate a massive policy shift in 2016. He anticipates the last great reflation initiative of global nature. Here are some of his key thoughts. The perception of unfair globalization, gilded Elites, and inauthentic politicians has led to a rise in both populist politicians and disruptive political party movements in several countries. Calls for the USFed to raise rates in order to boost the elderly's return from saving are becoming louder. Businesses on Main Street are threatened by a stalled global economy in 2015. If the secular reality of asset deflation and income inequality is intensified by economic recession and rising unemployment, investors should expect a massive policy shift in 2016. Seven years after the West went all-in on QE & ZIRP, the US/Japan/Europe would shift toward fiscal stimulus via government spending on infrastructure or more aggressive income redistribution. Seven years after China went all-in on fiscal stimulus, a shift toward QE with support from interest rates and FOREX currency exchange rates to support activity would be likely in the East. The implications for continued further debasement of money, and rise in Gold, are palpable and real. See Zero Hedge (HERE).
◄$$$ SILVER IN CRUISE MISSILES, EVIDENCE OF INELASTIC FACTOR. $$$
Consider the metal side of the war devices. Every cruise missile has approximately 15kg of silver components within it, which equals 500 ounces. Therefore, every time a cruise missile is fired (by any player), a very real 500 oz of silver simply vaporizes, never to be reclaimed by recycling or mining again. When conflict intensifies, the arms factories fire up production lines and acquire the silver. If silver were to become scarce, to be sure an arms purchaser would not become price sensitive to the input cost of silver into their missile. They would buy at any price, and pass the cost onto the federal government involved. Do some calculations. A load of 500 oz silver costs just $7500 at $15/oz. In the future likelihood that silver went to $200/oz, the rise would only constitute an additional $92,500 to the price of the cruise missile. The effect would be to raise the cost of the cruise missile from $1.5 million to $1.6 million. Conclude that the government procurers and industry partners would not halt either their purchase or production. They would keep buying. The silver demand during the constant war environment generated by the USGovt and its eternally belligerent gang of NeoCons is extremely inelastic.
◄$$$ DUBAI'S DGCX LAUNCHED NEW SILVER AND CRUDE OIL FUTURES CONTRACTS... THE SILVER CONTRACT WOULD BE SETTLED IN CASH AND AUGMENT THE INDIAN MARKET... THE OIL CONTRACT WOULD FACILITATE CROSS MARKET MARGIN MECHANISMS IN SMALL UNITS. $$$
The Dubai Gold & Commodities Exchange (DGCX) announced it would list two new futures contracts to trade actively. The derivatives bourse heralded the new India Silver Quanto Futures contract, which will trade before and after the closure of Indian markets. Its launch would offer traders increased trading opportunities, to be cash settled and denominated in USDollars. The second contract will be the Mini WTI contract sized at 100 oil barrels. It will provide market participants cross margin benefits with its existing WTI futures contract at the exchange. The bourse had announced plans for a spot Gold futures contract early last year as part of its growth as Emirate trading centre for the precious metal. The launch was originally scheduled for June 2014, but has been repeatedly delayed. See Reuters (HERE).
◄$$$ JAMES TURK GIVES WARNING OF A SURGE IN GOLD & SILVER PRICES BY YEAR END... THE GATES ARE BREAKING AS MONEY SUBSTITUTES CRUMBLE AND FALL BY THE WAYSIDE... THE KEY FACTOR AT WORK IS CURRENCY DEBASEMENT RISK, DURING A GROWING EXODUS FROM THE ESTABLISHED BANKING SYSTEM... EXPECT SOME RAPID MOVEMENTS, FOLLOWED BY POTENTIALLY EXTREME AND NON-LINEAR PRICE JUMPS IN THE NEAR FUTURE... THE KING DOLLAR IS BEING DETHRONED, AS CHINA IS GRADULLY WRESTING CONTROL WITH ITS POPULAR RMB VEHICLE. $$$
James Turk is the founder of GoldMoney, a pioneer precious metals bullion bank of sorts for acquiring and storing the gold & silver bars. He expounded on some key factors at work. The financial system is fracturing with countless open wounds. Many moving parts are at work, and Gold & Silver are among them, soon to become primary monetary cogs. The COMEX has gone dry essentially, along with its equally corrupt LBMA partner. The Chinese and Asians in general have begun to exert control over the precious metals market, realizing it is money and the fake substitutes are crumbling, falling by the wayside. See the YouTube video (HERE).
"The way I see silver today, it is a gold substitute. If you want to get your money outside the banking system there are two ways to do it: you buy Gold or you buy Silver. The problem with silver is that you have more volatility than gold. So if you want to structure your portfolio, my recommendation is to have about 2/3-rds of it in gold and 1/3-rd in silver. The world is going to go back to Gold & Silver. It is just a matter of time. There is always a higher risk in fiat currency than there is in gold, because gold cannot be created out of thin air like fiat currency can be. So gold has the lowest interest rate because it does not have that debasement risk that fiat currencies do. Interest rates are not only a time preference for money, but also the risk of a currency. So the South African Rand, for example, has more risk of a debasement than the USDollar. As a consequence, South African interest rates are higher than USDollar interest rates.
But gold will always have the lowest interest rate because it does not have the risk of debasement. So gold should always be in contango against all other currencies. When it is not, it is an aberration. It is an unusual situation that really should not happen. The dollars they control, these are just liabilities on the balance sheet of the banking system. They can do what they want with those dollars because it is just a liability. It is not a financial asset. Gold, on the other hand, is a physical asset. While they can have influence on the gold price by dishoarding and by their propaganda, talking against gold, at the end of the day, the value of that gold does not come from central banks. It comes from the market. It comes from everybody who wants to hold money with a 5000 year record that does not have counter-party risk. Right now, as it has been for several years, a lot of people in Asia prefer to hold gold instead of any fiat currency.
This thing could blow anytime soon. You have a potential to see $1300 or above on Gold by December 31st. And also $20, $22 dollars on silver by December 31st. Just like a stock can become over-valued or under-valued, [fake substitute] money itself can become over-valued or under-valued. Right now Gold is under-valued, and Dollars are over-valued. In fact all fiat currencies are over-valued relative to gold. So as that realization comes home, as the market moves the gold price higher to a more fair valuation, you are going to see the gold price rise in the weeks and months ahead."
◄$$$ SHANGHAI GOLD EXCHANGE PURCHASES HAVE TOTALED ALMOST 2000 METRIC TONS SO FAR IN THIS CALENDAR YEAR... THE ANNUAL TOTAL WILL GREATLY EXCEED GLOBAL MINE OUTPUT. $$$
Year to date withdrawals from the vaults of the Shanghai Gold Exchange (SGE) have come to a total 1958 tons. It a record high. The most recently reported week ending September 25th (week #38) saw 66.0 tons withdrawn from the official vaults. Low offered price and unstable Chinese financial markets added to their already brisk usual demand by savers. Their government also encourages the public to buy gold. A simple weekly extrapolation suggests total SGE withdrawals for 2015 might be 2679 metric tons. Compare the figure to official worldwide gold mine production, estimated to be 2000 mt. See Bullion Star (HERE).
◄$$$ RUSSIA IS WORKING TOWARD GLOBAL PLATINUM DOMINATION... ITS LEAD IN STRATEGIC METALS IS UNEQUALED. $$$
Russian companies are currently building a platinum warehouse complex estimated to cost $3 billion. The work proceeds according to schedule. The project was made public in September 2014, expected to enter its second phase in the spring of 2016. The scope of cooperation carries major implications for global platinum market. "Russia domestically controls 30 percent of global platinum and palladium output. The Zimbabwe mines represent the world's fourth leading source of these metals, meaning that Russian control in the African nation could create a stranglehold on this market," the media outlet noted. The East is locking in important supply chain channels, at times turning a blind eye to ugly political environments. See Sputnik (HERE).
## ECONOMIC WRECKAGE & DEBT SATURATION
◄$$$ GLOBAL DEBT TO GDP RATIO HAS GONE MUCH WORSE SINCE THE 2008 LEHMAN EVENT... MORE DEBT APPLIED DOES NOT FIX A DEBT SATURATION PROBLEM, MADE WORSE BY FUNNY MONEY FREE FLOW... THE MAESTROS BELIEVE DEBT IS MONEY, DEBT IS WEALTH, DEBT IS OINTMENT BALM, BUT IT IS NOT... THE CENTRAL BANK BALANCE SHEETS ARE BOILING OVER WITH TOXIC PAPER, IMPAIRED PAPER, UNWANTED PAPER WITH NO VIABLE MARKET... NO SOLUTIONS HAVE BEEN IMPLEMENTED SINCE 2008, JUST PAPER MACHE ON OPEN WOUNDS OF EXTRAORDINARY INSOLVENCY AMIDST REFUSAL TO INSTALL THE GOLD STANDARD SOLUTION. $$$
The situation is worse today than in 2008. What comes next is a global financial crisis climax which is ten times greater than the single Lehman event, in a systemic crisis event. After 2008, the bankers lashed themselves together, shared the derivative risk, bailed out every major offending insolvent bank player. In the process, they created a systemic risk, whereas in the past it was individual entity risks. An explosive climax is in progress which will remove the USDollar from the international trade desks, and then the banking reserves system. The global reserve status is going away. In the sweeping failures, much in private funds will be lost in consequence.
◄$$$ WALL STREET BANKS HAVE SET ASIDE MORE CASH TO COVER DEEP DAMAGE FROM THEIR OIL SECTOR PORTFOLIO... THE OIL BOOM & BUST WILL HIT THE UPCOMING EARNINGS STATEMENTS... NEXT COMES A GIGANTIC RISE IN LOAN LOSS RESERVES, WHICH AFFECT PROFITS DIRECTLY. $$$
Loan Loss Reserves are up at JPMorgan, Wells Fargo, and Bank of America. A wide trend has begun, which will surely grow in powerful terms like in volume. Wall Street lenders that bankrolled the debt-fueled US oil boom are setting aside more cash to cover potential energy losses. The lower oil price has remained in place for longer than expected. The portfolio damage has taken a painful toll. Oil prices have declined over 40% in the past year, with oil running regularly under the $50 per barrel mark. JPMorgan Chase stated that it increased its loan loss reserves for oil & gas by $160 million in the third quarter. Bank of America stated its at-risk loans increased by 15% from a year ago due to damage to its oil & gas borrowers. Wells Fargo reported that it reserved additional cash to cover potential losses in the energy sector.
JPMorgan CEO Dimon admitted the bank conducted stress tests on its loan portfolio to determine the impact from oil prices to possibly fall to $30 a barrel. The results were ugly, and the story will blossom like a toxic massive tree. To date the volume of Loan Loss Reserves set aside are small, but they will grow 10-fold quickly. Lack of refinancing a giant gob of such loans will result in a long nasty sequence of defaults and open sore losses with multiplied loss volume. See Bloomberg (HERE). As footnote, Wall Street banks are receiving hundreds of $billions under the table from the USFed to cover such energy portfolio losses. They admit only a small fraction publicly.
◄$$$ THE ENERGY SECTOR HAS BECOME A LARGE ECONOMIC DRAG... A RECOVERY CANNOT OCCUR DUE TO NO CHEAP EQUITY AND NO CHEAP CREDIT EITHER... THE LINK BETWEEN DEBT AND ENERGY REVEALS ACUTE WEAKNESS... LENDERS DID NOT PROTECT THEMSELVES ADEQUATELY FROM COVENANTS IN THE GO-GO YEARS... RELIANCE UPON EAGER CAPITAL CANNOT BE MET. $$$
The energy sector is in dire straits. The core companies are mired in a truly miserable financial situation. According to Jim Chanos, hedge fund manager Kynikos Assoc, cash flow from operations at some of the most prominent exploration and production (E&P) companies has not covered capital expenditure since 2010. Thus have spent more than their income. The trend includes the large players like Exxon, Chevron, and Royal Dutch Shell. Cash flow is dangerously negative, an unsustainable situation. The flow of capital investment that has propped up marginal projects will not continue. Spreads on the bonds issued by energy companies are 480 basis points wider than average yields for junk-rated companies. It means investors are finally demanding extra returns to compensate for the added risk of E&P. Chanos claims that even the most reliable E&P companies will be reluctant to tap such revolving credit lines, given the negative publicity attending such moves. Banks have opted to keep the troubled firms afloat, rather than to pull the debt plug. Renewed credit lines have come though with tougher lending terms.
Unfortunately for lenders, the majority of credit extended and debt sold in recent years had come with far fewer protections for lenders, known as covenants. The banks and hedge funds have become energy partners, bound by the same debt rope. It is mid-sized banks standing at risk this time around. The larger banks and money center banks protected themselves well in the last decade, by laying off the risk to hedge funds, junk bond funds, insurance companies, and others. The banks learned the hard way during the bust of the 1980's when no Texas bank and S&L survived. Given the weak balance sheets, investors are doing far more liquidity analysis, which has resulted in conclusions of more cases for imminent death. Chanos concluded, "Return to growth cannot happen without cheap equity and debt, neither of which exist today." See Bloomberg (HERE).
◄$$$ US SHALE PRODUCERS HAVE $150BN IN DEBT, ALL AT GREAT RISK... ROSNEFT HEAD BELIEVES THE US CONTROLS THE OIL PRICE, AND NOT OPEC WHICH IS A HOPELESS CHATTERBOX... THE US-ENERGY FIRMS ARE DECLARING HUGE WRITEDOWN LOSSES, THE Q3 PROCESS GAINING MOMENTUM... A RIPE $6.5BN IN ENERGY LOSSES ALREADY IN THE CURRENT QUARTERLY STATEMENTS. $$$
Rosneft president Igor Sechin gave a sober assessment of the US oil industry. The breakeven price for difficult to extract shale oil is $85-$98 per barrel, which is putting US producers deep in debt. Speaking at the Eurasian Forum in Verona Italy, Sechin stated "The total debt of only 25 companies engaged in the extraction of shale oil is about $150 billion. OPEC is no longer the regulator, since its meeting on October 21st did not bring any decisions." According to the fiercely independent CEO, it is the United States and not OPEC that controls the global oil market. Last week, the head of Russia's biggest oil company said the Saudis have been actively dumping and cutting prices to secure its share of the market and to gain new clients. Some European countries are now buying Saudi oil for the first time, for instance. Some free delivery offers help in grabbing new market share. Speaking about trends in the global energy market, Sechin said that Europe's share of world energy consumption will decrease from 19% in 2015 to 16% in 2030. Russian Energy Minister Aleksandr Novak said shale oil has endured a steady decline in its production in the recent months, accompanied by a painful investment outflow. The number of drilling rigs in the United States is way down, falling from 1600 rigs a year ago to about 600 now. See Russia Today (HERE). Notice how the forum held in Italy is more useful, more informative, and covers the key issues far more than an OPEC gaggle of arrogant privileged fools.
A staggering $6.5 billion in energy sector writedowns has rocked the sector in recent days, and the earning reporting season has only just begun for the third quarter. Southwestern reported $2.8 billion impairment in Q3, and Freeport-McMoRan posted charge of $3.7 billion on its oil & gas operations. The oil & gas industry's earnings season is barely underway. Barclays analysts believe $20 billion in charges among just six companies could occur very soon. Oil prices have tumbled 44% in the past year, and natural gas is down 35%, assuring massive write-off losses. The companies use an accounting method that requires them to recognize a charge when estimates of future cash flow from their properties fall below the companies costs for buying and developing the acreage. The predictions of future cash flow have fallen along with prices. Barclays predicted impairments for Apache, Chesapeake Energy, Devon Energy, Encana, and Newfield Exploration. All five companies are scheduled to report Q3 results in November. See Bloomberg (HERE) and Wall Street Journal (HERE).
◄$$$ THE HIGH YIELD BOND CURVE HAS GONE INVERTED... IT SPELLS BIG TROUBLE FOR REFINANCING THE OIL SECTOR BONDS THAT ARE IN THE PROCESS OF MATURING... NO RELIEF IN THE OIL PATCH, WHICH CANNOT OVERCOME THE PROBLEMS FROM LOAN COVENANT VIOLATIONS... MASSIVE LOAN DEFAULTS ARE COMING SOON, A GIANT SPECTACLE, ALONG WITH SOME BANK FAILURES IN THE PROCESS... THEY ARE BUSINESS PARTNERS. $$$
The High Yield curve has gone inverted. The USTreasury curve runs from the overnight (1-day) and short-term (1-month) to the long-term 10-years and 30-years in maturity. By contrast, the HY curve extends typically from 12 months to 10 years in maturity. The HY curve inversion means the short-term lending rate is higher than the long-term lending rate. Thus the loans cannot be rolled over, and cannot be refinanced, a brutal fate. The bond market is signaling that there is no liquidity available to refinance these maturing bonds, period. They are coming due. There is no way to refinance the massive loan portfolios that are approaching default, when the HY curve inverted. The big banks are on the hook, joined by big hedge funds. The new money costs more than expiring loans. The bankers must bite the bullet, and force losses upon their big clients in the oil sector. In the process the banks will suffer massive writedown losses. Consider losses in the hundreds of $billions.
Tom Heneghan wrote, "In closing, the United States is within two weeks of default as the privately owned US Federal Reserve has lost all credibility and lost control of the yield curve aka the USTreasury bond market. The inverted yield curve, which is tied to high yield grade credit spreads, is about to go hybrid and cause a default. The implication for the USEconomy and worldwide financial markets is that wide credit spreads and ascending downgrade and default risks will increase borrowing costs on under-margined Exchange Traded Funds and cross-collateralized derivatives, which will create a financial train wreck 1000 times worse than the year 2008." More warnings that the current situation is an order of magnitude worse than the Lehman event sideshow.
Ever the bright bulb, EuroRaj concluded with some quick thoughts. As we know, starting in 4Q2015, two things are going to happen. 1) These energy credits are having the protective oil hedges put on late last year coming to an end. Hence the banks who have taken the other side of the trade have to pay-up. But many of the banks teeter near insolvency themselves. 2) At the same time, these energy companies also need to renew their revolving credit lines with the banks. They will hit the wall in Q4, since the HY curve is inverted. The banks are not going to renew the lines, nor are they going to pay up on the hedges. Essentially, the banks will force these energy companies into default to avoid paying out hedges. New money is not willing to refinance maturing loans or loans that break covenants. Great pain, distress, and defaults come very soon.
◄$$$ HUGE CAR LOAN ASSET BUBBLE HAS BEEN SIGHTED BY SLEEPY REGULATORS... THE NEXT SUBPRIME BUST WILL OCCUR ON SCHEDULE... THEY FEATURE NEGATIVE EQUITY LOANS WITHIN ONE TO TWO MONTHS AFTER NEW CAR SALES, AND LOANS TO BORROWERS WITH POOR CREDIT, IN THE ALL TOO FAMILIAR 2007 SONG. $$$
The Jackass has been warning about housing, cars, and student loans for the last couple years. The US is a serial assset bubble blower of the debt variety, intended to replace legitimate income. The USEconomy is caught in a vicious recession, the car sales notwithstanding. The boom is fed by cheap dodgy debt which looks good on the surface, but is rancid below the tissue resides. Credit risk has begun to move to the forefront. The Office of the Comptroller of the Currency (OCC) is openly worried about bank exposure to the increasing risks of ballooning auto loans, particularly subprime auto loans, and commercial real estate loans. The OCC, the USFed, and the FDIC serve as the triad of federal bank regulators. Their job seems to be watching asset bubbles growing, not preventing them. Just like the subprime home loans, the banks are repackaging the suspect car loans, including subprime loans, into absurdly high rated asset-backed securities, in face of strong demand by investors who seek yield and ignore risk. The less creditworthy borrowers are being treated to the deluxe table of loans. Bond investors are the morons in the room.
By the end of 2Q2015, car loans accounted for 10% of all retail credit in OCC-regulated banks, up from 7% in 2Q2011. Total car loan balances outstanding rose to 10.5% in twelve months at the end of the second quarter and hit $1 trillion, according to Equifax. And 23.5% of new loans earlier this year were subprime, up from 22.7% a year ago. The home loan subprime problem has reappeared in the car package. Comptroller Thomas Curry concluded, "What is happening in this space today reminds me of what happened in mortgage backed securities in the run up to the crisis. At that time, lenders fed investor demand for more loans by relaxing underwriting standards and extending maturities. Today, 30% of all new vehicle financing features maturities of more than six years, and it is entirely possible to obtain a car loan even with very low credit scores. With these longer terms, borrowers remain in a negative equity position much longer, exposing lenders and investors to higher potential losses. Although delinquency and losses are currently low, it does not require great foresight to see that this may not last. How these auto loans, and especially the non-prime segment, will perform over their life is a matter of real concern to regulators." See Wolf Street (HERE).
◄$$$ PENSION FUNDS CUTS ON PAYOUTS AS THE NEW LAW MAKES IT POSSIBLE... UNDERFUNDED LIABILITIES ARE A NATIONWIDE SCOURGE... A BIG PROBLEM IS BANKRUPTED FIRMS (LIKE TRUCKING FIRMS) WHICH NO LONGER PAY INTO THE PENSION FUND SYSTEM... CENTRAL STATES PENSION FUND HAS ONE CONTRIBUTOR PER FIVE RETIREES, A TOTALLY UNTENABLE SITUATION AND PROBABLY TYPICAL IN THE PENSION ARENA. $$$
The pension fund time bombs are beginning to detonate. While the troubles with the Chicago and Illinois public retirement funds have been widely reported, last week a $17 billion private sector multi-employer pension pension fund announced that many of its beneficiaries will soon incur payout cuts as high as 60%. Pension Fund payout cuts are sweeping the nation. This is what happens when payout liabilities catch up to an underfunded asset base, while the USTreasury Bond yields pay a trifling amount for income. The problem has festered for several years. The total size of the US-based retirement asset market is around $18 trillion. The painful cuts in pensions should offer a strong signal of wealth decline, typical in the march to the Third World.
The Central States Pension Fund is pursuing a plan that would slash pension checks in half for some former union truck drivers. The fund is on the brink of insolvency and says it needs to cut benefits for 273,000 current and future retirees in order to stay afloat. The strain on individuals and households will be enormous. Legal changes pave the way for pension payout cuts, the laws making the cuts permitted. A controversial law passed last December allows multi-employer pension funds to reduce benefits if they are projected to run out of money (meaning chronically underfunded). A multitude of pensions funds covering over 10 million workers are in financial trouble. The Central States Pension Fund covers workers and retirees from more than 1500 companies across a range of industries including trucking, construction, and more.
Truck drivers once made up a majority of participants, thus their ranks to face most cuts. Another problem has been the bankruptcy of many trucking firms, which ended their worker contributions. Central States Pension Fund has five retirees for every active worker. Retirees whose former firms went bankrupt will suffer the biggest cuts, as required by law. Other features are merciful. Retirees age 80 years of age or older will not see any cuts. Reductions would be less severe for those older than 75 years of age or widows and widowers receiving spousal benefits. Those who drafted the law must have thought retirees under 70 could serve as WalMart greeters. The average cut for the 115,500 impacted retirees is 28%, according to the fund's spokeswoman. Central States Pension Fund Director Thomas Nyhan has stated that the fund will run out of money in 10 years if nothing is done. They have a major challenge on their hands. Maybe they should appeal to the USFed and USGovt to normalize interest rates. The insurance industry and individual savers loaded with bank CDs are also clamoring for higher rates. See CNN Money (HERE).
◄$$$ USECONOMY IS DIRE TROUBLE ALONG THE NORTHEAST CORRIDOR... THE USECONOMY IS SUFFERING FROM THE SEVENTH CONSECUTIVE DEEP RECESSION YEAR... THE PLUMMET IS UNMISTAKABLE AND UNDENIABLE, IN FULL VIEW, WHILE THE CLOWNISH USGOVT CONTINUES TO PARROT THE RECOVERY NARRATIVE... THE SIMILARITY TO 2008 IS STARK AND PLAIN, BUT THIS UPCOMING CRISIS EVENT WILL BE AN ORDER OF MAGNITUDE MORE POWERFUL... THE LABOR MARKET IS IN A DOWNWARD SPIRAL, MADE EVIDENT BY THE PAINFUL ANNUAL REVISIONS (THAT FEW CHOOSE TO LOOK AT). $$$
The negative economic data is overwhelming for the USFed to contend with. They cannot admit that ZIRP has destroyed the financial markets while QE has destroyed economic capital. No case can be made for an official rate hike. Last week the Bureau of Labor Statistics (pack of deceptive second rate statistical analysts) released the preliminary estimate of its annual benchmark revision to the popular mainline survey employment series. The more accurate Household series is less followed, less relevant to the herd. The Non-Farm Payroll (NFP) revision relates to the 12-month period ended March 2015. While the final report will not be released until February 5th of 2016, the release previews an admission that at least 208,000 total jobs (and 255,000 private jobs) were over-estimated in the year ending March 2015. The USGovt avidly exaggerates the monthly data amidst public cheers, then ramps down usually closer to a million jobs in a correction that few choose to pay attention to. They prefer the feel-good rah-rah data that is deceptive and positive, which can be traded for profit in the rigged markets. The reality would have meant a constant series of NFP headline misses versus estimates instead of consensus beats, followed by conniptions and mild panic with some measured frenzy.
◄$$$ US-BASED EXPORT TRADE IS DRYING UP FAST... ONE THIRD OF ALL LONG BEACH CALIFORNIA OUTBOUND CARGO VESSELS DEPART EMPTY... WITNESS ONE-WAY ASIAN TRAFFIC... THE US-TRADE GAP IS NEAR $50 BILLION PER MONTH, HITTING RECORD LEVELS. $$$
One of the fastest-growing US exports right now is big empty metal boxes. Shipments of empty containers from the United States are surging this year. The US imports more from China and Asia than it sends back, in a grand imbalance. Certain American industries such as scrap metal and wastepaper lead the declines given attention. They feed the Chinese industrial production, which is in decline. The data is alarming. In September, the Port of Long Beach California, the busiest ocean shipping gateway, handled 197,076 outbound empty boxes. The empties accounted for nearly one third of all containers that moved through the port last month. September was the eighth straight month in which empty containers leaving Long Beach outnumbered those loaded with finished goods and commodity items. One factor is the higher valued USDollar, which makes American goods more expensive. To be sure, the lonstanding primary US exports for the last two decades have been diabetes, toxic bonds, military weapons, twisted news stories, scrap items, and laced vaccines. Not very impressive!
Last month Long Beach and the Port of Oakland both reported a double digit rise in exports of empty containers. So far this year, empties at the two ports are up more than 20% from a year earlier. The Long Beach loaded outbound exports were down 8.2% this year through September, while the Oakland volume of outbound loaded containers fell 12.7% from a year earlier over the first nine months. In August, the Port of Los Angeles, the country's largest single container port, handled more than 225,000 empty outbound containers, 21% more than a year earlier. The east coast was actually worse, given the turmoil in Europe. The Port Authority of New York and New Jersey expanded its empty container exports nearly 31.5% in the first eight months of this year, as the ugly trend grows over time.
The trade imbalance has started to widen badly. The data reflects Chinese activity. Their imports fell 20.4% year-over-year in September, following a 13.8% decline in August. As of June, US exports of scrap materials were down 36% from their peak of $32.6 billion in 2011. The US trade gap has expanded sharply in recent months as exports have slipped, growing 15.6% in August to a seasonally adjusted $48.3 billion, according to the USDept Commerce. The high USDollar is the key factor, certainly not strong import demand. US exports fell 2.0% in the month to their lowest level since October 2012. The high USDollar is not a sign of strength, but actually of death throes and systemic failure, in a final chapter of chaos and turmoil. See Wall Street Journal (HERE) and Zero Hedge (HERE).
◄$$$ RAILROAD FREIGHT WITHIN THE USECONOMY IS HITTING EXTREME LEVELS ON THE DOWN SIDE, DRAGGED DOWN BY THE ENERGY SECTOR... THE INDEX DECLINE REFLECTS THE BROADER ECONOMY AS WELL... THE GLOBAL BALTIC DRY INDEX CONFIRMS THE HORRENDOUS DATA. $$$
North American railcar orders plummeted the most in at least 27 years as railroads shipped less oil and sand used for drilling. The US industrial decline is accelerating. It is not approaching a slowdown as the mainstream press indicates. It is rampaging downhill. Orders in Q3 for new freight cars plunged 83% from a year earlier to 7374, according to the Railway Supply Institute. It the biggest decline since at least 1988 and the lowest number for a quarter since 2010. A normal figure over a three month period would be 10,000 to 15,000, so claims a Wells Fargo analyst. In macro confirmation, the Baltic Dry Index is down nearly 22% over the last 12 months. See Bloomberg (HERE).
◄$$$ CHINESE ALL CASH BUYERS OF US-HOMES HAVE TRIPLED SINCE 2005... MANDARIN SPEAKING CHINESE ARE BUYING MOSTLY HIGH END HOMES WITH A MEDIAN PRICE OF OVER $500 THOUSAND. $$$
Xiaoshou is the open cry, the translation of 'For Sale' in Chinese. Transactions in cash for US property more often lately require a real estate agent who speaks Mandarin. Ethnic Technologies is multi-cultural marketing company, based in New Jersey. A joint analysis by realty research firm RealtyTrac and Ethnic Tech discovered that 46% of Mandarin speaking buyers who purchased US homes in the 17 months ending in May 2015 paid in all cash. The figure is triple the number paying all cash in 2005. Overall, Mandarin speakers are the second largest non-English speaking group paying in cash, totaling nearly 18% of all cash deals. In the second slot are those buyers speaking Spanish at 43% in sales. In aggregate, all non-English speaking groups were responsible for a 20% share in 2005, then for a 33% share in the 17 months ending in May 2015, for US home purchases. The two firms looked at 10 million publicly recorded residential property sales deeds in 2014 and 2015 compared with 2005 by ethnicity and native language spoken. The usual klaptrapp was heard about helping to support price appreciation in the broken US residential property market. See Market Watch (HERE).
◄$$$ MCDONALDS FAST FOOD CHAIN IS UNDERGOING A PAINFUL SERIES OF PULLBACKS... A MASS OF STORE SHUTDOWNS IS PLANNED... SOME FRANCHISE OWNERS CLAIM IT IS THEIR FINAL DAYS, AS INSOLVENCY HAS EMERGED WIDELY... PAINFUL LOSSES ARE ACROSS THE BOARD... LIKE SEARS, THE FLAGSHIP IN FAST FOOD FACES SEVERE CUTBACKS, BUT IN THE FORM OF FRANCHISE BUSTS. $$$
The McDonald franchise has been shrinking for the first time in company history that extends over 40 years. The US restaurant chain has undergone a 2% to 4% decline in store count for the last two years running. About 2% more of the US base will shut down very soon, the announcement having been made in April. McDonalds announced that it would be closing 700 underperforming locations, from its large base of 14,300 locations in the United States alone. Hence the reductions are not enormous by any measure. It still has more than double the locations of Burger King, its closest competitor. The trend is down, but the fundamentals have raised negative attention. The picture looks much worse than simply 700 stores closing down. One franchise owner wrote in response to a financial survey run by Nomura Group. "We are in the throes of a deep depression, and nothing is changing. Probably 30% of operators are insolvent." Another franchise owner went as far as to speculate that McDonalds is actually facing its final days, in his words. Competition is fierce, and Mickey-D feels it bigtime from healthy food chains and those who openly promote the avoidance of dangerous food additives. The trend away from fast food fat and garbage intake is gaining ground. See Zero Hedge (HERE). The company faces the same fate as numerous nationwide retail chains in the United States like Sears and others.
Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and more.