CRISIS COVERAGE REPORT
BAILOUTS, MERGERS, CORRUPTION
EXTENDED BREAKDOWN ANALYSIS

* Critical Tidbits
* Third World Destiny
* Aspects of Systemic Failure
* Firestorm Foreclosure Scandal



HAT TRICK LETTER
Issue #79
Jim Willie CB, 
“the Golden Jackass”
17 October 2010

"The preconditions for USEconomic growth in 2011 remain in place." ~ Ben Bernanke (blind man in clown suit occupying the USFed Chairman seat)

"We cannot solve problems by using the same kind of thinking we used when we created the problems." ~ Albert Einstein.

"We live in an amazing world. Everybody has big budget deficits and big easy money, but somehow the world as a whole cannot fully employ itself& It is a serious question. We are no longer talking about a single country having a big depression, but the entire world."
~ Paul Volcker

"The war on terror is a mythical historical narrative." ~ Zbigniew Brzezinski (former US National Security Adviser, speaking to the US Senate)

CRITICAL TIDBITS

◄$$$ THE 911 FIRESTORM OF DISPUTE HAS NEVER GONE AWAY. IT IS A CONSTANT REVULSION REJECTION UNDER THE SURFACE. CONSIDER JUST ONE ELEMENT, THE AIRCRAFT THAT CRASHED INTO THE WORLD TRADE CENTER. IT DOES NOT MATCH ANY COMMERCIAL AIRLINER. ADD ONE MORE ITEM TO THE GROWING PILE OF CONTRADICTORY ELEMENTS TO THE OFFICIAL STORY. $$$

They call them the Unidentified Murder Weapons. The aircraft that crashed on 11 September of 2001 have never been forensically matched to the four passenger planes which were allegedly hijacked that day. Requests under the Freedom of Information Act have met with denials and refusals. The documents which have been produced, allegedly using data from the only three Black Box flight recorders said to have been found, have no serial numbers of the devices listed on them. All flight recorders have serial numbers to identify the aircraft in association. The official investigation reads like a Keystone Cop exercise. See the YouTube video on the subject (CLICK HERE).

My sources indicate that the villainous flying aircraft laden with explosives match to Boeing tanker aircraft!! Their silhouette matches the large underbelly profile of the tankers used to carry jet fuel in airborne vessels, the flying gasoline stations. For further comprehension, check the advanced Raytheon remote guidance systems for pilotinga, developed in the 1990 decade. Robotic flying is a standard weapon used in the war theater nowadays. Some of the other inconsistencies surrounding the 911 event (Bloody Military Coup d'Etat) extend to arguments of basic physics expressed by an American consortium of physicists. They point to problems in the official report as to gravity, melting point of structural steel versus burning point of jetfuel, and demolition propagation footprints. An American consortium of chemists points to the residue of thermite found in every single sample of World Trade Center debris collected one month after the 911 event. Even a Danish scientific group has confronted the issue of thermite residue, their samples containing advanced nano elements. Thermite is a powerful explosive. Financial forensic analysts point to Building #7 at the WTCenter, which contained JPMorgan bond records and Enron data. The building collapsed without the assistance of any aircraft crash at all.

My conclusion on the US public acceptance of the official 911 Commission Report is that many who accept the official story start with a conclusion and ignore a large heap of contradicting evidence. My conclusion is that those people who start with a clean sheet of paper and build a case based upon evidence and basic scientific facts (called the Experimental Method) find it impossible to accept much of anything about the official story or its report. Precedent for sham reports to cover up the crime and to seal the national wounds go back to the Warren Commission which attempted to close the case on the Kennedy Assassination. In all likelihood, Kennedy was killed by interests that control the US Federal Reserve. He had taken initial steps to re-instate the Silver Certificate Notes, and had fired a top CIA official. That official sat on the Warren Commission. In my opinion, the 911 event was the most carefully planned and best executed Coup d'Etat in world history. The American people (perhaps 95%) still do not know the identity of those who took charge of the USGovt and USMilitary. Think syndicate, as in banks, weapons, narcotics, the chief American swords.

◄$$$ ACCORDING TO THE USGOVT, ANOTHER AL-QAEDA HEIGHTENED THREAT IN EUROPE IS TO BE HEEDED. REGARD IT AS YET ANOTHER RUSE WITH MOTIVE. FEAR DURING NOVEMBER ELECTIONS IN THE UNITED STATES SEEMS THE OBJECTIVE. ALSO, DISRUPTED TOURISM TO EUROPE SEEMS A SECONDARY OBJECTIVE, GIVING SUPPORT TO THE BELEAGUERED USDOLLAR. $$$

This is such a dangerous, thorny, and ugly topic. Fear and threats of terrorism are basic Nazi propaganda tools. Do some research of Goebbels from Nazi Germany and his propaganda apparatus. The basic fact not recognized much by the US population is that the War on Terrorism is a grand ruse, a cover for promotion of war, confiscation of foreign resources, and expansion of a global narcotics monopoly. The basic fact not recognized much by the US population is that the theme of Terrorism is a primary plank to the Nazi tactics. Do some research of Goebbels and propaganda strategies from Nazi Germany during invasions of neighboring nations. Promotion of fear was a standard tool, with a grand benefit of the public willingness to forfeit civil liberties. Observe the Patriot Act. Leave me out of it.

◄$$$ INTERNET CENSORSHIP IN THE UNITED STATES IS AN AMBITION BY CERTAIN POLITICAL GROUPS. WHAT THE BUSH II ADMIN STARTED, THE OBAMA ADMIN CONTINUES. THE POLITICAL THEMES ARE FIGHTING TERRORISM AND REMOVING UNLAWFUL CONTENT. BUT THE DEFINITION LEAVES OPEN THE BLOCKAGE OF TEA PARTY INFORMATION AND CARTOON LAMPOONS. $$$

The Obama Admin is pressuring Internet Service Providers (ISP) to assist in the censorship of werbsites. The USDept Justice wishes to possess the power to shut down a website due to unlawful content. Intellectual Property Czar Victoria Espinel has been holding meetings with ISPs, registrars, payment processors, and others in a bid to block access to websites dedicated to infringing activities. The definition applied is wide open, vague, and spurious. The USGovt deems such infringement to include political opinions which are antagonistic toward the state, in what appears an obvious extension of 1984-style Big Brother abuse. In the role, Espinel pursues a special relationship between the government and Internet companies in order to "harmonize the efforts of law enforcement at the federal, state, and local levels and strengthen cooperation with the private sector."

Datamation magazine reports that one avenue already pursued, with stated motive, to stop websites that sell gray market pharmaceuticals. Some opposition remains in place. ICANN, which manages the internet domain name system, did not attend the meeting, stating it would be inappropriate. The meeting was convened to serve as a secondary plan for USGovt control of the Internet. The growing unpopularity of the current regime toward Cyber-Security within the COICA bills has led to their tenuous political position for continued survival. The Combating Online Infringement and Counterfeits Act (COICA) would "Establish a path for the Department of Justice to take action against websites dedicated to peddling unlawful content, including leaning on Internet providers, registrars, payment processors, and other Internet players to deny services to the offending sites." Past precedent has demonstrated that the USDept Justice (DOJ) considers unlawful and potential terrorist activity the Tea Party literature posted on public bulletin boards, as well as political lampoons such as the Obama Joker poster. According to a recent memo released by the Bureau of Justice Assistance, a component of what the DOJ considers extremist literature includes political or religious displays, or anything related to abortion, with direct warnings given to radical bookstores.

If the USDept Justice uses wide definitions on offensive abusive and forbidden material, the USGovt will possess the tools to effectively silence political free speech based on their own definitions of what constitutes extremist content. Various levels are to function in the monitor. Federal and state authorities are considering the implementation of technology that scans Internet posts and emails for content deemed to display resentment toward government, and then passes the information to the relevant authorities for terrorist surveillance measures. A past precedent was outlined in March 2010, when the independent news website The Drudge Report was accused of serving malware. Digital rights groups like the Electronic Frontier Foundation and Public Knowledge have expressed concern over how the COICA bill offers an inadequate nebulous definition of what constitutes a website infringement, opening the door for the USGovt to shut down political adversaries arbitrarily. The Obama Admin, like its predecessor, lusts for control of the Internet. The challenges are daunting, not only politically but technologically. Senator Joseph Lieberman is a key supporter of cyber-security legislation. He has pressed for a Congressional Bill that would hand the President power to shut down portions of the Internet for months with no oversight. In an interview, he told Candy Crowley at CNN that the ultimate intention was to imitate the Communist Chinese system of Internet policing. He said, "Right now China, the government, can disconnect parts of its Internet in case of war. We need to have that here too." See the GovTrack tracking of the mentioned legislation pathway (CLICK HERE).

The Jackass opinion has long maintained that enemy of the state constitutes enemies and competitors to the ruling crime syndicate, their bank fraud network, and their narcotics organization. Laws that block online sports betting are disguised attempts to obstruct narcotics trafficker competition and their money flow. Regulations that block water bottles onboard aircraft are disguised attempts to obstruct the transport of diamonds. The only true objective unbiased and free flowing news source is the Internet, and the USGovt with the Syndicate at the helm is well aware. The Internet is their enemy. My forecast is for the next supposed terrorist attack, a false flag type like 911, will center on the Internet. Something like an attack to take down the electrical grid in large portions of an entire region. That would incite a public outcry for action and protection, handing greater powers to the USGovt and yielding citizen rights.

◄$$$ GLOBALISTS SEEKING WORLD DOMINATION THROUGH CREDIT PREDATION, WAR PROFITEERING, MAYHEM, GENOCIDE, EXPLOITATION, NEWS CONTROL, DEBT SLAVERY, AND FEAR ARE INTERRUPTED BY THE BREAKDOWN IN THE FINANCIAL AND ECONOMIC SYSTEMS. A TREND MIGHT BE FIRM TOWARD DE-CENTRALIZATION. THE CURRENT PATH APPEARS TO BE IN THE OPPOSITE DIRECTION INTENDED BY GLOBALISTS. WATCH THE CURRENCY REVERSION EVENTS IN EUROPE FOR MAJOR CLUES. $$

To preface, these are very dangerous topics that might best be kept in summary form. My preference is to touch the surface, then leave it to individuals to pursue further. Consider a string of mega-topics, the Globalist themes. Much detail has been given in past Crisis Coverage Reports on the swine flu chapter of world history. Its central players came from the United States and Central Europe, with vast collusion easily detected with Big Pharma and centers for disease control. The toxic if not lethal vaccinations have not been dispersed, accepted, and injected much anymore, reduced to a trickle after a strong degree of discovery occurred. The genocide plan was interrupted. The entire movement of unified continental currency has not gained traction. Two to three years ago, much talk centered upon the newly planned Amero currency for usage in North America by the US, Canada, and Mexico. Since then, Mexico fell into early stages of systemic failure, as its government gradually has been losing control to drug cartels intent on expanding their influence far beyond the narcotics arena. Since then, China has made great inroads into Canadian supply routes whereby perhaps one quarter of the northern resources and minerals might be committed to China. Since then, the United States suffered a banking system death episode that has been carefully disguised as a cardiac event requiring special attention and massive aid. The Amero currency has gone nowhere, and talk of it has ended. Besides, the global contracts written in US$ terms could not be altered legally. It was interrupted.

Not soon after the US financial crisis and series of mortal wounds were reported, a fresh initiative was launched to tax carbon dioxide. The movement of Cap & Trade was given birth, to tax the air we breathe, to tax the air emitted from factories. This is the greatest sham ever conceived in modern history. Scientists routinely discredit the claims, as other sanctioned viewpoints from paid compromised scientists promote the movement. Wall Street wishes to impose $trillion taxes on industry, the people, even residential homes that must comply. Since a spring 2010 meeting in Western Europe at a global gathering, which was undermined by scattered strong contradictions of the entire foundation of global warming, the movement lost political traction and has fizzled. Its architects have turned defensive, like Al Gore and Tony Blair. The political themes of sovereign debt defaults, large dead banks, and currency war have dominated instead. Hardly a word is mentioned in political circles about the carbon tax. It was interrupted.

On the horizon lie three new Globalist themes, of much different variety, and more likely some degree of success, with a heavy feedback, a backlash impact. As the global currency war and  trade war pick up momentum, with epicenter in the US-China conflict, the movement of capital controls has become extremely important. The exit of money from the United States will surely reach a crescendo level, enough to trigger attempts to limit the movement of funds out of the country. It has already started with the big US banks, where limits on weekly wire transfers and extensive paperwork are required before the approval of transfers. At the present time, US citizens can still remove money from the domestic locations, but restrictions are growing. My forecast is for capital controls to worsen, to turn more restrictive, and to result in a climax, perhaps when the banks shut down temporarily. It will NOT be interrupted. That is the Hat Trick Letter expectation. The entire prospect of gold confiscation has been a regular topic of debate, discussion, and creeping fear. The Jackass commentaries on the topic have been usually loaded with eagerness and anticipation. Let them try!! It would be the most welcome gift to gold investors worldwide. The US investors would have to be willing to take on more roles in civil disobedience. Any attempt to confiscate gold would result in a gigantic backfire of failure. The price of gold would skyrocket. The ineptitude of USGovt leaders would be an example of global mockery. Their aborted efforts would possibly lead to a string of breakdowns in trust and confidence in all things US$ related. The side effect, an unintended consequence, would be the silent declaration that gold is worth double the contrived price, unduly affected by naked shorting of paper gold substitutes. Confiscation will be interrupted, since a declaration of surrender.

The alternative opposition news sources have led to a slow barely disguised movement toward Internet censorship, led by the USCongress. The phony ruse of combating terrorism has been applied, whether for communication between villains or attacks against the US electricity grid. Attempts in 2005 to control internet domain licenses failed. The USCongress wanted to permit a handful of Western communications corporations to control all licensing, with a three-tier price system. The Golden Jackass website, for instance, would be subjected to a $25,000 annual fee for monitor, management, supervision, and security functions. The current charge is $32 annually (as in under $100). Attempts are made each year to include more internet controls. Senators Jay Rockefeller (West Virginia) and Olympia Snowe (Washington) are the architects for internet control and censorship. What they fail to realize is that internet web technology remains, and will continue, to be three years ahead of the clownish attempts to control it. See contract independent routing. Foreign relocation, like in friendly Sweden, easily circumvents their efforts at draconian controls. Any actual blockage must be total shutdown. The majority of industrialized nation supply chains have internet dependence, as does much customer service. Expect attempts to continue, met with steady interruption.

A new viral movement has arrived on the scene, one which has the potential to turn viral in the hearts & minds of the people, and direct anger & retribution against the bankers. Think lawsuits and legal prosecution, even RICO law applications. The home confiscation initiatives, aided by assembly lines of document forgery, false legal claims to foreclose, and property titles lacking perfection of bond securities, threaten to send the banker crowd into a much more defensive position. It might result in a shift in fashion toward orange jumpsuits, especially for the contract lawyers at the big banks. At issue is whether the banks operating out of Wall Street and their Fannie Mae headquarters, currently under USGovt supervision, can control the states. The stubborn states have supreme courts, legal teams, and an armada of available attorneys to fight the syndicate. The battle is raging, with rising volume and intensity each new day. However, in order to fully grasp the Globalist challenge, look no further than the Euro currency. Not only is the European Union in crisis, on the edge of dismantle from a faulty foundation, but the Euro currency is in the process of fracturing. Do not be lulled into a secure sense from a rise in the Euro currency exchange rate versus the USDollar. As the sovereign debt crisis continues to rotate around Europe like a oversized carousel, watch for reversion to former domestic currencies instead, greater power to individual central banks, grotesque distrust of power centers, and great anger by the people. The European nations want to devalue their currency, and reversion to former domestic currencies enables exactly that facility. The Greeks will eventually revert to the Drachma currency. A reliable source indicates that Germany will revert to the DMark currency in the second half of year 2011. Not only is a unified continental currency not in the cards for Europe, but an unstoppable de-centralization movement is afoot, gaining momentum, and will not be stopped. The direction is the exact opposite of what Globalists would prefer, since power will be distributed, not concentrated.

◄$$$ CAPITAL CONTROLS ARE RATCHETED UPWARDS. OBAMA IS PUSHING TO FORCE REPORTING OF ALL FINANCIAL TRANSACTIONS. NOTE ONE MORE SIGNAL OF SYSTEMIC FAILURE, AS THE POWERZ ATTEMPT TO CAPTURE PRIVATE WEALTH BEFORE ITS CONFISCATION. $$$

The Obama Admin is a mere continuation of the Bush II Admin as far as bank welfare, war profiteering, global warming, internet censorship, and capital controls are concerned. Obama has gone much farther than Bush II in measures toward capital control. He has ordered broader cross-border money flow monitoring. Under the thinly disguised premise of trying to control organized crime and terrorism, the Obama Admin has introduced a proposal that would require US banks and Western Union to report all cross-border financial transactions, regardless of size. The legal beagles point to potential violations to the Constitutional implied right to privacy, which was established with Griswold vs Connecticut, a landmark decision. A subsequent major decision was the Roe vs Wade privacy ruling that struck down laws against abortion. If this proposal becomes law, Obama will have given insult and disrespect to the US Constitution. The movement by the USGovt is gathering momentum to control capital flows in and out of the country. This is one of the hallmarks of a failing system and one in which devaluation of the currency is soon to find galloping speed with great intensity. The Powerz are giving loud signals to move wealth quickly with dispatch into gold & silver as defense against debasement and confiscation. If the ruin of money does not render great damage, the capture of money ensures imminent risk of profound loss. A bank holiday in my view would open the door to a grand heist. See the Truth in Gold article (CLICK HERE).

◄$$$ OUTSPOKEN CRITICS TO BIG GOVERNMENT AND THE BANK SYNDICATE WILL BE SILENCED, REMOVED, OR ELIMINATED. THAT MODUS OPERANDI HAS NOT CHANGED FOR CENTURIES. GLENN BECK WILL STEP DOWN, HAVING MADE HIS MARK. $$$

Witness Glenn Beck and the Silence of the Lambs. Two weeks ago, Beck announced on his radio show that he will be taking a brief leave of absence for medical reasons. He said, "There is something wrong with my voice, and we are not sure what it is. They are going to be doing CATscans and MREs or MRIs and PET scans. They are going to be doing blood work like crazy." A quick monitor of his telephone or management offices might provide a more immediate accurate diagnosis. Surgery might remove syndicate fingers around his throat. A shutdown was ordered by the syndicate. That is my view. The truth will emerge in time.

◄$$$ STUXNET WORMS HAVE INFECTED OVER 100,000 COMPUTERS. THE ORIGINAL TARGET WAS THE BUSHEHR NUCLEAR PLANT IN IRAN. BUT THE WORM  HAS GONE GLOBAL. THE WORMS ORIGINATED FROM A NATION CLOSELY ALLIED WITH THE UNITED STATES AND ENGLAND. $$$

Some have called the StuxNet worm a potential global black swan. The target was the large Iranian nuclear reactor facility at Bushehr and the German built Siemens equipment. However, the worm spread much farther beyond Bushehr in the system infections. If constrained to Iran, the effects would likely not have been noticed for some time, if at all. Instead, the worm was extremely aggressive in its infection vectors, spreading to fifteen other Siemens plants, and tens of thousands of other external computers worldwide. In Iran, 60 thousand computers have been infected. In Indonesia, 10 thousand computers have been infected. Even in the United States, where anti-virus layers are more a standard protection, several thousand computers are believed infected as well. What began as a standard Anglo data terror campaign has rendered many corporations vulnerable and opened the door to dangerous collateral damage. Numerous parties, including dark cloaked government security agencies, are racing to reverse engineer the code and exploit the infected machines. The infected machines contain compromised personal details and private industrial data not just in Iran, but also Indonesia and India (another infection site). Some risk exists even in the United States for corporate trade secrets and vital information. Melissa Hathaway is a former United States national cyber-security chief. She warned, "Proliferation is a real problem, and no country is prepared to deal with it. All of these guys are scared to death. We have about 90 days to fix this before some hacker begins using it."

The origin of the cyber attacks is a US ally. The infection of computer viruses and other wooden shoes in the electronic systems have been a standard method used since 2005. See the Iranian and Persian Gulf internet and telephone communication cables being cut in underwater seabeds. The New York Times quoted a former USGovt intelligence office as saying that the attack was the work of Israel's equivalent of the US National Security Agency, known as Unit 8200. According to the IEEE Spectrum issue in December, Israel had previously used a cyber-attack to successfully smother radar systems in Syria. The attack allowed a vital probe of what it believed to be a nuclear reactor under construction. See the Daily Tech article (CLICK HERE).

◄$$$ A BERKELY PHYSICS PROFESSOR OBJECTS TO THE GLOBAL WARMING DISINFORMATION. WITH HIS INPUT, ANOTHER LEG IS PULLED FROM THE CAP & TRADE FRAUDULENT STOOL. HE IS TOO OLD TO BE SILENCED, KIND OF LIKE CHALMERS JOHNSON. THE CARBON TAX IS THE LAST GASP OF THE ELITE TO SIPHON MONEY FROM THE SYSTEM LIKE GIANT PARASITES. $$$

Harold Lewis is professor emeritus of Physics, University of California at Santa Barbara, and its department former chairman; former member Defense Science Board, chairman of its Technology panel; chairman DSB study on Nuclear Winter; former member Advisory Committee on Reactor Safeguards; former member of President's Nuclear Safety Oversight Committee; chairman American Physical Society (APS) study on Nuclear Reactor Safety; co-founder and former chairman of JASON; former member of USAirForce Scientific Advisory Board; served in US Navy in WW2; author of several books such as technology risk and decision making. He has the solid credentials.

Harold Lewis boldly stated, "It is of course, the global warming scam, with the (literally) trillions of dollars driving it, that has corrupted so many scientists, and has carried APS before it like a rogue wave. It is the greatest and most successful pseudo-scientific fraud I have seen in my long life as a physicist. Anyone who has the faintest doubt that this is so should force himself to read the ClimateGate documents, which lay it bare. Montford's book organizes the facts very well. I do not believe that any real physicist, nay scientist, can read that stuff without revulsion. I would almost make that revulsion a definition of the word scientist."

Lewis continued to hypothesize what is happening and with what motive. The motive is tied to money, fame, and travel perks. He stated, "I do feel the need to add one note, and this is conjecture, since it is always risky to discuss other people's motives. This scheming at APS headquarters is so bizarre that there cannot be a simple explanation for it. Some have held that the physicists of today are not as smart as they used to be, but I do not think that is an issue. I think it is the money, exactly what Eisenhower warned about a half century ago. There are indeed trillions of dollars involved, to say nothing of the fame and glory (and frequent trips to exotic islands) that go with being a member of the club." See the Cryptogon article (CLICK HERE). My viewpoint is simple. Wall Street and London City financial syndicate dons ran out of asset bubbles to create, exploit, and defend for government aid and rescue, while resisting reform and restructure. They have turned to taxing carbon dioxide, the air we humans breathe and the air in exhaust from industrial plants. It is the Elite's last gasp at grand larceny. The sillyness of the concept testifies to their desperation. Any permission by the American public would be final proof of stupidity worthy of removal of the species by Darwinian natural selection. No species tribe deserves to carry on after granting permission to tax its air.

◄$$$ MARK MOBIUS OF TEMPLETON IDENTIFIES A GLOBAL DEPRESSION THREAT AS A CONSEQUENT RISK FROM TRADE WAR, CURRENCY WAR, CAPITAL CONTROLS, AND MORE. TOO MUCH ATTENTION IS DIRECTED AT CHINA, AND NOT ENOUGH AT USGOVT AND USTREASURY AND USFED POLICIES, WHICH EXACERBATE TRADE TENSIONS AND THE CURRENCY FRAMEWORK. THE RISK OF A BAD OUTCOME IS THE SLIDE TOWARD GLOBAL DEPRESSION. $$$

The world risks a global depression if currency tensions escalate. Nobody seems to give heed to the lessons of the Smoot-Hawley experience of the Great Depression. History is repeated, not learned from. Rising tensions stirred by an escalating global currency war has sparked talk of capital controls. The effect on financial markets would be dire, claims Mark Mobius, executive chairman of Templeton Emerging Markets Group. If enacted, currency controls spawn trade wars accompanied by the strangulation of trade restrictions. A transformation is being implemented. Mobius expressed the viewpoint that currency appreciation is not necessarily a bad thing for importers of raw materials, and can provide a structural stimulus toward greater domestic economic development from realignment. He was referring to China. On the investment side, he pointed to American Depositary Receipts or Global Depositary Receipts linked to Chinese companies as a way to avoid the trade war restrictions. Their investments are not obstructed under controls.

Mark Mobius said, "We could really move into a depression globally. I think the linchpin of this is China and the United States. If they can come to some kind of agreement, then I think we could see that softening up and tempered. I think the Chinese are beginning to realize that... [A gradual Yuan currency rise would] genuinely have a beneficial impact on China. China is becoming a more and more domestically oriented economy. They are going to de-emphasize exports... So a strong currency and of course moving towards a major world trading currency is definitely in the cards... You can be trading outside the market even though there are capital controls. This was the case with Argentina for example in the recent past and in other countries. That is one protection."

Fears of global currency and trade wars are top of the agenda at IMF and World Bank meetings. The preliminary Group of Seven meeting last week had a focus on the defuse of currency tensions. But with the US Federal Reserve expected to introduce further Quantitative Easing measures, the flood of easy money is set to weaken the USDollar and trigger an appreciation in other currencies. US policies aggravate currency tensions mightily. The main actor in the Competing Currency War is the United States and its monetary policy, even while it utters accusatory words in distraction. IMF head Dominique Strauss-Kahn continued to harp on China, saying it needed to accelerate the appreciation of the Yuan in order to relax tensions. He said, "If you want to be at the center of the system, it goes with having more responsibility in the system. An interesting turn of words, in which one can discern that the IMF realizes China has become a central global player. Heaven help the global stage if China abuses power as the United States has done. In June, China pledged to let its currency respond to market forces more freely, but the Yuan has only risen about 2% since then. See the CNBC article (CLICK HERE).

◄$$$ THE INCONGRUITY OF THE RATING AGENCY POSITIONS HAS BECOME NOTICEABLY TILTED AND RIDICULOUS. THE UNITED STATES AND UNITED KINGDOM ARE IMMUNE FROM THE REALITY OF THEIR DEEP DEBT. FOREIGN NATIONS ARE ANGRY OVER THE TWO TIERS AND BLATANT BIAS. THE SYSTEM INVITES A NASTY REACTION. THE GLOBAL RESPONSE WILL BE HARSH AND UNFORGIVING, A TICKET TO THE THIRD WORLD FOR THE TWO ANGLO NATIONS. $$$

The farce of the rosy credit ratings given to the USGovt and UKGovt debt has been exposed, as the fundamental data provide a telling story in inequality. The United States and the United Kingdom are bestowed sterling clean AAA debt ratings uniformly by the rating agencies. The rating has nothing to do with fundamentals, and everything to do with financial power abused. One flimsy practical argument is that if the US and UK debt were downgraded, the effect would be massive sales of bonds and havoc in financial markets. Therefore, the implied admission is that the current Western financial markets have a fallacious foundation. In an examination of the many European nations, considering their sovereign debt as a percentage of GDP (economy size), the inequality is exposed as grotesque. Of the 28 nations compared, the UK ranks #3 among highest deficit to GDP ratio at 11.5% while the US ranks #5 worst at 9.9% in the debt ratio. Spain ranks #4 with an 11.2% deficit ratio. Of the other AAA rated nations in the comparison, even France has a 7.5% debt ratio. Germany boasts a rather healthy 3.3% ratio. The Anglo national debts and deficits are clearly unsustainable. The movement has begun in some nations to cut budgets and reduce expenditures. They are trying to reduce the cost of government and the welfare state before those costs overwhelm them and bring ruin. In my view, their efforts are too late to avoid that ruin, as a disaster awaits. Austerity measures usually sink the ships of state, economy and all, from reduced cash flow and foreign capital flight. Many costs remain legislated and fixed, like state worker pensions, military and judicial pensions, and much more. Budget deficits have become a firm fixture.

One nation conspicuously stands out as NOT participating in any austerity measures, any budget cutbacks, any retreat in government size. That is the United States. It features mounting budgets, investment in dead banks, nationalization of black holes (Fannie Mae, AIG), expansion of bloated bureaucracies, and continued endless war. Yet the USGovt debt is bestowed through political largesse and syndicate orders a sterling debt rating by the rating agencies, whose past collusion with Wall Street firms has harmed their reputations and rubbed raw their unbiased claims. European centers observe the inequality, inconsistency, and disparity with growing disgust. The financial crisis and shock waves are not confined to Europe, but rather are global. William Buckler of the Privateer suggests there are three means of addressing the current crisis situation. 1) Do nothing, aggravate the problem, inflate the debt away, and hope the problem disappears. That is the US method. 2) Attempt to confront the deficit problem, even if belatedly, and make movement toward budget cutbacks and reduced government size. That is the European method. 3) Buckler offers lastly, "Or radically change the system by returning to SOUND finances. That is the method which will eventually prevail. Europe is doing something to prepare its people. The United States is not." The hypocrisy, double standard, hegemony, and grotesque inequity, discrimination, and profound injustice will not continue for much longer. The rigged two tier system that favors the Anglo nations, which were the worst perpetrators of credit explosion, bond fraud, and warmongering, invites a powerful reaction response from the rest of the world. That response in my view will send the US & UK into the Third World.

THIRD WORLD DESTINY

◄$$$ PAUL CRAIG ROBERTS DESCRIBES A THIRD WORLD ECONOMY ENGRAINED IN THE UNITED STATES. NEW EMPLOYMENT IN THE PRODUCTION OF TRADEABLE GOODS HAS GONE OFFSHORE. NEW EMPLOYMENT IN DOMESTIC SERVICE BOUND ONSHORE REMAINS THE GROWTH PATCH. THOSE JOBS TEND TO BE LOW INCOME, LOW SKILL, LOW SECURITY, LIKE THE CORE OF THIRD WORLD ECONOMIES. $$$

Paul Craig Roberts served as Assistant Secy Treasury in the Reagan Admin, and former associate editor of the Wall Street Journal. He put forth a harsh editorial that describes the labor force into a proper perspective. "The wage and salary cost savings obtained by giving Americans jobs to Chinese and Indians have enriched corporate CEOs, shareholders, and Wall Street at the expense of the middle class and America's consumer economy. The loss of middle class jobs and incomes was covered up for years by the expansion of consumer debt to substitute for the lack of income growth. Americans refinanced their homes and spent the equity, and they maxed out their credit cards. Consumer debt expansion has run its course, and there is no possibility of continuing to drive the economy with additions to consumer debt. Economists and policymakers continue to ignore the fact that all employment in tradable goods and services can be moved offshore (or filled by foreigners brought in on H-1b and L-1 visas). The only replacement jobs are in non-tradable domestic services, that is, those jobs that require hands-on activity, such as ambulatory health services, barbers, cleaning services, waitresses, and bartenders, which are jobs that describe the labor force of a Third World country. Even many of these jobs are now filed with foreigners brought in on R-1 type visas from Russia, Ukraine, Thailand, Romania, and elsewhere. The loss of American jobs and the compression of consumer income by low wages has removed consumer demand as the driving force of the economy. This is the reason why  expansionary monetary and fiscal policies are having no effect. The latest jobs report issued today shows that Americas transformation into a Third World economy continues. The economy lost 95,000 jobs in September, mainly due to cuts in local education and federal employment. Part of the loss of 159,000 government jobs was offset by 64,000 new private sector jobs. Where are the new jobs? They are in non-tradable lowly paid domestic services: 32,000 were in health care and social services, and 33,900 were in food services and drinking places. There you have it. That is America's New Economy." That is not the new economy, but rather the margin that offers growth.

◄$$$ CALLS OF AMERICA BEING AN EMERGING MARKET HAVE BEGUN. THESE ARE PRELUDE TO RECOGNITION LATER OF ENTRANCE IN THE THIRD WORLD.  A BETTER DESCRIPTION IS THE USECONOMY IS A SUBMERGING MARKET. IT CAN BECOME AN EMERGING ECONOMY ONLY AFTER IT HITS BOTTOM IN A FEW YEARS, IN A PLACE CALLED THE THIRD WORLD. SOME UNIQUE BIZARRE TRAITS CAN ALSO BE CITED CONCERNING THE U.S. EDUCATION SYSTEM, AS THE NATION IS AN EXTREME ANOMALY. $$$

An interesting debate on CNBC was presented in early October on whether the United States should be classified as an emerging market for investment purposes. The opponent mocked the arguments without a single substantial denial raised as a contradicting factor. The nation exhibits many of the risk factors traditionally correlated with developing markets. For example: 1) Out of control debts, 2) Crony capitalism socialism or whatever one might call it, 3) Decision making at the government level dominates all facts of economy and markets, 4) Dysfunctional government controlled by powerful groups, 5) Growing chasm between Rich & Poor classes, 6) Dysfunctional financing whereby the Treasury issues debt, and the central bank purchases it. The argument offered a conclusion challenge. "If I gave you those risk factors and did not say which country it applied to, the majority of people would say 'That is an emerging market.' " See the Fund My Mutual Fund article (CLICK HERE).

My view runs parallel but deeper, consistent with the emerging market, but with a different timeline. The United States Economy is not emerging from anything, anywhere, anytime soon. It is still in deep deterioration mode. It is better described as a Submerging Economy, since going backwards, which is what recession means. Its crises are reaching full blossom, with streaks of corruption laced throughout. The nation might qualify as an Emerging Economy at a later date, when it has completed an important degradation phase that might result in a climax collapse or debt default. A nation on the verge of debt default is hardly emerging, a baseless claim!! Add a few items to the list of factors and characteristics to support the above argument. For example, add: A) Insolvent banks under government subsidy, B) Profound political interference, intervention, involvement in the economy, C) Deep corruption in all financial channels including the money creation, D) Dysfunctional credit engines that favor the big banks in control, E) Lack of capital investment for economic development, F) Crumbling ancient infrastructure (object of talk but no action), G) Heavy import dependence, H) Lack of domestic business investment, I) Oppressive government regulation and consequent cost to business, and J) Narcotics involvement by its government agencies. Sorry, but my added factors might describe strong Third World Nation traits, my error. Witness the billboard signs on the way to the Third World, from which the nation might someday emerge from, but not yet. The timing is off.

Norman Augustine of Lockheed Martin recently completed a Competitive Educational study on the United States. What the study concluded is bizarre, not complimentary, and somewhat shocking to those whose eyes have been covered. The US as a nation produces more graduates in visual & performing arts than math & science. It noted that math & science typically form the path to higher living standards. The main problem with the college & university system is its top-heavy administration structure, but it still has a good student-teacher ratio (for now). The US as a nation has a high dropout rate for students at the secondary level, among the worst in the industrial world. It has a lowly #45 rank in educational scores internationally, but a #3 rank in spending per student, which screams inefficiency, big overhead, and waste. The study found a pervasive situation exists where teachers do not have expertise in their subjects. Foreigners dominate in expertise, as education is a mainstay exported service. Fully two thirds of the PhD degrees granted are to foreigners. Foreigners complain of some difficulty coming to the US and even more difficulty in staying.

My personal experience at Carnegie Mellon Univ in the graduate program (ended in 1980) revealed that half of students in the doctoral program were foreigners, and several were my friends. Only one professor was foreign born, a man from Taiwan with rather good english. The foreign students came from England, Austria, Romania, Yugoslavia (Montenegro), Sudan, Ghana, and several from Taiwan. The Taiwanese distinguished themselves, as they led in many areas and were helpful to younger students (like Tiaopin to me). None at CMU in my department came from India, a surprise. But at the Staples HQ during my five years there, several Indian MBAs worked in finance and accounting posts, curiously the only foreigners. The Staples executive staff was dominated by native Harvard MBAs. Years ago, several colleagues at Digital Equipment Corp (DEC) came from India, one in my group from Pakistan (by way of Wharton). A raft of Indian engineers at DEC were top notch. Few foreigners occupied DEC executive posts.

◄$$$ DEBT IN THE UNITED STATES IS GROWING MUCH FASTER THAN INCOME. AN EVENT IS COMING TO SHOCK THE SYSTEM, A CERTAIN KICK INTO THE THIRD WORLD. INCOME IS SOON TO HAVE FURTHER DOWNWARD SHOCKS FROM ACCELERATED JOB LOSS AND BUSINESS SHUTDOWNS. AT HEAVY RISK  IS LIFE SAVINGS. THE GAP BETWEEN DEBT AND INCOME IS WIDENING, TO A SHOCKING LEVEL, A FACTOR TO DICTATE A BREAKDOWN IN THE SYSTEM. $$$

◄$$$ THE UNITED STATES LEADS THE WORLD IN DEBT/REVENUE RATIO. MANY ANALYSTS FOCUS ON CUMULATIVE DEBT/ECONOMY RATIO, WHICH IS FINE. OTHERS FOCUS ON ANNUAL DEFICIT/ECONOMY RATIO, WHICH IS ALSO FINE. BUT REVENUE INCLUSION GIVES THE ALL IMPORTANT INDICATION OF FOREIGN FUNDED DEBT. $$$

John Mauldin makes a fine argument on revenues serving the most important indication. From the inception of the Hat Trick Letter, a mainstay Jackass argument has been that foreign funded debt would eventually undermine national sovereignty. In other words, the nation must cater to foreign interests and constantly bend, even in secret fashion, so as to maintain deficit finance. Although pressures are present here and now from foreign priorities, the USGovt, being of a fascist nature and combative to ally and enemy alike, has turned hostile to USTreasury creditors. The revenue inclusion dictates the health story, since deficits not covered by internal revenue must be financed by foreigners. In fact, modern history teaches that foreign flight paves the way to national ruin. In the case of the United States, the abuse of the US$ Printing Pre$$ has been indispensable in financing debt through monetization, often hidden, usually in high volume, always deceitful, surely desperate. Creditors abhor such monetization practice, since it acts as an involuntary debt writedown forced upon them by dictum.

John Mauldin wrote, "It is not GDP but government revenues that matter. Whatever the size of a government's liabilities, what matters ultimately is how they compare to the resources available to service them. One benefit of sovereignty is that governments can unilaterally increase their income by raising taxes, but they will only ever be able to acquire in this way a fraction of GDP. Debt/GDP therefore provides a flattering image of government finances. A better approach is to scale debt against actual government revenues. An even better approach would be to scale debt against the maximum level of revenues that governments can realistically obtain from using their tax raising power to the full. This is, inter alia, a function of the people's tolerance for taxation and government interference. Seen from this angle, the US federal debt no longer compares quite so favourably with that of European governments." Can you say Third World debt? Deep monetization of debt is a major Third World feature. Notice that on the Debt/Revenue ratio, the United States trails Greece!! See the Market Oracle article (CLICK HERE).


ASPECTS OF SYSTEMATIC FAILURE

◄$$$ THE BREAKDOWN SEQUENCE WILL GATHER MOMENTUM AND OCCUR MORE QUICKLY THAN MOST PEOPLE IMAGINE. COMPLEX SYSTEMS ARE COLLAPSING BEFORE OUR EYES. LINEAR PATHWAYS HAVE ENTERED WARP ZONES. UNPREDICTABLE EVENTS ARE IN PROGRESS. AN AVALANCHE OF DEBT IS READY TO COME DOWN THE MOUNTAIN. INSOLVENCY WILL MAGNIFY TO MUCH GREATER LEVELS, ONLY TO BECOME DEPENDENT ON PRINTED MONEY. GOLD & SILVER ARE THE PREPARATIONS FOR SURVIVAL. $$$

Chris Martenson lays out a brief but poignant article that cuts directly to the core of the numerous problems. He summarizes them well. The main theme he presents is that moments of discontinuity are coming soon, if not already. More financial breakdowns are imminent, perhaps bigger than previous crisis events. Hard walls will be encountered to the usual remedy policies. No linear pathways will be available. The problems will seem to accelerate, both with greater frequency and greater intensity. He said, "When the next moment of discontinuity finally arrives, events will unfold much more rapidly than most people expect... But far too many people expect events to unfold in a more or less orderly manner, with plenty of time to adjust along the way. In other words, linearly... We still face the convergence of multiple trends, each of which alone has the power to permanently transform our economic landscape and standard of living." He cited peak oil as a major challenge, but my focus is on the mention of sovereign insolvency and currency debasement. A big breakdown toward systemic failure is nigh, but its timing is as difficult to predict as when an avalanche of snow strikes the lower grounds. The accumulation of debt creates the risk. Its mass of hardpacked snowy debt will cause unspeakable damage.

In sovereign debt, most nations have set up pension and entitlement programs that render their states as insolvent on a chronic basis. Any shortfalls can be funded only with a bright economic future, and strong recoveries. But huge future deficits are built in. The USGovt official deficit is likely to grow by $9 trillion in the next decade. A string of sovereign defaults lie in the future, whose fuses are criss-crossed from interconnected borrowings. This topic was addressed in Hat Trick Letter reports earlier this year. Each nation's banks own debt from other neighbor nations. Each nation has significant trade with other neighbor nations. Martenson warns that attention must be directed to the shape, timing, and severity of the aftermath of economic wreckage that is certain to come from upcoming sovereign defaults.

In the currency wars, one of my key themes, nations have resorted in knee-jerk fashion to printing money in order to attempt to find relief from both economic distress and banking system insolvency. Currency debasement results. Martenson describes the Competing Currency War, and reminds that all nations cannot win simultaneously in the battle to debase currencies, yet they will try. He misses a great big point though, since all nations will lose, with no winners at all!! Political support is easy to muster for printing money to dig a way out of the morass. He urges preparation for a global program of currency debasement as a guaranteed aspect of the economic future. My view extends to the effect of the currency war, the race to the bottom, which results in a uniformly higher cost structure, further ruin of the capital base, lower incomes, finally a corporate breakdown and economic failures. The quantum drop in standard of living will be the grand shock, and the ticket stub to the trip into the Third World. Debt will not be financed, and must be restructured with great losses incurred. A domino effect follows with bank failures, since many banks own outsized blocks of supposedly safe sovereign debt. Safe havens will be ravaged. Prepare for non-linear events, big surprises, even shocks, grand disruptions like to the supply chain, and gradual choas taking root. The supply chain woes will cause civil unrest and riots. See the Martenson article entitled "Prediction: Things Will Unravel Faster Than You Think" on Gold-Eagle (CLICK HERE).

◄$$$ THE USFED INSOLVENCY WILL BECOME A STARK REALITY SOON, VISIBLE AT A GLOBAL LEVEL, LIKE IN A FISHBOWL. THE MORTGAGE FORECLOSURE SCANDAL WILL TURN MUCH MORTGAGE BOND PAPER INTO WORTHLESS HANDI-WIPE TISSUES. THE USFED BALANCE SHEET WILL QIUCKLY APPROACH MINUS $1 TRILLION WITHIN A YEAR. PRESSURE TO CONTINUE THEIR FUNCTION WILL BECOME ACUTE IN THE COMING MONTHS. $$$

USFed insolvency and quitting never enters the minds of analysts. My forecast in mid-2009 was for the USFed to move from a $500 billion hole on their balance sheet to a full $1 trillion. The stage is set for precisely that next quantum leap in red ink flow with large holes blown in their balance sheet. The mortgage bonds they bought at phony high value have lost much value. They will lose much more value in the coming months. They must find a way to dump toxic debt on the ever-willing USGovt, like in the Fannie Mae back door. That is surely another big reason why it was nationalized. The Chinese forced the nationalization in summer 2008, if truth be known. The White House chooses not to jump on the populist bandwagon to halt all foreclosures in a moratorium, since their masters own the USFed. They do not wish to accelerate the lethal powerful losses on their increasingly acidic balance sheet. The accomplice USDept Treasury is equally worried about the asset backed bond market. Mortgage bonds hold the foundation for the entire housing market, with home loans the connective tissue. The Fannie Mae cesspool just turned a couple points higher on pH acidity level. The USGovt is on the hook for the Fannie Mae gigantic vats that they fully adopted. Regard the Treasury Secy Geithner as the custodial officer of the Fannie Mae fields of financial effluent of the most toxic variety. Thus he will defend their vats. The USGovt has given a formal guarantee, no longer quasi or implicit, but rather an explicit guarantee on $trillions in Govt Sponored Enterprise bonds, the Fannie Mae and Freddie Mac mortgage bonds supposedly backed by properties. However, developments during the last few weeks have highlighted the dubious linkage to any title claims at all. Calling a moratorium on foreclosures would accelerate the fracture that has already grown as wide as the Mississippi River. The TARP Fund grand fraud and larceny solidified and tightened the Fannie Mae guy wires and oversized cables connecting the GSE mortgage bonds. The nationalization of Fannie & Freddie was not so much to exploit the profit potential. It was to conceal for as long as possible the colossal fraud in the mortgage industry, and to create a toxic dumping ground.

The USFed owns nearly $1.5 trillion of toxic assets that have no bid, no market, and no integrity. That is a giant hole burned in their balance sheet. By being without a bid, that means any bond professional has an extreme challenge to argue or justify any inherent value whatsoever. Only the USFed offered demand for them, since the mortgage bond market was at high risk of near total collapse. The nation has returned to the same critical point two years later, since nothing was fixed. Now the USFed and USDept Treasury do not want to undermine the broken mortgage bond market, by adding greater uncertainty about the home loans that serve as their backbone. If foreclosed homes cannot be sold because of fraudulent paperwork, imagine the difficulty in selling assets chockfull of faulty or fraud-ridden loans. Chaos would ensue in the bond market, with ripple effects to USTreasurys. The nation is gripped with the challenge or finding a property title for a foreclosed home, and some homeowners are demanding proof of title before evacuating during foreclosure. Others have stopped mortgage payments until they are satisfied the bank actually holds the title. The next chapter to this nightmarish systemic national scandal is verification of the related home loans within asset backed securities, a key income stream claimed. Then further still, an impossible challenge comes in removing the home loans out of a pyramid of securities sitting on top of it. Think Collateralized Debt Obligation, heavy leverage, and unaccountability. We are witnessing perhaps a financially violent transformation into a communist society, starting with individual property rights!!

The USThe banking industry is exposed for $3 trillion in losses from mortgage bonds that have tenuous if not absent linkage through viable claims to properties, their residual sale value, their mortgage payment revenue stream, or even their rental income stream upon reclassification to rental properties after separation from homeowners. The USFed and USDept Treasury do NOT wish to throw gasoline on the mortgage bonfire that has spontaneously erupted. This bonfire will erupt naturally on its own, and the bank leaders know it. The Treasury is directly backing $400 billion of GSE securities, and is indirectly backing another $6.8 trillion by virtue of mortgage insurance. Given the tight link guarantee between the Fannie Mae bonds and the USGovt, one can hardly distinguish them from USTreasury Bonds. If the linkage is further removed from the asset in securitization, the Fannie Mae bond reverts to a USTreasury Bond. Thus the chain link threat to the USDollar. Thus the revulsion by foreign creditors to the US$-based debt securities in general. The USGovt and US central bank do not wish to aid the disconnection process. See the Zero Hedge article (CLICK HERE).

Fannie Mae wishes to avoid the entire home foreclosure process. That is why Fannie cleverly offers the home rental option. Just give the USGovt your tired, your poor, your huddled masses of property titles and the US Constitution provision of personal property rights will be one step closer to total shredding, an Elitist objective. One nation under banks, by the banks, and for the banks. This is no joke!! One can be most assured that the contract and document paperwork at Fannie & Freddie is a big pile of melted rotten spaghetti with rancid meat sauce. Anyone who would challenge the USGovt to produce their property title before making a single additional monthly mortgage payment, well, that would be too nasty and even revolutionary. Maybe it is justice. Henry David Thoreau would be proud of the civil disobedience, the title of his famous essay, one had a profound effect on the young Jackass.

◄$$$ BERNANKE WARNS IN A LONG DETAILED SPEECH OF FINANCIAL AND ECONOMIC COLLAPSE IN PROGRESS. SUCH AN HONEST ASSESSMENT COULD NEVER BE GIVEN BY HIM IN FRONT OF THE USCONGRESS. SOME MIGHT ACCUSE BERNANKE OF A LAPSED FIT OF LUCID HONESTY. OTHERS MIGHT CONCLUDE THAT BEN COMPREHENDS THAT USGOVT FINANCES AND USBANK FINANCES ARE BOTH ON DEATH ROW. BEN MIGHT HAVE EXPERIENCED AN EPIPHANY OF PURE LIGHT AND TRUTH. BERNANKE MUST REALIZE THE UNITED STATES IS ON THE BRINK OF FINANCIAL CATASTROPHE. DEAD AHEAD IS THE THIRD WORLD. $$$

Credit must be given where due. The US bankers have managed to keep the charade and carousel going much longer than sound money analysts expected. On October 4th, USFed Chairman Bernanke delivered a speech before the the Annual Meeting of the Rhode Island Public Expenditure Council in the capital Providence. In the speech, Ben warned that the current state of the government finances was dire and unsustainable. Consider a stream of his main points, permit a summary of his major points, each a shocking dose with reality. Never would he dare deliver such a message to the USCongress, where the standard fare is optimism, deception, baseless forecasts, errant complexity, and basic gibberish. The following are the thoughts of the chairman, lucid thoughts. The Jackass believes he is attempting to provide an alibi to forced reckless monetary policy, for his memoirs, so history will treat him sympathetically.

Bernanke believes that future budget deficits and debts could rise indefinitely. "Almost by definition, unsustainable trajectories of deficits and debts will never actually transpire, because creditors would never be willing to lend to a country in which the fiscal debt relative to the national income is rising without limit... The needed fiscal adjustments will be a rapid and painful response to a looming or actual fiscal crisis... Countries that continually spend beyond their means suffer slower growth in incomes and living standards and are prone to greater economic and financial instability." He referred loosely to the shock from some form of USTreasury debt default, with restructure. He admitted to the severe budgetary pressures to the state governments and the federal government. He described the deterioration of the USGovt finances, with lower revenue due to the recession and greater costs to alleviate the recession and stabilize the financial system. The current wretched fiscal condition resembles the period immediately following World War II. He admitted that the budget deficit is large. "Economic conditions provide little scope for reducing deficits significantly further over the next year or two... If current policy settings are maintained, and under reasonable assumptions about economic growth, the federal budget will be on an unsustainable path in coming years, with the ratio of federal debt held by the public to national income rising at an increasing pace. Moreover, as the national debt grows, so will the associated interest payments, which in turn will lead to further increases in projected deficits. Expectations of large and increasing deficits in the future could inhibit current household and business spending." He mentioned how the constant fiscal duress within the federal budget constrains the flexibility of fiscal policy to respond to current or new economic conditions. He expects Obama Health Care coupled with an aging population to greatly aggravate the fiscal situation. Medicare and Social Security are entrenched hemorrhages. He painted a bleak picture for the global economy and foreign fiscal condition as well. He pointed out that Europe and Japan are older in demographics than the United States population. However, he did not mention that the US population is the most unhealthy of any industrialized nation.

Bernanke emphasized the heightened risk to the overall USEconomy. He gave stern warning, but ironically he must heed his own warning. Monetary inflation is eroding capital, which he must realize. "Failing to address our unsustainable fiscal situation exposes our country to serious economic costs and risks... In the longer term, a rising level of government debt relative to national income is likely to put upward pressure on interest rates and thus inhibit capital formation, productivity, and economic growth. Larger government deficits increase our reliance on foreign lenders, all else being equal, implying that the share of US national income devoted to paying interest to foreign investors will increase over time. Income paid to foreign investors is not available for domestic consumption or investment. And an increasingly large cost of servicing a growing national debt means that the adjustments, when they come, could be sharp and disruptive. For example, large tax increases that might be imposed to cover the rising interest on the debt would slow potential growth by reducing incentives to work, save, hire, and invest... The threat to our economy is real and growing, which should be sufficient reason for fiscal policymakers to put in place a credible plan for bringing deficits down to sustainable levels over the medium term."

After an impressive steady stream of lucid logic bound in realism, Bernanke concluded with delusion and wishful thinking. He identified ways the USCongress could rein in spending and make the tax system more efficient. He must not realize that the august body has no motive to do so, nor ability, and certainly every bribed incentive to continue its servitude to the banking industry. Banks donated $200 million to shape (if not write) the Financial Regulation Bill. The jist of his speech was his dire warning of the financial crisis just ahead. See the Economic Policy Journal article (CLICK HERE). To catch a hint of the deep risk for USGovt debt shock, contrast the meter of private debt resolution versus the absence of federal debt resolution. The federal bubble has yet to burst. When it does, all hell will break loose, and the United States through the various powerful natural forces, will find itself suddenly knee deep in the Third World, a place it has read about but never experienced.

◄$$$ THE FASCIST BUSINESS MODEL LIES AT THE HEART OF THE NATIONAL ECONOMIC PATHOLOGY. THE BIGGEST BANKS ARE BEING SAVED AS A NATIONAL PRIORITY, AT THE RISK OF ECONOMIC COLLAPSE. FEAR OF DEPRESSION IS WIDELY SPREAD IF THEY ARE PERMITTED TO FAIL. THE NATION WILL PLUNGE INTO A DEPRESSION IF THEY DO NOT FAIL. THE OUTLET IS THE FAVORITE FASCIST DEVICE, NAMELY WAR. THE CONSTANT IS ANOTHER FASCIST DEVICE, PROMOTION OF AND PREOCCUPATION WITH TERRORISM. $$$

Almost every prominent independent economist has concluded that the giant banks must be broken up, in order to enable the national economy an opportunity to recover. They are clogging the entire credit system, the credit markets, and the credit generation. Midsized and small banks actually lend more to businesses than the mega-banks, and thus serve the USEconomy more effectively. The foreclosure scandal is just the latest episode of Wall Street corruption in a long skein. Unless the big US banks are broken up, their vast crippled portfolios given the liquidation flush, the entire banking sysetm will remain grotesquely warped, and the credit engines will operate in a continued dysfunctional manner. If not, the propped financial markets will remain in permanent rigged status. If not, derivatives will never be pulled under control. If not, unemployment will keep rising. If not, the big banks will continue to not only dominate US politics, but control the USDept Treasury and most finance committees in the USCongress. If not, then then the representative form of government in the United States will suffer a sudden death. The tragic truth in my view is that refusal to send the big banks into the liquidation & restructure mill invites marxist collectivism at best, and martial law at worst. The risk of lost property and legislating poverty is the prospect of the former, and rationed supplies is the prospect of the latter. A class struggle cometh.

◄$$$ THE I.M.F. ADMITS THAT THE WEST IS STUCK IN NEAR DEPRESSION, AND AUSTERITY MEASURES WILL LIKELY BACKFIRE. THE WOES OF SOUTHERN EUROPE ARE EXPECTED TO RESULT IN AMPLIFIED ECONOMIC DAMAGE, SINCE THE OVERVALUED EURO CURRENCY LIMITS MONETARY POLICY REACTION. THE STAGE IS SET FOR A EUROPEAN MONETARY UNION BREAKUP, AND MOVE BACK TO FORMER CURRENCIES. THE ECONOMIC DAMAGE WILL NEXT BE FELT, COMPLETE WITH FAST GROWING FISCAL DEFICITS. $$$

Bring to the table the interpreter to filter the latest Intl Monetary Fund report. In Chapter Three of the IMF World Economic Outlook offers a bleak forward view that condemns Southern Europe to death by slow suffocation and leaves little doubt that fiscal tightening will trap North Europe, Great Britain, and the United States in slump for a long time. The report misses or sidesteps the systemic failure in progress. France and Spain, caught in the overvalued Euro currency speed trap, decided to call national strikes. The IMF report entitled "Will It Hurt? Macroeconomic Effects of Fiscal Consolidation" makes the case convincingly that austerity measures will do more damage than so far admitted. They claim that in normal times, tightening federal spending by 1% of GDP in one country leads to a 0.5% loss of growth after two years. The current nightmare involves the entire global economy, stuck in the mud of insolvency. The IMF actually admitted that all nations cannot simultaneously devalue their currencies with benefits, an awakening to the Competing Currency War without recognition of its rotations of destruction. Nobel economist Joe Stiglitz warns a great dam might break in parts of Europe, setting off a death spiral in his words. The IMFund acknowledged the risk of doubled damage for states that cannot cut rates or devalue currency, stuck in the Euro straitjacket. Consider Spain, Portugal, Ireland, Greece, and Italy, all trapped in the European Monetary Union (common Euro currency) at overvalued exchange rates. The notion of amplified economic damage heaped upon nations with fixed exchange rate regimes has hit the discussions. The political justifications for reversion to former currencies is being made clear.

◄$$$ JIM GRANT DELIVERS A HARSH INDICTMENT OF THE USFED FOR ITS LETHAL INTERVENTIONS INTO THE USECONOMY. THE BREADTH AND DEPTH OF THEIR INVOLVEMENT HAS CREATED CONDITIONS THAT REQUIRE A PERMANENT ROLE. THEIR REMOVAL FROM A HEAVY ROLE PLAYED INVITES A SYSTEMIC COLLAPSE. HE PAINTS A PICTURE OF THE AMERICAN POLITBURO.

$$$

Jim Grant of the Grant Interest Rate Observer delivered an unusually harsh crticism. Couple it with the Volcker diatribe, and the criticism is at shrill levels. Grant accused the USFed of Lethal Intervention and widespread manipulation of the USEconomy. He stopped short of claiming the nation's economy and financial system have failed. He implied that without their continued prop role, the US system would fail. The charge of lethal interventions goes hand in hand with the implied necessity of ongoing props, which cannot be removed. The nation is exiting capitalism and entering something perverse, whose core is a deeply corrupted fascism. In an interview with Pimm Fox of Bloomberg, Grant refers to H Parker Willis, one of the founders of the Federal Reserve in 1913. In a book written in the 1930 decade, Willis openly regretted the creation and very existence of the USFed. As Grant said, "Willis was present at the creation of the Fed. He was one of the draftsmen of the Federal Reserve Act of 1913. Willis was also the first secretary of the Federal Reserve Board. He knows this institution. He wrote a book in 1936, which was a lamentation about the lowly state of Central Banking in America, the Fed having lost its way in 1936. It had opened its doors in 1914 and by 1936 it had eaten the forbidden fruit. It was in the business of guiding the economy, of managing the economy, of manipulating the aggregate...  It is a wonderful tract against the tendency of the Fed to do what it has so lethally done to this economy in my opinion, which is to steer us. In the interest of raising the GDP, it presses interest rates to zero, pouring out immense volumes of econometric studies in support of this dubious enterprise." Grant and Willis described the American Politburo, a soviet entity that now operates on entrenched US soil. The criticism delivered by Grant heralds great change or monumental breakdown. See the Zero Hedge article (CLICK HERE). My view is the breakdown will precede the change, which will occur only after much more fraud, much more systemic broken planks, much more USGovt largesse toward the banks, and much more attempts at justice.

◄$$$ AMBROSE URGES TO SHUT DOWN THE USFED, WHICH IS REVIVING PROVEN DESTRUCTIVE IDEAS. THEY ARE DOING ONLY WHAT THEY KNOW, INFLATE. THEY CONTINUE TO DO WHAT THEY HAVE ALWAYS DONE, DESTROY. THEY WILL PRODUCE A HIGHER COST STRUCTURE WITHOUT HIGHER NATIONAL WAGES. MONETARY THEORIES BEHIND KEYNESIAN PRINCIPLES ARE BEING SEQUENTIALLY DISCREDITED. $$$

As preface, one must focus on the claim that USFed Chairman Bernanke called the USDollar Printing Pre$$ an efficient electronic tool that spews out money at zero cost, useful in crisis prevention. He was boasting of the extreme tools the United States possesses to combat economic stagnation and bank system woes. Remember that thought, since the high cost of the monetary inflation gone into hyper-drive is destruction of the entire economy. That is the opposite of zero cost, rather infinite cost. The blind spot of American economists is their lack of realization that their policies destroy capital, displace industry, and wreck savings within the USEconomic system. What Bernanke fails to comprehend is capital destruction. Easy money has turned almost free, but with greatly reduced demand, a concept the bankers cannot explain.

Ambrose Evans-Pritchard has undergone a transformation with linked awakening. He finally comprehends the destructive power of the USFed. For a full year, he has defended their emergency stimulus policies. He has argued vigorously that "the USFed would not succumb to drug addiction, political abuse, and mad intoxicated debauchery, once it began taking its first shots of Quantitative Easing. My pathetic assumption was that Ben Bernanke would deploy further QE only to stave off DEFLATION, not to create INFLATION. If the Federal Open Market Committee cannot see the difference, God help America." Where the USFed fails is perception of deflation when inflation runs risk, and perception of inflation when deflation runs risk. They have a firm track record of fighting the last war and producing the next monster. Ambrose laments his support, when he admits to the epiphany. He read the recent FOMC minutes and saw the USFed is willing "to provide additional accommodation if needed to & return inflation, over time, to levels consistent with its mandate." The USFed plans to produce inflation. THEY WILL SUCCEED, but with great collateral damage in a higher cost structure without income gains. They wish to secure political blessing in their mission. They will earn only rebuke.

Ambrose traces blame back to abandonment of the Inflation Target, a new turn in policy by Bernanke. It is evident from their active desire to generate more inflation. Harken back to 1996, fourteen years ago. His predecessor Alan Greenspan abandoned controls placed on monetary growth in favor of monitoring the price inflation. The Inflation Target was born, a travesty, like the alarm bell turned off, or the window given a facade painting to mask the horizon view. They watched the CPI doctored to stay low in the late 1990 decade, then proceeded to generate one asset bubble after another until the banks died, households went insolvent, jobs vanished, and federal deficits shot over $1.5 trillion annually. THAT IS THE GREENSPAN LEGACY!! The Greenspan decision to place careful focus on the distorted CPI to warn of price inflation turned out to be disastrous. Now Bernanke plans to drop the Inflation Target, and to pump the monetary press until the banks revitalize to show a stronger balance sheet, or until the consumer demand revives, or until job growth returns. They are blind fools, heretics in high priest robes, economic morons. The USFed is going down the same path as the Weimar Republic, rationalizing its steps, ignoring the risks, after having done revisionist history tabloid writing. See Von Havenstein, head of the Weimar Reichsbank, who knew his path would lead to wreckage, aside Bernanke, who is ignorant of each demon that appears around the next corner. Bernanke has missed every single turn in the financial crisis, which the Jackass has laid out, all in progress and in advance. Ben looks to be praying not to preside over catastrophe. It reminds me of a man whose PhD dissertation is being refuted convincingly.

Ambrose admits his errors in defending the hyper-inflating establishment cabal. He tips his hat to critics who sent a steady stream of negative if not nasty emails to the UK Telegraph. He admits the USFed is out of control, having lost its way. He describes the current justification with an historical light. He shows confusion though in accepting Friedmanite preachings, as the Quantitative Theory of Money has been blown to smitherines. The adopted rationale has been laid out. Ambrose summarized it, saying "The dangers of tipping into a debt compound trap, as described by Irving Fisher in Debt Deflation Theory of Great Depresssions in 1933, outweigh the risk of an expanded money stock catching fire and setting off an inflation surge later." He incorrectly calls Debt Deflation a toxic process that can and does destroy societies as well as economies, which is not to be trifled with. Debt deflation kills off the guilty banks, a necessary process to eradicate corruption, which he overlooks. He sees the destructive path of hyper-inflation from monetary growth, while missing that debt deflation has a great tremendous positive outcome as in the bankruptcy tunnel. The problem with debt deflation, known by many as liquidation of bad debt and toxic assets, is that the process removes from power the main control agents of the USGovt and UKGovt, and at the same time invites a series of nuclear financial explosions lit from the basement of credit derivatives. By abhoring the debt cleanup process, Ambrose ignores the entire bankruptcy gift to recovery pathways, a key cornerstone of capitalism. He leans favorably on a pickup evident in the money velocity, when it is like saying the dead man has crawled out of the gutter to the edge of the sidewalk.

Ambrose closes with a reference to the Competing Currency War heating up. The Bank of Japan has embarked on unsterilized currency intervention, which amounts to stimulus. That means they do not neutralize one currency infused by purchase of the other's bonds in offset. The USFed and the Bank of England are signalling fresh Quantitative Easing initiatives. Their previous efforts failed, so do it again. Ambrose advises "If the US is not in deep trouble, the Fed should not be thinking of extra QE. It should step back and let the economy heal itself, if necessary, and endure several years of poor growth to purge excess leverage. Yes, U6 unemployment is 16.7%. But as dissenters at the Minneapolis Fed remind us, you cannot solve a structural unemployment crisis with loose money. Fed is trying to conjure away the hangover from the last binge (which Greenspan & Bernanke caused, let us not forget), as if to vindicate its prior claim that you can always clean up painlessly after asset bubbles." He is delusional except for realizing loose money cannot promote job growth. Time does not bring about a recovery. It requires a restructure and liquidation of broken pieces and excess debt fat. Nothing remotely like such has happened!!

The passage of time will bring continued economic breakdown and systemic failure. A QE2 will bring about a few months of relief but with heavy burden immediately of a higher cost structure, a point missed by economists. The same economic breakdown and systemic failure will occur, but with a higher cost platform. My forecast is for at least two more QE initiatives, a QE2 starting this December, and a QE3 starting one year later. Each will lift the cost structure. Neither will aid the income levels, just as the QE1 never touched the income level. Neither will promote job growth, the constant nightmare. Ambrose raises the specter of the Americans and the British being so decadent that they will refuse to take their punishment, opting to default on their debts by stealth. This is the Chinese accusation. See the UK Telegraph article (CLICK HERE). Analogies are helpful at times. It reminds me of a drunk sleeping in the gutter because he can drink runoff water. The drunk returns to the bottle of booze because it is so familiar, and it seems cleaner. One of the most amazing human characteristics is the attraction of the familiar, even when it is clearly destructive, even when it is killing the person. In time, death is welcomed as an end. Recovering addicts are familiar, as this allegory is old school.

◄$$$ MARTIN HUTCHINSON ACKNOWLEDGES CAPITAL DESTRUCTION AND THE MARCH TO THE THIRD WORLD. THE HEAVY COST OF PROMOTED ASSET BUBBLES IS ABANDONED, LIQUIDATED, AND UNKEPT CAPITAL. AMERICA IS LEFT WITHOUT ENGINES OF WEALTH, ONLY MOUNTAINS OF DEBT. $$$

Martin Hutchinson is a fine analyst, with association to the Prudent Bear. Hutchinson forecasts a powerful USEconomic recession, and ongoing haphazard attempts to manage wreckage from a sequence of failed asset bubbles. He makes a point consistent with the Jackass, that the chronic strong monetary inflation has destroyed significant capital, which he called de-capitalization. The US economic hacks have given consistent political support and advocacy of clean industry, thus the paved road to financial engineering palaces that toppled. Hutchinson wrote, "That, not temporary slowdowns in current economic activity, will cause a Double-Dip US recession, and a very nasty second dip it will be. What's more the Fed, by engineering collapsing bubbles successively in dotcoms, housing, and now junk bonds and leveraged loans, will have de-capitalized the USEeconomy. Savings have been suppressed for close on two decades, preventing the natural accumulation of capital as Baby-Boomers drew closer to retirement, while the majority of the country's magnificent and unmatched capital stock will have been poured down a succession of ratholes. In an era of globalization, the result of such de-capitalization will be a rapid downwards convergence of US living standards towards those of the less provident members of the Third World. Ben Bernanke may well be remembered in 2100, while all other Fed Chairmen within 50 years either side of him have been forgotten. But to the impoverished mass proletariat of that era, he will be known as the Bernard Madoff of monetary policy." See the Prudent Bear article (CLICK HERE).

Americans were lured repeatedly into asset bubble participation instead of saving. They gambled instead and now find themselves largely without pensions or much in life savings. The savings would have supplied industry, which has also mostly left town and left the country. When imagining de-capitalization, bring to mind cutting the head off industry, the legitimate engine of income.

FIRESTORM FORECLOSURE SCANDAL
◄$$$ TAKE THE TIME TO READ THE FOLLOWING EXTREMELY ADEPT AND THOROUGH DESCRIPTION OF THE MORTGAGE BOND AND FORECLOSURE SCANDAL. IT HAS GONE VIRAL!! IT HAS THE POTENTIAL TO CHANGE THE NATION, ITS PERCEPTION OF BANKER FRAUD, AND THE ENTIRE CONCEPT OF HOME OWNERSHIP. IT HAS THE POTENTIAL TO HASTEN SYSTEMIC FAILURE, EVEN USTREASURY DEFAULT. IT HAS THE POTENTIAL TO ENCOURAGE BROAD CIVIL DISOBEDIENCE. THIS IS A COMPLICATED SETTING. THIS ANONYMOUS SUMMARY IS THE BEST YET. PERSONALLY,  IT VALIDATES AND CONFIRMS MY STATED CLAIMS IN OPEN FORUMS THAT THE UNITED STATES FINANCIAL SYSTEM HARBORS PROTECTED SOPHISTICATED CORRUPTION OF THE HIGHEST ORDER. $$$

John Mauldin received an anonymous commentary on the mortgage and foreclosure scandal that is extremely comprehensive and well worth the time to read, review, and absorb. The source comes from inside the financial services business. It was written out of disgust and dismay, heavily edited by Mauldin himself to remove angry profanity. Quotes will not put be in place. The entire commentary is presented from his source verbatim, delivered by Kotok. It is not a Jackass interpretation or analysis. Many thanks to Mauldin for its publication. What follows comes from inside the bank world:

Homeowners can only be foreclosed and evicted from their homes by the person or institution who actually has the loan paper. Only the note holder has legal standing to ask a court to foreclose and evict. Not the mortgage, the note, which is the actual IOU that people sign, promising to pay back the mortgage loan. Before mortgage backed securities, most mortgage loans were issued by the local Savings & Loan. So the note usually did not go anywhere. It stayed in the offices of the S&L down the street. But once mortgage loan securitization happened, things got sloppy. They got sloppy by the very nature of mortgage backed securities. The whole purpose of MBSs was for different investors to have their different risk appetites satiated with different bonds. Some bond customers wanted super safe bonds with low returns, some others wanted riskier bonds with correspondingly higher rates of return.

Therefore, as everyone knows, the loans were bundled into REMICs, Real Estate Mortgage Investment Conduits, a special vehicle designed to hold the loans for tax purposes, and then sliced & diced, split up and put into tranches, according to their likelihood of default, their interest rates, and other characteristics. This slicing and dicing created senior tranches, where the loans would likely be paid in full, if the past history of mortgage loan statistics was to be believed. And it also created junior tranches, where the loans might well default, again according to past history and statistics. A whole range of tranches was created, of course, but for the purposes of this discussion we can ignore all those countless other variations. These various tranches were sold to different investors, according to their risk appetite. That is why some of the MBS bonds were rated as safe as Treasury bonds, and others were rated by the ratings agencies as risky as junk bonds.

But here is the key issue. When an MBS was first created, all the mortgages were pristine. None had defaulted yet, because they were all brand new loans. Statistically, some would default and some others would be paid back in full. But which ones specifically would default? No one knew, of course. If I toss a coin 1000 times, statistically, around 500 tosses the coin will land heads. But what will the result be of, say, the 723rd toss? No one knows. Same with mortgages. So in fact, it was not that the riskier loans were in junior tranches and the safer ones were in senior tranches. Rather, all the loans were in the REMIC, and if and when a mortgage in a given bundle of mortgages defaulted, the junior tranche holders would take the losses first, and the senior tranche holder last. But who were the owners of the junior tranche bond and the senior tranche bonds? Two different people. Therefore, the mortgage note was not actually signed over to the bond holder. In fact, it could no't be signed over. Because, again, since no one knew which mortgage would default first, it was impossible to assign a specific mortgage to a specific bond. Therefore, how to make sure the safe mortgage loan stayed with the safe MBS tranche, and the risky and/or defaulting mortgage went to the riskier tranche?

Enter stage right the famed MERS, the Mortgage Electronic Registration System. MERS was the repository of these digitized mortgage notes that the banks originated from the actual mortgage loans signed by homebuyers. MERS was jointly owned by Fannie Mae and Freddie Mac, like the chlamydia and the gonorrhea of the financial world. The purpose of MERS was to help in the securitization process. Basically, MERS directed defaulting mortgages to the appropriate tranches of mortgage bonds. MERS was essentially where the digitized mortgage notes were sliced and diced and rearranged so as to create the mortgage backed securities. Think of MERS as Frankenstein's operating table, where the beast got put together. However, legally, and this is the important part, MERS did not hold any mortgage notes. The true owner of the mortgage notes should have been the REMICs. But the REMICs did not own the notes either, because of a fluke of the ratings agencies. The REMICs had to be bankruptcy remote, in order to get the precious ratings needed to peddle mortgage backed Securities to institutional investors. So somewhere between the REMICs and MERS, the chain of title was broken.

Now, what does 'Broken Chain of Title' mean? Simple: when a homebuyer signs a mortgage, the key document is the note. As I said before, it is the actual IOU. In order for the mortgage note to be sold or transferred to someone else, and therefore turned into a mortgage backed security, this document has to be physically endorsed to the next person. All of these signatures on the note are called the 'Chain of Title.' You can endorse the note as many times as you please, but you have to have a clear chain of title right on the actual note. I sold the note to Moe, who sold it to Larry, who sold it to Curly, and all our notarized signatures are actually, physically, on the note, one after the other. If for whatever reason any of these signatures is skipped, then the chain of title is said to be broken. Therefore, legally, the mortgage note is no longer valid. That is, the person who took out the mortgage loan to pay for the house no longer owes the loan, because he no longer knows whom to pay. To repeat: if the chain of title of the note is broken, then the borrower no longer owes any money on the loan. Now you see the can of worms that is opening up.

The broken chain of title might not have been an issue if there had not been an unusual number of foreclosures. Before the housing bubble collapse, the people who defaulted on their mortgages would not have bothered to check to see that the paperwork was in order. But as everyone knows, following the housing collapse of 2007 to 2010 and counting, there has been a boatload of foreclosures, and foreclosures on a lot of people who were not sloppy bums who skipped out on their mortgage payments, but smart and cautious people who got squeezed by circumstances. These people started contesting their foreclosures and evictions, and so started looking into the chain-of-title issue, and that is when the paperwork became important. So the chain of title became crucial and the botched paperwork became a nontrivial issue.

Now, the banks had hired 'Foreclosure Mills,' law firms that specialized in foreclosures in order to handle the massive volume of foreclosures and evictions that occurred because of the housing crisis. The foreclosure mills, as one would expect, were the first to spot the broken chain of titles. Well, what do you know, it turns out that these foreclosure mills might have faked and falsified documentation, so as to fraudulently repair the chain-of-title issue, thereby 'proving' that the banks had judicial standing to foreclose on delinquent mortgages. These foreclosure mills might have even forged the loan note itself. Wait, why am I hedging? The foreclosure mills did actually, deliberately, and categorically fake and falsify documents, in order to expedite these foreclosures and evictions. Yves Smith at Naked Capitalism, who has been all over this story, put up a price list for this 'service' from a company called DocX. Yes, a price list for forged documents. Talk about your one-stop shopping! So in other words, a massive fraud was carried out, with the inevitable innocent bystanders getting caught up in the fraud. The guy who got foreclosed and evicted from his home in Florida, even though he did not actually have a mortgage, and in fact owned his house free and clear. The family that was foreclosed and evicted, even though they had a perfect mortgage payment record. Et cetera, depressing et cetera.

Now, the reason this all came to light is not because too many people were getting screwed by the banks or the government or someone with some power saw what was going on and decided to put a stop to it. That would have been nice, to see a shining knight in armor, riding on a white horse. But that is not how America works nowadays. No, alarm bells started going off when the title insurance companies started to refuse to insure the titles. In every sale, a title insurance company insures that the title is free and clear, that the prospective buyer is in fact buying a properly vetted house, with its title issues all in order. Title insurance companies stopped providing their service because. Of course, they did not want to expose themselves to the risk that the chain of title had been broken, and that the bank had illegally foreclosed on the previous owner. That is when things started getting interesting. That is when the attorneys general of various states started snooping around and making noises, since elections are coming up, after all.

The fact that Ally Financial (formerly GMAC), JP Morgan Chase, and now Bank of America have suspended foreclosures signals that this is a serious problem, obviously. Banks that size, with that much exposure to foreclosed properties, do not suspend foreclosures just because they are good corporate citizens who want to do the right thing, and who have all their paperwork in strict order. They are halting their foreclosures for a reason.

The move by the United States Congress last week, to sneak by the Interstate Recognition of Notarizations Act? That was all the banking lobby. They wanted to shove down that law, so that their foreclosure mills forged and fraudulent documents would not be scrutinized by out-of-state judges. The spineless cowards in the Senate carried out their master's will by a voice vote, so that there would be no registry of who had voted for it, and therefore no accountability. And President Obama's pocket veto of the measure? He had to veto it. If he had signed it, there would have been political hell to pay, plus it would have been challenged almost immediately, and likely overturned as un-Constitutional in short order. But he did not have the gumption to come right out and veto it. He pocket vetoed it. As soon as the White House announced the pocket veto, the very next day, Bank of America halted all foreclosures, nationwide.

Why do you think that happened? Because the banks are in trouble, again, over the same thing as last time, the damned mortgage backed securities! The reason the banks are in the tank again is, if they have been foreclosing on people they did not have the legal right to foreclose on, then those people have the right to get their houses back. And the people who bought those foreclosed houses from the bank might not actually own the houses they paid for. And it will not matter if a particular case, or even most cases, were on the up & up. It will not matter if most of the foreclosures and evictions were truly due to the homeowner failing to pay his mortgage. The fraud committed by the foreclosure mills casts enough doubt that, now, all foreclosures come into question. Not only that, all mortgages come into question.

People still have not figured out what all this means. But I will tell you. If enough mortgage paying homeowners realize that they may be able to get out of their mortgage loans and keep their houses, scott-free!! That is basically a license to halt payments right now, thank you. That is basically a license to tell the banks to take a hike. What are the banks going to do, try to foreclose and then evict you? Show me the paper, Mr Banker, will be all you need to say.

This is a major, major crisis. The Lehman bankruptcy could be a spring rain compared to this hurricane. And if this is not handled right, and handled right quick, in the next couple of weeks at the outside, this crisis could also spell the end of the mortgage business altogether. Of banking altogether. Hell, of civil society. What do you think happens in a country when the citizens realize they do not need to pay their debts ???

◄$$$ SOME FINAL COMMENTARY, WRITTEN BY THE JACKASS WITH GREATLY MIXED EMOTIONS. THEY ARE SADNESS, SHOCK, DISAPPOINTMENT, SHAME, EXCITEMENT, SATISFACTION, DISGUST, ANGER, DISBELIEF, AND DESIRE FOR JUSTICE. SYSTEMIC FAILURE IS IN PROGRESS BEFORE YOUR EYES. ITS DRIVING FORCE IS BANKER CRIMINAL BEHAVIOR. SEVERAL MONTHS FROM NOW, CALLS WILL COME FOR NUREMBERG BANKER TRIALS. THE NATION IS AT RISK OF MARTIAL LAW FROM CHAOS. THIS IS MY OWN VIEWPOINT. $$$

The kiss of death is the fraudulent MERS title vehicle. Later, the kiss of the funeral coffin will be the fraudulent REMIC finance vehicle. The class action lawsuits just received a huge energized positive push. A systemic risk to the US financial system from the foreclosure scandal is more than acute, since stark, public, and obvious. In time this could lead to a big bank shutdown holiday within the next couple months, like Christmas or before February. The invocation of RICO in civil lawsuit actions taken opens a grand door to threaten the very existence of Wall Street. Its call will force extreme pressure on the USCongress to water down the provisions of RICO asset seizures, or to pave the way for ex-post-facto bond fraud forgiveness. The fraud has been a constant in US finance, including the USGovt. The states versus the federal government could be the ultimate battleground.

The scandal is going viral in my view, possibly to result in a global boycott of USTreasurys, but starting with a boycott and dumping of USAgency Mortgage Bonds. If the truth of premedicated fraud with concerted coverup is exposed, understood, and accepted, the USTreasury and USDollar will collapse within a month or two. The site of greatest risk is Fannie Mae, being the collector of toxic waste in bond securities. If mortgage bonds are declared worthless by the courts, a tipping point for a USTreasury Bond default could be progress of occurring. The bridge to chaos is the potential for Civil Disobedience, people refusing to make their mortgage payments. If hundreds of thousands of home loan holders consult with lawyers to demand proper title before continuing to pay on mortgages, the chaos could accelerate. In a year, perhaps 50% of people will not pay their mortgage!! This is a potential systemic failure lever event in the making. Never lose sight of the fact that the USFed holds $1.5 trillion in mortgage bonds. If they are declared worthless, the USFed dies!! That could be the inroad to USTreasury default!!

A sense of reassurance comes to see at least three State Supreme Courts take action. They have imposed a moratorium freeze on home foreclosures. The states have been obstructed in their Tenth Amendment initiatives to separate from the USGovt over the Wall Street fraud and federal bailouts. However, imposition of state rights on foreclosure gives them the avenue to cut some cords. The properties lie in the states, which have direct jurisdiction. The cords are from Wall Street firms though in the challenged foreclosure cases. Given the tight linkage between USGovt finance ministry control by Wall Street, the state challenges to the USGovt authority can be more successful through the Wall Street front. If the USCongress forgives $trillion fraud in full view, the states might declare some unique independence from the federal system, on the basis of federally sponsored racketeering.

The US press is beginning to catch wind of the depth of fraud. Ten days ago, the anchors were saying only 10% of the documents were faulty. Therefore, a moratorium seemed out of proportion. One week later, they were openly questioning whether 40% to 50% of the documents were faulty. The media avoids the word FRAUD and prefers the word ERRORS. Recall the denial in 2007 over the subprime mortgage episode, and claims the bond market damage was limited. That lesson has taught the analysts and press networks alike that the true problem is likely much bigger than the banks admit. The other lesson is that the private analysts and media pundits have learned big lessons on the ineptitude of the USFed itself to detect problems and crises in advance. It is not clear that court spectacles will take place. The spectacles will instead be public demonstrations that could easily turn violent.

The battle will be inside the USCongress over sweeping amnesty of Wall Street firms. No potential exists for out of court settlements on a meaningful scale unless they are done in class action cases. Watch Fannie Mae, both a fraud participant but a potential recipient of mortgage payments in doubt. The big banks might be forced to assign rights over to Fannie Mae in resolutions, like in exchange for forgiveness of broad committed fraud. The most egregious Robo-Signed document was the Patriot Act, which in fact few legislators read admist coercion and vivid palpable threats. Most USCongress Bills are not read, just signed, since their marching orders are contained within, after the banks or insurance firms or defense contractors or pharmas write the bill. The systemic failure that the Jackass has written about in the last three years is coming to center stage, with broad recognition, and acceptance in shock.