Errata: Paragraph 2 of the September Hat Trick Letter Global Money War Report stated that Scotland is a trail blazer. It is the first nation in the European Union region to try and break free from a larger entity. My intention was to indicate that Scotland is trying to break free from a union, not the EU. They are considering a break from the United Kingdom.
QUOTES ON GOLD
"I have just had an email from a Russian source who says that his insider in the Middle East, via high level meetings, has become aware that the anticipated divorce of Saudi from the USDollar system has essentially now been rubber stamped in totality, a fait accompli. Expect to see announcements in due course of de-dollarisation of oil trade payments and trade deals with Saudi partners to be announced in non-dollar terms. We are essentially seeing the demise of the Petro-Dollar happening, which has stood as the foundation for the USD for four decades. The shock waves from a Saudi rejection of the USD, coupled with the new Russia-China deals denominated in Rubles & Yuan, means the end of the Dollar Regime Era. Great channges come." ~ London Paul (the big storm is near)
"The Chinese do not like publicity. They do not engage into popularity contests. They do their own things in their own time. The short-term actions to catch an effect is not their style. Theirs is well designed strategy that is set to be executed like clockwork. Since their shortest time window is 100 years, they need not to worry. The rest of humanity does not comprehend the big picture anyhow, surely not what they are up to. For the Chinese it is all about trade and not about patronizing others. They dislike war as a business strategy. They are building a relational empire and not a hierarchical one. Look at how the Chinese systematically de-industrialized the United States. They conquered the US economically, whereas WashingtonDC got all hyped up in building a war machine that ultimately destroys itself. The Wild West mentality persists in trying to play cowboys, bullying the entire world. The entitled exceptionalist leaders in the USGovt and elsewhere simply are not aware of what the Chinese are doing and what they have accomplished." ~ The Voice
"No one takes Kerry and the USGovt emissaries seriously any longer. No one respects and trusts the US leaders any longer. No one cares about what the USGovt says or does any longer. Other nations are calling the shots these days. For the US and the West to treat Russia like Sudan and Persia has demonstrated to the rest of the global community what kind of clowns, amateurs, and criminals are in control in the West. They are on the defensive now. They are desperately trying to save their skins." ~ The Voice
"If the world economy gets better, commodities are very good place to be in. Even if the world economy does not improve, commodities are still a fabulous place to be. Commodity prices have always gone up when a country is printing money. And every government is printing money now." ~ Jim Rogers
"If stocks get whacked, the USDollar will not strengthen for two reasons. The artificial perception of the US doing much better will unwind, and so will all the carry trades and leverage. A huge consequence is that foreign currency buying will come to a halt, as in not selling foreign currency and buying dollars. A lot of money will cash out of US markets, and make the exchange while their currency is still very weak. So when the stocks go down hard, the whole thing shatters quickly, real quickly. It will happen way faster and more thoroughly than the last time. The military tanks are going to roll, with or without the Treasury Secretary going to Congress in appeals." ~ George (of COMEX Logistics)
"It is no surprise that I see the greatest financial Bubble in history. I believe asset market inflation and bubbles have been fueled by speculative leverage exceeding pre-2008 crisis levels. I see global financial and economic imbalances that have been exacerbated by six years of the most extreme monetary policy measures. By now, this type of analysis has been completely discredited. Few will care that I discern acute vulnerabilities." ~ Doug Noland (Prudent Bear)
"Interest rates are not low enough. Given where we are with inflation, it is challenging to know why we are removing stimulus from the economy at the rate that we are. It is a challenging question, and I do not really have a good answer. Willson's [song about inflation, hired by President Gerald Ford] pithy characterization was spot on in 1974. But 40 years later, I would suggest that it is exactly backward. Right now, this nation needs more inflation. I do not think we have been hitting maximum employment successfully, and we have not been hitting 2% inflation. Both of those seem to call for lower interest rates. The problem is not that they are too low." ~ Narayana Kocherlakota (Minneapolis Federal Reserve President, a financial moron who has no idea that bond monetization in QE causes capital destruction and wrecks the entire economy)
"Mario Draghi has played a weak hand with skill, as always. He is a superb actor. Yet the package of measures unveiled by the ECB yesterday is pitifully small and mostly window dressing, an effort to buy time with a mix of vague gestures and outright gimmicks, a substitute for decisive action. The delirious reaction of market traders is interesting, but essentially just noise. What the ECB did will not move the macro-economic dial by one iota." ~ Ambrose Evans-Pritchard
"The dollar is the world's reserve currency. The problems that having the dollar as the primary reserve currency are causing in our economy and have been causing for years are deeply under appreciated. They include a large and persistent trade deficit, so we are exporting millions of good jobs overseas. We have ended up with asset bubbles, and a marked budget deficit, high unemployment. There was a point in time where that privilege helped us a great deal, but that is well behind us now." ~ Jared Bernstein (former economic adviser to VP Joseph Biden senior, now fellow at the Center on Budget and Policy Priorities, who despite good awareness still overlooks the $8 trillion spent by USGovt on war in the last few decades, and $6 trillion just since 911)
"The Occupy Wall Street movement had the right idea, but could not articulate its objectives very well, especially when in public with placards and chants. The movement was to stop government welfare of the bank sector, to have the banks prosecuted for enormous crimes (even applying RICO laws), to liquidate the dead hollow giant reeds posing as banks, and to eliminate bank influence in Congress and the Executive branch. Such was not clear by observing a demonstration with pithy slogans, and especially not when viewing the lunatic display at Zuccotti Park for its camping absurdity. The USGovt treated it like a terrorist organization, which coincidentally is what the Wall Street bank community is exactly." ~ the Jackass
## INTRO GOLDEN NUGGETS
◄$$$ SOMETHING BIG IS GOING ON, SINCE SEVERAL IMPORTANT COMMODITIES ARE BEING SMASHED IN ORDER TO SUPPORT THE USDOLLAR... OIL, GOLD, SILVER, CRB ARE ALL HIT HARD, AS THE US-DX INDEX RISES... THIS COULD BE PART OF THE FINAL STAGE WITH THE USDOLLAR RISING AND RISING BEFORE SUDDENLY DYING. $$$
A concerted smash is in progress and has been going on for the past week or two, particularly directed at Silver, down hard. The smashdown involves commodities, crude oil, precious metals, all slammed to support the USDollar. They are all inversely correlated to the USDollar, thus targets by Wall Street. The conclusion might be as simple as the Boyz are working to destroy all instruments in order to support the USDollar. They appear to be slamming any instrument that is oppositely correlated to the USD. The inverse correlation between the USD and CRB commodity index is well known and cited by the Hat Trick Letter, especially in published 2004 2005 2006 reports. By using an index (conglomerate), the Wall Street banks can deliver a nasty blow to the entire set of commodities in a single blow. The CRB is dominated by crude oil. Wall Street has been using indexes in this way for efficient control since the 1990 decade when Rubin brought his keen skills and acumen to the dark side of illicit manipulation. The recent slam on CRB and commodities signals a late stage level of desperation. Notice the near perfect inverse correlation between the CRB index and the US-DX dollar index, especially in the last four years.
The Voice concurred on the overall instrument smashdown concept, as did many on my team. He wrote in sly manner, "The smashdown is great. We cannot wait to pick up all the physical Gold from the margin calls. The blowback will be incredible later. Precious metals prices will go through the roof. Then later, the USDollar, Euro, British Pound are going to be shredded. All in time." The man is not distracted by daily and weekly events, but rather stays focused on the big picture and long run. He is as sharp as a bacon slicer.
The dastradly theme has two other commonly seen applications, evident over the last few years. First, wreck final demand for the USEconomy in order to keep price inflation in check. The policy has been in place since Greenspan left the USFed. The hint was mention of final demand frequently, too much. With damage done to the many elements of the economy, demand will not be great enough to propel the systemic price levels too high. Hence balance financial inflation spigot flow of money with damage to the general Main Street businesses, so as to conceal the inflation. The abusers wished to keeping prices down. The second, render harm to the European Economy in order to support the USDollar. The investment would be diverted to the United States as better alternative. Doing so would tend to distract the USEconomic damage. If both continents are badly harmed economically, the US looks comparatively better. A common theme, in full view. A sick view, in a table full of ugliness plates to consume.
◄$$$ THE USECONOMY IS THE LARGEST ECONOMY IN THE WORLD, BUT NOT FOR LONG... EMPIRE ECLIPSE IS COMING, ALONG WITH GLOBAL PARADIGM SHIFT... THE UNITED STATES MUST PREPARE FOR THE BACK SEAT. $$$
As preface, note that the Chinese financial analysts and experts have criticized the calculus in the USEconomy GDP data. Chinese critics believe 40% to 50% of the US GDP is simple debt paper shuffled around from building to building, and not evidence of valid economic activity like manufacturing items. The era of clean US industry has given way to fraudulent bond paper distribution, including its export. The USEconomy is in danger of being overtaken by China according to a different but valid measure, the Purchase Power criterion. Jim Reid of Deutsche Bank demonstrates that the United States is not likely to remain the largest economy for much longer. He wrote, "As Alexander, Rome, and Britain fell from their positions of absolute global dominance, so too has the US begun to slip. America’s global economic dominance has been declining since 1998, well before the Global Financial Crisis. A large part of this decline has actually had little to do with the actions of the US but rather with the unraveling of a century’s long economic anomaly. China has begun to return to the position in the global economy it occupied for millennia before the industrial revolution.
Based on current trends China’s economy will overtake America’s in purchasing power terms within the next few years. The US is now no longer the world’s sole economic superpower and indeed its share of world output (on a PPP basis) has slipped below the 20% level, which we have seen was a useful sign historically of a single dominant economic superpower. In economic terms we already live in a bi-polar world. Between them, the US and China today control over a third of world output (on a PPP basis)." See the Business Insider article (CLICK HERE). Notice the crossover around 1910 when the British Empire yielded to the American Empire. Notice the post-WW2 peak during US expansion, which was not reconstruction, since Europe had to rebuild. Next comes the crossover of China surpassing the US. Blame must go to outsourcing of US industry, reliance upon asset bubbles, the endless war machine, and Wall Street bond fraud. The Fascist Business Model has delivered a deadly blow to the body economic of the American Empire. It demands a salute to the flag, the symbol for the nation it destroyed.
As Napoleon Bonaparte long ago stated, "Let China sleep, for when she awakes, she will shake the world." China awakened in 1999 with the granted Most Favored Nation status from the USGovt, in a strange turn of events that coincided with a return of the British colony. The Chinese handed over a huge gold bullion cache to keep the Wall Street rigged currency markets going, and to supply the corrupt US banks with physical gold to sacrifice in the march to perdition for the United States. Resentment over the British opium infiltration 100 years ago is much thicker than Westerners realize. All should keep it in mind for motive to carry out vengeance in the Sun Tzu way.
◄$$$ THE KHERSON SHIPYARD HAS DIED, AN IMPORTANT UKRAINE FACILITY... IT IS A CASUALTY OF WAR. $$$
Kherson Shipyard, one of the largest shipbuilding companies in Ukraine, has gone under and gone bust. It was founded in 1951, kicked the bucket. It was the center of a city, the main thrust behind many supporting businesses, with a critical trickle down on a large scale. The Economic Court of the Kherson region initiated legal proceedings in the bankruptcy case of PJSC, known as the Kherson Shipyard, on the application of PJSC Balaklava Mine of Gorky of Sevastopol. Both companies are controlled by the Smart-Holding, whose main beneficiary is a billionaire tycoon Vadim Novinsky. The court imposed a moratorium on satisfaction of creditors, and appointed Teterich Natalia as executor of the estate. The court instructed her to develop a roster of creditors, and then to make an inventory of the debtor's property for the purpose of determining its value, all within a time schedule. A preliminary hearing in the case is scheduled for October 15th. The shipyard will be revived at a later date, probably with direct Russian funds.
◄$$$ THE RUSSIAN PLANS MIGHT INCLUDE A RETURN OF ALASKA... SOME ODD INDICATIONS HINT OF THE ACTION. $$$
Certain indications are telling, while some might be more tempted toward odd goals. Based on the recent activities, the United States might be poised to lose Alaska to Russia. Recall that debtor nations are not in control, as creditors call the shots and force their will in the indebted slobs. Five indications can be noted. 1) The Obama Admin gave up four islands early in his presidency to Russia. 2) Military assets and alerts are actively being withdrawn from the Alaskan area. 3) The Russian Parliment features a map of Alaska with Russian City names in certain member offices. 4) Russia wants the Arctic resources to expand their current projects. 5) A high speed train to connect Russia and Alaska is in the works. No proof of any plan can be confirmed. To be sure, Russia is extremely angry at the Ukraine War, the US direct involvement, and the blame put on Russia by the American Fascists. A very astute source told the Jackass a couple months ago that Putin is very crafty, and the fine print for the Seward Deal to originally acquire Alaska might have cited lease, not purchase. It will be worth watching to see if the lease is soon to expire. By the way, another bigger creditor China might wish to take Hawaii and create a Naval Base there in a great strategic location.
## COMMODITY WARS PROP USDOLLAR
◄$$$ DRIVING THE OIL PRICE DOWN IS INTENDED TO HARM RUSSIA AND IRAN, EVEN THE ISLAMIC STATE (IRAQ)... WALL STREET IS GIVEN AID TO THE USDOLLAR... THE SUB-$100 OIL PRICE WILL HELP THE USECONOMY, BUT HARM AMERICAN OIL FIRMS TOO. $$$
The crude oil price has been below the $100 level for three weeks. The rumor, indication, and buzz is that the US maestros are trying to do a repeat of a maneuver two decades ago to render harm to Russia by pushing down the oil price. The Russian Economy is very dependent on the price. The previous episode in 2009 was very different, as financial markets essentially melted down, pushing crude oil to $50/barrel and below. Tensions are high between the West and Russia, while Iraq is in turmoil, and Iran contends with annual sanctions. The market reality does point to more US-based supply from the shale oil output. It has changed the supply equation, or perhaps the powerful USEconomic recession has taken a toll on the demand side. Without debate, the US enemies Russia and Iran are heavily reliant on oil sales and face budget challenge at current price levels. Some energy analysts even claim that the Islamic State (ISIS/ISIL), which has captured a number of oil fields in Syria and Iraq, will be hurt by lower oil prices. It will generate less black market income for funding the militant group. The group was hatched by Langley, and seeks some independent funding apart from its original USGovt source from narcotics.
The energy analysts are very wrong about Russian exposure and risk at lower oil prices. The Voice has access to energy industry data, and cites the $50 per barrel mark as critical for Russia, hardly $100. The hit to the Russian Ruble raises their import costs from vegetables to cars to domestic electronics, even luxury items. A hidden victim might be Saudi Arabia, which is under multi-faceted pressures including budget pain. They have no spare capacity from which to draw additional income, a lie for almost a full decade. See the Fox Business article (CLICK HERE). Once more, US actions cause self-inflicted damage. To be sure, a major pushdown is being orchestrated to drive down the crude oil price in order to provide lift and assistance to the besieged USDollar. The fast deteriorating USEconomy can only muster weak energy demand, as a breakdown in the oil price is in progress. Benefit to the US consumer is clear, although gasoline prices have risen in the last couple years, so that oil price relief is barely noticeable. Expect a price bounce.
For all the barking about harm done to US enemies, the other unstated victim in the pushdown of crude oil price is the US energy giants and Western European energy giants. They sell oil too. They will have to cut some spending budgets soon. With low borrowing rates for the housing market, and low oil costs for the energy market, selling the USEconomic recovery will be impossible during its chronic semi-depression. It should be receiving a lower cost boost, but a systemic breakdown is in full gallop. The propaganda horns are sounding as loud as they are errant.
◄$$$ USGOVT HAS DECLARED WAR ON RUSSIAN STRATEGIC METALS, THE TARGET BEING A TITANIUM SUPPLIER IN BUSINESS WITH BOEING... YET ANOTHER UKRAINE COMPANY WITH US-ELITE CONNECTIONS IS TO BE BOLSTERED, WITH SUPPORT ACTIONS IN SANCTIONS... BOEING AND THE RUSSIAN TITANIUM SUPPLIER VSMPO HAVE SIGNED A SUPPLY CONTRACT THROUGH YEAR 2022. $$$
The Ukraine Govt and other commercial interests are lobbying the USGovt to support sanctions directed against VSMPO-AVISMA, the Russian supplier of titanium to Boeing and other US aerospace companies. As alternative supplier to VSMPO, the Ukraine officials wish to have arranged contracts to a different firm. Other US (and fascist friendly funds) would set up financing for the establishment of new high grade titanium production lines at Zaporizhye Titanium & Magnesium Combine (ZTMC). Then would come the expansion of Ukraine titanium exports to the US. Last year VSMPO produced almost 30,000 tons of titanium, while ZTMC produced around 10,000 tons. In the first half of 2014, the VSMPO output rose by 10%, while ZTMC fell by 25%. The plan proposed by the fascist Kiev Regime to the fascist USGovt regime would direct operations for raising the ZTMC output to between 20,000 and 40,000 tons, and to replace VSMPO shipments to the USEconomy entirely. They wish to cut out the current VSMPO supplier.
More subterfuge. The USDept Justice indicted Dmitry Firtash in connection to the Russian firm for alleged bribery in the titanium trade. In September, the Kiev Govt moved to strip Firtash of his Ukraine based titanium production assets. Just a coincidence, according to US sources. An investment required to complete the substitution of Ukraine titanium sponge in lieu of VSMPO output in the US market has been estimated at more than $110 million for new metal production facilities, and $2.5 billion for expansion of both downstream production and upstream titanium mining in Ukraine. The assets under confiscation plotted by US prosecutors against Firtash are estimated at $500 million. The value of direct VSMPO exports to the United States in 2013 was $380.2 million, a sizeable 24% of its sales revenue for the year. The loss would be taken by Russians. They might retaliate with vanadium or strontium supply threats (aka chess moves), the other strategic metals which Russia dominates.
With imminent moves to force the Russians out of the US titanium market, industry and official sources have been leaking that they suspect Boeing and other US companies that buy Russian titanium have been secretly accelerating deliveries to the US and stockpiling the Russian metal. They act in anticipation of supply interruptions. Boeing admitted to advanced shipments so as to maintain the production lines, stated by Shep Hill, president of Boeing International. The scoop came at the UK Farnborough air show in July. For their part, chief executive Mikhail Voevodin of VSMPO disclosed in July that his company had signed supply contract extensions to keep the Russian metal flowing to Boeing through the year 2022. The contract is in place. As of now, neither the US nor the European Union (EU) has imposed direct sanctions on VSMPO. See the Naked Capitalism article (CLICK HERE). To be sure, the USGovt foreign policy maestros are busy fashioning new and better, bigger and broader sanctions to keep America safe. The United States is far too focused on war and sanctions, and not enough on commerce and industry. They will earn the Third World in isolation as reward, a pariah rogue state.
◄$$$ ISRAEL AFIRMED A MAJOR NATGAS DEAL WITH JORDAN FOR SUPPLY FROM THE GIANT TAMAR PLATFORM... THE MORE DEALS CUT, THE LESS WAR WITH NEIGHBOR NATIONS (FROM REMOVED MOTIVE)... ENERGY OUTPUT SURPLUS IS COMMITTED TO RUSSIAN GAZPROM, PUTTING ISRAEL IN AN AWKWARD POSITION. $$$
Israel has signed a Memorandum of Understanding with neighbor Jordan, with which it has maintained good relations for a long time. Israel will supply the Hashemite Kingdom with $15 billion worth of natural gas from its Leviathan energy field over a 15-year period. The new deal is the largest collaboration with Jordan to date, and will make Israel its chief supplier. The final agreement is subject to final approval by the Israeli Govt Ministry of Water & Energy. The USGovt attended the negotiations, and brokered portions of the deal. The firms involved are the Delek Group and Nobel Energy. The deal is expected to strengthen the economic and diplomatic ties between Israel and Jordan. Given the two large off-shore discoveries, Israel finds itself suddenly a regional energy supplier, which will reduce imports. In fact, Israel stands to see exports rise, and have its Current Account turn positive in a big way. The source of gas will be the Tamar natural gas field in the Mediterranean Sea. Curiously, the Jordanians turned to Israel because their supply of natural gas from Egypt had been halted. It has been rendered insecure due to repeated violent attacks on the gas pipeline. Jordan is not alone. The Tamar site is committed via contract to supply an Egypt facility and a Palestinian firm.
The off-shore site is active. In March 2013, Israel began producing natural gas from the Tamar deposit, which was discovered in 2009 and located some 90 km (=56 miles) west of Haifa. The deposit holds an estimated 8.5 trillion cubic feet of natural gas. In addition to Tamar, in 2010 the even larger Leviathan deposit added an estimated 16 to 18 trillion cubic feet of gas, thus the name. That deposit was discovered 130 km (=81 miles) west of Haifa. It is expected to enter production in 2016. The finds are expected to transform Israel from an energy importer to a major world player in the gas market. Last year a partnership was announced between Israel and Russia, for surplus natgas from the Tamar site to enter the Gazprom pipeline network. It will supply Europe to some extent, as it enters the undisputed existing network to the south. The former Water & Energy Ministry had made a recommendation that Israel keep the first 450 billion cubic meters for domestic use, and allow the export of up to half of any additional amount extracted from the proven reserves. The bellicose prime minister has promised a new diplomatic horizon with improved regional ties, after the recent carnage in the Gaza Strip. See the Times of Israel article (CLICK HERE).
Gold Ole Bibi might find it hard to wash the blood off his hands. The Jackass is highly suspicious of false flag attacks and Langley supply to Hamas, to facilitate a war during the lucrative Israeli off-shore operations. The precedent was set with USGovt security agency collusion with the violent Islamic groups, including the Brotherhood. Refer to Libya, Egypt, and Syria. In fact, precedent for such suspicions is ample. Watch for additional signals between Israel and Russian, like possible friction, strange bedfellows on the energy front, since they are on opposites sides of the endless Syrian battle. If Israel begins to ally with Russia while showing respect for China, the United States will find the isolation to be more acute than already. The Tamar & Leviathan might act as a grand wedge between the US and Israel.
## ROGUE NATION ELEMENTS
◄$$$ SCOTLAND BY ALL INDICATIONS HAD ITS VOTE RIGGED TO REFUSE INDEPENDENCE... NEXT COMES THE CONTROVERSY, ACCUSATIONS, DEBATE, AND INVESTIGATIONS POSSIBLY... THEY MIGHT TRY AGAIN AT A LATER DATE, AND PREVENT VOTE RIGGING FOR THE (UPCOMING THIRD WORLD) NATION... THE AFTERMATH WILL COULD BE FILLED WITH INTRIGUE. $$$
The Jackass expected a rigged vote, and it happened. The NO vote to independence was at 55.3% and YES at 44.7% with a total of 3.623 million votes cast, in a huge 84.6% turnout. See the Wikipedia account (CLICK HERE). The Scottish Independence Referendum Bill, setting out the arrangements for this referendum, was passed by the Scottish Parliament in November 2013, following an agreement between the Scottish and the United Kingdom governments. It has been defeated in the official referendum vote. To wide surprise, the fraud was more in the open than expected. Some demonstrations ensued, a few violent. See the YouTube video on riots (CLICK HERE). See the confrontations in the Armstrong article (CLICK HERE) and a good overview in the Zero Hedge article (CLICK HERE). Some rather convincing evidence, useful to prove the voter fraud, can be observed. Some call them smoking guns. See the YouTube video (CLICK HERE and HERE).
A higher level of reporting for the fraud is presented in the UK Metro article (CLICK HERE). The police might conduct some flimsy investigation to whitewash, or perhaps arrive at a direct challenge to the government. See the Herald Scotland article (CLICK HERE). Even Russia has called the UK out as conducting a fraudulent vote on such an important matter. See the UK Guardian article (CLICK HERE). The Scottish Vote has received a considerable amount of dissection. In a legitimate vein, older citizens (seniors) often voted to stay in the union, so as to keep their pension dole secure. See the Zero Hedge article (CLICK HERE). On the other elite side, the Brussels commissioners celebrated their stolen vote. The finger of accusation can be directed at the British Govt and the EU Commission. If more so the commission, then expect some serious flack and criticism with investigations. See the Armstrong article (CLICK HERE). Recall the famous words of a man with a lot of experience in criminal activity, fierce pressure, broadly applied genocide, and popular controls.
"People who cast the votes decide nothing. The people who count the votes decide everything." ~ Josef Stalin (Russian mass murderer in early 20th Century)
◄$$$ THE WORLD PAYS THE AMERICAN EMPIRE A TRIBUTE FOR ITS EXCEPTIONAL NATURE WITH USDOLLAR FEES... THE VAST PILES OF USTREASURY BONDS WILL NEVER BE REPAID, ACCEPTED IN EXCHANGE FOR FINISHED PRODUCTS AND BASIC COMMODITIES... THE RISK IS HIGH FOR HOLDERS IN FOREX RESERVES DURING THE UPCOMING DEFAULT. $$$
In his latest commentary Hugo Salinas Price, president of the Mexican Civic Association for Silver, explained how foreign exchange surpluses (like those hold in USTreasurys) are actually the tax or tribute lesser countries pay to the empires which dominate them. Countries that hold such bonds in exchange for their exports have not really been paid and never will be paid. Essentially the United States has traded bad paper securities for years, which have now turned toxic due to QE bond monetization, in exchange for finished products and raw materials like crude oil. The suppliers have begun to balk and refuse, while the USGovt is busily imposing sanctions that accelerate the process of rejection. Global monetary reserves set a new high mark early this month, at slightly over $12 trillion. The dominant portion of FOREX reserves is held in USDollars, he rest among Euros, Pound Sterling, Yen, and Swiss Francs. Consider them promises to pay, extended credit, packaged in securities. They have dubious value. Much will be defaulted. The essay by Salinas Price is entitled "The Tribute the World Pays to the Empire" can be seen in the Mexican Plata website (CLICK HERE) or as the 24HrGold article (CLICK HERE).
Salinas Price concluded, "Since August 1971, when the countries of the World ceased to have the option of receiving gold in payment of their favorable balances of trade, or of extending credit by receiving dollars, the quantity of monetary reserves in world central banks has grown monstrously. Since there was no more payment in gold, the world had no option but to grant credit while it waited for the real payment, which has not arrived, and never will arrive.
The bald truth is that $12 trillion dollars is the imperial tribute extracted from all the countries that do not issue a reserve currency, and delivered to the countries that issue the reserve currencies, in the course of the last 43 years. It cannot be anything other than imperial tribute, because those funds represent bonds that will never be paid. Exports exchanged for bonds that will never be paid are tribute which the exporting world has delivered to the United States and Europe. Never in history has there been any collection of imperial tribute on the scale of the present financial scheme, of paying for imports with bonds that will never be paid. The devilish thing about it is that hardly anyone understands it. Only payment in gold can cancel international debts. As long as gold is not used to settle international debts, as used to be the case up until 1971, then the world will continue to pay tribute to the countries that issue reserve currencies. Exporting countries will be handing over part of their wealth for nothing in exchange. Such is the essence of TRIBUTE."
◄$$$ THE FORMER BRITISH AMBASSADOR TO UZBEKISTAN CLAIMED THE UNITED KINGDOM TO BE A ROGUE STATE AND DANGER TO THE WORLD... HE STATED THEIR MOTIVE FOR WAR AND INTERVENTION HAS BEEN TO SECURE RESOURCES. $$$
Craig Murray is a former British Ambassador to Uzbekistan. He had some startling comments to make, the timing for which is interesting and useful. The US, UK, EU fascists are busy in Ukraine. Murray delivered a speech ahead of an historic vote on Scottish independence. He told an open public meeting in St Andrews that the actions he witnessed as a senior diplomat had changed his world view. He made the following disturbing statement, "The British Government is deeply, deeply immoral. They do not care how many people they kill abroad if it advances [their cause]. Anybody who votes No [to Scottish independence] is voting to support a pathological state which is a danger in the world, a rogue state and a state prepared to go to war to make a few people wealthy. It is impossible to be proud of the United Kingdom. I think when we invaded Iraq, we did to the United Nations what Hitler and Mussolini did to the League of Nations. If you look at Libya, it is a disaster now that we bombed it and we killed 15,000 people. When NATO bombed Sirte, something they never told you on the BBC, did we make it better? No! I have seen things from the inside and the UK foreign interventions are almost always about resources. It is every bit as corrupt as others have indicated. It is not an academic construct. The system stinks. Now as you may imagine, my world view changed." See the RIA Novosti article (CLICK HERE).
◄$$$ THE USGOVT IS A ROGUE NATION WITH DUPLICITOUS EVIL ACTIONS AND NO ACCOUNTABILITY... CONDITIONS ARE GROWING WORSE, THE INSIDIOUS BEHAVIOR GROWING WORSE, THE INTERNAL PROCESSES GROWING WORSE, THE GLOBAL CRIME SCENE GROWING WORSE. $$$
The DC Whispers provide a glimpse into the daily chaos that is the Obama White House. He is the US President and a great embarrassment. The debt-ridden nation has a Third World leader with questionable identity and surely a dastardly agenda. The executive branch is out of control, as busy covering up past dirty deeds as starting new wars with hidden agendas. See the Before Its News article (CLICK HERE). The upcoming speech by President Obama at the United Nations is intended to solicit global support for the War on Terror, as the USMilitary returns to Syria and Iraq for more war actions. The USGovt security agencies are largely responsible for the terror, the violence, the arms shipments underground, and ISIS itself (a Langley creation). It is unclear how widely the audience will see the duplicity. See the AOL News article (CLICK HERE).
A very dangerous situation has finally arisen in the highest chambers of the USGovt. The Pentagon Regulars of the USMilitary are now facing the Langley Mercenaries and other platoons in Iraq, as the ISIS forces are under attack by the Pentagon-led missions. The Obama presidency is at stake, since promises were made by powerful elite members to remove him if the two wings of the USGovt fighting forces (overt & covert) are forced into armed conflict. Such is the case now.
Suspicions run deep inside the leadership coalition of Iraq that the CIA and the Islamic state are united, in which the Arab Moslem guerrilla faction is a creation of Langley. The USGovt security agency trained them, supplied them, organized them, and directed their initial attacks in the MidEast region. The leaders of Iraq are far more informed than the US population which is bombarded by press propaganda. See the New York Times article (CLICK HERE).
The fabricated drought in California is a result of weather engineering. The same HAARP tool produces hurricanes. It can steer storm masses to wall off a region, and can cause a powerful vertical funnel as in a hurricane. It is nuclear powered and can be detected on Doppler Radio scopes with heavy striation lines. The Western United States has been subjected for months to a powerful climate engineering assault, California most of all. The Weather Makers can shut the hydrological cycle off from the state for as long as they wish. Satellite images and NOAA maps shown in this presentation are shocking and highly revealing. What remains unclear is the agenda of those in power. However, one conclusion is certain. The drought in California is a direct result of the ongoing climate engineering insanity. Weather warfare is now being waged on the American population which in the recent past had been used against China, to deny them rainfall also. The USGovt engineers want to produce chaos in our land, for the purpose of installing martial law. See the YouTube video by Dane Wigington (CLICK HERE).
Permissible levels of radiation in drinking water are to be raised by the USGovt, not for the first time. Cancer deaths are expected to increase sharply. The White House has given final approval for dramatically raising permissible radioactive levels in drinking water and soil following radiological incidents. The nuclear industry seeks what its proponents call a New Normal for radiation exposure among the US population, according Public Employees for Environmental Responsibility (PEER). In soil, the long-term public exposure to radiation in amounts has been as high as 2000 millirems. The widely accepted effect of the change is startling. The change would increase a longstanding 1-in-10,000 person cancer rate to a rate of 1-in-23 persons exposed over a 30-year period. The PEER group stated, "No compelling justification is offered for increasing the cancer deaths of Americans innocently exposed to corporate miscalculations several hundred-fold." See the Global Research article (CLICK HERE). Then there are the chemtrails laced with benzene.
The USGovt has hiked the fee to renounce citizenship by 422%. The USDept State made an interim rule change. They just raised the fee for renunciation of US citizenship to $2350 from $450. Critics note that the new higher fee is twenty times the average level in other high income countries. The office justified their fee hike by citing higher demand on their services, and the extra workload they have to process people who wish to leave the country (the emerging fascist dictatorship). An affluent client last week mentioned in a personal conversation that he has spent over $28,000 in fees to the USGovt, to banks, and to accountants in order to comply with the FATCA rules and other rules. So he wants out, which costs even more in fees. See the Forbes article (CLICK HERE). Those citizens who depart and renounce US citizenship face further problems, obstacles, and distress. They face USGovt retaliation as though enemies of the state, or at least undesirables. They are at risk of appearing on No Fly Lists, attack lists for searching for Hidden Assets, and other Harrassment Programs.
A programmer under oath admitted that in the United States, computers rig elections in our national elections. Energy giant pastor Lindsey Williams has mentioned that after Obama was elected, the USA will never have a fair election again. Only those chosen by the elite will be elected, the practice extended at all levels. The vote of people does not count any longer. It is all planned and orchestrated. Leaders are selected, not elected. See the YouTube video (CLICK HERE). The big giveaway hint was USCongress passing a law ten years ago forbidding the challenge of voting machines and their software, when those in objection wish to prove voter fraud. In 2008, a friend in Philadelphia volunteered to oversee the local precinct vote in the Bush II versus Kerry presidential election. At 7am, a crew of overseers spotted the machines all had 500 votes for Bush II in the initial status. So they reset them to zero. Numerous other stories of voter fraud could be told. The favorite for the statistical analyst Jackass is the grand discrepancy between final official votes tallied versus the Exit Polls. For over two decades, over a 95% correlation existed between final vote counts and such unique polled results. In Ohio and Florida in the presidential elections conducted in 2000 and 2004 and 2008, the correlation fell by over 20%. Conclude rigged votes and doctored machines.
◄$$$ CNBC NEAR ITS END, AS VIEWERSHIP IN AUGUST PLUNGED TO 21-YEAR LOWS... ITS ADVERTISEMENT REVENUE HAS FALLEN HARD... CONSIDER IT A HINT OF THE END GAME NEARING. $$$
The reason why can be widely endlessly argued. America's interest with finance and the stock market is largely done. Poverty and insecurity have entered the population, as have growing political distrust and banker resentment. The ratings are miserable. Some observations for the core 25-54 age demographic bracket. The CNBC Business Day segment is down every month this year compared to last year, with August's 28,000 count literally a step into the abyss compared to last year. Viewership has plummeted by a near record 30%, with advertisement revenue following close behind. In fact, the last time CNBC saw a rise in Business Day ratings year to year was in July 2012. The bottom line is painful. August recorded the lowest month of ratings in the core demographic since February 1993. In fact, in CNBC's entire Nielsen-rated history, there is only one month in history when this primary category in viewership was lower. It was back in November 1992, when demo viewership was just 1000 less at 27,000 viewers.
The alleged reasons are many for the powerful CNBC decline, often called CNBS by colleagues, friends, and clients (to indicate heaps of bull excrement). The list is long. It could be from investors being depleted, having lost much in home equity, even employment income. Maybe the domination of centrally planned markets by a few central banks. Maybe the prevalent High Frequency Trading outfits forcing out all human elements. Maybe the volatility plunging to record lows and complacency at record highs. Maybe the tactic by the network to place new young female faces that are increasingly taking over the prime time financial TV slots is losing its luster and appeal. Maybe the impatience and frustration from hearing endless justification of a record disconnect between manipulated record high markets and a economy stuck in powerful recession (more like depression). Maybe just because the video game consoles that have come to dominate the living rooms and bedrooms do not cover the finance television shows.
The fervent Jackass hope is that CNBC goes off the air. Their 21-year low in rating is loudly applauded. They converted some analyst hosts to the party line of growth and fair markets, after in early months they were more honest and negative on the situation. Almost none of their analysts or anchors is right about anything important or honest about market rigging. To hell with CNBC. The only gem in the bunch is Rick Santelli from the Chicago pits. His refreshing honesty about horrible economic condition and propped market should have earned him a dismissal long ago. See the Zero Hedge article (CLICK HERE). Gotta say, sure do miss Martha McCallum and Mandy the Aussie. Special disdain has gone to Steve Liesman, once an economic analysis with integrity until 2004, full of good insights. He sold out, evident in a sudden change of mind, change in perceptions, and change in tone. Strange mixed feelings for Mark Haines, who died of a sudden heart attack. The Jackass found him at times insightful, but often arrogant in his very wrong views. Santelli remains a favorite, a brave bold smart guy who is kept for resident status on the contrary side.
## USFED WRECKAGE & TURMOIL SPREAD
◄$$$ MONEY VELOCITY HIT A RECORD LOW, WHILE MONEY SUPPLY CONTINUES TO GO INTO ORBIT... SYSTEMIC FAILURE IS EVIDENT... THE PUBLIC IS SURELY NOT HOARDING CASH, THE OFFICIAL DOPEY LINE... MONETARY POLICY IS KILLING CAPITAL AND DISTORTING ASSET ALLOCATION... THE BIG RED LIGHT WARNING SIGNAL IS FAILURES TO DELIVER USTREASURY BONDS, WHICH TELLS OF THE ARTIFICIAL USTBOND SUPPORT FROM DERIVATIVES, AS IN FABRICATED DEMAND THAT HAS OVERWHELMED EXISTING SUPPLY. $$$
The US bond situation involves corrosive ruinous effect of monetary policy in its fourth year. They said the 0% ZIRP would be just for a few months, but they lied. The Jackass said in 2009 that it would be permanent. They said QE bond monetization would be just for a few months, but they lied. The Jackass said in 2011 that it would be permanent. We were taught by central bank mouthpieces for years that a little inflation is good, but a lot is bad. We were taught in economics classes that hyper inflation destroys the entire system eventually, like it does in Third World nations. Yet QE (hyper monetary inflation) and ZIRP (free money) respectively cause capital destruction with retired equipment and distorted asset prices with no reward to savers. Just because it is endorsed by the USFed, USGovt, and Wall Street does not mean it is stimulus. It is destructive and always has been destructive. QE & ZIRP assure an endless recession until systemic failure, followed by a debt default.
The two graphs show in clear terms that QE is not stimulus, and ZIRP is a wet blanket. Together they are causing economic collapse. The systemic failure has shown numerous signals. The Jackass words have sounded exaggerated and fantastic for years, actually since the Lehman failure, a basic scuttle killjob done by Wall Street criminal banks in order to protect Goldman Sachs from sinking. The two graphs show a Money Velocity down almost 4-fold while Money Supply is up 3.5-fold. You decide if it translates to systemic failure. Jackass says resoundingly yes. This is broken US financial system and thus a broken USEconomy, the consequence of heretical injurious damaging monetary policy. The greater tragedy is that it cannot be removed. Putting a halt to the QE monetary spigot means letting the financial markets collapse, bond yields to rise, stock indexes to fall, carry trade to go into reverse, and consumer lending to dry up. So the QE spigot continues in a slow death dispensing acid, rather than causing a sudden death with the hangman at the gallows.
The story sold on the highly corrosive and assuredly ruinous monetary policy is of stimulus. The only stimulus is for the big US banks to continue recycling their worthless bond assets to the USFed as buyer of last resort. The USFed has been totally wrecked in the process, a good thing since the HQ of the banking crime syndicate. The only stimulus offered is to the big US banks to continue with carry trade projects instead of lending toward capital formation in the business sector. The big banks are able to keep the derivative game going with free money, to maintain the Whirling Dervish platform of vaporous mass. The banking system has no foundation. The result has been a systematic assault on capital. The USEconomy has entered a feedback loop of capital destruction, job cuts, and reduced activity. It cannot be stopped. The resulting lower Money Velocity stands as screaming evidence of failure in monetary policy. The moribund activity means capital is being ruined, not functioning, not producing the wanted output. The slower turnover in the USEconomy is not from hoarding of cash, the latest propaganda. The participants are suffering a shortage of money, often struggling to survive. Putting money in mattresses is an absurd concept when struggling to pay the rent and to buy the food and to pay the utilities. The beneficiaries of the easy money are the big US banks. They are also suffering a shortage of money, since the derivative holes are acting like sewers to drain their capital. Their capital ratios are not good, and the harsher Basel III rules have been delayed. No cash hoarding evident anywhere, just widespread insolvency across the entire system.
The logical end is systemic failure, USGovt debt default, war to defend the USDollar and the USTreasury Bond. The USDollar has become the ticket that when refused, invites war. The USTBond has become the toxic element in the banking systems. The Western chambers in the US, UK, EU refuse to liquidate the big banks and work toward the Gold Standard return. So the Eastern chambers in Russia, China, and BRICS nations will pursue the return to the Gold Trade Standard with a growing alliance in support. They are accumulating gold in volume.
Red light warning signals are flashing all over the place. The biggest in the Jackass view is the Failures to Deliver. We are told that the demand for USTreasurys is huge by the market players. It might be moderate, but surely not huge, since savings is in shortage. When the Interest Rate Swaps are applied, using 0% money into the machinery tubes, the result is an artificial demand produced to purchase the same USTreasurys. The big US banks are required to follow through, or else to expose the entire sham game, a veritable Ponzi Scheme. The banks are growing in resentment, and pressure to snuff out official bond dealers grows. However, not enough USTBonds exist in the operating bond market to satisfy such outsized contrived demand out of machinery. The result is Failures to Deliver, the warning signal of a fabricated rigged market. This Third World nation has fancy machinery indeed.
◄$$$ THE US-BASED MIDDLE CLASS IS BEING WRECKED, WITH THE PROXIMAL CAUSE THE MONETARY POLICY AND UNSOUND MONEY... BUSINESS INVESTMENT IS WAY DOWN SINCE THE HOUSING/MORTGAGE BUST. $$$
Thad Beversdorf summarized it well. He wrote, "The theory also attempts to explain this inefficiency. It suggests that, as fixed capital investment declines, we get increasing slack in the job market due to reduced capacity. If this is true, we should also see a correlation between the first chart above and median household incomes which should decline as job market slack increases. Let’s have a look. Again we find significant support for our theory. One can see simply by looking at the chart, there is a strong correlation between the reallocation from fixed capital investment to financial markets and median household incomes. Specifically, as we move away from fixed capital investment we see a decline in real median household incomes. As a note, I regressed these functions as well and although not as strong as the M2 regression, I found statistical significance and good explanatory properties." (That means a statistical model was justified and verified with small residual error compared to the good relation exhibited by fitting income in connection to investment.) See the Voice of Liberty article (CLICK HERE).
◄$$$ RUMBLINGS FINALLY THAT MONETARY POLICY IS SLAMMING ECONOMIC GROWTH... STOCKMAN IS ON THE RIGHT TRACK, BUT STILL WEARING BADLY PRESCRIBED GLASSES... HE IS ONE OF THE GOOD GUY CRITICS, BUT HIS ECONOMIC FUNDAMENTAL KNOWLEDGE IS POOR. $$$
Stockman sounded off. "Six years of zero percent interest rates and trillions and trillions of new public debt have failed to restore economic health, but our conclusion is that we just have not given it enough time or effort. My theory is a bit different. Maybe zero percent interest rates and asset bubbles hinder rather than help a real recovery. Maybe they resurrect the zombie of a failed model and prevent something viable and lasting from gaining traction. This is a possibility that no one in power is prepared to consider. But what if they succeed in getting the inflation, but we never get the growth? What if we are headed toward stagflation, a condition that in the late 1970s gripped the US? It may come as a surprise to the new generation of economists, but high inflation and high unemployment can coexist. In fact, the two were combined in the 1970s and 1980s to produce the Misery Index. But according to today’s economic thinking, the Index should not be possible. Inflation is supposed to cause growth. If unemployment is high, they say there is no demand to push up prices. But it is the monetary expansion that pushes prices up, not the healthy job market. The tragedy is that if the policy fails to produce real growth, as I am convinced it will, the price will be paid by those elements of society least able to bear it, the poor and the old. Inflation and stagnation mean lost purchasing power. The rich can mitigate the pain with a rising stock portfolio and more modest vacation destinations. But they will not miss a meal. Those subsisting on meager income will be hit the hardest."
Although Stockman is critical and dubious of existing monetary policy, he does not notice or comprehend rising cost structure or capital destruction. When profits vanish from rising costs, the equipment goes idle and the workers are removed from the active economy. Stockman does not dismiss outright the absurd belief that inflation causing growth, when it causes the opposite, massive capital removal. He notices that QE pushes up prices, but he does not distinguish between cost of materials and energy versus final product prices and wages. The former (cost) rise while the latter (product prices, wages) do not, thus the profit squeeze. Stockman should have been more admaant that current monetary policy will not eventually produce real growth, since an errant heretic conclusion. These guys including economists do not know much about economics, capitalism, or finance. But Stockman is on the right path, and deserves praise. See the Stockman Contra Corner article (CLICK HERE).
◄$$$ THE BLATANT LIE THAT THE DEFICIT IS DECLINING... THE RECENT DATA RELEASE CLAIMED A USGOVT DEFICIT HAVING DECLINED TO AROUND HALF A $TRILLION, ALMOST A 50% REDUCTION... IT IS A BIG FAT LIE... THE DEFICIT HAS GROWN BY OVER $1 TRILLION IN THIS FISCAL YEAR, PRECISELY AS THE JACKASS FORECAST IN 2010 (ANNUAL $1 TRILLION DEFICITS AS FAR AS THE EYE CAN SEE). $$$
The USGovt liars claim the federal deficit has been reduced to $589 billion dollars for the first 11 months of this year. However, no progress has been made on cutting spending or raising revenues or managing the debt. The reported deficit reduction data is a bold blatant lie. The Jackass has doubted all such USGovt deficit data for the past three years, since they are either revised toward $1 trillion each year, or stand as so falsified as to be laughable. Michael Snyder blew the whistle on this latest deficit claim.
"The idea that the Obama administration has the budget deficit under control is a complete and total lie. According to the USTreasury, the federal government has officially run a deficit of $589 billion for the first 11 months of fiscal year 2014. But this number is just for public consumption, and it relies on accounting tricks which massively understate how much debt is actually being accumulated. If you want to know what the real budget deficit is, all you have to do is go to a USTreasury website which calculates the US national debt to the penny. On September 30th, 2013 the US national debt was sitting at $16,738,183,526,697. As I write this, the US national debt is sitting at $17,742,108,970,073. That means that the US national debt has actually grown by more than a $trillion in less than 12 months. We continue to wildly run up debt as if there is no tomorrow, and by doing so we are destroying the future of this nation." With at least two weeks to go in the full fiscal year (allowing for slight lag), the USGovt debt has risen $4 billion more than a cool $1 trillion. These guys are liars, thieves, fraud kings, con men, and charlatans. The leaders deserve a hanging, and the stat rat artisans deserve a job cut. They could not make it in the business sector. See the Economic Noise article (CLICK HERE) and the Economic Collapse article (CLICK HERE).
◄$$$ CREDIT SWAPS HAVE BEEN REFORMED IN A $19 TRILLION DERIVATIVE OVERHAUL... EVENT TRIGGERS HAVE BEEN MADE MORE LIBERAL, IN RESPONSE TO PROTEST OVER THE PORTUGAL BANK FAILURE AND RESTRUCTURE... THE CDSWAP HOLDERS REALIZED NO PROTECTION IN EUROPE. $$$
The Credit Swaps niche of $19 trillion in derivative has been overhauled in an important project by the the Intl Swaps & Derivatives Assn. Regard it as a new and improved patchwork of broken foundation planks to the Western banking system. The officials sought to resolve flaws that prevented some contracts paying out as buyers anticipated, like in the recent Banco Espirito Santo (BES) case that affected its junior debt. Some of their CDSwap contracts are repriced 50% higher, which officials argue is due to offering more protection. They are all basically fire insurance policies in over-subscribed fashion for your neighbor's house. They do not all pay out in the event of a failure, since the payouts greatly exceed the house's value. Such is the clear hint of group mob fraud.
The triggers have been reformed in the overhaul process. Credit Default Swaps pay the buyer face value in exchange for the underlying securities (like bank firm bonds) or the cash equivalent in the event that the firm fails to conform to its debt agreements. The list of events triggering payouts is being expanded to include bail-ins, when investors are forced to contribute to bank rescues like those at Banco Espirito Santo (BES). The new definitions will also explicitly insure against debt writedowns, bond exchanges, or conversions of debt into equity. The changes will take effect on September 22nd. The BES case in Portugal prompted a small firestorm of protest for the contract inadequacy. When their bonds were divided as part of a EUR 4.9 billion (=$6.6 bn) rescue by the Bank of Portugal, the lender’s senior bonds and credit swaps were transferred to a new entity. The subordinated debt remained with Banco Espirito Santo, which meant that buyers of insurance contracts on the junior notes were left holding devalued contracts without addressed losses. Under the new rules, swaps will remain with the debt they are designed to protect. The ISDA theme is to keep brisk the liquidity, since the dubious observer would reason their reaction is intended to keep the flawed floating Whirling Dirvish rotating rapidly. See the Bloomberg article (CLICK HERE).
◄$$$ BROKEN TRANSMISSION IS EVIDENT IN THE US-FINANCIAL ENGINES... BANK CREDIT AS PERCENTAGE OF MONETARY BASE HAS HIT AN ALL-TIME LOW... MORE EVIDENCE OF HIGHER LIQUIDITY HAS NOT WORKED, SINCE THE MONETARY MECHANISM IS BROKEN... INFLATION AS POLICY FAILS ALWAYS, WHILE INDUSTRY SUCCEEDS. $$$
Money Velocity has continued to decline in an historically unprecedented manner, despite the extraordinary increase in the monetary base of the United States. Bank credit has plummeted as part of the decline. That explains the poor mortgage growth, as bankers are reluctant to lend. They see close-up the chronic USEconomy recession. The system is irreparably broken, as monetary authorities remain dedicated to the wrong policy. Stuffing money into commercial banks has not worked as expected. Wage income growth is stagnant and labor force participation continues to go down. As a result, gross domestic product (GDP) also has hit an all-time low as a percentage of monetary base. Note yet another indicator of the trumped up economic date. As for the Case-Shiller home price index, chalk that rise up to the Wall Street private equity demand for REO homes given in tranches. The phenomenon is already fading. See the Confounded Interest article (CLICK HERE).
◄$$$ CHINA SOLD OFF USTREASURYS IN JULY, FOR 2ND STRAIGHT MONTH, ENDING THEIR SKEIN OF SIX MONTHS OF NET PURCHASES... THE JACKASS SUSPECTS THAT CHINA OWNS MUCH LESS THAN THE $1.29 TRILLION IN USTBONDS POSTED. $$$
China was a seller of USGovt debt securities for the second straight month in July, according to the Treasury International Capital (TIC) report. The nation reduced its holdings by $3.5 billion in the month. Data is tallied with a two month lag. China remained the largest holder of USTreasurys, with total holdings reaching $1.26 trillion. The Jackass wonders about the quality and integrity of the information. My guess is China owns maybe $200 to $300 billion less in USTBonds than the USDept Treasury official data indicates. Proxy sales have taken place over several years. A sudden strong reduction would meet with too many questions, and too many alarm bells going off. Japan has leveled off and showed a mere $0.5 billion reduction in July. The month showed the first sale following six straight months of counter-trend buying by China, where purchases of a total of $131 billion were recorded. Notice the careful usage of word record instead of made. The data might be altered for national security reasons. All other data from the wayward dishonest USGovt are highly erroneous.
Foreign holdings of USTreasurys fell in July by $16 billion (=0.3 percent) to $6 trillion in total. Overseas investors had increased their US debt holdings by $420.4 billion (=7.5 percent) since the last decline in July 2013. The July TIC flows came in considerably below market expectations. To be sure, Asian creditors are deeply concerned about both the USEconomy and the entrenched monetary policy to continue the corrosive bond monetization programs. See the China Daily article (CLICK HERE).
◄$$$ THE BANK OF CANADA CAN BE PRESENTED AS THE WORST CAPITALIZED CENTRAL BANK IN THE WEST, WITH LESS THAN HALF THE CAPITAL THAN THE VACANT USFED... CANADA IS GIVEN HIGH MARKS BY WESTERN ANALYSTS WITHOUT JUSTIFICATION, LIKELY DUE TO ITS HUGE INHERENT COMMODITY WEALTH... IT HAS FORFEITED OVER 90% OF ITS GOLD SINCE YEAR 2000, AND HAS BAIL-IN PROCEDURES IN PLACE... NO STRENGTH IS EVIDENT, NO SECURITY GIVEN, CERTAINLY NO SAFE HAVEN. $$$
Any strong banking system requires a central bank with a pristine balance sheet specifically, with substantial net equity as a percentage of assets. The Banque du Canada is actually the most pitifully capitalized central bank in the Western world. They make the USFed look healthy. The US Federal Reserve shows a capital reserve of just 1.27%, while Canada shows a tiny 0.47%, under half of one percent. After the 2007-2008 meltdown in the United States, the banks in Canada had to be bailed out to the tune of about $40 billion. Multiply by ten typically to compare to US, which means per capita Canadian banks were aided by $400bn in comparison.
At Jackson Hole, the world’s top central bankers gathered for their annual jamboree, where Canada was given praise. The nation has benefited from its perceived status as a global financial safe haven. Some fools in attendance claimed that Canada is now what Switzerland was 20 years ago, and the banks in Canada are what Swiss banks were 20 years ago. Such plain errant thinking and warped perceptions devoid of solid analysis. Canada is seen as the new banking safe haven and an island of safety and stability, mainly because of its perceived sound fiscal position, commodity wealth, and solid economic performance. The first and last points are not the case, but its commodity and energy deposit wealth are huge.
For a look at a sturdy healthy central bank, check the Hong Kong Monetary Authority Exchange Fund, which has a strong balance sheet. Their latest figures at end June indicate a large capital reserve equal to nearly 22% of total assets. a massive margin of safety for the central bank. The US Federal Reserve, on the other hand, shows a capital reserve of almost 20 times less. Furthermore, Canada has zero reserve requirements for its banks. Hence Canadian banks are not obliged to hold any of their customer deposits. The Canadian Deposit Insurance Corp (CDIC) insures bank deposits up to C$100,000. The banking system in Canada has C$646 billion of eligible deposits versus a mere $2.8 billion in CDIC cash available to insure it all, a ratio of just 0.43% in weakness. It gets worse. The nation has legislated an actual Cyprus-style confiscation of deposits in the event that Canadian banks deplete their capital. Included in the official Economic Action Plan 2013 is a provision that would implement a Bail-in procedure for systemically important banks. Such is not a safe haven characteristic, but rather a trap with hands in client pockets. Lastly, the Canadian Govt gold reserves are next to nothing. At year 2000, Canada held 46.19 tons of gold. They currently hold only 2.99 tons, a pittance or floor droppings. The 93.5% decline in gold reserves in just over a decade indicates desperation and insolvency for their financial system. They have managed to run their central bank into near insolvency. The data belies the prevailing sentiment. Canada is no safe haven. It has a Third World central bank. See the Sovereign Man article (CLICK HERE).
◄$$$ THE USFED HAS IMPOSED FINANCIAL AUSTERITY ON THE STATES BY PUTTING RESTRICTIONS ON MUNI BONDS... THEY ARE NOT GRADED AS ACCEPTABLE LIQUID ASSETS... LOCAL FINANCE COSTS WILL RISE. $$$
Without any stated justification, the USFed and its related regulatory bodies made some changes in what are considered acceptable liquid assets. Municipal bonds did not the grade. They included investment grade corporate bonds, of which most do not trade on an exchange, but also stocks in the Russell 1000. These assets hereby meet the nutball definition of high quality liquid assets, but none of the municipal bonds meet the arbitrary definition. The general obligation municipal bonds from healthy states are excluded as liquid assets, even those a better credit standing than BBB-rated corporate bonds. The many state treasurers are angry, in protest. The five largest Wall Street banks control the majority of deposits in the US, but very likely hold very little in the way of Muni Bonds. By disqualifying municipal bonds from such approved status, the biggest banks and vast array of mid-sized in the country are set to trim back their holdings in munis.
The result will be higher finance costs. The states, counties, cities, and school districts will have more trouble in issuing Muni Bonds to build schools, roads, bridges, and other infrastructure needs, as well as fund their depleted pension funds for the bloated legion of pensioners. The action is unusual, if not reckless for a USFed concerned about poor economic conditions. The Jackass expected the USFed to expand their bond monetization to include the Muni Bond category. Here we are a year later, and it seems the central bank is trying to force more municipal bankruptcies, in the other direction. The USFed assessment of Muni Bonds not being highly liquid makes some sense, but the effect will be harsh in reality. The action appears to be another to sink the USEconomy, consistent with QE bond purchase policy. See the Wall Street on Parade article (CLICK HERE).
◄$$$ THE BANK OF JAPAN BOUGHT GOVERNMENT DEBT AT NEGATIVE YIELD... BOND INVESTORS SEEM BLOCKHEADED, AND MIGHT AWAKEN TO FIND THE GOLD MARKET AS ALTERNATIVE. $$$
The Bank of Japan purchased short-term Japanese Govt debt at a negative yield for the first time. The BOJ raked in the hopeless securities which have traded at a negative yield for the past two trading days with strong demand. The negative yield means the investor will receive at maturity less than what was invested. Traders claimed the central bank wanted to show the market that it would meet its asset purchase goals regardless of the cost. The BOJ buys Treasury discount bills as part of its asset purchase program, designed to lift the economy to 2% inflation. The bank has a JPY 270 trillion monetary base target to achieve by the end of the year. The official purchases increase cash in the financial system, pushing it toward the target. In the bizarre world of wayward central banks, the European Central Bank rate cut and its own negative interest rate has created demand for short-term Japanese Govt debt from European investors. Due to internal structures, if Treasury Bill rates stay negative, the longer-term government debt could be pulled down in yields. At some point, the investors might choose instead to break away from the broken bank and bond world, and invest in Gold & Silver bars at the discount offered from suppressed and illicit market practices. The errant BOJ policy might result in buying a higher propotion of shorter-term debt later down the road, than at this time. Sooner or later, Japan's financial sector will discover gold as an investment alternative. See the Wall Street Journal article (CLICK HERE).
## EMBATTLED DRAGHI EURO CENTRAL BANK
◄$$$ THE EURO CENTRAL BANK UNEXPECTEDLY CUT INTEREST RATES AS THE ECONOMIC OUTLOOK DARKENED... EUROPE’S UBER-BANK HAS TAKEN AGGRESSIVE STEPS... THESE GUYS ARE TOSSING MONETARY HAND GRENADES AMIDST CHEERS... THEY DO NOT REALIZE THAT THE MONETARY POLICY IS RESPONSIBLE FOR THE DECLINE... APPLYING MORE PRESSURE ASSURES BREAKDOWN... IT WILL COME IN BROADER BOND PURCHASE PROGRAMS LED BY PRINCE DRAGHI. $$$
On September 4th, the European Central Bank unexpectedly cut interest rates to spur economic growth and stave off the threat of deflation. The arrogant Prince Draghi remains totally unaware that the EuroCB remains the proximal cause for the decline and decay. The central bank's 24-member Governing Council reduced all three of its main interest rates by 10 basis points. The benchmark rate was lowered to 0.05% and the deposit rate is now minus 0.2% (negative). The rate cuts come three months after an historic package of stimulus measures, which failed to alleviate the continental distress. Draghi has a plan for additional measures ready to be unveiled later on, like a purchase program for asset backed securities or a larger program of Quantitative Easing that risks dividing policy makers. The QE plan would anger Germany to the hilt, the extreme. The central banker is desperate, since in June he announced "for all the practical purposes, we have reached the lower bound." That month, he cut the benchmark rate, took the deposit rate negative for the first time, and said any further changes would mainly be technical adjustments. He lied, or else he realized the system is in the process of imploding. Given their wrong thinking and arrogance, they surely do not perceive their role in the destructive process. They cling to the notion of stimulus, even through destructive, since they employ tunnel vision on the bond demand factor without much comprehension of capital (formation, destruction, cost effects). These guys preside over wrecking balls. See the Bloomberg article (CLICK HERE).
The aggressive steps taken by the EuroCB mean cutting interest rates to the bone. He is charging banks even more to park their money in his secure country club. In an unusual way, Draghi is using the central bank’s financial muscle to spur lending. He is at the end of his policy option arsenal, except for the huge step of making outsized bond purchases in pure monetization of debt. The Americans do this with their exceptionalism authority, pure destruction of capital, with no visible opposition. In Europe it is different, since the German Bundesbank opposes hyper inflation from the monetary spigot. Sadly, the Draghi poor remaining options reflect the gloomy state of the European Economy. Inflation is low due to liquidations, Chinese competition, and absent income to power demand. A great deterioration and disintegration is occuring under the prince's watch. A vicious cycle has been entered which Draghi and other Keynesian hacks do not fully comprehend. The desired adjustments between the more prosperous Northern European nations and weaker Southern nations cannot be done without a split from the Euro currency. Devaluation of currency is required, not more bond purchases. Like liquidating the big banks, splitting from the Euro Monetary Union is not an option for the urgent devaluation needed. The policy makers and politicians are frustrated, confounded, and desperate as the economy is gaining downward momentum. They are the cause, not the cure.
Draghi wishes to deploy more desperate monetary policy akin to the USFed. He wants the central bank to expand on the fledgling policy undertaken already. Significantly, the central bank took the first steps toward large-scale asset purchases, a milder version of the so-called Quantitative Easing that the Federal Reserve has used in recent years to pump money into the USEconomy. Starting in October, the Euro Central Bank will begin buying asset backed securities in the form of packaged home loans, business loans, and credit card debt. They are bundled into securities, ready to sell to investors. The details of the bond purchase program were intentional vague. Draghi prefers to exercise his power, even though it inflames the conflict with the more disciplined Germans. He only assured that quality standards would be met, and that bond volume would be in accordance with economic need implicitly. The program resembles Quantitative Easing in that the EuroCB will purchase assets outright, the prince admitted. Keep in mind that Draghi is setting himself up for rejection by Germany, and their exit to the Euro Monetary Union. See the New York Times article (CLICK HERE).
◄$$$ DRAGHI HAS REACHED THE DEAD END OF KEYNESIAN CENTRAL BANKING, CLAIMS DAVID STOCKMAN... THEIR FOCUS ON CREDIT FLOW IS WRONG-FOOTED, AND IGNORED THE COST EFFECT TO MONETARY INFLATION. $$$
David Stockman deserves praise for taking the mantle as newly designated harsh central bank critic. The Jackass is a strict demanding professor, who believes Stockman has the right motive but only half the comprehension of the central bank role in systematic economic destruction. Inflation destroys capital, a concept poorly grasped He has declared "We are now at the lower bound. Europe is not growing much because most of its economies have been crushed under a mountain of debt, taxes, welfarism, and statist dirigisme. Yet somehow the foolish pettifogger running the ECB [Draghi] thinks that driving the cost of money to the lower bound (i.e. zero) will help overcome these insuperable (and government made) barriers to prosperity. Indeed, today’s 10 basis point cut by the EuroCB is in itself screaming proof that central bankers are lost in a Keynesian dead-end." He accuses the elite bankers of securing the zero cost money on their lucrative carry trades a great Stockman accusation. Most analysts do not touch the carry trade topic, since part of their blind eye field. They borrow free money, and use it to gain yield (interest profit) on longer dated bond securities. Stockman misses the entire free cost of the feeder fabricator for USTreasury Bond demand via the Interest Rate Swap derivative. The critic correctly identifies the mindset errant focus, whereby the central banks are entirely operating with a priority toward credit flow today and tomorrow. He concluded, "Accordingly, lower interest rates, no matter how trivial the change, are ritualistically presumed to stimulate more borrowing in the real economy, and therefore more spending, income, and virtuous circle of Keynesian growth." The bankers have been wrong for a long time in full view, since industry is lacking, not liquidity flow from more debt of phony money. To be fair, the derivative feeder process might make Stockman's head explode if explained to him.
These central bankers are wrong, loud wrong, since they overlook the cost structure effect from rabid inflation, which slams profitability. Thus the retired equipment, shuttered businesses, furloughed workers, which the Jackass calls capital destruction. A machine put aside and turned off might not be put under the wrecking ball or crusher, but in the economic perspective, it is capital no longer active in the system, and thus retired, the same technically as destroyed. The solution is a return to the Gold Standard, and a move toward re-industrialization, with real capital formation, done with savings, not dispensation from an arrogant set of monetary princes. See the David Stockman article (CLICK HERE).
◄$$$ DRAGHI LUSTS TO APPLY ALMOST $1 TRILLION STIMULUS, AS A GRAND QE BOND PURCHASE FIGHT BREWS WITH GERMANY... MARIO DRAGHI CANNOT LAUNCH QE WITHOUT GERMAN POLITICAL ASSENT... THE POPULAR MOVEMENT INSIDE GERMANY TO DEPART FROM THE EURO CURRENCY IS GROWING FAST AND MAKING LOUD NOISES, ENOUGH TO ALTER OFFICIAL POLITICS... THE MERKEL GOVT HAS LESS DISCRETION. $$$
Watch Prince Mario Draghi defy Germany. He signaled at least EUR 700 billion (=US$906 bn) of fresh aid for the moribund EuroZone Economy. A big fight is brewing, which he has sidestepped for now. The Germans vocifersously oppose the plan of sovereign bond purchases. They might leave the Euro Monetary Union over the issue, since so important in its destructive potential (not recognized). Draghi has pledged to significantly steer the EuroCB balance sheet toward the EUR 2.7 trillion level of early 2012 from EUR 2.0 trillion euros now. He offered some vague details on his plan to buy privately owned securities. Insanity prevails. One program is designed to attract greater participation in a targeted lending program for banks, unveiled in June and to start in September. Banks can borrow from the ECB for as much as four years at a small premium to the benchmark rate. His stated mission is to revive price inflation in the 18-nation EuroZone region. His actions will lift costs instead. The full Quantitative Easing plan as deployed in the United States and Japan was not enacted, since the 24-member Governing Council was split. Bundesbank President Jens Weidmann opposed the new stimulus and other plans. Steps taken reflect the absent unanimity, as a large enough majority for Quantitative Easing is not there. Draghi is anxious to do more. However, the rate cuts mark the end of the blind alley for conventional monetary policy.
As price inflation declines slowly from already low levels, the EuroCB chose to cut rates, which slow the economy further. Reduced yields given to savers is depressive, not simulative. Bloated asset markets are not healthy for the system. The benchmark and deposit rates were reduced by 10 basis points to 0.05 percent and minus 0.2 percent, respectively. The overall investment in the EuroZone fell by 0.3% last quarter, the first decline since the start of 2013, which is a signal of failed policy, not a justification for more of the same. The result has been stagnation in gross domestic product (economic activity) while household consumption and government spending rose. Governing Council member Ewald Nowotny revealed, "The rate cut was mainly meant to lead to a reversal of the Euro currency appreciation [for relief to exporters]. The key issue was the influence on the exchange rate, and that happened very quickly and is going to last." A contradiction is clear.
The bankers rejigger the Euro exchange rate in the FOREX to keep it high, enabling more favorable dumping of bonds, while then later explaining that ECB rate cuts are done to reverse the Euro appreciation. Their goal is for the EuroZone population to spend more, and to save less, which depletes the economic vitality and removes working capital from legitimate sources, namely savings. See the Bloomberg articles (CLICK HERE and HERE). A close look shows that banks in Italy and Spain have taken more than 45% of all Euro Central Bank loans. Ruin is the hidden goal, since liquidation is not an option. These guys regard savings as problematic. These guys are poor students of economics. They are truly insane. They are truly out of control. They are a grotesque menace.
The German resistance has reached the popular level. Recent elections favor an exit from the burdensome European Monetary Union. The stunning rise of Germany’s anti-Euro party threatens to break the EuroZone apart. It also is sure to undermine any aggressive bond monetization (QE) probram by the Euro Central Bank. The Alternative fur Deutschland (AfD) has swept through Germany like a storm, winning 12.6% of the vote in Brandenburg and 10.6% in Thuringia last week. The party has formally entered the doors of three regional assemblies, after winning its first platform in Strasbourg with seven Euro Parliament seats. The German UKIP is making a comeback, capturing the centrist ground. The German Govt must respond, and take a tougher line in European politics on monetary matters. It is losing some of its discretion in decision making. The sentiment is universal in the country, that German taxpayers are being drained in order to prop up the broken Southern European nations. The formerly scattered dissidents have united in an organized manner. AfD appears to have a disciplined leadership with a well-funded party appealing to conservatives. The new movement calls for an orderly break-up of the monetary union, meaning departure from the Euro currency. They seek to disband into smaller blocs or to return once again to national currencies, like the French Franc, the Italian Lira, the Spanish Peseta, Portuguese Escudo, and Greek Drachma. See the UK Telegraph article (CLICK HERE).
◄$$$ THE EUROPEAN BOND MARKET AND STOCK MARKET ANTICIPATE CONTINUED LARGESSE BY THE EURO CENTRAL BANK... RISK RISES AS COMPLACENCY GROWS... MARIO DRAGHI CANNOT LAUNCH QE WITHOUT GERMAN POLITICAL ASSENT... THE GERMAN OPPOSITION COMES FROM MANY CORNERS AND IS FIERCELY STRIDENT... THE GERMANS MIGHT OFFER SOME FISCAL STIMULUS, BUT IT IS CONDITIONAL... A SHOWDOWN COMES, WHICH COULD RESULT IN FORMAL OPEN PREPARATIONS TO LEAVE THE EURO CURRENCY AND DRAGHI'S DICTATORIAL RULE. $$$
As though QE with high volume bond monetization is a fait accompli, financial market investors are committed to the notion that the Euro Central Bank will carry identical ruinous policy as the US Federal Reserve in a seamless continuation. Their goal is a torrent in liquidity supply, without concern for capital effect. The Eurostoxx 50 index of equities is up 8% since mid-August, despite the EU slowdown. The broad anticipation that the EuroCB will soon join the crowded bond markets on a massive buying spree is a principal reason why yields on 10-year German Bunds have broken all records, falling below 0.90% in a recent week. The French yields are down to 1.23% in unison. Yet no stimulus is realized, as Europe's policy settings continue to be contractionary on both the monetary and fiscal side. The errant wayward myopic central bankers urge governments for reduced budgets, when the accommodation with new phony money is the bigger problem to removal of capital with its retirement. Corporate loans are still shrinking, down in volume by 2.3% in the last year. French President Hollande is pushing through EUR 50 billion in austerity measures over three years to comply with EU rules, guaranteeing staggering unemployment through his presidency. The Italian Prime Minister Matteo Renzi is caught in the same vise, forced to keep cutting budgets in order to reduce the budget deficit, mainly caused by a triple-dip recession, which arrived as the result of ECB policy. A vicious circle of incompetence has hit Europe. See the UK Telegraph article (CLICK HERE).
German opposition to the Draghi QE inflation plan comes from the Bundesbank, the German Govt, the courts, and university professors. The court challenge might prevail on other grounds. They cite the unlimited volume of bond purchases. Previous programs had limits. The court filing might actually interrupt the Draghi plan on legal grounds. He operates against overwhelming opposition from the German political class. Back in July 2012 at the time of the Draghi comment at Jackson Hole, whatever it takes meant something different, since the EuroCB was working in concert with the German finance ministry, in full agreement. This round (before QE launch) Draghi is in direct conflict with Berlin and all the German institutions.
More insanity is seen. Draghi threatens to install the QE inflation device in order to pressure Merkel and the German Govt to abandon their policy of pro-cyclical budget surpluses. The central bank heretically regards savings and trade surpluses as deeply damaging to the Euro Monetary Union. They cause a Euro rise in the exchange rate. This is Reich Finance at work. These central bankers are upside down errant in their thinking, dangerous so. Merkel might opt to accept fiscal stimulus as a lesser evil than QE. That means order deficit spending in Berlin instead of permitting the monetary spigot to run rampant out of the Draghi ECB. Their thinking is based on preservation of debt machinery, not legitimate healthy systems which produce surpluses. The gambit and brinkmanship by Prince Draghi might yield results. The newspaper Die Zeit reported the finance ministry is preparing an emergency stimulus package, conditional upon the German Economy weakening further. The German officials are confident of recovery later this year without the need for any real action. Yet the Russian sanctions will dole out damage, the weakening almost assured.
◄$$$ CENTRAL BANKS PRESIDE OVER A RACE TO THE BOTTOM, A GRAND DESTRUCTION IN PROGRESS WITH HUGE DOWNWARD MOMENTUM. $$$
The USFed is destroying capital at a horrific rate with bond monetization. We were taught in university that high volume monetary inflation is lethal to economies, but when the Americans do it, suddenly it becomes stimulus. The USGovt is so lonely being the most broken nation, so it encourages the European Union to destroy its economy with Russian alienation and further sanctions. Draghi at the Euro Central Bank detests the German surpluses, so he encourages them to run deficits in order to bring balance to the Euro currency and the wrecked fiat consortium of fiat currency toilet paper. One nation lowers its interest rate in order not to have its currency rise, so as to keep its export trade stronger and more brisk. Another nation will buy USTreasurys in order to drive down their own currency, so as to preserve the export industry. These central bankers are more sewage treatment plant directors than lords over economies. They preside over a race to the bottom, as in the bottom of the toilet bowl.
◄$$$ THE EUROPEAN SOVEREIGN BOND BUBBLE IS HISTORICAL IN ITS PERVERSION AND MINDLESS SPECULATION... BOND YIELDS AMONG PIIGS ARE MOVING TOWARD ZERO, AN ECHO TO THE USTREASURYS... INVESTORS ARE SHIFTING OUT OF STOCKS, BUT THE DRAGHI EURO-CB IS SUPPORTING THE BOND MARKET... THE EKG IS BARELY SHOWING A PULSE, AS THE 2-YEAR SOVEREIGNS ARE FLAT, MEANING NO REAL BOND MARKETS EXIST. $$$
## BRICS DYNAMIC DEVELOPMENTS
◄$$$ TOSSED BRICS THROUGH THE WESTERN WINDOW... MANY ARE THE DEVELOPMENTS FOR THE BRICS OUTPOSTS IN RUSSIA, CHINA, INDIA, IRAN, AND VENEZUELA... THE SAUDI ARABIAN ROYALS ARE SET TO BE TOPPLED... THE FUTURE OPTIMISM AND BRIGHTER PROSPECTS LIE IN THE BRICS YARD, NOT THE WESTERN FASCIST FIELD. $$$
The creation by the BRICS of the New Development Bank (NDB) is called a landmark achievement. It is finally happening. The creation of the bank is a positive step for the BRICS nations and developing countries in general. While it is not yet clear whether the NDB will pose a direct challenge to the global financial status quo, its creation presents a number of opportunities for the developing nations. First, the creation of the NDB will strengthen the voice of developing economies in shaping the future direction of global development finance in an independent manner. The Bretton Woods institutions, such as the World Bank and IMF, have long dominated the development agenda. Developing countries feel that their place at the decision making table is not proportionate to their growing economic influence. Second, the NDB can fill the existing gap in infrastructure financing. The 2008 global financial crisis has diminished the lending capabilities of Western institutions. Lastly, while the NDB does not yet pose a direct challenge to its existing Bretton Woods counterparts, its creation will generate competition among global financial institutions. Call it the Anti-Dollar Bank. See the Economy Watch article (CLICK HERE).
A tidbit but important, and not directly related to the BRICS nations, but juicy. Recall the huge controversy with Dominique Strauss Kahn, who allegedly raped a Haitian woman working as maid in a Manhattan hotel. It was quite the rage of a story. The Jackass searched for the story behind the story, the motive for the contrived USGovt attack on him. DSKahn was pushing for the USGovt into proving its non-existent 8500 tons of gold reserves, using some legal angle. But he pushed the US bank crime syndicate too far. They had him quickly removed, under the staged crime scene. DSKahn should really write a book, but he would then be killed like many of the London bankers who know too much about JPMorgan malfeasance.
China has formally welcomed India's bid for full SCO membership. Russia is in charge, and China will confirm in the tag team. The countervailing force to NATO is forming in this security alliance. Expect a string of new members soon, mostly from West Asia. See the Siasat article (CLICK HERE).
Russia mulls supplying grain to Iran in exchange for oil. The new trade outside USDollars adds to the washing out of the Petro-Dollar pillars and foundation. The USGovt cannot stop the process, not even with sanctions. Bear in mind that Russia does not need the supply of Iran oil in import. Their objective is to help Iran to skirt sanctions, but also to increase the liquidity of non-USD oil sales. See the Zero Hedge article (CLICK HERE) and the ITAR-TASS article (CLICK HERE). London Paul calls Russia the Big Oil Brother appropriately.
The Russians & Chinese will continue to work on the USDollar alternative. The news does not receive proper attention, but Russia just began to put customs duties on Ukrainian goods. Until now, their exports enjoyed a free ride into Russia for sale. They cannot receive the benefits (likely hardships instead) from the European Union, without a penalty from Russia. The Kremlin will continue its reorientation with Eastern states as trade partners. See the Russia Behind the Headlines article (CLICK HERE).
China and Iran have signed a $4.5 billion deal to finance petro-chemical investments in the Islamic Republic. In all, twelve new projects in the energy field will be pursued, with eight already financed so far, and four projects underway. Talks with the Iranian Central Bank about providing payment guarantees for Chinese credit are still ongoing. Combined with the Russia-Iran oil deals (for greater liquidity flow), Iran should be integrated nicely in the Eurasian Trade Zone. See the World Bulletin article (CLICK HERE).
China is prepared to invest $100 billion in India. China’s Consul General at meetings in the city of Mumbai has confirmed the news. The commitments will span over five years on the investments. The projects will be directed toward industrial parks, railways, highways, ports, power generation, power distribution & transmission, automobiles, manufacturing, food processing, and textile industries. The sum is triple what Japan has committed to India. The Beijing leaders are converting their fiat paper (USTreasury Bonds) at lightning speed, knowing well that it will crash and burn not before long. See the In Serbia Info article (CLICK HERE).
China has announced a formal clearing bank in Paris for the RMB business. The plan was known months ago, but finally the bank has been identified. With the array of European swap facilities and RMB Hubs, the movement away from the USDollar will be made swift, thus avoiding the USGovt interference in bank functions. See the BRICS Post article (CLICK HERE).
Saudi Arabia is under siege internally, during succession with two groups vying for power among the diverse royals. The nation is also from Islamic reform, economic pressures, and unequal wealth and privilege. Finally the women factor has become a great source of instability, as they object to essentially slavery and toy status. See the BBC article (CLICK HERE) and Voltaire Net article (CLICK HERE). The Voice provided a critical comment. "The Saudis are the next in line to suffer revolt and lost power. They are being taken down from within. It is a unique situation. A gigantic power struggle is taking place inside the Royal Families, plus the unrest among the people in the country is enormous. I am of the opinion that it will be the Saudi women who will be bringing down the system. They are fed up being patronized and kept like birds in golden cages or as slaves." The Jackass adds that the Saudis are next to be subjected to pressures that result in loosened security on its gold reserve, then stolen. Coming is the blowback phase after two generations of US-British allegiance. Other excluded tribes are pushing for power, not friends to the Anglo-Americans.
Supplies in Venezuela are fast vanishing. First it was beans and rice doing a vanishing act. The nation is besieged by urgent need to raise hard currency, in order to defend its Bolizar currency. Its harsh decline has spawned price inflation and produced shortages. The shortages are from exports of the high volume output, to raise cash. The shortages have extended to paper supplies, including toilet paper. See the Zero Hedge article (CLICK HERE). When the United States must launch a new Scheiss Dollar, the devaluation pressures will result in similar pressure to export US-based output in defense of the New Dollar. In a real sense, Venezuela and its chaos is a good example of what comes to the US in extreme problems.
Venezuela must adjust to its evolution from a light crude producer to a heavy crude producer. The nation has not built more refining capacity inside the country. The nation is exploring the idea of importing crude oil for the first time in its history. Its industry is out of balance. They might export one type of oil, and import another type of oil, a net wash but lost opportunity from poor planning, disorganization, and misallocation of funds (stolen by Chazez & Maduro cronies). See the Caracas Chronicles article (CLICK HERE). Maduro is a big fat zero, nothing more than Chavez redux.
The youth in BRICS nations foresee a brighter future and outlook than the Western nations. The people in nations aligned with the BRICS alliance have the most positive outlook on their life from all countries on this planet. According to the poll conducted by the Ipsos MORI Social Research Institute, the nations China, India, Brazil, Turkey, and Russia lead the pack in future optimism. Conversely France, Belgium, Spain, United States, Sweden, Great Britain, Canada, and Germany trail the pack in the same future optimism. The King Dollar has wrought decay, fraud, destruction, and wrecked capital structures amidst a generation of industrial outsourcing. The BRICS with their broad industrial base and movement toward a legitimate gold-backed currency, are reaping the benefits. See the Ipsos MORI article (CLICK HERE).
## USDOLLAR SYSTEM SET TO COLLAPSE
◄$$$ THE RUBLE & YUAN CURRENCIES WILL PAVE THE WAY FOR USDOLLAR SUBSTITUTION... CROSS-BORDER PROJECTS WILL ACCELERATE, AS WILL CHINESE FINANCING OF PROJECTS IN COMPENSATION TO SANCTIONS... MOSCOW SEEKS TO INCREASE TRADE AND BANKING COOPERATION WITH BEIJING, WITH THE USDOLLAR AVOIDED AS UNNECESSARY THIRD PARTY CURRENCY... PROCESSES ARE ACCELERATING TO A POINT OF NO RETURN FOR THE USDOLLAR... AGAIN, NO ISOLATION TO RUSSIA, JUST ANNOYANCE. $$$
A new meeting has been hatched, surely the first of many. Chinese Vice Premier Zhang Gaoli and Russian Prime Minister Igor Shuvalov co-chaired the first meeting of the China-Russia Investment Cooperation Committee in the Great Hall of the People in Beijing early in September. It should become a regular sequence with important purpose. Russia & China have begun discussions on new high profile projects, touching on infrastructure, agriculture, and petro-chemicals. A key element for the agreement is to sharply increase the usage of the Ruble and Yuan currencies in joint trade transactions. In all, 32 bilateral investment projects were discussed. They range from hundreds of $millions to around 1$billion in size.
The enhanced cooperation comes in response to the US, UK, EU sanctions directed at Russia. Shuvalov said, "[The projects] are related to transport infrastructure, petro-chemical complexes, the extraction, processing, and delivery of natural resources through the Far East region and development of the agricultural sector. We are going to encourage companies from the two countries to settle more in local currencies, to avoid using a currency from a third country. We talked about the infrastructure of investment cooperation, expanding trade in Rubles and Yuan, banking cooperation, the possibility of Russian companies opening accounts and being issued loans from Chinese banks, as well as the possibility of facilitating Chinese companies’ access to Russian banks." Both parties and the global audience heard USDollar in reference to third country currency. The USDollar is being isolated, rejected, and scorned, if not sanctioned in response by the real producing nations. Russian President Putin and his Chinese President Xi Jinping proposed the idea of the investment commission during their bilateral meet in May, earlier this year. It has come to pass. See the BRICS Post article (CLICK HERE).
◄$$$ INITIAL GAZPROM NEFT TRANSACTIONS TO EUROPE HAVE BEGUN, THE PAYMENTS IN RUBLES... TWO TRANSACTIONS HAVE BEEN COMPLETED... THE RUSSIANS WILL PROBABLY ROLL OUT OTHER VENDORS FOR THE SAME RUBLE PAYMENT, SINCE THE TEST CASE HAS WORKED WITH SUCCESS... NEXT COMES EXCHANGES TO SET THE CRUDE OIL PRICE IN RUBLES... THE PETRO-DOLLAR IS DYING... A BACKFIRE TO LONDON AND WALL STREET COULD ARRIVE SOON, AS THE RUBLE STRENGTHENS. $$$
Jaroslav in St Petersburg Russia has supplied some highly important information. The following is from him, with my edits for readability and flow. The information uses quoted comments from Alexander Dyukov, the head of Gazprom Neft (Gazprom Oil). Almost all their clients for crude oil and petroleum products have signed agreements to pay in Rubles. A few have been permitted from certain points to make payments in Euro currency. As for Novoport, this project has already begun delivery for Ruble currency, and ongoing oil deliveries from the field will be paid for in Rubles. Also, from this time onward, the deliveries to the Asian market are to be completed in Yuan currency. The USDollar is a global liquid currency, and the transition into any other currency is a certain chore with risks and costs. "They see a potentially large amount of crude oil and oil products which could be realized in USD settlement. They require conversion into Rubles, to be done with as minimal risk and as simple as possible." He was clear that Russia should consider creating its own price agency and exchanges that set quoted oil prices in Rubles. This function would help to facilitate global access to the Ruble, which in turn would increase the volume of oil and petroleum products sold in Rubles and Yuan. Witness the beginning of crude oil set in Ruble prices, a great step toward killing the Petro-Dollar. Watch the Saudis follow the Russian lead.
In update, Gazprom Neft has sent the second oil tanker for settlement in Rubles. The oil was produced at the Novoportovskoye field on the Yamal Peninsula . It contained crude oil in the amount of 27.2 thousand tons, delivered on September 17th to NorthWestern Europe. New oil is called Novy Port, its quality characteristics, including low sulfur content, exceeds the benchmark grade of Brent. They are currently preparing for shipment of a third tanker. One should conclude that Oil for Rubles is a done deal, a newly established trend, early but very real. Soon other Russian companies will join in, for conducting large sales in Rubles, and possibly Yuan, possibly outside the energy sector. The Jackass adds that the Ruble currency will strengthen considerably. One can hope that the London and Wall Street market rig specialists will experience a vast backfire with heavy losses at their desks and in their faces. The Yamal Peninsula is in Northern Siberia on the Yamal Sea, a very undeveloped area on permafrost. Work is going on with three large infrastructure projects. They include the new 572-km Obskaya–Bovanenkovo railway due to be completed in 2011, a gas pipeline, and several bridges. It is Gazprom's largest project in history with estimated reserves of 55 trillion cubic meters of natgas. Yamal holds Russia's biggest natural gas reserves, for that matter the world's biggest. The Russian energy trade will lock out the USDollar in extraordinary volume.
◄$$$ RUSSIANS WERE STUNNED WHEN CHINESE MINING EXECUTIVES PUSHED THE CONCEPT OF A GOLD-BACKED YUAN... THE CONCEPT IS OUT IN THE OPEN IN DISCUSSION... GOLD ACCUMULATION IS RAPID, WHILE THE GOLD EXCHANGES ARE EXPANDING IN NUMBER AND CONTRACT TYPES. $$$
John Ing is an independent analyst, a wise fellow who has contributed to the gold community for years. He claims that Chinese officials are calling for a gold-backed Yuan. Such has been the Jackass suspicion, a vehicle to be developed with Russia, for service to the Eurasian Trade Zone, to be launched by the BRICS nations in a formidable alliance. Ing was interviewed, and the following are many of his thoughts in abridged version, relating his experience at a recent Beijing conference. Some might argue that it is only a Chinese National Gold corporation executive that strives for a gold-backed Yuan currency. Bear in mind that the major corporations in China, being state owned, are therefore state run. Therefore, the statement is probably a device used by the Chinese Govt in promulgating their plan for a gold currency, made from the side door to the government palace. It is doubtful the Russians were stunned at the gold-backed currency discussed. They might have been taken off guard a little by the open forum, or the timing. Ing said the following in the interview.
"I was invited to give a speech at the first ever Chinese Gold Congress, which was sponsored by the Chinese Govt and the five big gold companies, including (state owned) China National Gold. There was a heavy Chinese Govt representation (over 600 attendees). The fact is that the Chinese remain bullish on gold, and they have been buying up to one third of world supply. All five Chinese producers echoed that their reserve life is something that concerns them. All of them are looking internationally to acquire reserves in the ground. Even the president of China National Gold said that the Renminbi, which is becoming internationalized, should have a gold-backing. It was also announced that the Chinese have planned another gold vault which will be equipped to store about 1900 additional tons of gold. That will be located across from Hong Kong in the Chinese city of Shenzhen. I believe that brings the total number of gold vaults in China to four. This is necessary because they are such a big player in the physical market and their presence in the gold market will only increase over time. When I was in China, the Shanghai Gold Exchange announced that they will be trading gold internationally, and they intend to set the physical price for gold. The importance of that is that they are going to initially introduce something like 11 Renminbi contracts. Gold will be transacted and settled in renminbi instead of the USDollar. Together with the vaults and the changes at the Shanghai Gold Exchange opening up for international investors, this tells me the Chinese are setting up to dominate the gold market in the future as they continue to soak up the world’s available supply of gold.
I also found it interesting that the Russians were attending and listening intently at the Chinese Gold Congress. I am sure the Russians were surprised at the open discussion of a Chinese gold-backed currency. This shows that the Western sanctions have moved Russia and China closer together, as the Russians look to the East for financing. We also know that the Russians have been big buyers of Gold. The Russians have moved up their reserves from 600 tons to well over 1000 tons. So the Russians also continue accumulating gold. What we are seeing is the last gasp in terms of USDollar strength. You see the Chinese, Russians, and other countries buying currencies other than the USDollar. In fact, this move away from the USDollar will be one of the catalysts to move Gold higher. We seem to be in the midst of a currency war where every country is trying to weaken their currencies, including the Japanese and the Chinese. These currency wars are a very favorable backdrop for higher Gold prices. So on a risk-reward basis, the downside is somewhat limited in Gold and the sky is the limit on the upside." See the King World News interview (CLICK HERE). Surely Ing will soon realize (with shock) the Russian Govt has at least 10 times and probably over 15 times the 1000 tons he referred to.
◄$$$ BEHOLD THE SILENT DEATH OF THE USDOLLAR (EXCEPT FOR WAR TO DEFEND IT)... THE USDOLLAR IS SYSTEMATICALLY BEING REMOVED FROM GLOBAL TRADE, BRINGING ABOUT A GRADUAL LOSS OF PRESTIGE... THE USDOLLAR IS IN THE PROCESS OF LOSING THE GLOBAL RESERVE STATUS, HASTENED BY THE DEMISE OF THE PETRO-DOLLAR. $$$
The USGovt has become particularly belligerent militarily toward the rest of the world. Hidden is the motive to defend the USDollar, actually not so hidden with the outbreak of the Ukraine War. The United States is provoking Russia while tolerating China all over the globe. The hostility involves war, sanctions, trade tariffs, and heavy pressure to join wrong-footed trade unions. The reason for the US hostile activity is simple. The USDollar is being gradually and systematically removed from its reserve status. The Yuan has been fitted with pillbox locations (Yuan Swap Facilities and RMB Hubs) all over the world, including the Western world, even in London and Frankfurt, including where the British Empire once set in Australia and New Zealand. The emerging industrial giant China has been quietly arranging bilateral trade deals with all its major trading partner, thus bypassing the USDollar in trade settlement. Recently China signed huge deals with Iran and Russia to trade energy in their respective currencies. The big contracts internationally extricate their trade activities from the USDollar, which has turned cancerous.
As the US-DX index has risen, notice that the Yen and Euro have been beaten down to lift the widely watched Dollar Index. The Yuan and Ruble are not included in the standard measurement of the US-DX index. Russia & China do not care much anymore about the value of their currencies in relation to the USD in trade, but they are mindful of their USTreasury holdings value. Both superpowers are slowly unloading their USTreasury Bonds. They are both accumulating physical gold hand over fist. In fact, a large portion of the SPDR Gold Trust (aka GLD Fund) has seen its gold inventory shipped to China. The rest has gone to the COMEX to prevent a contract default. Some of the COMEX contracts are in Chinese hands. Therefore Wall Street banks are servicing the hind parts of China with gold provision. China is removing as much gold bullion from the West as possible, calling in old debts. The affected drained parties are primarily London and New York, the legacy contracts and other derivative abuse contracts kept out of the news, like those used to acquire the JPMorgan HQ in Manhattan. In effect, Russia and China are methodically killing the USDollar. The sign posts are there to see for anyone who wants to look for them. See the Investment Research Dynamics article (CLICK HERE). As footnote, the GLD Fund is fast being depleted. Its gold inventory is down hard by 20 tons this month alone. Standing at 774.65 tons, it has fallen all the way down to the December 2008 level.
The Jackass adds a rejoinder in summary. The USD will rise from hunkering down into the currency by foreigners as the crisis intensifies and their domestic financial systems undergo great distress. The other nations cannot print money, so they hide in the cave where the USD is printed. The USD will become useless when it is rejected for oil sales and trade settlement by the majority of the global players. Also, all derivative payouts and contract conversions are done in USD terms, according to the contracts. So as the system implodes, more USD demand will come but temporarily. The rise of the USD versus other Western currencies signals the systemic breakdown of the Western system. The USD will rise and rise from hunkering and derivative wreckage, then the USD will vanish from rejection in oil trade. Both Saudis and Russians will not use it, bringing the demise of the Petro-Dollar defacto standard that has stood for 40 years. The rise of the Eurasian Trade Zone led by Russia & China assure the USD will lose its prestigious position in the global reserve standard. Then comes real messy chaos for the USEconomy, which 90% or more of Americans neither comprehend nor anticipate.
◄$$$ THE VOICE INTRODUCED A CHALLENGE FOR DEBATE ON THE TIMING OF THE WESTERN FINANCIAL SYSTEMIC COLLAPSE... SEVERAL CONTRIBUTIONS WERE MADE, BUT NOT FROM THE VOICE... THE BREAK COULD OCCUR WITH BIG BANKS, OR COMEX, OR STOCK DECLINE, WHILE RETAIL CONTINUES TO FADE AND FADE. $$$
The Voice hinted strongly that the global financial system is hanging by threads. He has regularly and frequently cited major broken platforms like the FOREX, the sovereign bonds, the government deficits, and insolvent banks, along with the derivatives abused as glue to hold it all together. The tone used by the Voice has changed in the last month concerning the status and condition of the entire system. He indicated with a stern tone that it faces serious and imminent risk of breakdown, not years but months probably. An important step was to be done in a Global Currency Reset in February or March, but it was delayed as a result of the US & EU sponsored coup d'etat in Ukraine, followed by war. The perpetrators lobbied for propaganda support to claim that Russia attacked Ukraine. The reset was delayed. So in a very real sense, war is holding up the reforms that will materially alter the USDollar, give it downgrade, or possibly give it final dismissal. The Voice hinted that some breakdown events might occur any month now, that the Boyz are having extreme challenges in holding it all together. He addressed more recently the complexity, which has them overwhelmed. It is like the Ponzi Scheme requires an acceleration in the office situation room activity to manage the many crises that crop up. Their resources and abilities are overwhelmed. A systemic breakdown is soon to occur. The Voice will contribute more on his coalescing theory for the breakdown. He might not be at liberty to share too much at this point in time. The Jackass is very grateful for what he does share to our humble cadre of expert analysts.
The Voice gave our group of colleagues a challenge, to describe the timing of breakdown, and the speed of the contagion with collapse. Doing so is almost impossible without some reference to the trigger site to the breakdown. The Jackass took up the challenge right away, expecting to update with additions later. Here is my theory on a platter. All nations outside of US, UK, and its MidEast allied partner realize these three nations must be stopped as the Fascist Axis spreads its destructive influence, through wars, bond fraud, gold thefts, hyper monetary inflation, and more. The biggest vulnerability and key to holding the USDollar together is the USTreasury Bond complex, due to complexity and derivative volume gone out of control. The key nation is Germany, which will pull the plug on derivatives that support the USTBond, done via Deutsche Bank. The USGovt prosecution to D-Bank will be the final straw. The EuroCB action toward bond monetization will also press them into action. They might not dump derivatives, but instead permit one or more mid-sized German banks to fail, thus causing a contagion that urgently disrupts the bank derivatives. Quick update, the Raiffeisen Bank suffered a sudden plunge in its stock price after issuing a profit warning. The Austrian bank is heavily exposed to Ukraine and Eastern Europe. This is just the beginning of a wider European banking meltdown. There is always a catalyst.
The urgency is finally recognized with the US-UK-EU, their actions having put Europe in jeopardy from Ukraine War. The breakdown will happen before the end of this year. Once the plug is pulled with some bank failures, the damage will spread quickly and irrevocably within three weeks to London & New York banks, but through the PIGS banks. The weak banks in France, Spain, Italy, Portugal, and Greece will be immediately affected, and relay the contagion to London and New York. They will suffer lost support from larger banks which own a stake in their weak banks. Recall an important Jackass concept of all the big Western banks being lashed together.
The strangest part will be identifying when the plug was actually pulled, since it might not be recognized right away. The Jackass belief is it will be pulled after the Wales NATO Summit, which is now. Word has come that the sense of desperation by the fascist bankers is at a screaming high peak level, as they are cornered. All attendees will realize at the summit the Fascist destructive element mixed with pure insanity and lost perspective. The process of actually pulling the plug to initiate the process might take a longer time than realized, as preparations must be made to assure survival. As footnote, Ukraine has just introduced capital controls. The collapse is accelerating, and the Jackass forecast of fallen regime before January is looking good, with IMF aid gone and street protests. The controls should not be surprising since the Hryvnia currency is collapsing. It gets worse. First Germany, and now France has refused to support the USGovt on its plan for Syrian airstrikes. They might have severed more NATO cable lines than is understood externally. Finally, no coalition seems at work at all. Europe is fast awaking, as it expresses no trust at all for WashingtonDC fascist warmongering clowns. See the Zero Hedge articles (CLICK HERE and HERE).
London Paul offered a theory on a platter, his points with very minor edits for flow. The COMEX could be collapsed by a massive sudden physcial demand, perhaps Silver more than Gold. The bust would cause a huge short squeeze and possibly take down JPMorgan the bank, which would be catalyst. If Nazis are aware that an event is coming which will take down their financial system and finish them off for good, then they will stage another 911 type incident somewhere in West, blame whomever, go to war with the blessing of the people, and stave off their demise a little longer. Chance of that happening now is quite high. We know that COMEX carries an enormous short position which is used for price manipulation. At some point the lack of physical supply, given the current demand trajectory, is going to correct this manipulation, notwithstanding any systemic failure of banking system which would lead to a rush to hard assets. However, a collapse of the COMEX could be induced by a massive and sudden physical demand, perhaps in Silver more than Gold, which would cause a huge short squeeze. By its possible takedown of JPMorgan, the event would be catalyst for the aforementioned systemic banking failure. They do not steal Silver, which might be their Achilles Heel as opposed to Gold. The Jackass notes that London Paul focuses attention on the precious metals physical market vulnerability, which is consistent with Von Mises principles.
George of COMEX Logistics background offered his theory on a platter, his points with my minor edits. First, he stated his amazement that it has not imploded already. If you asked me 5 to 8 years ago, I would have said impossible to last until 2014. I have held two scenarios for some time. There will be a 20-30% stock decline. It will not take 40% to 60% since the USFed and money center banks are massively long in equity (stocks). This will essentially dictate a bank holiday which results in about a 50% devaluation in stock values. The event could come at almost anytime, as only sharks are left in the equity waters. When blood is introduced, the frenzy will have them eating their own. There are no bank profits from traditional lending. There is nobody to lend to and the yield curve is very compressed. They still have lots of garbage buried off balance sheet. They have no commodity operations anymore. They cannot rip equity up and down anymore because their holdings are so large, that they cannot get short (other than derivatives over quarter end to mask holdings). Also they can not allow the volatility as they are afraid they will not be able to control it on the downside. This allows only equity appreciation.
Second point by George, the BRICS completely stop accepting USDollars and shortly thereafter refuse Euros. This appears to be underway somewhat, which has obviously has triggered great stress. Of course, the USGovt is very frustrated not being able to overrun or bully Russia as they have at least a half dozen countries in the last ten years which dared move away from the Petro-Dollar. I strongly doubt bonds will be dumped as an opening ploy by Eastern powers, since this would be seen an overt act of war and rallying point for the American people. But it could and will come later, or used for barter chips for mines, property, resources, even turning our head to taking the disputed islands off Japan. Both scenarios end the USDollar as the reserve currency. Both will be blamed on someone else. Both have a high probability of triggering war of some nature. The Jackass sees George as having offered an internal and external argument for collapse, both of which could occur simultaneously.
A smart contract named DavidA in California pitched in, not so much with a theory but with a good observation, his points with minor edits. As Catherine Fitts stated a few years ago, the corrupted markets and system will go on as long as the Boyz have more people to throw under the bus. (The Jackass adds also, as long as more Gold lies around to be stolen, like in Libya, Syria, Saudi Arabia, and Ukraine.) Pensions, IRAs, and Bail-ins are still coming. The retail sector is in complete collapse as well as trade all over the globe. It is amazing how many rabbits they keep pulling out of the hat (and new wars to wage). This fascist NATO insanity has been going on for years, and they own the politicians. With all the eavesdropping on their communications systems, I can only imagine what kind of dirt they have on each and everyone of them. This insanity will go until the people take to the streets. The Jackass believes the system breaks from within its structures before the people hit the streets. Besides, they have begun to demonstrate over numerous causes in numerous countries, but not yet in violent manner.
The Jackass adds a conclusion afterthought. When the shock comes, and it could arrive before the end of year 2014, numerous consequences will occur in grand disruptions. My list includes a) USDollar cash held & exchange rate; b) bank holiday & halted transfers; c) supply network shortages (gasoline, supermarket food, ATMachine cash); d) electricity grid & telephone networks; e) border crossing & airports; f) USGovt offices processes & applications; g) nasty revelations (911, Langley, heroin, ISIS collusion); and h) deeper uglier revelations (Satanists, Vatican, ETs, pedafilia).
## MINING & DRILLING MATTERS
◄$$$ GOLD MINING STOCKS HAVE REGISTERED PATHETIC GAINS VERSUS THE GOLD METAL IN THE LAST 18 YEARS... THE HUI STOCK INDEX HAS TRULY EMBARRASSING GAINS, WHILE GOLD HAS RISEN BY TRIPLE FROM THE BROWN BOTTOM IN 2001... THE STOCKS ARE ON AN UGLY ROLLER COASTER... THE LAST THREE WEEKS PUT THE HUI STOCK INDEX ON IDENTICAL GROUND VERSUS 1996, FOR ZERO GAINS... BOTH THE METAL AND THE STOCKS COULD SEE BIG GAINS FROM HERE, BUT WITH SOME FALSE STARTS AND FURTHER SLIDES... GOLD & SILVER BARS & COINS WILL BE HUGE WINNERS, WHILE SOME MINING STOCKS WILL END UP IN THE PLUS COLUMN... RISK-REWARD FAVORS THE PHYSICAL METAL. $$$
The gain in the HUI precious metal stock index is miniscule and puny. With the last three weeks showing strong declines, the HUI stock index is actually dead even with the 1996 level. The Jackass has been a harsh critic of the precious metals mining stocks since early 2008. They have had a very rough ride, suppressed to be sure by Goldman Sachs, using their handy GDX index suppression tool. Notice a potential positive augur in the major long-term MACD crossover, a big bullish signal. But it could take a few months to obtain traction for any upward movement. The potential is present for a major rise in the next year or two, maybe three to five years, perhaps reaching new highs. The last big rise signaled by MACD was impressive, a 100% rise. But it came from a moderate level, after a strong correction in 2009. What stands out here is the big MACD bullish crossover from incredibly low levels, deeply oversold. Something big is coming, as it brews and boils. However, it is still possible for the HUI to slide backward some more. The risk is greater for the smaller mining stocks to suffer big losses, like be cut in half again. Special thanks to client and friend Jon McIntosh in Toronto for the chart. As footnote, in Spanish the name for roller coaster is Russian Mountain.
McIntosh summarized well from his vantage point, "Gold stocks are not Gold! They continue to mine investors of their savings. Like GLD, and many other pseudo gold products, gold mining stocks defer investment from physical gold bullion into paper proxies with the unfulfilled promise of leverage, to the temporary detriment of all Gold investors. Here is a chart of the HUI since its inception. The HUI, the definitive large-cap gold mining index, started on March 15th, 1996 with a base value of 200 points. It is the industry gold index standard for un-hedged gold stocks. Since inception, the HUI has yielded investors virtually a 0% rate of return! That’s correct, assuming there has been no inflation, no management costs, no trading costs, no gains tax, etc. Gold stock investors have made no money in gold equities in almost 19 years.
By way of comparison, Gold has comfortably tripled while Gold stocks have provided 0% returns over the same period. So, where has the leverage been? GOLD BULLION! If the prior 19 years of empirical data does not do it for the remaining gold equity investors, perhaps some further analysis is warranted. Even the dullest of minds understands that in order to mine gold, one must find it first. Consider the return on exploration ratio for gold over the last six decades. Rather than measuring exploration costs in dollars, it is determined by calculating how much gold is found per one ounce that is spent looking for it. Clearly, returns on exploration for the Gold industry peaked in the 1960s, over half of a century ago. We were finding 105 ounces for every 1 ounce we spent looking for it. Since that time, we have seen exponentially declining rates of return [in discoveries], starting out with a 21% decline in the 1970s, a 31% in the 1980s, a 42% decline in the 1990s, and a 52% decline in the 2000s. This is a trend that now spans over half of a century. Expect continued 50%+ declines in the coming decades. So, perhaps, gold equity analysts may see this data and assume there is just lots of un-mined, yet already discovered high quality assets?"
The argument is made convincingly that producing Gold is very arduous and often not successful, the businesses typically hit or miss, rendering the mining firms as questionable frustrating even unrewarding investments. The costs for infrastructure are enormous, from roadways, electricity leads, water sourcing, and mill construction. The dilution to cover executive compensation and the next mine project work like inflation and a tax respectively. To be sure, the capital tax might pan out, but many do not, and the timespan is very long. The Gold bar or coin is leveraged against the mining challenges and obstacles, like foreign governments, their feisty labor unions, and the onerous environmentalists. Physical Gold wins, while paper proxies lose.
◄$$$ MINE CLOSURES AND SHORTAGES ARE SENDING BASE METAL ZINC HIGHER... THE SILVER BY-PRODUCT FACTOR MIGHT COMING INTO PLAY... STRONG MONETARY DEMAND IS DUE FROM THE NEW BRICS CURRENCY. $$$
Supply constraints have hit the industrial metal zinc niche, and possibly other industrial metals soon like lead, tin, nickel. Global supply for zinc is shrinking, causing factories to scramble, and even forcing the USMint to redouble its cost cutting efforts in pursuit of a cheaper penny. Demand outstrips production. Some analysts are expecting a hefty rise in the zinc price next year, like a 16% move. Nickel is expected to rise also next year by 23%, due to an Indonesia export ban. Meantime, the corrupted contaminated USD-based commodity markets are experiencing a downward sequence of price steps. The fundamentals contradict the price action. To be sure, supply constraints do not drive long-term price action entirely, since economic demand is the main factor. Near-term price action can run contrary to economic imbalances. The Jackass suspects Wall Street and London are pushing down commodity prices in some nefarious effort. See the Crush The Street article (CLICK HERE).
Another phenomenon must be brought into the equation. Silver is often an important by-product in output from mine projects centered upon zinc, lead, and copper. It is often hand in hand with zinc and lead mines. If these base metals are pursued with more mine projects, it could mean more silver output from the secondary sources. The pressure on the Silver price is acute on the monetary demand side, which might be offset by some additional by-product silver output. However, other extraordinary factors work to reduce supply. The new BRICS currency is to be backed by both Gold & Silver. With the silver shortage already well noted, an event is coming into view on a silver default somewhere in the world.
◄$$$ PERU'S GOLD OUTPUT WILL LIKELY FALL 20 PERCENT THIS YEAR, AS OLDER MAJOR MINES PRODUCE LESS AND A BARRICK MINE UNDERGOES SHUTDOWN... NATIONAL COPPER OUTPUT CONTINUES TO RISE, BUT LESS THAN FORECAST... THE PERU ECONOMY STILL IS GROWING, BUT REVISIONS HAVE COME OF LESS GROWTH THAN EARLIER FORECAST. $$$
Aging mines roll out less precious metal in Peru at a time when the government crackdown has curbed informal production (likely less enforced environmental conformity). The Peruvian output is expected to fall by 20% this year, and to continue falling through years 2016. However, their Mines Minister Shinno reported that copper production will rise by 9% this year to 1.5 million tons, less than their previous 10% to 14% growth estimate. So hardly a calamity. He said that new mines will likely add another 400,000 to 450,000 tons of copper to the national annual output in 2015, a 30% jump. The ministry expects a strong production drop. The nation must revise downward its economic growth rate to a 4.2% expansion. Again hardly a calamity. Although still a positive, the Andean country is seeing its weakest growth rate since 2009. In the gold sector, Peru's output has been hit by dwindling reserves at the aging Newmont mine at Yanacocha. The Barrick Gold project at Pierina is in the process of closing. Peru is the world's #3 global copper exporter and #5 global gold producer. The nation is a major player in these metals. See the Reuters article (CLICK HERE). As footnote, the Andes mountain region represents the longest range in the world, extending almost the entire length of South America.
◄$$$ GOLDCORP CEO BELIEVES THE ARRIVAL OF PEAK GOLD HAS COME, AND A $900 GOLD PRICE COULD HAPPEN (GREAT OPPORTUNITY)... JEANNES DELINEATES THE FACTORS THAT HAVE BROUGHT ON DECLINING GLOBAL GOLD MINE OUTPUT... THEY ARE MANY. $$$
Goldcorp is arguably one of the most successful of the world’s mega gold miners. Their financial and operational standing is exemplary. The Canadian giant is the world’s fourth largest gold producer, always near the best among production on a low cash cost basis. CEO Chuck Jeannes has been running a public relations campaign in recent weeks. His views are interesting and make good sense with fine logic. For years, company peers have been trying to emulate their success. The firm has deep financial pockets, with a strong balance sheet and considerable financial resources. It was recently involved in a failed $2.6 billion bid to acquire Osisko. They do not seek another takeover target at this time. They might be in a position to pick up some strong distressed assets at good prices in this uncertain and troubled market. If the Gold Price falls anywhere near the $1000 level, expect to see a lot of nervous junior and mid-tier gold producers and explorers without the financial strength to ride the storm of depressed gold prices. Jeannes has made some astute comments on the topic of Peak Gold, meaning global mine output is to decline for the next decade or more. Peak output has been reached, come and gone. Next is the ramp downward.
The pace of gold exploration has decelerated dramatically, as 1) majors have cut back and juniors are cash strapped. Furthermore, 2) the discovery of new major gold deposits has diminished to near zero, while 3) big new projects under development are coming to an end. 4) The majors have reduced their capital layouts. 5) Finance for multi-$billion giant projects is difficult, if not impossible, in the current financial climate. The topic Peak Gold has lacked the impetus in credibility until raised by a titan in the gold sector. Jeannes has given the theme the prominence it warrants. The 20th Century saw the great South African mines providing a huge portion of global output. At one time around year 2003 or 2005, one third of all the gold in the world originally came from SAfrican mines. Some new potential major gold development prospects are out there, although none on the scale of the South African Witwatersrand gold deposits. It stands as a measure of giant scale. Some large scale projects lie in remote or risky locations. Some require enormous capital layouts to bring to production. With thorny jurisdictions like what Barrick experienced with Pascua Lama, big costs have been incurred without any output, the interruption coming from courts. Other locations like in Indonesia have encountered environmental obstacles. It seems where there is large output, large investment, large work force, the risk of national targeting is present to exploit a situation. From their viewpoint, the nations wish to win a favorable royalty, to win a good wage, to avoid contamination of their lands.
Jeannes is vocal on the jurisdiction risk. He openly would prefer that Canada host all the company’s mines, its home nation. He wondered aloud about the possibility of the cash strapped Ontario Govt tapping the mining industry in order to help balance its books, a nasty exploitation. The challenges to mining firms remain low ore grades, huge permit fees, heavy environmental costs, high mill costs, long lead times to production, intransigent indigenous population, and unsupportive provincial attitudes to mining. Jeannes mentioned a Jackass theme. He believes Peak Gold is pushed forward to happen sooner by the depletion effect from the lower gold price. Big mining firms are forced to mine higher ore grades, to amplify production rates, but with their best mines. They win lowered unit costs, but deplete the mine resource more rapidly. They rob tomorrow's output to meet the requirements for today, which satisfy investors.
Rapid output from the lowest cost gold mines means Peak Gold happens more quickly, that simple. A spurt in output might have been realized in 2013 due to accelerated operations from on-stream projects already in the pipeline. But the industry’s scope for maintaining the pace of output in the midst a suppressed price climate will diminish the future potential. Jeannes made the prediction that global gold output is on the verge of turning downwards, and might remain on a downhill path for many years to come. See the Mineweb article (CLICK HERE) and the Mining article (CLICK HERE). The Jackass would like to see a strike by mining firms against COMEX, not supply the market, and force the corruption issue. It is both difficult and impractical. Call me an idealist.
◄$$$ MINING STOCKS FORWARD VIEW IS TROUBLESOME BUT WITH SOME RAY OF LIGHT POSSIBLY... DISAGREEMENT WITH JACKASS VIEW IS BEING SEEN MORE OFTEN... THE BOTTOM MIGHT HAVE BEEN HIT ALREADY, AND MANY MINING STOCK BIG GAINS COULD COME SOON... STILL MANY MIGHT BE CUT IN HALF. $$$
The Jackass continues not to favor the precious metals mining stock shares. A few clients disagree and believe they are poised for substantial upward moves. They might be right. At this point, it is a risk assessment game. In my view, the risk has not been totally wrung out of miners. They face a controlled suppressed price on their output metal which is unacceptable and intolerable for any investment. The risk for Gold & Silver coins & bars is zero in my book, just a waiting game. The only hardship is finding supply of the bars & coins due to widespread shortages. So with some mining stock risk and almost zero physical risk, an easy call from my standpoint, provided no leverage or credit is used. After staggering losses in the mining stock niche in recent years, many investors still abhor and avoid risk. More downside risk could be seen. A 10-cent stock that used to be 1 or 2 dollars per share could still go to 3 cents or 4 cents, for big losses when large share positions are held. A very smart cohort once told me back in 2005 that mining stocks are not for the faint of heart. In past years, like six to ten years ago, they would produce one big winner versus seven or ten losers, with two washes. The exception is the huge gainer.
The Jackass remains biased against mining stocks after coming to know some firm executives. Their firms are mostly little shams with executives killing their firms softly with insider control, overly generous compensation packages, even lavish stock options. Where executives are honest, the funds are tight and a series of dilutions to shares must be done. They essentially fund their next project with more share dilution, in a down market, then suffer selling by investors when the restricted period ends. My guidance is to continue to stay away from them like a small plague. A new business line is forming with domestic electronics. To me it is truly amazing that a business can be created from mining yields at 1 to 3 gm/ton in yield. Such yields seem to be absurdly insignificant. The untold story in the niche is the accounting for the mining sector is the most devious defiant destructive among numerous industries. As a group, they do an extremely poor job of promoting precious metals as an investment to the public community. A shiny coin is not marketing well, when it could be promoted as protection from a global USDollar rejection, revolt, then tumult.
A smart client and friend in Alaska wrote the following. His points are valid and laid out logically. He might be right. He could be a huge winner, and gloat when we meet next. He wrote, "I must disagree with you on your comments about the future of the mining shares. Many of the miners, especially some of the juniors, have hit generational lows and are rallying. It appears the weeding out of the viable versus non-viable has already taken place over the past three years and only the winners are left. The stock market is running on fumes and new money is constantly flowing into the viable miners, especially over the past six months. I agree with the shadiness of many mining executives. I have read many horror stories of CEOs and Boards granting themselves huge salaries and bonuses. If one follows the mining stories closely enough however, these are the same mining companies that go belly up months later. As with all things there are both good and bad company chiefs. The decent ones have become the survivors. Interesting factoid. The new mining boom is in recycling electronics. A typical gold miner will get one gram of gold per ton of ore, but from recycling cellphones they will get 4 grams per ton." He might be right. But the Jackass is on the lookout for yet another powerful downleg during a general stock market selloff. The massive decline in the last month kind of proves the point, but without a general selloff. My preference is to stick with the assured winner in precious metal bars & coins, and help to drain the global inventory. Some huge winners might come with mining stocks, but more than a few companies are likely to be gobbled up by the inefficient giants which can raise money, even if narco money in the case of Barrick Gold. Expect hundreds of junior mining firms to be acquired for pennies.
## GOLD PRICE IMMINENT THREATS
◄$$$ JAMES TURK BELIEVES THAT DESPITE RECENT WEAKNESS IN GOLD, AN IMPORTANT REVALUATION SPIKE IS COMING, PART OF A GREAT DISRUPTION... ATTENTION IS GIVEN TO A GOLD MARKET BREAKDOWN OR THE INTRODUCTON OF A BRICS GOLD CURRENCY... HE HIGHLIGHTS A DIVERGENCE BETWEEN USFED BALANCE SHEET AND GOLD PRICE EVIDENT SINCE EARLY IN YEAR 2013. $$$
James Turk is the founder of Gold Money, the gold investment firm with honest Gold & Silver bar lists. He is full of integrity and insights. He made four main points in a recent interview.
- When central banks print money by growing the size of their balance sheet, they bring about a currency debasement. Asset prices rise as consequence, not from higher intrinsic value but from reduced value of money. This happened for gold until January 2013 and oil later in the year. But the official Gold price has gone down while the S&P500 kept rising, a disconnect.
- The S&P500 closed at a record high for the same reason the USFed balance sheet is at a record high at just under $4.5 trillion, from money printing. The S&P is not rising because of good economic conditions. The USEconomy is in big trouble, and the labor force is shrinking. It remains well below the 2007 peak.
- On a relative basis, Gold and crude oil look very undervalued. Both should be rising along with the S&P500, as they did up until 2013. But oil is weak because demand is falling, due to the weak economy. Also, Gold is weak because its price is being suppressed by central banks.
- Finally, the green line in the shows the growth in the USFed balance sheet. It will come to a halt only when the USFed winds down QE. Their talk to date has been lies.
Turk went on to digest his main post. He anticipates one of two continued paths: The stock market will tank like in 2011, or the USFed will renew its QE program with heavy volume. So far, all indications are for central bank expansion of the monetary aggregate, continued QE bond monetization, making their liars on tapering. The USFed will foolishly (Jackass calls it reckless) keep printing in the hope that infinite money creation will jumpstart a sick economy saturated with debt. The strategy is hopelessly wrong-footed and extremely destructive. Only business investment will move the sick economy, which occurs in Emerging Market nations. The USGovt central planners have converted the system into one that concentrates on borrowing and spending, instead of saving and producing.
Turk concluded, "The central planners cannot have it both ways. If they debase the dollar by expanding their balance sheet, asset prices will rise, regardless of whether those assets are the S&P500, houses, collectibles, or gold. The fact that Gold has not risen is an artificial anomaly arising from the gold price suppression scheme. Markets can only be prodded so far. But today the central planners are being helped by what I call the Money Bubble. People mistakenly think that government debt and the currency in which it is denominated are a safe haven, notwithstanding all the many episodes in monetary history disproving that notion. So what investors can expect to see is that Gold will be revalued dramatically higher, either by market forces or through the announcement of a new currency bloc in the East that is backed by physical Gold. We are seeing the last legs of the desperate gold price suppression scheme at work in the West. As this suppression scheme collapses, just as it did in the 1960s, this is when you will begin to see immediate and violent moves higher in the gold market." Notice the correlation between the USFed's balance sheet, S&P 500, Gold, and crude oil. The chart has a base-100 scale to keep it discernible, enabling the relative movement to be observed in these assets each week from March 2009, which is when the Fed announced its first QE program. See the King World News interview (CLICK HERE).
◄$$$ HARVEY ORGAN EXPECTS THE COMEX/LBMA GOLD MARKET TO BLOW UP BY END OF YEAR (DECEMBER 2014)... THE BACKWARDATION OF GOLD (GOFO RATE) IS A KEY SIGNAL, STEADILY IN PLACE... CRITICAL POINT WILL BE CHINA DEPLETED OF SILVER, AS WORLD HAS BEEN DRAINED OF SUPPLY... THE SHANGHAI FUTURES MARKET WILL BE OPERATIONAL BY SEPTEMBER 22ND, AND SETTLE CONTRACTS IN METAL, SUFFICIENT TO CONTRAST AND BUST NEW YORK AND LONDON... WAR HAS BEEN USED TO OBSTRUCT THE END OF PRECIOUS METALS MARKET CORRUPTION.
ORGAN FORECASTS AN EXPLOSION TO MULTIPLES HIGHER IN GOLD & SILVER PRICES, TO COME BY JANUARY, AS THE USDOLLAR SUFFERS A 40% DECLINE... BOLD FORECAST, AND THE PIECES ARE THERE... HIS ERROR IS TO EXPECT CHINA TO PULL THE PLUG, WHEN THEY WISH TO KEEP THE SYSTEM GOING IN ORDER TO CONVERT THEIR USTBONDS INTO HARD ASSETS FROM A WIDE VARIETY OF TYPES... CHINESE HAS A VERY BIG SILVER STOCKPILE... THE SHANGHAI ELEMENT MUST BE FACTORED IN, BUT CHINA WILL PROBABLY USE IT TO WIN MORE FAVORABLE TERMS IN BOTH GOLD PROVISION AND OTHER ARENAS. $$$
The following is the line of rational thought by Harvey Organ. It is very organized, thorough, detailed and logical. He adeptly puts the pieces together well. There are 100 paper obligation claims per 1 oz gold physical, a gross imbalance that indicates extreme corruption and abused leverage. The United States is exporting gold, using non-US accounts, basic thefts. Gold has gone into backwardation on a chronic basis, and the Gold Forward (GOFO) rate is disrupted and out of kilter. The rate should never be near zero, since gold is money. It means players in the gold market are fearful that leased metal will not be returned. Paper default (in futures contracts) can be papered over, and have been for a long time. But a physical gold default cannot be treated with paper, meaning a flood of futures contract in supply.
London is having extreme difficulty in supplying China to meet the physical gold demand. The GOFO rate is so miniscule, and the GLD/SLV metal inventory is running very low. Therefore, London and New York can no longer supply the metal in volume. The LBMA, COMEX, and GLD are almost all completely out of gold. The big event will be China, with announcement of large gold reserves. Also Russia will announce large gold reserves, since R&C are joined at the hip. Organ claims China & Russia have two to three times what their official statement indicates. He believes we could see $3000 to $5000 per oz in gold, and $200 per oz in silver, by end year 2014. Silver is more acute in supply shortage. He turned his attention to China and Shanghai, which will feature by September 22nd a futures market like COMEX. It will settle in metal, unlike the COMEX which forcibly settles in cash (no metal delivery for almost two years). Shanghai will be in total conflict with New York & London, with actual contract settlement in metal. The Shanghai silver market is well advanced, with almost depleted inventory. China demands physical silver for diverse industry, twice what they produce. It will be Game Over when China runs out of Silver, so Organ believes. China has surrounded the Silver market in New York & London. Organ firmly expects China will demand its delivery from the high volume of contracts held currently. He believes long contracts for Gold & Silver are owned by Mainland China. An unusual situation has occurred with high Open Interest on silver futures contracts but with very low price in Silver. China has probably suffered as futures contract default victim in December 2013, a recent past event. The US bankers probably gave them some time leeway.
The USGovt has triggered wars in order to prevent the end of the Gold & Silver market corruption. China can threaten to flood the world with USDollars and USTreasury Bonds in response. Meanwhile, Germany and China are coming together. Furthermore, Saudi Arabia will soon price their oil in Yuan currency, convert to the Petro-Yuan. It is just a matter of time for the Saudis to do so. Organ was very clear, quite emphatic, and bold in his forecast stated with confidence and assurance. He expects by January 2015 we will see $10,000 gold and $200 silver and $130-140 for crude oil, with a US-DX index decline to 50 from current 84 level. He mentioned the $3000 gold target by year end, but then in his excitement cited the $10,000 gold target. See the USA Watchdog interview with Harvey Organ (CLICK HERE).
The Voice agreed with the factors as laid out in some degree of completeness, when painting the picture for the Gold market. However, he does not agree with the conclusion and leap, given the factors on the table. He does not anticipate China will call the Western poker players and force them into the open with a Silver market default. He referred to our group's challenge for a debate on the breakdown, which could possibly be imminent (whatever that means, like days, weeks, but not several months). He wrote, "That is the question I had asked you a couple of days back. Harvey Organ addressed it. He has many good facts, lines them up nicely. But I am not certain that he really understands the bigger picture properly. In particular, his comments on what China might do overtly are totally off, very wrong indeed. His indicated time window could very well be correctly defined though. We shall soon find out. China will not make loud announcements. They just do things their way."
The Jackass continues. Let me pursue the line of thought by the experienced savvy expert on the global gold market who heads our brain trust. More likely China will not demand metal and force default. Instead, China will enable prolongation of the fake gold shell game by New York & London bankers in order to continue its own strategy of converting USTBonds into hard assets of a very wide variety. In fact it is easier to express, as China will continue to tap US assets as long as QE runs on. The Jackass ventures to postulate that QE is designed to enable Wall Street banks to dump leveraged bond assets and the Chinese Govt to dump USTreasurys. The USFed is busy destroying the system with hyper monetary inflation, which alerts China to dump their USTBonds held as savings. They have a lot more to dump, but probably much less than the officially stated $1.3 trillion stated in USTreasurys. They have been active in quietly secretly cleverly converting to hard assets like properties, mines, ports, railways, energy pipelines, and more. Perhaps Harvey Organ misses how London can continue the gold supply to feed East hands by means of Vatican and Basel Switzerland. The hidden silver provision might be from Vatican and Indian sources. Those parties do not wish to preside over a default, since they might be exposed in some slimy scummy manner. Organ does not fully factor in other sources for China to fulfill their silver demand. They have a gigantic stockpile of silver, at the official Chinese Govt level, often discussed, which Organ overlooks.
The Shanghai inventory is not their only source. This could be a serious HarveyO blind spot. To think the giant China nation has only a single silver source could be called utterly absurd, but that might be harsh criticism. To be sure, the big picture must include the Shanghai factor. The COMEX pricing fraud in Gold & Silver will not last much longer. It is just a matter of time before Shanghai makes its move. They will probably use the Shanghai exchange to exert more pressure on the Western bankers, to win hidden concessions, maybe to break off their Ukraine War, maybe to leave the Saudis alone, not to molest them when they go off the exclusive USD payment system (Petro-Dollar defacto standard). The West is indescribably vulnerable. See the Zero Hedge article (CLICK HERE).
◄$$$ THE VOICE SHARED VIEWS ON CHINA IN A BROAD STROKE. $$$
"China and Russia do not like any publicity when it comes to their hard asset transactions, precious metal policies, and commercial dealings. The Chinese are moving hundreds of billions of US$, bonds, and cash into position in certain countries where they will intelligently convert this worthless paper to hard assets in mining, agriculture, and other self-repricing hard assets. This explains why the Chinese banks are opening fully licensed banking subsidiaries all over the globe with lightning speed. These banks will serve as fiat conversion outlets. China is also going to fill the void that Western banks are forced to leave behind in Russia. The West is incredibly stupid due to its incapacity to think in long-term strategic timelines. China has an old culture where precious metal has played a very important role. China has a lot more Gold & Silver than anyone can imagine, the same being true for Russia. China will buy as long as they can obtain physical metal, at whatever price, as long as they can convert fiat bond paper for hard physical.
China will not only crush the United States, but they will destroy the British in retaliation of all the atrocities committed by the empire to them. India would love to go after the Brits as well but they are too weak. Prime Minister Modi will either be assassinated by the West or totally paralyzed for pulling away from the Anglo-Americans. Here again the Chinese & Russians will come in behind the Indians, putting a halt to the endless Western enslavement and exploitation. Even if they manipulate Gold & Silver down even further, one morning we shall all wake up and Gold will be at $10,000 and Silver at $400 in today's US$ terms. It is all going to happen in the foreseeable future, very interesting indeed."
## GOLD BRIEF DIGEST
◄$$$ MANY ARE THE USUAL GOLD STORIES, BUT WITH NEW TWISTS. $$$
The CME will launch a gold futures contract in Hong Hong by year end, deliverable in metal. The deeply corrupted firm talks of capturing the hedge and investment buying in the Asian region, and of their need to manage risk. But risk to the West is leaps and bounds greater than risk to Asian firms. They will be watched like a hawk for violations and subterfuge. Asia accounted for 63% of total consumption of gold jewelry, bars, and coins in 2013, up from 57% in 2010, according to the World Gold Council. The launch of the Shanghai Gold Exchange international bourse later this month will open China to foreign players by allowing them to participate directly in physical trading and to use offshore Yuan. See the Reuters article (CLICK HERE).
The Hong Kong gold bourse has been approved to build vaults inside China. Huge momentum next will come after a precious metals vault is set up in Shenzhen. The plan has been approved to build the 1500-ton facility to store Gold & Silver in Qianhai, a special economic zone on the west of Shenzhen. Construction will begin next year and take about 18 months. Regulators still prevent foreign exchanges from licensing mainland storage facilities for commodities. The China element to the gold equation is getting very interesting. See the Bloomberg article (CLICK HERE).
The propaganda machinery switched onto a different oddball trail in the US house. The CIA has leaked evidence of the Chinese Govt involved in Gold smuggling, even using the Chinese Military for legwork. Try not to laugh hard. The acquisition of gold bars is never smuggling, since it is money. It is like stealing air or sunshine. They are converting sovereign bond toilet paper into gold bars in an effort to diversify the foreign reserves. The desperation by the US is matched only by its deceptions. SRS Rocco has been reporting for at least three months that the PBOC has been engaged in gold purchases, none of which were reflected in the SGE data. See the Money Morning article (CLICK HERE).
The number of days that world production covers short positions is shown in a chart update, for which Silver has the biggest point of vulnerability. Once in a while, the Jackass likes to check the pulse of the latest Commitment of Traders data. It shows that the Cocoa market is more vulnerable than Gold, but Silver stands out with Palladium as the most at risk. A big hat tip to Nick Laird for the chart.
## USECONOMY IN RUINS
◄$$$ LABOR PARTICIPATION RATE AT 62.8% DROPPED TO ITS LOWEST LEVEL SINCE 1978... PEOPLE NOT IN LABOR FORCE ROSE TO RECORD 92.3 MILLION... REASONS GIVEN ARE OFF THE MARK AND WAVERING... US-LABOR MARKET INCLUDES 53 MILLION TEMPS, INDICATIVE OF A PATHETIC MARKET AND NO JOB RECOVERY... A FREELANCE NATION IS EMERGING, AS ONE-THIRD OF US-WORKERS ARE FREELANCERS (WITHOUT FRINGE BENEFITS)... THE USECONOMY IS DETERIORATING RAPIDLY. $$$
The Bureau of Labor Statistics explained two months ago that the decline in the labor force participation rate since 2007 is structural in nature. This month the same Reich Economics scribblers attribute the poor data to delayed retirement, a truly moronic premise. They cannot admit the truth about the horrendous deterioration in the USEconomy as seen in the labor market. The labor force participation rate dropped slightly in August to 62.8% from 62.9% in the previous month, matching the lowest since 1978. People not in the labor force are rising once again, hitting a new all time high record of 92,269,000, which is up 268,000 from the prior month. The mere 0.1% rise might seem small, but over a quarter million people would fill five sports stadiums. Take note, in August the number of people not in the labor force increased by nearly double the 142,000 who found jobs. Incredibly, since the start of the depression (called sluggish recovery in official circles) in December 2007, the number of people not in the labor force has increased by 13.0 million. The number of jobs added is 768,000, evidence of a comotose market. See the Zero Hedge article (CLICK HERE).
According to the Wall Street Journal, one in three US workers is now a freelancer. That is a ripe 53 million Americans, equal to 34% of the national workforce. The new buzzword is freelancers. These individuals include independent contractors, temps, and moonlighters, among others. In response to ObamaCare rules, companies are eager to lower payroll costs and take advantage of a more flexible workforce. They are calling upon the contingent labor on a growing basis, eroding the labor market in effect. According to the National Employment Law Project, 2.8 million temp jobs constitute an all-time high of 2% of all positions in the USEconomy. A positive rub is clear. The survey, conducted by independent research firm Edelman Berland found that 90% of workers prefer and enjoy the extra liberty. They have neither health care nor other fringe benefits in return. The temporary job condition of employment erases loyalty to companies and the nation. See the Zero Hedge article (CLICK HERE) and the Finance Yahoo article (CLICK HERE).
◄$$$ THE LARGEST DECLINE IN USED CAR PRICES IN HISTORY IS COMING, THE EFFECT HAVING JUST BEGUN... THE US-BASED CAR MARKET IS ABUSING FINANCE TERMS WITH SUBPRIME LOANS, PULLING FUTURE SALES... THEY ARE CREATING AN AIR POCKET WHICH HAS BEGUN TO BE NOTICED... THE MARKET HAS BEGUN TO FALTER. $$$
Numerous incentives and generous financing terms are pulling forward consumer demand from the future. Abuse is ripe in financing of cars. August saw a tremendous month of car sales, with 17.5 million (annualized) versus 16.5 million expected. The number is huge when considering that an annual pace of 17 million units was the historic high point for the US market over a decade ago. Many justified red flags have been raised about subprime auto loans and leasing terms, the most egregious being the term of loan stretched more than five years. The loans are into negative equity before the first year ends, meaning any asset backed bond security is worthless against the income stream, and investors are buying an empty fist. A reversal is occurring in the car market compared to 2009. The US sales pace fell below 10 million back then, with a shortage of new cars produced. Besides, consumers could not afford a new car when lenders were tight with loan finance. The used market benefited with strong prices.
Here and now, a surplus of new cars could easily harm the used car prices, when two factors are at work. Terms are easy for driving a new car off the lot, and the finance abuse could result in a flood of used cars dumped on the market by banks in repossession at a later date, since no residual equity. Expect an undermine to used car values very soon. See the Business Insider article (CLICK HERE). Recall the surplus of new cars that clog the dealer lots and occupy extremely large fields, like in England (expansive photos shown in HTLetter reports early this year). That was the first signal of great distress. Subprime underwriting kills the entire market, just like with the US housing market. Here we are over six years later, and still a dead market. Just another consequence of ZIRP (0% cost of money). The next dead market is cars. The falling used car price phenomenon has already arrived.
Millions of used cars, many coming off lease, some from repossessions after poor loan underwriting, are starting to flood the market. The industry is braced to expect a tremendous increase in used car supply over the next couple of years. Look for less generous trade-in values, more costly leases, and even better looking used cars for the price. Wholesale used car prices were down 0.4% in August versus a year ago, and down 1.6% from July sequentially. Supply is expected to greatly outpace demand in the coming months. Pockets like Wyoming continue to see strong prices still. See the USA Today article (CLICK HERE).
◄$$$ GENERAL MILLS IS TO SHUT DOWN TWO CEREAL PLANTS IN THE UNITED STATES AFTER A 9% YEAR-ON-YEAR DEMAND DECLINE. $$$
General Mills, maker of Cheerios and Yoplait yogurt, will close two US plants by the end of year 2015. It is North America’s second largest cereal company. Domestic demand is falling quickly for its breakfast cereal business. The Minneapolis company has embarked on a $100 million cost reduction plan, as profits face steep decline. To shut down are the cereal factory in Lodi California that employs about 430 workers, and a yogurt plant in Methuen Massachusetts with 144 employees. The company saw US-based demand for its cereal brands drop 9% in its recent fiscal quarter ending August 24th. See the Wealthy Debates article (CLICK HERE).
◄$$$ AMERICAN CREDIT CARD DEBT HAS HIT A POST-2008 HIGH, AS ADDITIONS TO THE DEBT ARE RUNNING DOUBLE THOSE OF 2Q2009... CREDIT CARD BALANCES ARE BELOW 2008 LEVELS, BUT BY YEAR END A TIPPING POINT IS EXPECTED TO BE REACHED THAT LEADS TO DELINQUENCIES. $$$
US households and consumers are back to relying heavily upon their plastic, the infamous credit cards. Americans added $28.2 billion to their credit cards in the 2Q2014, the largest amount in the last six years. The amount was almost 200% more than the marginal addition in 2Q2009 when depths of financial crisis hit. Data was provided by CardHub.com, the personal finance website. After paying off $32.5 billion on loan balances during the first quarter of 2014, consumers ran up roughly 86% more debt during the following quarter. The average US household credit card balance stands at $6802, still down from the alarming $8431 seen at the end of 2008. The report concluded that by the end of the year, US consumers will be roughly $1300 away from the credit card debt tipping point (as they call it), where minimum payments become unsustainable and delinquencies skyrocket. Some desperation appears to be entering the household budget equation. Some live only for today, while others are doing whatever they can to pay the bills. See the Market Watch article (CLICK HERE).
◄$$$ FORECLOSURES ARE PICKING UP, INDICATING MORE DISTRESS TO THE HOUSING MARKET... US-BASED FORECLOSURE ACTIVITY ROSE FOR THE SECOND STRAIGHT MONTH IN AUGUST. $$$
Foreclosure activity in the United States jumped in August for the second consecutive month as banks started the FC process on more properties and scheduled more housing auctions. Overall 116,913 properties were at some stage of the foreclosure process, which includes foreclosure notices, scheduled auctions, and bank repossessions. Overall activity rose 7% from July, and such activity was down 9% from a year ago. Lenders initiated the foreclosure proceedings on 55,000 properties in August, up 12% from July, and the second consecutive monthly rise. However, the FC proceeding were unchanged from a year ago. A total of 51,192 properties were set for foreclosure auctions last month, a 1% decline from July, but up 1% from a year ago. The month ended a 44-month streak of annual decreases.
Daren Blomquist is VP at RealtyTrac. He said, "It is not time to get worried about another tsunami of foreclosures hitting anything close to what we saw back in 2008 to 2010. However, it is reason to wake up and realize the housing recovery we have seen over the past two years is not as strong as it might have seemed." What an understatement, since the contrived rebound was the result of Wall Street private equity funds buying huge tranches from banks, with almost nothing more on the demand side. Lenders reclaimed 26,343 properties in August, up 2% from the prior month, but down 33% in such seizures from a year ago. The dampened trend of new FC filings had been attributed to state consumer laws that imposed new requirements on lenders. To be sure, the increase in auctions indicated mortgage servicers were adjusting to the new rules. Florida continued to have the highest foreclosure rate last month, followed by Nevada, Maryland, New Jersey, and Georgia. See the CNBC article (CLICK HERE).
◄$$$ MAL-INVESTMENT MANIA HAS RETURNED... THE SECOND LIEN SCRAMBLE IS BACK FOR LOUSY EUROPEAN BONDS... IN THE UNITED STATES, HOME FLIPPING HAS COLLAPSED IN SAN FRANCISCO, AS LOSSES SUDDENLY SPREAD... THE SIGNAL IS HEARD OF IMMINENT HOUSING MARKET PROBLEMS, IN A POSSIBLE RENEWED SUBPRIME CRISIS. $$$
A wretched signal is evident, as companies with very low credit ratings are raising a high volume of debt capital. The zombification of the corporate sector continues. Investors are gobbling up some of the riskiest debt from junk-rated European companies at the fastest pace in years. The bond investors are starved for yield, and ignore the risk. The riskiest tranche of the debt raised is the second lien variety off junior loans, which amounted to $3.3 billion, almost double the amount raised at the same stage last year. Its volume exceeds comparative periods since 2007. The torrent of demand for lousy quality bonds has resulted in a loosening of terms and potentially more leverage with even more aggressive structures. Companies with lower credit ratings have raised $186 billion in junk loans so far this year, according to Dealogic, an obscene amount given the crappy quality. See the Zero Hedge article (CLICK HERE).
Intrepid colleague DonaldS from Florida reports from personal experiences on the home flipping factor, which has hit a dead end. He reports, "My last career before retirement was hard money lending to flippers. Very lucrative while it lasted. Fortunately, I had the smarts to recall my capital in April & May of 2007, then move on to retirement. An article was written and posted by me about a year ago regarding early word of cargo warehouses in the San Francisco Bay Area being empty. Good warning. Then came the revelation of Q2 flipper collapse. That is when the hard money lenders foreclose on investors who walk away and leave the money sources stuck. The flippers are an excellent canary early warning signal. Now Wolf Street reports it is happening all over the country, the end to home flipping." Beware the home flipping signal to some serious distress in the new housing subprime market bust. It is coming. It is forewarned. The babbling fools and talking heads on finance deception networks continue to mention a housing recovery. They are dead wrong.
Home flippers involve the small players and the bigger groups. The little guys used to enter into into housing markets to buy homes at a discount, rehab them or add cosmetics, do some landscaping, and flip the unit in less than a year, and thus earn a profit. The bigger go for several properties. They seek discounts, use leverage, and thus shift risk to the lender. It involves skills, connections, knowledge, and some luck. However, home flipping has started to run out of air in much of the country. In the large San Francisco metropolitan area, flipping collapsed in the second quarter. The flippers for the first time in years have started wading into red ink. See the Wolf Street article (CLICK HERE).
◄$$$ VIOLENCE HAS ERUPTED IN FRANCE, AS FARMERS SET FIRE TO GOVERNMENT OFFICES... THEY OBJECT TO FALLING FARM OUTPUT PRICES... WHILE SPANISH BANKERS GAVE AWAY FRUIT, THE FRENCH TURNED TO VIOLENCE INSTEAD... ANGER HAS REACHED THE BOILING POINT FOR THE EU COMMISSIONER SUBSERVIENCE TO THE FASCIST USGOVT. $$$
French farmers set an official tax office on fire, a first event aimed against the government. Next comes widespread violence across many nations, in particular the hard hit Southern European nations. The demise of the European Union has begun to accelerate. The vegetable farmers triggered the incident with torches. An entire tax office and official building were set ablaze. The facility served as a symbol of increasing administrative interference, disruption, and business ruin. Witness the onset of European backlash. Keep in mind that the Southern PIGS nations have nothing to lose, their economies in shambles, the jobless youth in legions, home prices shattered. The Jackass always includes France with the PIGS, as in PIGS+F. So it is France which has experienced the backlash of subservient policy to America and the servile EU Commissioners (unelected). See the Black Listed News article (CLICK HERE).
◄$$$ JAPAN SAYS THE ECONOMY CONTRACTED BY 7.1 PERCENT IN 2Q2014... THE NATION IS RESPONDING TO A TAX HIKE AND CONTINUED ENERGY COST DISTRESS... AN ABSENT TRADE SURPLUS HAS UNCOVERED BLEMISHES. $$$
The Japanese Economy is in big trouble. It contracted by at annual rate of 7.1% in the April to June quarter. Companies and households slashed spending after a controversial tax hike. They continue to feel the pain of higher energy costs, higher electricity costs, the ongoing consequence of the Fukushima plant shutdowns. The revised data showed business investment fell 5.1%, more than twice the estimated level. Private residential spending sank 10.4% on annualized terms. The recovery of the world's third largest economy has reacted notably to the sales tax increase from 5% to 8%, imposed on April 1st. The clownish US puppet Prime Minister Shinzo Abe has championed an aggressive stimulus program aimed at ending chronic deflation. Instead, his policies have discouraged corporate investment and inhibited growth.
Without the trade surpluses, the QE bond monetization that has extended for 23 years finally is inflicting damage to capital structures. The higher costs are blamed on electricity, but might be due to monetary policy without the trade surplus ingredient. The surplus covered many warts and blemishes from the monetary chambers. The nation has been forced to adjust to the new Asian competitor in China, which features lower costs. Hardly any financial analysts include the lost the trade surplus into the work. The risks to Japan are suddenly enormous from internal sources pertaining to deficit spending combined with bond monetization, a double poison elixir. See the Associated Press article (CLICK HERE).
Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and more.