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The Fed Destruction, and a Cascading Panic Among Investors

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On the heels of continued propaganda from the Fed today, 40-year veteran, Robert Fitzwilson, wrote the most extraordinary piece for King World News. Fitzwilson, who is founder of The Portola Group, discusses the tragedy of what is unfolding and how key markets are responding such as gold and silver to the ongoing drama. Below is Fitzwilson’s exclusive piece for KWN:

Continue reading at Kingworldnews.Com…

“Whether intended to be so or not, today was the equivalent of the stress tests that the Federal Reserve and their counterparts overseas conducted on banking institutions. It was the markets instead which were tested this time.

Robert Fitzwilson


The Fed Destruction & A Cascading Panic Among Investors

[Financial Survival Network]

Written by testudoetlepus

May 23rd, 2013 at 3:04 pm

Jim Willie: Immutable Gold Laws

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By Jim Willie –

  • the Gold Standard will return out of the force of value and valid solution
  • the Zero Percent Interest Rate Policy assures the continued Gold Bull Market
  • the continued Quantitative Easing assures the shrinking profit margins, job cuts, reduced business
  • the ZIRP & QE assure eventual USGovt debt default and systemic failure
  • criminal activity is rising to keep the fiat paper currency system in place
  • with the rise in official govt gold accounts demanded for repatriation
  • the movement of large Gold volume from London to East brings with it a grand shift in geopolitical power
  • the advent of Gold Wars comes after sovereign bond busts, allocated gold account demands
  • a Wild Card comes with the imminent death of King Abdullah, as the House of Saud will fall
  • with it goes the Petro-Dollar, a crippling blow to the USDollar itself
  • the Gold Price will break out in all major currencies, having been led by the EuroGold price

Several immutable Gold Rules appear to be self-evident and powerfully manifested in the modern world of banker corruption, financial market intervention, currency debasement, phony accounting, and economic deterioration, all amidst powerful incessant media propaganda, against a backdrop of endless war. The global fascism movement has taken deepest root in what during the 1960 through 1980 decade was the capitalism regions steeped in democracy. Since the Lehman Brother scuttle and the Fannie Mae adoption and the AIG black hole admission, the financial crisis that began with the housing bubble and subprime mortgage bust has turned virulent. The global financial crisis is better described as a global monetary war to defend the toxic USDollar, whose sunset can be seen. In the last 12 to 18 months, the monetary war has again morphed, this time into a far more serious and financially violent global Gold War. Nations are fast realizing that their only true liquid assets of value are their gold reserves, and even they have been tampered with or stolen in a vast re-hypothecation scheme.

The Gold War is on, having moved to a higher gear, but nowhere near a climax gear. The true value of gold is being realized. The strength of gold during insolvency crisis is being observed. The resistance and rescue from the plague of insolvency is being made clear on a global stage. The new important part of the Gold War comes with the Allocated Gold Account scandal which will dwarf the LIBOR and MFGlobal scandals. The demands for repatriated gold accounts, primarily from the criminal bank sectors in London and New York, have amplified. Germany has finally joined with demands for gold repatriation. The demands will continue to grow even as tampered gold bars add to the motivation to repatriate. If only Chavez of Venezuela knew that he was to start a global trend to call gold home, in a Gran Aletazo de Mariposas. The grand butterfly flapping has caused a whirlwind that will turn into a tornado to wreck the central banks in a final death blow.


The law can be stated: The Gold Standard will return from a sheer standpoint of value, stability, and resistance to storms based in failed bond auctions, debt writedowns, and insolvency consequences. Only a hard asset backed new currency can replace a fiat paper currency reserve.

The law is self-evident and being manifested, with alarm if not deep trepidation by the financial leadership among the Western nations. While the central banks and the finance ministers stumble around seeking solutions, applying patches, making money free, redeeming toxic bonds, and otherwise bumbling in the midst of their own balance sheet and fiscal ruin, the emergence of Gold has become clear. It is the only asset rising of recognized value during the grand debasement of money committed by the central banks. It is the only asset whose value is being demonstrated as strong during the fiscal cliffs that so many major industrial nations have already gone over. They are not approaching fiscal cliffs. Four consecutive years of USGovt deficits over $1.3 trillion amply demonstrate to anyone with an uncorrupted view and unaltered pulse that the crash into the canyon floor is next, not the plunge over the cliff. Downward acceleration and speed have already been achieved.

As nations and continents come to realize their new debt compositions are nothing more than a series of shots of tequila for the patient suffering delirious tremens from alcohol poisoning, they are coming to the painful conclusion (for them) that a Gold Standard is the only solution. Applications of more paper mache accomplish nothing when the base of paper is rotten. The Gold Standard will be imposed upon them by the global rebellion against the USDollar, which will emanate from the trade sector. The Gold Standard will return, in the form of trade settlement as its payment core, as in the short-term trade notes. The bank cartel will be brought into the standard from which they broke away in 1971 with the abandoned Bretton Woods Accord. They will be brought in kicking and screaming, since only Gold can and will properly bring the nations out of the wilderness from the chaos. Once more, the banking systems will follow the trade system, rather than the corrupt banks dictating terms on reserves management in fiat paper currencies which disseminate toxic bonds. It has been backwards for 30 years.


The law can be stated: The Gold Bull continues unbounded with the Zero Percent Interest Policy (ZIRP) as its primary cylinder, while the artificial 0% distorts all financial markets, all assets, and all value. The Gold Bull will continue until the USGovt debt default, and until the USDollar retirement.

The 0% official rate has been declared as permanent, if the words of USFed Chairman Bernanke are properly interpreted. A sliding forward promise, first told as end 2013, later revised to end 2014, later to be end 2015, is a clear signal to those with an active brain stem. It is permanent. The 0% rate, however maintained like with Interest Rate Swap contracts, renders all financial markets as grossly distorted, since most assets have a value that extends from the cost of money. But practically, the USGovt debt cannot manage a rate hike, or else the borrowing costs approach the size of major social programs, even approach the size of the USMilitary offense budget. A rate hike would break the entire debt structure and result in a quick default and wreckage of the entire USTreasury Bond complex. Worse, a rate hike would cause a sudden collapse of the support structures bound within the vast derivative complex. This complex has enabled the US financial structure from a collapse that should have occurred around the 1998 to 2001 timeframe. Also, a rate hike would bring ruin to the big US banks heavily committed to the USTBond carry trade, for easy risk-free profits. Recall the Jackass forecast of a USGovt debt default, the position stated in the last months of 2008. The event is coming true.

The Gold Bull is powered by the negative real rate of interest. Its calculation is made simple by the 0% official rate. But take the prevailing consumer price inflation rate of about 8% to 10%, subtract it from the rate earned, tied to long-term USTBonds. The result is a negative real rate at minus 6% or minus 7%, sufficient to power the Gold Bull Market. Given the permanent ZIRP policy, the Gold Bull is in permanent mode. All talk about the Gold Bull Market having run its course is based on vacant arguments and nonexistent logic. It is the propaganda of fools, even desperate people. Calls that the bull in gold has run its course since it hit the $1000 level were laughed at by the Jackass a few years ago. Calls from the same scummy deceptive corners that the bull in gold has run its course since it almost reached the $2000 level are also ridiculed. No solutions have been installed, and the grand debasement of money persists without end. Many doubters and critics of the Gold Bull Market will be humbled when it vaults past that level. The justification, numerous as they are, are gaining attention. The Jackass is glad to help the process along, and to silence the corrupt corners.

The law can be stated: The bond monetization known as Quantitative Easing (QE) powers the upward move in the cost structure for the global economy. The result is a shrinking profit margins imposed on the entire economies, felt in job cuts and reduced budgets for expansion, even maintenance.

The expanded bond monetization has been declared as permanent, if the words of USFed Chairman Bernanke are properly interpreted. A sequence of bond purchase commitments, including both USTBonds and Mortgage Bonds, to meet urgent calls to address the quagmire, is a clear signal to those with an active brain stem. It is permanent. In fact, the QE3 has some rather obvious motive to cover the multi-$trillion mortgage bond fraud, thus permitting a possible housing market recovery. Not gonna happen. The foreign bond creditors have vanished, with only a scattering of Japanese and Chinese investors serving as the bulk of foreign demand. In order to prevent the short-term USTBill yields from shooting up to 5% suddenly, in order to prevent the long-term USTBond yields from shooting up to 10% suddenly, the USFed has made a series of commitments to buy the USGovt debt. Nobody seems to want it, nobody seems to afford it (savings vanishing act), nobody seems to find it as holding value anymore. Besides, deep criminal banker fraud is becoming recognized in story after story. Without the vast QE, despite all its deception and chicanery like Operation Twist, and without the vast apparatus of interest rate derivatives to maintain the 0% artificial rate, the USTBond structure would collapse. If these words seems absurd, then the reader is probably ignorant, uneducated, or wearing red white & blue jockey shorts.

The law can be stated, as a profound consequence: The combination of ZIRP & QE lead to capital destruction and systemic breakdown. Observe the fast falling Money Velocity while money supply grows at a staggering pace.

The telltale signals are the capital destruction, the retirement of equipment, the shutdown of unprofitable businesses and business segments. The USEconomy is not in recovery, but rather in a grand deterioration process. The evidence is overwhelming, shown on a regular basis within the Hat Trick Letter reports. Whether reduced rail shipments, or fast rising Food Stamp participation, or significant declines in payroll tax withholdings, or still growing state budget deficits, or the stunning fall in Money Velocity, those among the aware crowd can see the pathogenesis. The principal cause is the Zero Percent Interest Rate matched by Quantitative Easing, which kill capital as they lift costs. This is the glaring shocking blind spot among hack US economists, most of whom are compromised by either Wall Street or university grants. Hardly any have my respect, since abject apologists for the failed system with few if any valued lucid perceptions. They are the corrupt harlots of Wall Street. They are the vapid academic talking heads. The path paved by fiat paper currency has led to insolvent systems.

The current monetary policy coordinated by the major central banks of the United States, Europe, United Kingdom, Switzerland, and Japan assure no deviation from the path driven by momentum of the grand sovereign debt defaults and ultimate systemic breakdown. In fact, no solution is even attempted, a consistent Jackass point, since the policies and actions are directed toward preservation of power and away from big bank liquidation. The commitment to the failed system increases every year, assuring the impact of the systemic breakdown to be greater as well.


The law can be stated: The anti-Gold system continues to attempt to reinforce itself until its final implosion. Criminal means and false accounting backed by media propaganda are their tools that reinforce the current power structure. It will yield to foreign designed trade settlement systems, to the forced Gold Standard return, and to vast liquidation.

For the US and UK and Europe and Japan, the 0% official rate will continue until the debt defaults occur, which are in progress. The government deficits will not come down. They will instead escalate, as the economies produce fewer tax receipts and the calls for socialist relief programs expand. The political apparatus is being recognized as broken, a travesty in full view. The economies are experiencing a permanence in the shock from the ZIRP & QE in tandem. Households feel the higher cost of food, energy, utilities, town services, and even property taxes. Businesses feel the higher costs of everything from energy to materials to shipping. Lately they will react to the Obama Care as the health care tax is imposed, against their will. The financial firms have been guilty of doctored gimmicked financial statements ever since April 2009, when the USCongress blessed the decision by the Financial Accounting Standards Board. The FASB decided to permit the financial firms to declare any value they wish for rotten assets, the collection of impaired assets not to face the grim reaper of reality. The parade of Zombie Banks has reeked havoc ever since upon the economies.

Criminal deeds have become the norm. The established norm has been for outsized naked short positions for the Big Four US Banks. They are an everyday fixture. No laws are enforced for selling enormous supply without metal. Why on November 15th, my colleague Turd Ferguson reported the following gold ambush. In the TFMetals Report, he summarized the ambush as he wrote, “Over the course of about 5 minutes, one single order was filled. This massive dump of about 25,000 gold contracts managed to move the price of gold down by nearly $20. To give you an appreciation of the size and scale of this deliberately criminal act, 25,000 contracts is the paper equivalent of 2.5 million ounces of gold, or roughly 77 metric tonnes, the paper equivalent to the alleged physical holdings of Australia or Indonesia.” No end to the naked shorting. The financial press reported not a peep on order by the Syndicate, who act as advertisers on the network channels.

On November 2nd, the Silver Doctor reported a similar silver ambush. NetDania provides a service, to estimate volume from five separate market sources. It is not an exact indicator of volume data, but does shed much accurate light on the deeply corrupted market. According to NetDania, a total volume of 38,400 contracts, equal to 191.99 million ounces of paper silver were dumped on the market in only ten minutes between 8:30am and 8:40am EST. The Boyz chose to execute the raid precisely on the day of the gimmicked Non-Farm Payroll data release. They smelled a potential for a precious metals price uprising, and snuffed it. The volume for those ten minutes corresponds to nearly one quarter of annual global silver production! Not the US output, but global output. No response by market regulators, business as usual.

Criminal deeds have become the norm. Money laundering has kept the entire major US banks afloat, the money laced with narcotics. Overnight satisfaction of loans is sometimes done with heroin paper packets the size of bricks. For the last 20 years, the New York and London bankers have illicitly (nicer word than illegally) leased official gold accounts. Those nations are one by one demanding their gold repatriation. Hot war has been justified in order to win the release of official gold held in accounts. Plenty of Arab despots sit in power, but the Libyan seat was targeted as special for its 144 tons of gold. The London bankers pilfered the Libyan gold account in the Qaddafi name, offering flimsy requirements for its return to their people, demands which will never be met. The stolen private accounts at MFGlobal waiting for silver delivery served as another criminal deed. The crime scene was protected by the US regulators and the courts. Apparently, the wrong interpretation of bankruptcy law matters little. MFGlobal was a brokerage firm, not a financial firm. Therefore, the private accounts should have been held first in line for redemption, not last.

The criminal appellate court upheld the wrong decision. The newest criminal streak involves tungsten lacing in fake gold bars. The story was cited here in early 2010, with Rob Kirby taking the lead. My source informs that two important characteristics are noteworthy. The Hong Kong banks are the biggest among the victims. The distribution routes run through a crucial Central American nation, just like the narcotics. Fort Knox was systematically gutted as its content bars were swapped, whose extent has yet to be determined. Expect some deep consequences for the counterfeit in Tungsten bars. Refer to TRIAD for old fashioned justice, and the Intl Court of the Hague for justice with more procedure involved. Perhaps the unusual story of bankers simply vanishing will be the case.


The most prominent criminal practice has been challenged, the illicit usage for leasing of official gold accounts in the name of sovereign governments. The challenge will make for the grandest banker scandal in modern history. My source estimates that over 40 thousand metric tons have been vacated from the official accounts over the last two decades. Clearly, the volume indicates a lot of unofficial unaccounted gold, which nonetheless exists. The pressure has finally come to the London bankers largely responsible for the happy fingers. The New York and Swiss banks have been working overtime, often in midnight emergency shipments, to avoid a direct default. That would be both embarrassing and an invitation for prosecution which would be difficult to prevent, given the public outcry. As the London bankers struggle to meet the repatriation demands, the pressure will not relent. They must replace the leased gold or see their crime scene exposed.

Only when the vast Swiss repository is denied to the London banksters, the drain will erupt into a major gold default event with glaring publicity. It is when they are exposed, when the urgent need to replace the improperly leased (stolen) gold is realized, when the public and financial community is made aware of the altered Supply & Demand dynamics, that the Gold Price will shoot upward fast hard and without stopping. Far less gold is held in supply than recognized, while tremendous gold demand occurs. The Allocated Gold Account scandal will force the Gold price to $5000 per ounce, at a minimum. The agreed upon trade settlement gold core will probably permit the gold price to be fixed on a temporary basis. Gold is in increasingly short supply, given the labor problems in both South Africa and South America. Expect important gaping shortages and deficits. So the $5000/oz price is only a target, easily surpassed.


The law can be stated: Gold Bullion diverges into official voided supply, matched by huge syndicate supply. The visible vault storage with public accounting will eventually show nothing present, while the private syndicate vault storage will be hidden from view.

One private important location is the Carlyle Group, which holds significant counter-party positions to the vast short positions that Wall Street banks are responsible for. The biggest hidden gold hoards, truly magnificent in size, are located in Basel Switzerland, the Roman Catacombs, under the Kremlin, and by the ancient Chinese families, along with Wilbur & Mack who buried a hoard in their Arkansas backyard ready with buddies Smith & Wesson. The divergence will continue until the official gold supply is demonstrated, with shock & awe, to be near zero.

Another important divergence will occur. The official price discovery markets such as the COMEX and LBMA will be exposed as having near zero Gold & Silver in inventory. The prices posted for Gold & Silver will remain artificially low, held down by corrupt methods such as widespread naked shorting (permitted by the US regulators and USDept Justice). The physical price paid for Gold & Silver will continue to rise without bound. Already, no more large gold purchases can be satisfied, since supply is for the most part gone. Premiums for coins are on the fast rise, if coin supply exists at all. The unfortunate aspect of Supply & Demand dynamics is that when price is forced down by intervention and other illegal pressures, the result is vanished supply. That is precisely what is happening. Expect a tremendous divergence to occur, as the COMEX and LBMA tagteam of corruption experience a total depletion, but report some asinine moderate price. Nobody will be able to purchase at their posted price, since they will not have any Gold or Silver metal in inventory. It will be gone. Extraordinary methods are being used right here, right now, to prevent the default. See vast exports of gold from the US to London. See the vast shipments of silver from the US to London. See the rapid decline in the GLD & SLV inventory, which the Wall Street firms have access to. See the MFGlobal and PFG-Best private account thefts.

Coins exhibit the inflation in a highly visible manner. The coins in the Untied States & Canada are going away for 1-cent and 5-cent pieces. A friend in Toronto reports that recent modifications to the looney and tooney (C$1 and C$2 coins) have not only altered their appearance, but have altered their perception. They seem like play money to the public, which has shown derision. The US merchants will soon be permitted to round the transaction costs to the nearest 10 cents. The visible inflation has resulted in the cost of making small denomination coins too expensive, and thus impractical. ZIRP & QE will do that. The cost to make a 1-cent US penny is now 4.8 cents and the cost to make a 5-cent US nickel is now 16.2 cents. How embarrassing, even adding to the USGovt deficit. Due to high zinc and other cheap contents, the 10-cent US dime and 25-cent US quarter are still inexpensive to make. Why not use wooden nickels? Unless subjected to another fabricated hurricane, they will hold a stable appearance, if not value. A quick review of the National Atmospheric Release Advisory Center website will demonstrate easily the evidence of South Atlantic heavy microwave activity during the entire month of September. Angels don’t play this haarp.


The law can be stated: With Gold goes the geopolitical power. As huge amounts of Gold are shipped Eastward, with huge tonnage leaving London for points East like China, so goes the important shift in geopolitical power. A Paradigm Shift is in progress, at work.

Since March 2012, a whopping 6000 metric tons of gold bullion has been shipped from London to the East, primarily China. The circumstances behind the shipments are murky, but they indicate private off-market transactions that are intended to avoid publicity. My suspicion is that old wealthy Chinese families had their Allocated Gold Accounts improperly used in leasing practices by London bankers, associated with posted margin on a gaggle of leveraged contracts spanning from sovereign debt to currencies. The trades went sour. Margin calls were enforced with lost gold in a grand forfeit, the London bankers feet put to the fire reportedly. Publicity was avoided, but in the process a tremendous amount of gold was forfeited. With the gold went a transfer of power, to the East. They will dictate terms of the new trade settlement system. They will become the world’s more prominent lenders. They will control the next geopolitical chapter.


Since the Lehman bust in September 2008, the global financial crisis has been a fixture, without solution. My preference is to call it the Global Monetary War, whose unspoken main objective by the powers in control is to maintain power, to preserve the big banks as fortresses of power, and to protect the USTBond & USDollar in their primary perches. Two important events have altered the crisis. The first was the breakdown of the Southern European sovereign debt structure. The Greek Govt Bond went into crisis mode in late 2009, which spread to Ireland, Portugal, and lately to Spain, Italy, and France. It will consume the Euro currency, despite all their best efforts NOT to fix anything, despite their best efforts to alter the bond subordination in new bond issuance. The Europeans are guilty of kicking the debt can down the road, just like the Americans. The victims that topple the system will be the big national banks in the affected nations of Europe, even the German banks. Their flagship Deutsche Bank has been dead for years, full of hollowed corridors.

The second important event was the widening demands for repatriation of official gold accounts. It might have begun with Chavez in Venezuela, but it has continued. The Ghana Govt made their gold account repatriation demand, but a mysterious death of their leader halted the process. The Germans are spearheading this revolt. The Dutch will follow. The Austrians are next. Even little Ecuador wants one third of their gold account returned. Others will join.

An extreme wild card has surfaced. It began to be in play when Saudi Prince Bandar was assassinated a couple months ago, at the hands of HezBollah. Of course, the event was kept secret, but the Saudi Minister of Security was killed as revenge for the Saudi role in the high level Syrian assassinations. Phony photographs and other doctored official accounts have been produced by the Riyadh crowd to conceal the damage. The House of Saud, so the Jackass has claimed for two months, is in danger of falling, along with the Petro-Dollar. Well this week, reports have come out that King Abdullah faces death. He underwent a mid-November back surgery but has not recovered, or even come into consciousness. His entire set of organs has shut down, no longer functioning. The risk to the Petro-Dollar was high with the Bandar killing. The risk just went double acute with a succession to the throne imminent. Domestic challenges by an increasingly aware population, beset by higher cost of living, will come. The great Saudi oil surplus is slowly dwindling, what with higher domestic usage in a higher standard of living. The foreign challenge will remain from HezBollah, with roots from the radical and very powerful Shiite sect. Expect the Petro-Dollar defacto standard to fall in the coming months, as only weak successors remain in the line of surviving brothers. Think bottom of the family barrel (of oil). The teetering USTBond and confronted USDollar make for a poor foundation on which to keep the Petro-Dollar in place. Imagine the impact if the Saudis announce that Euros, Pounds, Swiss Francs, and Yen, even Gold are accepted for crude oil transactions. The Petro-Dollar is walking dead.


The process began with a Gold Price breakout in Euro terms. The continent is the site of the most visible systemic bust that has engulfed the sovereign bonds, the big banks, and the economies, even public trust. Soon to follow suit will be the Gold Price breakout in US$ terms, in British Pound terms, and in Japanese Yen terms, an event to occur simultaneously. The central banks from Europe, the US, the UK, and Japan are coordinated and aligned. They are all putting into practice the monetary lethal policies of unlimited hyper monetary inflation with a 0% rate attached. Witness Weimar gone global in a grand currency debasement. The Gold price will surpass the US$2000 mark easily. When it does, the Gold Price breakout will be recognized in all major currencies.





The central bank franchise system is broken. The global monetary system is broken. The big Western banks are broken. The financial markets are broken. The safe savings vehicles are broken. The all-important confidence factor to support fiat paper currencies is fast vanishing. The arrival of the Gold Standard as the solution is being slowly manifested in the form of a gold-core trade settlement system, which will drive a global Gold Standard. The new system will dictate bank reserves practices, and render the USTBond as a rejected toxic paper relic. It should arrive early in 2013. In the process, the Western nations will become impoverished, as they desperately cling to the failed system. Anger will rise. Disorder will prevail. The USDollars inside the United States will be trapped, then devalued as the public watches in shock. The power will shift East inevitably, with the shipment of Gold. A new era will begin.




From subscribers and readers

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

“A Paradigm change is occurring for sure. Your reports and analysis are historic documents, allowing future generations to have an accurate account of what and why things went wrong so badly. There is no other written account that strings things along on the timeline, as your writings do. I share them with a handful of incredibly influential people whose decisions are greatly impacted by having the information in the Jackass format. The system is coming apart on such a mega scale that it is difficult to wrap one’s head around where all this will end. But then, the universe strives for equilibrium and all will eventually balance out.”

(The Voice, a European gold trader source.

“It has been my hope that the financial collapse would occur within a slower time frame, like a year from now. I have followed your articles on various sites for a while, and have to say that you are very perceptive and accurate as well as analytical. You have been more accurate, detailed and thorough than others, and your Big Picture analysis is usually spot on. I have noticed that it often becomes public news 3 to 6 months later. It is not easy connecting all the dots and understanding the implications one event has on everything else, then interweaving all the threads to grasp that big picture. I don’t usually spend the money for a subscription,

but I feel your information is vital to know.”

(KathyN from Arizona.

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at



Jim Willie: Immutable Gold Laws


The Market Ticker: Lee Adler Gets It. Why Don’t You?

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by Karl Denninger

Another one comes to the light…

We as a society must stop pretending. Most of us think that we still have money in the bank to protect, so we go along with the game of extend and pretend. For some of us, the game has already ended. The rapacious zero interest rate policy that I call Bernankecide has already robbed millions of savers of their life savings. This is the reality that has yet to hit home for many Americans who are content to wallow in the status quo. Unfortunately, the longer it takes for them to wake up, the worse their, and our, fate will be.

It is not just “money to protect.”  It is also unpayable political promises, most-particularly the concept of unlimited health care spending for seniors.  The tab for this is somewhere around $50 – 70 dollars.  We do not have it, we cannot acquire it, and thus it will not be paid.  This is not subject to any sort of honest debate.

My mother and millions of other senior citizens are among the victims of the game that policy makers and those who empower them are playing. Their life savings are gone because Bernankecide, the financial genocide of the elderly, forced them to spend their principal. Now the government is indirectly confiscating 8% of my income because I must support my mother. That percentage is likely to grow as her health deteriorates.

Or worse, take “more risk.”  This of course means you might earn a return, but you might also make a loss.  The former is ok, the latter ruinous.  Neither should be happening but both are, and we the people are to blame.  We vote for people who promise us ponies, whether we can fund them or not.  But we also demand “cheap” credit which inherently means we will subsidize losses, since nobody in private business will lend at a loss.

Millions of other boomers are in the same boat. They are forced to pay this immoral hidden tax because Ben Bernanke decided that the innocent must pay for the sins of the guilty. While Bernanke’s ZIRP goes on allowing the banksters to continue to collect their fat bonuses, it steals the savings of millions of Americans, eliminates their disposable income, and cuts the spending power of millions of others who must now support those rendered destitute. The guilty benefit, and the innocent are punished.

Bernanke knows that, yet he continues to side with the criminal bankers in support of the financial genocide of the super elderly, and their children, the baby boomers who must increasingly support them.

Yep.  Those who did the right thing are being destroyed.  I see it daily around me, and yet I also see rampant consumerism still running amok.  The drunks are still boozing it up; we the people continue to play the “aspirational consumption” game even though we cannot cash the checks we write.  Then, when the chickens come home to roost, we watch as the banksters get bailed out and continue on their way, and we refuse to rise, in no small part because if we do the credit cards will be cut off and we refuse to accept that just as a drug habit requires both a pusher

Among the OWS protesters are those calling for forgiveness of student loans. They may be acting in their own self interest, but it is a just cause, and must be a part of the cleansing of the system. The student loan thing is a long running racket that preys on the inexperience of children and young people just starting out in life.

Here I disagree.  Students should be able to go , not have loans forgiven.  There must be a consequence for borrower and lender.  Being stupid must come with consequences.  The only way one learns is via the reward and pain system – you are rewarded for doing smart things, and suffer pain for doing dumb ones.  Bankruptcy is pain.  It’s not intractable pain, but it’s pain – it cuts off or severely raises the price of credit for some time.

The student loans are the tip of the iceberg. Bankers have made and sold trillions of dollars worth of loans that they knew, or should have known, could not be repaid. That’s fraud. It must be prosecuted. Today, central bankers and governments are refunding those loans, knowing that a substantial portion of them cannot be repaid. Worse, they are buying them above par because of today’s fake low interest rates. Then they guarantee them by obligating us and future generations to repay them. This is criminal.

Yes it is.  And the stooges such as Obama, Geithner and the rest (including Congress) are the reason it’s happening.  Were of these people raise their hand and say “no more damnit!” it would end tomorrow.

Read the rest folks.  It’s worth it.  Lee points out what I’ve been saying for a long time: We are quickly coming to the end of the line for this process to be carried out and remedied via reformation – that is, peaceful, lawful means. 

The other possibilities are all ugly, and they’re approaching – quickly.

The Market Ticker: Lee Adler Gets It. Why Don’t You?

[The Market Ticker]

Written by testudoetlepus

October 12th, 2011 at 11:13 am

Illusion of Stable Currency Vortex

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by Jim Willie

The Jackson Hole Conference was a dud. To the astute student observer, something happened never seen before. The US central bank chief admitted failure, if only people could properly interpret and translate his words of helplessness and disappointment. A more apt description was that USFed Chairman Bernanke used the forum to announce on stage that the central bank failed and is powerless to react to the current lapse into recession. Many watchers no longer believe that a Quantitative Easing chapter #3 will be announced. Surely it will come sooner or  later. Watch the USTreasury auctions for the best clue. The QE2 program was about prevention of auction failure, not economic stimulus. A quick review of monetary policy and its effect is horrifying for its utter complete failure. The FedFunds rate has been under 0.5% for three years, yet neither the USEconomy nor the US housing market have recovered. That is a first in history. The USFed gobbled up over $1 trillion in toxic mortgage bonds and related derivatives, also with no resulting rebound in the housing or mortgage finance markets. The QE2 debt monetization program averted USTreasury auction failures, but the bold monetary inflation gesture sustained for several months did cause a backfire. It lifted the entire cost structure to the USEconomy in painful fashion. The profit margin squeeze and household spending squeeze have been radically evident and deeply damaging.

Chairman Bernanke admitted on stage before his peers, in full admiration of his failure and lost leadership, that the USFed has no more tools at its disposal, and that the USEconomy must recover on its own. For the first time he mentioned tools at his disposal without delineation what they were. He has none. His heavy doses of liquidity to treat insolvency have not succeeded in achieving anything except higher costs without job growth. He even attempted to point the finger of responsibility to the USGovt for its budget extravagance and intractable deficit. Big Ben has crashed his helicopter without any cash drops on citizen homes. Worse, he has shown all on stage that he has nothing under the hood, and that the bulge below is nothing but a massive paperwad in his pocket. The USFed is impotent. Its board members are in open dispute on the chosen path for QE3, even the scored success of QE2. The US Federal Reserve is a failure, its franchise system a failure, its monetary policy a failure, its balance sheet a failure, its analysis chronically incorrect, its initiatives in backfire, its toolbag empty. Perhaps it is time for the USFed to resign its contract with the USCongress. The crowning blow should have been the $16 trillion in unauthorized loans to global banks, given cloud cover by the TARP Fund and its confusion. This is a syndicate fortress with its own agenda, nothing more.


In past analysis, a Jackass viewpoint has been shared concerning the Competing Currency War. A sense of stability can be achieved, if only the European mess can be equated with the American mess on equal footing. For the past two years, the bounces and jumps in the USDollar have often come by wretched comparisons to the Euro currency. The Euro is uglier, therefore the USDollar looks better. But Europe has a huge distinction. Their many broken sovereign bonds from member nations trade at different bond yields, thus differentiating them. The Euro currency thus trades on interest rate expectations, rather than what Wall Street compromised analysts believe. EuroCB head Trichet is the object of language dissection also. His latest utterance indicated no longer a concern over inflation, thus prompting forecasts of no more ECB rate hikes. The European banks have a colossal problem as an extension of the rate differential Trichet brought about with the official rate hikes this year. The European inter-bank lending is in the process of seizure, as in the money market funds. Call it an unintended consequence from the EuroCB attempting to make distance from the reckless USFed monetary policy. Just another casualty in the Competing Currency War. The Euro Central Bank did not want to follow the USFed into the monetary hell-hole in 2009. The USFed went down to 0%, but the EuroCB chose not to follow. The Euro currency rose too high as a result, up to the 150 level, harming the German import trade. Just another casualty in the Competing Currency War. In fact, the war kills all economies and destroys capital uniformly.

The corps of sell side analysts seem never to factor in the bond yield effect, choosing to paint Europe with a single broad brush incorrectly. My theory is that the USFed is waiting for Europe to announce and come to a more firm agreement on bailouts of the expanding sovereign debt crisis. The EUR 850 billion pledge to the European Financial Stability Fund hit the rocks quickly, as German bankers pulled their support. The Europeans must contend with contagion, as the sovereign bond toxicity has moved across the borders into Italy and France. Funny how Spain has avoided the axe, but France has been thrust onto the firing line.

The USFed is waiting for the Euro Central Bank to take action. The key is the EuroCB debasing its Euro currency in the next move, which will give the USFed permission to debase its USDollar currency in its next move. They require coordination. Japan and Switzerland are doing their part in monetary debasement, having learned much from the Americans. The inescapable truth is that in the larger context it does not matter since both the Euro and USDollar are doomed. When Greece or Italy or Spain defaults on sovereign debt, or France is bailed out on sovereign debt, all of which are inevitable, the landscape will see 20 Lehman-type bank failures, perhaps some in London and New York. The strategy is clear. The central banker rats are cornered. The USFed is tangled in a US$ straitjacket. It cannot continue on its QE2 or advance into QE3 without a dance partner in Europe capable of stepping in the quicksand at a matching pace. If Bernanke Fed goes it alone, then the puss from the USDollar will break through the FOREX skin surface. That would cause a rash of rising costs in the entire commodity sector, from gasoline to food to cotton to metals to paper to scrap. The myopic wrong-footed analytically incompetent Bernanke, still widely revered for his leadership to ruin in a sequence of direct iceberg hits, would prefer that European monetary authorities dispense trillions more Euros to save their wrecked banks. The tragedy lies in the fact that neither the large American nor European nor London banks can be saved. Ample or accelerated liquidity does not fix their insolvency. The key is the falling housing markets, still on a downward course. The key is lost industrial bases, handed to China as part of the grand plan. That plan pertains to designed ruin, gold leases, and consolidated power.


The USFed, like the USDollar, is cornered. The historically unprecedented nearly $2 trillion in debt monetization fixed nothing. Take a look backwards at the lack of options that the USFed faced. In 2007, debate was over whether the USFed should drop the interest rate. The mortgage crisis was erupting from its subprime core. The USFed openly admitted its reluctance to lower rates, since doing so would invite inflation to the dinner table. After crisis struck the banks, after the stock market dived, after the recession was obvious, the USFed took action with sharp sudden big rate cuts. They were suddenly heroes whose elbows rested over the liquor cabinet. They are as lousy at policy delivery as with economic analysis topped by forecasts. In early 2010, the USFed was again cornered without options. It was pressured to keep the near 0% steady, since the housing market was so fragile. They openly spoke about an Exit Strategy from the ZIRP jail. The Zero Interest Rate Policy, for adept students, is a permanent prison, something American economists refuse to comprehend or believe, due to blindness, incompetence, intellectual compromise, and syndicate devotion. So instead of exiting from the 0% corner, then doubled down with a Quantitative Easing enema, both forecasted by the Jackass. Being in a straitjacket is compounded by massive bloat of liquid infusions. The excrement is played out on the USEconomy directly, but the global economy as well, from the rising cost structure.

Questions abound while for almost five years, the USFed has been out of options. Should they pop the housing bubble they so eagerly created in 2006 by hiking interest rates? Should they instead encourage price inflation by lowering rates below the prevailing inflation rate, as in free money? Should they prevent a galloping recession, or encourage more asset bubbles? Should they lap up the excess liquidity, or rely upon inflation as a growth engine? Should they take away bank loan loss reserves, or leave the Fed balance sheet exposed as wrecked? Should they go it alone with QE3, or enlist the aid of other central bankers in a Global QE? Should the primary bond dealers be hung out to dry as they swallow huge USTBond supply, or continue the 3-week roundtrip to FOMC coverage to hide the complete auction farce of indirect backdoor bond monetization? Should the stock market be used as a justification for massive QE3 liquidity infusions in a departure from the Fed charter, or permit the stock indexes to settle at lower levels in synch with the reality of recession and profit squeeze? Should they attempt to let the banking system run without crutch props and intravenous lines, or continue them in a manner that displays the USFed acting as the entire banking system intermediary octopus? Should they let the USEconomy falter badly in order to encourage USTreasury Bond demand in a stock fund migration, or stand aside and not crowd out the bond market which is vital to capital formation? Should they permit a large already dead US bank to fail, in order to gain more emergency powers and earn the side benefit of a black hole to lose more data? Should they simply continue doing what they wish, and simply lie much more?

It is extremely safe to conclude that the USFed has no good choices. It is without alternatives or tools. The deception is topped off by decisions to deploy the powerful leveraged Interest Rate Swaps. They enabled the 10-year USTNote yield to fall to 2.0% and paint a billboard to contradict the risk of USGovt credit worthiness. Soon the Office of the Comptroller to the Currency will not report such derivative data, since it is so clearly the tool to keep long-term interest rates down. The IRSwap not only pushes down rates, but creates artificial end demand for bonds that covers the $trillion bond fraud committed by Wall Street firms. They lost their investment banking business, but found a ripe channel with USGovt cloud cover. All hail the resilient USTreasury Bond asset bubble. It is a sponsored Black Hole. It will starve the USEconomy for capital. Its supply will grow from even larger deficits. Its appetite will grow. Its funding needs will grow. It will demand QE To Infinity. The USTBond bubble will destroy the USDollar. It will destroy the entire fiat monetary system. The pathogenesis will require the passage of time before conclusion, more than the Sound Money advocates believe, but not as much time as the Powerz believe. The pace of internal systemic devastation has turned rapid.

The language to cover their actions is full of deception and veiled intrigue. The USFed never discusses the risk to USTreasury auctions, the real reason they instituted QE1 and QE2, and the actual reason they will be forced to institute QE3. They further cloud the stage with their nonsense about deflation. The pendulum moves from inflation to deflation over the many years and back whenever the USFed must justify its destructive policy. The ringtones of deflation were frequently heard a year ago when QE2 was announced. They actually said that with higher risk of falling prices, the need for QE2 was urgently pressing. The latest ringtones direct attention to an economy denied as showing signs of recession. Bear in mind that the Bernanke Fed has not correctly assessed breakdown risks, has not correctly analyzed any risk of bond contagion, has not correctly anticipated any price shocks, and has dutifully channeled $trillions to big banks in the open and in large quantities shrouded by secrecy.


Last week the Jackass was on high alert for the trigger for a US Stock market rebound. Anything reasonable would serve the purpose. It arrived with vivid deception and full banner. The durable goods report was the road car decided upon to wave the green flag on the track. The headline number was sufficient to paint on the pace setter car. It stated a 4.0% rise in durable goods orders for July. Yippie!! But please do not bother to read the details, since the audience was both mathematically challenged and in desperate need of good news. The quick hint was given when the huge Boeing order was a key item on the supposedly positive news. The durable goods order figure excluding transportation was up only 0.7%, not good, not bad. Those big one-time aircraft orders do skew the data indeed. Another item skews the data, basic weapon system orders required to sustain the endless sacred wars. They are devoted to destruction and fraud, not nation building, at home or abroad.

Since the Hat Trick Letter began, the focus has been given to the real CAPEX order statistic. It is defined as the ex-defense, ex-transportation capital goods orders. For July this figure came in at MINUS 1.5%, heavily watched by competent economists. The revision for June was plus 0.6% growth. The competent economists were either drowned out, or decided to swallow their integrity. Their voices were not heard, or their mouths were covered. Often they do speak about the more meaningful CAPEX orders. Much more additional extra weight of recession and its pressure comes from the federal and state budget slashing and immediate job cuts. This is basic science that escapes the compromised majority.

Alcoholics Anonymous has a wonderful principle put to practice, which cuts through the maze, the nonsense, and the denials. If a USEconomic recession was not painfully obvious even to the street bums and bank parasites, then why is the question asked 38 times per day?? At the household level, if the chronic question of Uncle Albert being a drunk keeps being asked and repeated in discussion, even at the dinner table, then the question itself is a confirmation of his alcoholic condition. The other rationalization tools often relied upon by the denial experts have been brought forth in the financial press. The bad weather from the spring rains in the Plains and Midwest were a drag. The Japanese supply chain disruption from their earthquake and tsunami disasters, followed by the Fukushima nuclear meltdown, they too were a certain drag. Then came the freeze in business decisions and commitments from the stalemate on the USGovt budget impasse. It also contributed to the drag. Lately, the crutch is Hurricane Irene which slammed the entire eastern seaboard, causing floods and power outages. The storm and its damage are an unmistakable drag. To be sure, monetary policy, fiscal policy, stimulus policy, and economic policy are all fine and dandy. The problem is all the one-off exogenous factors. What a crock!!

A truly perverse dynamic is at work. The expectation of economic recession is widely seen as a byproduct extension of the major US Stock indexes. This is backwards, since the painted tapes and high frequency trading and foreign subsidiary profits and doctored economic statistics are the norm. The S&P500 stock index has become a quintessential leading indicator, and thus the object of manipulative control, a major piece to Management of Perceptual Expectations. The pre-occupation with consumer spending dominates the distorted attention span. In a healthy system, the focus would be on capital spending instead. The nation continues to be stuck in false ideology preached by heretical high priests, a strong remnant from the last decade. The USEconomy was believed in 2001 through 2006 to be dominated by assets as engines, rather than industry and factories. The blockheaded called it the Macro Asset Economy, the latest chapter in their Book of Ruin. Just check the recent data.

  • Philly Fed logged in at minus 30.7 after recently careening into negative ground

  • Richmond Fed logged in at minus 10 after treading near zero for two months

  • Dallas Fed logged in at minus 11.4 after a minus 2.0 the previous month

  • Empire State logged in at minus 7.72 after a 3.76 the previous month

  • CAPEX business investment down 1.5% in July

  • Jobless claims stuck at 400 thousand per week

  • Gross Domestic Product at 1.0%, after a 5% lift from corrupted inflation adjustment

  • West Texas oil price at $89.14, but European Brent at $114.80


The USDollar appears vulnerable from two fronts. Since mid-2010, the US$ DX index has been under siege due to the heavy debt monetization of USTreasury and US Mortgage Bonds, during a hyper monetary inflation exercise of grand debasement. The threat from the other side is a US$ DX decline from a return slide into the quicksand of another USEconomic recession. A recession, whether recognized or not, will result in another round of stimulus initiatives of equally questionable effectiveness. More USDollars will be wasted, used, with certain debasement the outcome. Regardless of the next USFed move, or no move, the USDollar is extremely vulnerable. The only factor keeping it up is the ruin in Europe. Given the double barreled threat of an Inflationary Recession (my forecast), the USDollar is dangerously vulnerable.

The biggest upcoming beneficiary to the USDollar and major currency debasement will be Silver. The Gold price made its summer run impressively, reaching 1900. Huge profits are in the process of being switched from gold to silver positions. The 44:1 ratio in price enables sizeable new silver positions to be leveraged. Look out for a significant upward price move in Silver, as its technicals are showing a very positive bullish signal. The simple Moving Aveage is set for a crossover, an event noticed by thousands of commodity and FOREX traders. Silver is unique, being both an industrial metal in shortage deficit, and a monetary metal pursued as a safe haven during a time of crumbling monetary system and rancid sovereign bonds. Always remember that Gold fights and wins the political battles, but Silver rides through the broken phalanx on a white horse to take triple the gains.


A hilarious display of vested interest, lifting of fellow broken brethren, and market props of bank stocks came last week. The flagship Deutsche Bank has been a primary player with the London, Wall Street, and Swiss bankers for two decades, working diligently to keep the fiat paper game going, to conceal the gold leasing, and other sundry duties like money laundering with the US agencies. The mighty D-Bank was caught in the toxic US mortgage bond trap, was caught in the housing toxic asset trap, was caught in the naked gold shorting trap, and has been caught in the Southern Europe sovereign bond toxic bond trap. Embattled CEO Josef Ackermann might continue his ruinous tenure until 2013, but that will not remove the criminal charges that lurk over his head. The hilarious display last week came in the form of D-Bank giving a strong recommendation to Barclays and Royal Bank of Scotland, two giant banks in deep throes of insolvency. So a dead bank recommends other dead banks. Perhaps intrepid Barclays analysts can recommend Deutsche Bank, and RBS analysts too. Maybe analysts at Bank of America can recommend Barclays, RBS, and D-Bank all. They surely all participate in flash trading to lift in rapid round robin their exchanged stock shares.

Closer to home, Bank of America is a wreck of a diseased hollow tree, a reflective symbol of the irreparably insolvent US bank sector. A quick glance is useful. BOA is very busy selling off its best and only viable assets. It will be left with the hollow tree incapable of withstanding even a mild storm. They took in the Berkshire Hathaway $5 billion in funds from Warren Buffet. Regard this as a second payment toward syndicate membership for Buffet, the first being the Goldman Sachs preferred stock purchase two years ago. Membership has its privileges, avoided scrutiny, and protection from Wall Street ambushes. Then BOA sold its 5% stake in the Chinese Construction Bank, reaping $8.3 billion. The funny part was that BOA executives claimed they did not need the money. Neither does any dying man need food or water. The latest blow was the Federal Deposit Insurance Corp and their rejection of the $8.5 billion cap on the mortgage bond fraud case payoff. This is the bond fraud restitution ring fence, as BOA rounded up its favorite fraud victims, and attempted to strike a deal to limit its liability. The list of plaintiffs in the accord included Blackrock, MetLife, and the New York City. The only problem is that several important mortgage bond fraud victims were not included, like American Intl Group, the USGovt adopted dead orphan. AIG has filed a $10 billion lawsuit against Bank of America. But never fear, the putrid “BAC” stock shares from the grotesquely insolvent bank are rising. Apparently the whiff of Pine Sol and Glade fresheners can produce a short cover stampede, followed by moronic go-go speculator types. The fact of the matter is that 475 thousand jobs have been lost among Wall Street firms, but not enough for executives. European banks have shed 40 thousand jobs in just the last month. BOA has cut all non-essential businesses. Unfortunately, they cut all lines from profitable businesses. They are left with the more pure rot.


The path to recovery seems so elusive. The obstacles are obvious to any competent economist, of which there are few. To be an American economist in recent years requires great compromise, since the employer doling out the paycheck or research grant has deeply vested interests to protect. One could provide a long recital of principles of capital formation, of tangled control lines extended to USGovt finance ministries, of profound fraud engrained in programs old and new, but suffice it to be simple. Two requirements are basic in fostering a recovery, apart from necessary tax reform or regulatory reform. Neither required step will remotely occur, since doing so would remove from power the bankers who control the USGovt, the bankers who control the USDollar printing press, the bankers who profit from counterfeit and fraud. They will never order their own removal from power, their own ruin financially, their own exposure to criminal prosecution. Therefore the system will march along down the edges of the abyss. The irony is that with each major bank bailout or bond buy program or organized regulatory lapse or blessed accounting hypocrisy, a new deeper crash bottom potential in the abyss is defined. Here are the two requirements for recovery:

  • Liquidation of big US banks deemed too big to fail, since rotten and loaded with toxic paper that inhibits their ability to function as credit engines, while they require unlimited funds to perpetuate their garden of ruin.

  • Liquidation of big housing inventory, since bloated and hanging over the entire market, preventing a price stability situation for another two years (2013), and whose continued bank held inventory expansion assures two more years (2015) on top of that, a result of deep distress if not internal chaos, voluntary loan defaults by homeowners, job insecurity, and property title challenges in court (i.e. permanent market decline).

Any bank liquidation would cause the biggest ten US banks to enter a disruptive failure, much worse than Lehman Brothers. The fallout would take years to clean up, complete with a derivative meltdown nuclear chain of events. Any housing liquidation would result in at least a 20% to 30% additional home price decline, sufficient to topple another 500 midsized US banks. So neither liquidation will occur, not even close. All attempted solutions save the broken zombie banks, perpetuate their propped insolvent structure, waste new money, debase the currency further, and require 0% rates to continue. The deep distortions continue to rip apart the nation. None of the current steps taken are sincere legitimate attempts to remedy the system. The countless captains of the ship, mostly wearing Goldman Sachs and JPMorgan uniforms, have no vested interest in remedy. It is as simple as that. Just recently the Standard & Poors head was replaced by a Citigroup vice president. No end to the club tokens used to seat members of the clan.


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At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at For personal questions about subscriptions, contact him at

Illusion of Stable Currency Vortex

[The Daily Gold]

Panic & Anxiety Swirl-A-Storm

without comments

by Jim Willie

Something big is going on in the United States in a sentiment change, an altered state of psychology, a growing sense of panic. My opinion is that the nation has entered the early stage of comprehension among the population of systemic failure. The most immediate measures are the rash of heavy selling down days in the US Stock market, the strong purchases in Gold, as well as the reactions to constant news of sovereign debt in trouble, and the big banks teetering. Several other softer measures have been noted, made overwhelming by their sheer numbers. A perception wave has taken hold of a toxic USEconomy, a toxic US financial sector, a toxic US housing sector, a toxic economic brain trust in the US towers. A sense of doom is creeping into the nation’s living rooms and board rooms, that the nation is in deterioration. Worse, they are realizing how US Federal Reserve is toothless, unable to address or treat the problems. The citizenry is not adept or gifted enough to conclude that the problem is national insolvency, whose errant prescription has been a flood of liquidity. But they sense something is horribly wrong, and worse, that no current treatment will fix anything. They detect the backfire of the blunt banker solution and the misfired futility of the federal government solution. Witness the rooted perception and horrifying awareness that the United States is moving gradually and unavoidably into a systemic failure. The perception is that neither governments nor bankers have any solutions to help the people, who must impose their own gold standard. The Gold price registered a new high over $1900 per ounce, this after mental midget clowns and propaganda wags in May pronounced the bull market as finished. Their opinions are worthless. Watch them vanish behind the tall shrubbery when Gold surpasses $2000 this autumn.


In my view, the national illness is a toxic USEconomy dominated by pervasive profound grotesque insolvency. In the early part of the 2000 decade, a strong hint of near-term future failure was obvious. The USEconomy shed its industry to Asia since the 1980 decade. In the early years of last decade, the migration of factories was to China. In its place, the US consumers relied upon home equity withdrawal, blessed as good by the American economists and high priest of heretical ideology Alan Greenspasm. The hint to sound money economists such as the Jackass from the dependence shift was a clear signal of ruin in a few years, as in now. It came on time. In my view, the national illness is a toxic US financial sector dominated by pervasive insolvency and massive fraud. The FASB accounting rule change permitted grotesque falsification of the bank balance sheets, reflected in market capitalizations above zero. The value zero has been and still is more accurate, still is the price target. The big US banks continue to fight off the powerful forces of a housing market in resumed chronic decline, sovereign bonds overseas beset by heavy losses, and a spate of bond investor lawsuits that rack up. All attempts to limit lawsuit exposure have failed. Litigants line up in court like Wal-Mart shoppers on a big sale. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.

The Achilles Heel, the broken leg, the ruined road, and the toxic field is HOUSING & MORTGAGES. The contaminated blood, the leaking gangrene into the circulation system, the sewer line in the water supply is BANKING & FINANCE. The USEconomy grew dependent upon the two-sided asset bubble. No resolution or remedy or liquidation means rotting flesh and gangrene on the body economic. Americans have noticed. The US banking system remains insolvent, worse each quarter from toxic assets. Home prices have resumed their decline, despite all incorrect announcements by banking, political, and economic leaders over public address propaganda loudspeakers. The crowd control devices are not working, as the people are deeply worried. The banks are plagued by an REO inventory bloat extended from home foreclosures, where they do not dare release all the homes onto the already bloated market for sale. The banks are peppered in attacks by bond investor lawsuits, which work to resolve the bond fraud from misrepresentation of mortgages packaged in AAA toxic bundles. They lost 30% to 60% in a matter of months and a few years. The banks have a dirty secret of hundreds of thousands of home loans operating in strategic default, whether the homeowners refuse to pay anything more on their mortgages, often demanding to see the proper title on the property. The news media will not cover this story. In every court challenge, the banks have lost the cases, resulting in the homeowners taking clear title with the loan fully forgiven. The newest threat to the banks is the next Option ARM wave, the second round of adjustable rate mortgage that will continue in a storm until 2013 ends. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.

No meaningful home loan balance scheme conducted by the USGovt means the housing mass & mortgage connective tissue circle the toilet in a flush. The reason is simple. Home loan balance reductions would expose gigantic bond fraud in tracing the mortgage bonds to home loans with title registrations. It would result in exposure of Fannie Mae counterfeit bonds having circulated widely. It would result in forced bank asset writedowns amidst the pervasive accounting fiction at work on the balance sheets, blessed as good by the FASB. It would expose MERS as a fraudulent device to hold titles without legal standing. It would embolden half the nation into civil disobedience, as in outright refusal to pay banks on home loans. It would expose the nation as insolvent generally. It might interfere with some perverse national plan to use Fannie Mae as some devious device to become landlord to one third of the nation’s homes, a plan of collectivism that Karl Marx might approve. Americans are awakening to the unfixable nature of the USEconomy and the broken fraudulent nature of the US financial sector.


The tragedy that struck the US nation has a great connection to toxic economic thought from its economic brain trust. It is thoroughly toxic, corrupted, and destructive ideology woven in an acidic blanket with rampant impairment to working capital. It earns a D grade on economics effectiveness, and in fairness is not what Keynes prescribed. It is toxic thinking. It seems to have elevated the Voodoo Economics of the 1980 decade to the Fascist Business Model in the 2000 decade. The license to engage in fraudulent activity is engrained in the pact between big business (led by big banks) and the USGovt policy making groups which are dominated by Wall Street firms (led by Goldman Sachs). The summary line is vividly clear to astute adept students of economics: the United States no longer has any concept of capitalism, and has undergone three decades of capital destruction. The crescendo of the capital destruction has taken place in the last three or four years, whose climax tune is the shrill Quantitative Easing. The cast of American economists is wedded deeply to the notion of credit dispensation and monetary growth under the illusion of control. They do not comprehend capital formation anymore, relying instead upon what the Jackass calls with bitter intended mockery the Panhandle Doctrine applied to consumers, matched by a Parasite Doctrine applied to banks. If you give a street bum money, he will buy coffee and maybe a sandwich. The USEconomy is based upon coffee and sandwiches, not much more, as the consumer is given money in pockets and purses to spend. The depravity of economic thought is shocking. The stock market & housing sector (FIRE) replaced industry & factories with tragic outcome. FIRE means finance, insurance, and real estate, a great ironic moniker since the fires burned capital at a rapid rate.

A prevailing belief exists among American economists that if the consumer picks up, then industry will expand with big capital spending and job hires. The belief is entirely backwards, a symptom of American economist ignorance and stupidity. The consumer (street bum) relies upon tax breaks, reduced Social Security & Medicare contributions, extended jobless benefits, clunker car gifts, first time home buyer tax credits, and more. They are all examples of the Panhandle Doctrine from which the USEconomy have grown dependent upon. Observe the toxic American economist ideology. For banks, a parallel Parasite Doctrine hard at work has gutted the financial sector. The regular fare offered as examples as strategic crutches to a broken sector are sponsored USTreasury carry trade (aided steered by Interest Rate Swaps), betting on their own stocks lifted by phony FASB accounting rules, participation in USFed frequent flyer programs like the Money Market giveaways, flash stock trading (High Frequency Games) done with impunity, short stock sale bans (Goldman Sachs given an exemption), and naked selling of USTBonds (grandaddy fraud). See failures to deliver, buttressed by Interest Rate Swap artificial end demand that serves to cover the other end and qualify as a bonafide bucket shop.

Thanks to Aaron Krowne and his Mortgage Implode website, for the intrepid work on the mortgage market and recently on the USTreasury market. He provided the graph on Failures to Deliver on USTBonds. See the ML Implode article (CLICK HERE). The total is roughly $1 trillion in bond fraud, an ongoing figure. The story broke in mid-2009, only to disappear with organized suppression. The Wall Street firms lost their investment banking business, but found a fertile source of liquidity from naked short sales of USTBonds, whose buyers were the artificial factory of Interest Rate Swaps. Without this naked shorting line of liquidity, the Wall Street job cuts would have been much worse, equal to the London and European bank sector job cuts. The Parasite Doctrine has a poster boy project with these fraudulent sales given cover by the Securities & Exchange Commission, whose official ranks are filled by Wall Street henchmen.


The American public is told that confidence is the root cause of the absent woefully low business spending. The confidence took on damage after the vacant USGovt & USCongress budget deal and debt extension to be sure. But the true source of absent business capital investment is broad deep insolvency, the poor business risk, extending from the broken housing market, the wrecked banking sector, and the inadequate industrial base. The government finance requirements serve to crowd out the bond market, which in a normal system would rely upon the financial sector for capital formation, business development, and construction of platforms that offer job growth. In the US financial sector, the innovation is with carry trade speculation, exploitation of easy money facilities, and profound bond fraud, hardly the stuff of growth mechanisms. Big banks do not lend when they can reliably make money on the USTreasury Bond carry trade. The American corporate sector has responded to the liquidity flood, aka monetary hyper-inflation, and the corresponding acidic undermine to capital, by moving investment overseas. See Cisco, General Electric, and Hewlett Packard, which is instead raising a white flag to Asian PC makers. The most glaring consequence to the monetary policy, marred (not aided) by QE and QE-Lite and QE2 and Secret Global QE, has been the entire cost structure has risen, without benefit of rising incomes.

Furthermore check Economics 201, Chairman Bernanke. Low interest rates suppress the USEconomy, not stimulate it. Almost twice as much interest income is earned versus interest costs paid. The pensioners and retirees are struggling with inadequate income, spending less. The bond investors sought out higher yields in mortgage bonds, only to be burned by 25% to 40% losses in principal. Pension fund income is way down. Of course the motive has been to support and stimulate speculation in Wall Street, where the USFed primary loyalty lies, surely not with Main Street and business interests.


A confluence of major perceptual factors is flowing in the national mindset. Fear is setting in. The early stage of panic is evident. A growing perception of ruin can be spotted. People are responding to numerous high profile stories, each of which is important in painting a mosaic of extremes, none of which would have occurred in the 1990 decade. The chorus of crisis is loud and shrill. Here are some important events that the American public must examine.

  • The broken USGovt budget and upcoming huger deficits. With tax receipts trending down, and the need for economic stimulus programs clear, the USGovt deficit next year will be larger, not smaller, despite what the errant Govt Accountability Office statement reads.
  • The blatantly obvious USeconomic recession, whose billboard signs litter the highway, the latest being the Richmond Fed down 10% (called good), and the Philly Fed down 37 (could not be called anything but horrible). The Philly Fed forecast was minus 2 by the intrepid marketing prop carnival barker American economists.
  • The EUR 850 billion bailout by the Euro Central Bank, intended to cover the mountain of Italian and Spanish Govt bonds. But the bailout will accomplish nothing, just like Greece, where numerous bank bond bandaids have been applied. And besides, the Germans have refused to offer any more bailout funds, calling Italy and Spain too big to bail out, quite properly.
  • The creepy feeling of a global monetary system breakdown. The major currencies are being debased to such a grand extent that even the less gifted American public can notice. They see the onslaught of sovereign bonds overseas, and might harbor more distrust for USTreasury Bonds that the media reports. They might be buying gold & silver coins from the USMint, which cannot keep up with demand.
  • The anticipated QE3 heresy is certain to continue. It has already come in Global QE form, as the Jackass expected. My forecast is that the USFed will formally support the US Stock market and violate its charter. But the move will be applauded and serve as the next heroin injection to the body economic, with certain additional capital destruction and rising cost structure.
  • The Swiss and Japanese central bank futile actions, designed to halt their rising Franc and Yen currencies. The lesson learned is that all major central banks have turned toothless, their policies ineffective, wasteful, and destructive. The Competing Currency War is making all of them big losers. Their economies suffer.
  • The pitiful paltry puny USTreasury long-term yield of 2.0% to 2.2% does not offer the American saver the proper incentive to save, nor the proper return on investment, certainly not an adequate yield to reflect the risk taken. The yield now stands at 7% to 8% below the true CPI rate.

SINKING INTO THE AMERICAN PEOPLE MINDSET IS THAT THIS IS 2008 ALL OVER AGAIN, BUT TWICE AS BAD, SINCE THE SOLUTION HAS FAILED AND TRUE REMEDY IS SEEN AS IMPOSSIBLE!!  The USGovt and USFed and Wall Street policy makers and league of Rasputins have thrown $3 trillion at the problem, have bailed out the big US banks, have conducted numerous liquidity programs, have made Swap Lines to Europe, have completed a few mickey mouse stimulus initiatives (clunker cars, first time home buyers), have extended but terminated aid to states, have extended jobless benefits, have given SS/Medicare relief, have operated gigantic debt monetization programs (QE’s), but the USEconomy is rolling over into a recession anyway. The confirmation of the recession is the many denials with shorter frequency between denials


As the Jackson Hole Conference is set to begin in the spectacular picturesque mountains of Wyoming, anticipation and anxiety rise. The Grand Tetons serve as a fitting location to announce the renewed dependence from the USFed teats, the monetary spigot. Where the spigot is directed remains the main question in debate. Given the robust supposed USTreasury Bond rally, it hardly seems suitable to direct QE3 toward more USTBond buying, unless they wish to avoid USTreasury auction failures. The ultra-low yield combined with ultra-high supply makes for extremely high risk. Bond investors might not show up at all. A failed auction would be highly embarrassing as a event after the highly publicized bond rally, an irony worthy of Rolling Stone exposure or a Saturday Night Live comedy segment. The USGovt minions and Wall Street made men had crowed that the bond rally contradicted the Standard & Poors downgrade for the USGovt debt. My forecast is that the QE3, when it comes, will be designed and intended openly to support the Stock market. It will not arrive this week. It will arrive with full bore announcement in response to the next round of deep US stock market declines. History will be made. The spin on the USTBond rally to 2% on the 10-yr is deafening and deceptive. We are told the bond market anticipates QE3 but that is patently false. The bond market smells with great dread the next USEconomic recession, or more accurately, recognition of the ongoing chronic powerful recession that began in 2008 and never ended. The bond market smells unfixable recession, all current tools having failed. The bond market detects correctly that the US Stock market from mid-2010 has been propped by QE initiatives, now absent.

The irony, intrigue, and corruption is both bizarre and macabre. The Standard & Poors President Deven Sharma has decided to step down only three weeks after the agency downgraded the US credit rating. What a predictable move. The post will be occupied by Douglas Peterson, chief operating officer of Citibank, to take effect on September 12th. Business as usual on Wall Street. The S&P lead role will be in capable hands. One might wonder if the outgoing officer will be charged with child pornography or a rape in a hotel. That event might not be needed.


This week has been tumultuous. The best summary in my view is to conclude that the Gold price set a record high, and fully revealed what direction it will take this autumn. In the low volume vacation dominated days of summer, an opportunity to engineer a selloff has begun in earnest. Gold has gone down to $1765 and Silver to $40 flat, still way up on the year. Hats off to Ben Davies, who has been impressively accurate in his precious metals forecasts. He nailed the silver forecast in April, expecting a steep pullback to $35. We saw it!! In June, when Gold was trading in the low $1500 level, Davies boldly forecasted that Gold would break above $2000 by yearend 2011. The strong upward moves seen so far in August have captured global attention. After action last week, Davies fine tuned his 2011 gold call, stating he expects Gold to reach $2100 by the end of December after first a correction to $1675. Today we saw it!! The hefty pullback will lose some faithful followers, but offer savvy investors a great chance to add to their positions. The cartel is busy making countless grateful Chinese, Indians, and Asians who have not stopped buying precious metals in defense of rapid inflation. They see the American bankers as the inflation villains. The sudden pullback has assured the last fire sale before the autumn gold bull romp, a great trampling event to come. It is written, it will happen. See the King World News interview (CLICK HERE).

The compromised clowns have been busy citing how the Gold price is $150 to $200 too high based upon price inflation, or even 50% over-valued based on some cockeyed Fed Business Model. They overlook the broken distorted market is the USTBonds, supported by powerful usage of Interest Rate Swaps, aided by USFed monetization still and the migration from stocks to bonds. The volatile moves in the Gold market can be interpreted with high predictability. The big down move today signals even bigger upward moves in the next few months. The money is moving quickly today on Wednesday. The 10-yr USTreasury has rallied on the TNX from 2.14% to 2.21% as a decent move. The crude oil price is up from $85.40 to $86.1 as a modest move. Nobody can deny that panic has hit the stock market, as the recession can be seen without rose colored glasses. Expect much more debasement of the USDollar, as tax revenues fall and stimulus costs rise. The bigger USGovt deficits must be financed, during a truly hostile climate. The complete ruin of major global currencies is in progress, not stoppable. Money is being ruined to such an extent that people are bewildered, wondering what constitutes money if sovereign bonds are being attacked and losing value. The tainted USTreasury Bond market has become almost a source of great amusement. The entire major currency market is in turmoil. See the Swiss Franc, the Japanese Yen, and their rapid rise several standard deviations above their norms or trendlines. Havoc has taken root.

The Libyan chapter will be properly told in a year or two. Tyrant Qaddafi wanted to install a Gold Dinar for North African usage, a similar sin committed by Saddam Hussein. These guys never learn that a challenge to the USDollar is met with armed resistance. The US & UK forces entered the fray. The secondary goal might have been to take oil producing capacity offline, thus lifting the crude oil price. Big Oil interests do not want the global recession to rock the crude oil price too much. The other benefits have been the $50 billion in funds frozen solid in US & London banks. Another $50 billion is frozen in European banks. Expect it to remain out of reach by Libya’s new leaders, despite talk. It is too badly needed within the Anglo banking system. See Oslo. The search is on not only for Qaddafi, who is surely comfortable somewhere in a desert bunker, but also well fed, and well medicated with his usual fare of psycho-tropic drugs. The hunt is also on for Libyan gold bullion. The Anglo bankers need it, since the COMEX and LBMA are just about bone dry, and the big US & UK banks are insolvent on the edge of failure. See their Credit Default Swap rates on debt insurance. For the greater good of the Anglo Empire, gold must be found and secured and locked up in the banking system, regardless of the propaganda messages put forth.

Prepare for $2100 gold by January, and $60 silver by January. The last open door is being made possible in the final days of August. Like last year, the months of September through January will be ones for the history books. The start of big bank failures in the United States, London, and Europe should add to the gold run. Contagion has hit Italy, Spain, and France (the newest PIGS lookalike). The breakdown will be broad, deep, and frightening in the next few months. The twisted thinking is probably that gold must be brought down as much as possible, to make a lower base before the next gigantic upward moves beyond the $2000 level and probably past $2100. The gold breakout will capture global attention and make major headline news. This is 2008 all over again, but much worse!! The story line will be that nothing was fixed, but that nothing can be fixed, and much more debasement of money will come. The Gold Meter will rise in direct reflection.


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Panic & Anxiety Swirl A Storm

[Investor Cafe]

License To Debase USDollar Further

without comments

by Jim Willie

The US Federal Reserve has no monetary options whatsoever. They have been backed into the corner since 2007. It was coerced to reduce interest rates as the subprime mortgage crisis morphed into an absolute bond crisis, as the Jackass loudly stated during that fateful summer. TheUSbank leaders claimed it was contained. It was not. The USFed was backed into the corner in 2009, unable to raise interest rates from near 0% (the Zero Interest Rate Policy disease) and put into effect its propaganda theme of an Exit Strategy. TheUSbank leaders knew the longest period of time for the Fed Funds rate to stick at 0% was nine months, ensuring a future disaster. They saw it. They claimed a move toward normalcy. It did not come. The Jackass called them liars with a message of deception to manage the USTreasury Bond and stock market. They did not hike rates, as their bluff was called. The USFed looked weak as a result. They began to shed thick layers of prestige. The USFed was backed into the corner in 2010, unwilling to use printed money to monetize USTBonds, giving birth to the second dreaded Quantitative Easing disease. They did anyway. So the ZIRP & QE twin scourges became part of the landscape of ruin. The USFed denied they would embark on QE. The Jackass called them liars with a message of deception. They did embark on QE, then QE Lite, then QE2, all replete with denials. The USFed has lost all its prestige, all its credibility, and all its respect for economic analysis. They are actually a central office for the Syndicate. They are the focal point of the failure of the central bank franchise model.

The unfolding drama on Capitol Hill with the USGovt changed the entire picture, thus putting a toxic icing atop a hemlock pie with arsenic candles giving off deadly gas. In private discussions, my full expectation was for no debt default, not even close, with the debt limit extended, the unfolding American Tragedy saga taking place on a global stage. My call was for a path of least resistance to be taken in consensus, but it would involve decision avoidance and political expedience, if not constitutional cowardice. The players in the USCongress, along with the leader himself, were exposed as pusillanimous, deceptive, polarized, destructive, wayfaring fools. They are as much fully equipped squires for both the banking industry and the military establishment. They avoided a debt disaster in default, but they did not avoid a debt rating downgrade. They have given the system license to debase the USDollar further, as Gold has responded in a breakout. The President is so clueless as to believe patent reform can make a difference. The bigger obstacles are poor education, minimal math & science requirements, tendency to play video games & text messages than studying (even inside school classrooms). Of course the debilitation is compounded by theUS lacking a strong industrial base. So better patent protection would mean theUS corporations could more effectively protect their offshore jobs, where the majority of jobs are located.

Worse, the players on the global debt debate stage exposed the USGovt as Greece times one hundred. The veil of ruin and arrogance has been lifted for all to see, the deep blemishes and skin cancer visible for all to see. The USGovt borrowing costs are near 0% for the same reason that the Greek borrowing costs are at 30%. BOTH NATION’S FINANCES ARE BROKEN. To cap it off, the tombstone on the US Republic will feature a Super Committee to recommend the most difficult of budget decisions. Such fanfare without proper label. The committee is a formalization of the Politburo process, a perverse interwoven political stranglehold fabric that takes the worst of the Weimar Republic and melds with the worst of the Fascist Business Model. Slowly forming is the Fascist Dictatorship that follows logically from nationalization of Fannie Mae and AIG, the home mortgage cesspool and the derivative black hole. The growth of czars will grow dangerously. Look in the near future for a wave of office shutdowns. The USGovt is required to pay its creditors. But it will act with negligence and shut down offices. See the Federal Aviation Agency, which must contend with 70,000 job cuts. It has lost its funding, while the USCongress went on its August vacation. An improvement would have come if the cut in budget came to the Transportation Security Admin (TSA) to alleviate the public from airport assaults that draws tears from old ladies, anger from defiant citizens, and consternation from most everybody. By the way, the planned date for the Super Committee to convene and make its recommendations is in the middle of the Presidential Primary season next summer. Expect a circus.


Speaking of spineless and pusillanimous, Moodys and Fitch call the debt deal with the USGovt a good first step. They maintain the AAA rating. The brave Lancelot might be Standard & Poor which has delivered a louder firmer threat of debt downgrade if not significant progress to reduce the budget deficit. They all three seem more like boys cracking whips without threat of anything substantial. Their offices might be Oslo’ed if they actually downgraded. The USGovt debt deal accomplished nothing but to raise the debt limit, which means THE USGOVT IS PERMITTED TO DEBASE THE USDOLLAR CURRENCY FOR ANOTHER YEAR OR MORE. It is actually quite funny to watch and listen to hacks on the tube, as their share their shaman wisdom. They told the public that when the debt limit was extended and the crisis was averted, the Gold price would probably subside and relax downward. What nonsense! The Gold demand would continue from free rein to create more money to cover more permitted debt. They know nothing about gold. They seem to find no relevance or importance that theUSmoney supply is rising exponentially, without benefit of even economic flatline stability. The inefficient usage of new money is a story for the ages, a symptom of the ruin in progress. This point is made in the Hat Trick Letter in detail.

The Gold market correctly interpreted the vacant gutless debt pact, a deal to make a future deal, a decision to make future decisions. The Gold price rose on Tuesday by $40 and the Silver price rose the same day by $1.50 per ounce. The damage is more hidden than what is seen in nominal price. The short covering process has begun. The defended $1600 barrier has been breached, smashed, and overrun. Those who recklessly placed their short positions at that level did not anticipate the power of this bull market, or recognize the strong attack from all four flanks. The $40 barrier is also being overrun. Gold will continue to fight the political battles, to bust the cartel phalanx, and to enable the harsh light of truth to shine on the wrecked USDollar and ponzi ridden USTreasury Bond. Silver will continue to run impressive breath-taking strides through the opened pathways. Expect a run past the $50 mark within the next two months, likely sooner. Things always seem to happen more quickly these days. The clock is running faster with all the fever and ruin.

Prepare for continuation in the long drawn out economic deterioration, business squeeze, financial depletion, and systemic failure. The USGovt debt default process is one for the history books, part of a bold Jackass forecast made in the wake of the Lehman, Fannie Mae, and AIG visible disaster in September 2008. At work was the more important but less visible destruction of theUSbanking industry. It has not recovered since the Lehman engineered bust kill job, fully exploited by Wall Street. Expect in the next couple years economic martial law, deep rationing, and economic implosion. Protect from lost life savings, forfeited wealth to the USTreasury Bond monster, and the fast pace of toxic paper spoilage. The answer is Gold & Silver, if not commodity stockpiles and energy deposits. For the small investor, the safest is precious metals with no paper securities and thus no counter-party risk. The GLD & SLV funds are both fraudulent, to be revealed in time, if not already for those with discerning eyes. They should be avoided, unless the investor wishes to miss the climax runup in price. The precious metals Gold & Silver have received zero positive press by the corrupted financial media, as well as very little respect despite being the best performing asset in the last decade. Ignore their deceptive messages, and climb aboard the Gold ship with Silver cabins, and watch the unfolding disaster from the heat tempered windows. The Fiat Paper locomotive has already gone over the cliff. The debt deal only defined a lower crash point in the abyss far below.


The USGovt has the wonderful benefit of Interest Rate Swap contracts. They produce leveraged magnificent artificial demand for the 10-year USTreasury. Despite huge uncontrollable bond supply for USGovt debt, contrary to standard myopic finance theory promoted in universities (see USFed-funded chairs), the bond yield continues to decline. In no way does migration from stocks to bonds justify the move under 2.60% on the TNX yield. Every time some negative USEconomic news is released, and plenty of such lousy data has come in the last several weeks, a big bond rally comes. It is aided with a vast under-current of Interest Rate Swaps. Between  80% and 86% of the total derivative market is IRSwap contracts. That market was measured at $243 trillion by the Office of Comptroller to the Currency in its 1Q2011 report of the Top25 commercial banks and trust companies. Shockingly, Morgan Stanley added $51 trillion to their derivative book in the first quarter alone, with zero coverage by the sleepy intrepid lapdog financial press. Let the reader decided if $51 trillion in notional value spread over three months would have much effect on USTreasury Bonds.

The hacks who operate at the bond desks have pathetically little knowledge of their own sector. Most bond traders actually believe the IRSwap application has no practical effect on the USTreasury market, with no end product. They are at best stupid and at worst corrupt. As friend and colleague Rob Kirby points out, the IRSwap contract has a real actual end demand in a USTreasury Bill or Note or Bond. Typically, they sell a short-term USTBill in order to buy a long-term USTreasury, like a 10-year note. This is all within the structure of the IRSwap contract. Thus the fast move below 2.60% from 3.00% on the TNX yield.


The USEconomy is stuck in a recession that worsens each quarter. The current recession is measured between minus 5% and minus 6%, is in progress, and is intensifying. The USGovt runs a devious stat lab shop. It uses every scummy trick known to the stat rats. The Jackass is a refined furry stat rodent, not a rat. Consider an honest method with integrity, which is actively avoided. A simple method is to take the nominal data (raw untreated numbers) for a full year and compare them to the nominal data for the previous full year, then adjust by a legitimate reasonable price inflation index. The Shadow Govt Statistics folks do a fantastic job in honest economic estimation, the best on the planet in my opinion. The SGS Consumer Price Inflation was about 9% in 2010 and currently runs about 10%. Anyone with half a brain can attest to the validity of their CPI estimate. The honest assessment of the USEconomy performance is minus 7.5% recession in 2010, much worse for 2009, seen in the red circle. Let’s be conservative and call the valid CPI at 7% last year and 8% this year. Then the recession of 2010 would have been recorded at minus 5.5% last year and worsening in the current year.

The above graph is utterly shocking and calls the entire USGovt stat team liars. Notice how in 2009 (green circle) the nominal GDP growth was minus 2%. Apply any CPI index to register something worse. That bears repeating. The unadjusted economic growth data for full year 2009 was negative, without inflation adjustment. Anything positive for price inflation would mean a worse recession in 2009 than minus 2%. The quarterly method used by the Bureau of Economic Analysis is corrupt and deceptive, intentionally so. They measure quarters in sequence and apply a raft of absurd adjustments led by the hedonic quality lifts, then multiply their gross error by four to annualize. Even Goldman Sachs realizes the economy is sliding into reverse. Even Martin Feldstein must see the poor taste of federal pork on the plate, as he has given a 50-50 chance for a recession reversal. He must not know much about economics, since the recession is in its fourth year.


The USFed realizes to their dismay that debt monetization does not stimulate the USEconomy. They will be pushed into purchase of USTreasurys for a simple reason. Another big lie of past Quantitative Easing motivated to stimulate the USEconomy has come to light from direct exposure. The QE process will become an integral part of the monetary policy. The purpose for its continuation has been and will continue to be to prevent USTreasury auction failures which would paint a global billboard sign of USGovt insolvency, ruin, and default. The events from this week have profound meaning. The deliberations over the lifted debt ceiling were interwoven in toxic fashion with the budget debate. USGovt expenditures and taxation issues were hotly debated, enough to produce a stalemate that clearly continues. The main message behind the imminent new budget & debt limit deal is that the USGOVT IS GIVEN FREE REIN TO DEBASE THE USDOLLAR CURRENCY, while nothing has been done to reduce the $1.5 trillion deficit. The USGovt debt should lose its AAA rating due to chronic $1.5 trillion deficits, whose lethal continuation was forecasted by the Jackass in 2009. At that time, most people were suffering from deep shock. They were told by captains on the Titanic Helm that the next annual national budget deficit would be under $1 trillion. The Jackass warned of consecutive calamitous $1.5 trillion forecasts. That was a correct call. One third of the $14.3 trillion cumulative USGovt debt is from war adventure. War spending forIraq andAfghanistan since 2001 has totaled $1.3 trillion. An almost hilarious partial solution was offered by the bold Tyler Durden of Zero Hedge, so on point and so sensible as to be funny. Shut down 15% of the USGovt offices and save $150 billion per year, save $1.5 trillion in ten years. My suggestion is to disband the USCongress by referendum, and to replace it with a group of city mayors and county leaders who would block lobbyists to their offices. Let the House of Representatives represent the people from where they live and work, and not represent the banks and corporations whose lobby budgets are huge.


The last two years have proved convincingly that treating insolvency with liquidity solves nothing. The ineffective blunt tool wielded by the USFed has resulted in a rise in the cost structure globally, not just in the United States. The deceptive message promulgated has been to engineer a lower USDollar for the stated purpose of stimulating theUS export trade. This is a great lie! They wish to support the bigUS banks in unending fashion, until the end marred by systemic failure. The USEconomy has inadequate critical mass in the industrial base (see Chinese Foreign Direct Investment since 2002). The excess capacity in factories and workers does not prevent cost inflation (great irony, since lost base), as the clueless cast of US economists has insisted erroneously. TheUS bank sector is insolvent, heavily reliant upon naked USTBond sales and narco money laundering. The story broke in 2009 that the Wall Street firms had over $1 trillion in undelivered USTBonds sold to clients and funds. They are chronically not delivered after 30 days, because they were sold naked illicitly by Wall Street. They are formally called Failures to Deliver. But the good news (at least to Wall Street) was that it was a fertile source of liquidity and revenue generation when investment banking hit the wall. Imagine selling lemonade at a stand but not providing a cup of the tasty product. The money laundering of dirty ‘Agency’ funds through Wall Street is uniformly applied across its pillars to the Syndicate. The process and criminality is out in the open. The laughable part is that no felony charges are ever filed, since deals are cut. Last year Wachovia completed a plea bargain, paid a fine, and walked away. The details escaped the sleepUS financial press. Wachovia paid a mere 1/30-th of one cent per dollar of illegally laundered funds. The funds entered from Mexico. Chalk up a small business cost, a very small cost indeed. This is not a new story.

Back to the mainstream. The housing market is a guaranteed two-ton millstone to depress both households and banks by the neck. My annual forecast is for two more years of housing bear market decline. That always sounds better and more credible than a permanent bear market, which was the private Jackass forecast made privately in 2007. Read: permanent. Each year strong factors such as heavy new home supply and continued job loss make obvious another two years of powerful home price declines. The ugly joke in the bank industry is 3 million homes lie on bank balance sheets, 3 million homes stand in foreclosure, and 3 million line up in default. The overhang is staggering, enormous, magnificent, disastrous, and crippling. To claim theUS housing market is in recovery is the most egregious of lies. The additional hidden supply of homes makes impossible the clearing within the market. The bank balance sheets are still growing, despite their recent decisions to send the REO bank owned homes for sale in the open market. That has resulted in the resumption of the visible price decline, noticed by the dumb slow and half blind analysts who fail to apologize for a skein of wrong forecasts.


The USFed has no monetary options whatsoever. The USFed realizes debt monetization does not stimulate economy. But it does prevent USTreasury auction failures. The painful direct impact of USFed response to crisis and taken action is a uniformly rising cost structure. Price is determined by Supply & Demand, but also the USDollar. The current budget patch deal will result in further dampers. The termination of extended jobless benefits, part of the latest debt deal, has a direct obvious effect. The Austerity Pills have begun to come to the US throats. The low USTreasury yields mean the Interest Rate Swap machinery is working overtime. The low bond yields force low saving yields for certificates of deposit at banks. The result is a damper effect on the USEconomy, not a stimulus. The only stimulus is to the stock market, which has become heavily reliant upon the Working Group for Financial Markets, which does its work at 10am and 3pm in the form of miraculous market index recoveries. The propaganda continues in mindless fashion. The public is told that the policy is in place, it needs time to work, and the second half recovery is to be expected. We are not morons!! The second half of 2011 will feature a massive powerful headline Gold & Silver breakout rally that reflects the broken USDollar, the broken USGovt finances, the broken USEconomy, and the broken USFed leadership. The rally will capture global attention and encourage additional investment demand. Even the USMint badly aggravates the Silver shortage domestically.


The gold price is driven by certain immutable principal themes, each powerful in its own right. Combined, they form the basis for a global Paradigm Shift in wealth transfer. Gold has run roughshod over the $1600 supposed barrier. When it reaches $1700, it will make quick strides and long strides in a sudden move to $2000. The overriding themes are:

  • ultra-low interest rates, the 0% scourge that urges asset protection
  • lost faith in sovereign bonds, ruined on periphery, moving to core
  • exploding government deficits, made worse each year.

Most every Gold bull market has been triggered by ultra-low interest rates. The term is Negative Real Rates, which means the prevailing interest rate is way below the prevailing price inflation rate (in the real world). Since 2009, the USFed has held the Fed Funds rate near 0%. It is a signal of ruin, not stimulus, verified by its chronic continuation. All major currencies will fall together versus Gold, as in the USDollar, the Euro, and the British Pound. The Hat Trick Letter in the last two months has shown vivid detail of the broad Gold bull market breakout. A contrary wind is also detected. The Swiss Franc, the Japanese Yen, the Aussie Dollar, and the Canadian Dollar have risen versus the more broken major currencies. What they have in common is grand mineral and resource wealth. Their still fiat paper currencies are indirectly supported by the commodity riches, making them much more favorable to FOREX traders. The best that central banks can achieve is stability among the major currency exchange rates. This theme is their next propaganda plank of deception. They can claim stability while ignoring the resumed rising cost structure. The mantra must be recognized. Inflate or die means more rising costs, without benefit of increased wages.

Nothing changed since the COMEX ambush of naked shorting in early May, the avalanche that prompted the parade of deceptive analysts to proclaim the end of the Gold trade, the end of the Anti-US$ trade. They were wrong, loud wrong, and we called them wrong. Mark Twain defined ‘dogmatic’ as wrong at the top of the voice. How true! How appropriate! Nothing changed on the endless spew of debt, the endless spew of bank welfare, the endless spew of budget deficits, the endless spew of wrecked toxic sovereign bonds, the relentless rise of costs, the relentless lost job security, the relentless assault on households. The debt crisis has moved into new ground, with the USGovt debt moving onto the same stage as Greece, Portugal, and Ireland. The next broken legs to walk on stage will be Italy and Spain. The biggest surprise will be the entry on stage by France, which looks much more like a PIGS nation than the others. A simple cluster analysis (nifty multi-variate statistical technique) would reveal  France as part of the PIGS pen easily. See the debt ratio charts of the past for a basic pattern. They might lead the PIGS in a Mediterranean Central Bank with a common devalued Latin Euro currency. It would be devalued at least 30%, maybe 50%. A split is coming to the Euro Monetary Union, since the PIGS nations cannot carry such Euro currency in their tortured insolvent tattered wallets any longer. The July Hat Trick Letter covered the split in detail. My belief is firm that France will remain with Germany, since the German financial firms own 95% of French Govt debt, a dirty secret that never is mentioned. The Germans will need squires to carry their bags to meetings.


After the EMU split occurs, look for 20 Lehmans to go bust in Europe, as their large banks are badly exposed and heavily damaged. The key is Italy, and tethered Spain. The cross-border debt exposure is magnificent. Bear in mind that Italy is the #8 biggest economy in the world. Italy is responsible for 17% of all European sovereign debt. The practical implications are immediate, as the Italian Treasury must roll over 69 billion Euros in August and September. The Italian Govt debt due between July and end 2011 totals 175 billion Euros, whose financing simply will not happen.Italy must find buyers for a staggering 500 billion Euros in new securities by the end of 2013.Italy will break the Euro, period! A massive Gold Rush will come when money flees supposedly safe haven sovereign funds. The big European banks will drop like wrecked pillars.


Check out the Japanese Yen currency breakout. This was forecasted by the Jackass in April as a paradox concept. The Japanese financial institutions, insurance firms, and central bank are selling USTreasury Bonds in order to pay for grand Reconstruction costs. The J-Yen blew through the 130 level this week. It translates to under 76 on the Dollar/Yen index. That prompted Bank of Japan action, but it will prove futile. They called 78 a line in the sand to defend. It was overrun. The Japanese financial firms are selling USTreasurys on a massive scale. As reported in the Hat Trick Letter two months ago, sale of USTBonds is a better alternative than more fiscal deficits or more debt monetization. Instead of prompting more domestic price inflation, they will take their risk with a rising Yen exchange rate, and watch the export damage. Never overlook the rampage of Yen short covering, as the Yen Carry Trade continues to shut down after 20 years of abuse. The USEconomy will import price inflation from Asia, a diverse effect. See Wal-Mart already on this factor. My view is that the next pact (just like in April with the hasty G-7 Meeting) to halt the J-Yen rise will be the guts of GLOBAL QE. The central banks in the next several months will drop their transparency initiative. Hyper monetary inflation is not a message they wish to provide gory details for.


The Strong Dollar Policy of the 1990 decade resulted in a gutting of US industry. Many jobs were sent off-shore. The primary emphasis became the clean industry behind the financial sector, whose size grew markedly, leading up to the 2000 tech telecom bust. Then came the housing bubble then bust, and the deadly aftermath of insolvency that plagues the nation. The Weak Dollar policy engineered in the last two years as part of the Quantitative Easing programs has resulted in more gutting of US industry. The great majority of households and businesses are suffering from a uniformly rising cost structure, but not rising wages. The support of the banker largesse bailouts and USTreasury Bond debt monetization has lifted the entire cost structure. What is missing clearly is a Sound Fair Dollar Policy. But the Gold Standard is considered a third rail with heavy electric current to kill anyone who touches it. The standard will emerge from the ruins that befall theUnited States in its economy, its financial structure, and its political morass.


Gold rises from threat of chaos amidst debt default. Gold rises from continued debasement of the USDollar and other major currencies. Gold rises from the powerful current of price inflation. Gold rises from strong investment demand, side by side with Silver investment demand amidst chronic annual deficits. Gold rises from the increasingly recognized ruin of sovereign bonds. Where are the stooges who shot their mouths off in May?? Do they merely preach as spokesmen for the Syndicate on the financial news channels?? Bring them back to explain where they went wrong. Start with two hacks named Dennis Gartman and Nouriel Roubini.


From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

“I really enjoy your writings. It is scary, really scary, but this is the world we live in. I have followed advice and I am profiting and preserving what I have worked for my entire life.”

(MarkW inManitoba)

“I look forward to your newsletter more than all the rest each month as you seem to have the best grasp of what is going on.”

(ScottN inWashington)

When I initially read your writings, they provoked a wide range of emotions in me from fear and anger to outright laughter. Initially some of your predictions ranged from the ridiculous to impossible. Yet time and again, over the past five years, I have watched with incredulity as they came true. Your analysis contains cogent analysis that benefits from a solid network of private contacts coupled with your scouring of the internet for information.”

(PaulM inMissouri)

“Your analysis is absolutely superior to anything available out there. Like no other publication, yours places a premium on telling the truth and provides a true macro perspective with forecasts that are uncannily accurate. I eagerly await each month’s issues and spend hours reading and studying them. Many times I go back and re-read the most current issue just make sure I did not miss anything the first time!”

(DevM fromVirginia)

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at For personal questions about subscriptions, contact him at


[Investor Cafe]

“Next Week We Will See If Bernanke Is A True Money Printer or Just An Amateur”

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“The whole world is mad” – so says Marc Faber when beginning his latest observations of the markets in the attached Bloomberg TV interview. “Stocks will be dropping 30%, then rallying 20%, and dropping another 30% –  that’s going to be the pattern. And whoever can’t live with that shouldn’t be buying equities at all.” And while the publisher of the Gloom, Boom & Doom report, said “there is a case to be ultrabearish about everything, and markets are going to go lower” he notes that markets are “extremely oversold” and he expects a “snap-back” rally in the U.S. Standard & Poor’s 500 Index of about 40-50 points. That said, Faber sees no new highs in 2011. He concludes that he can already smell QE3, and that the “next week will be important to see if Bernanke is a true money printer or an amateur, and if he is a true money printer he will start printing soon.” We are confident that gold can’t wait to find out the answer.

Marc Faber: “Next Week We Will See If Bernanke Is A True Money Printer Or Just An Amateur”


| Gramercy Images |

LaRouche: Jail Bernanke, Geithner and Obama Now For Massive Theft and Loan Fraud

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July 26, 2011

Lyndon LaRouche today called for the immediate jailing of Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and President Barack Obama for their role in a massive theft of taxpayers money, in the 2008 bailout of Wall Street and London, and the ongoing pledge to continue the bailout of the hopelessly bankrupt European Monetary Union and Wall Street.

LaRouche made the demand after reviewing the July 2011 Government Accountability Office (GAO) audit of the Federal Reserve, which is the first installment of a larger audit to be completed by October of this year. The preliminary audit revealed a trail of criminal action on the part of Bernanke and Geithner. In March 2008, Fed Chairman Bernanke fraudulently invoked an emergency clause in the Federal Reserve Act, claiming that on the basis of “unusual and exigent circumstances,” the Fed could issue emergency loans to nondepository institutions for the first time since the Great Depression. As the result, the Fed issued more than $16 trillion in emergency loans to Wall Street and foreign banks. Furthermore, most of the fraudulent “emergency lending” was outsourced to private contractors, led by JP Morgan Chase, Morgan Stanley and Wells Fargo, in no-bid contracts that totalled $660 million in fees. Numerous officials of the Fed and the outside contractors were given blanket waivers, allowing them to act despite clear conflicts of interest. The Fed audit cited the case of William Dudley, a former chief economist of Goldman Sachs, who is now the Chairman of the New York Federal Reserve, who was given a conflict-of-interest waiver to retain his stocks in AIG and General Electric at a time when he was authorizing hundreds of billions of dollars in fraudulent “emergency” loans to these firms. In another example of the rampant conflict of interest, the CEO of JP Morgan Chase was allowed to remain on the board of directors of the New York Federal Reserve Bank while his firm received $390 billion in loans, and functioned as a major clearinghouse for the entire Federal Reserve emergency loan program.

The GAO audit was conducted under an amendment to the Dodd-Frank bill that was introduced by Sen. Bernie Sanders (I-Vt.), over strenuous objections.

Lyndon LaRouche today demanded that Bernanke, Geithner and President Obama be immediately sent to prison for their role in this fraudulent theft of taxpayer’s money. “There never was an emergency warranting $16 trillion in bailout to Wall Street and foreign banks,” LaRouche declared. “There was always an alternative, which I spelled out clearly in my 2007 Homeowners and Bank Protection Act (HBPA), an alternative thoroughly in keeping with the U.S. Constitution. I called for the immediate reinstatement of the Glass Steagall Act and a freeze on all home foreclosures for the duration of the bankruptcy reorganization of the entire Federal Reserve System. It was a high crime to bail out Wall Street and London’s gambling debts, and Bernanke’s declaration of emergency, unleashing $16 trillion in Fed funds to bailout gambling debts that can never be paid, was a criminal fraud. President Obama has furthered that criminal fraud, by pledging that the U.S. Federal Reserve and Treasury would be the lenders of last resort for the European Monetary Union. The President made that illegal promise as recently as last week, during a telephone conversation with German Chancellor Angela Merkel.”

LaRouche concluded: “There is only one appropriate course of action. Send Bernanke, Geithner and Obama to prison right now. The idea that the American people should be held responsible for bailing out tens of trillions of dollars in fraudulent, worthless, unpayable debt, is unforgivable, and must be punished by criminal prosecution and hard jail time. Public officials elected or appointed to high office in our Federal government must be held accountable for their crimes, or else our entire Constitutional system is worthless. I know the American people are with me, and that there can be no delay. The GAO is the official investigative arm of the U.S. Congress. They have provided their findings in a 239 page audit report. The facts speak for themselves.”

LaRouche: Jail Bernanke, Geithner And Obama Now For Massive Theft And Loan Fraud


The Silver Platter Opportunity

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by Jim Willie

Every few years, a tremendous opportunity arises. The autumn months of 2007 and the autumn months of 2008 offered such an opportunity to buy silver. That $11 silver price is long gone. Many smart folks seized it. Whatever can be said on such silver platters applies almost equally to gold. The silver sprint gains are typically much larger than the gold steady gains. The coming autumn months will feature a gaggle of supposed financial analyst experts backpeddling in their hasty damage control. They have been broadcasting a wide assortment of low level propaganda posing as competent analysis, as they attempt to make the point that the anti-USDollar trade is done, the gold trade is over, the silver trade is spent. They are so wrong. A comedy of clumsy oafs and dolts on the Wall Street payroll awaits the public in a grand chapter on stage. They will struggle to explain the move in silver over $50 on its way to $80 per ounce. They will struggle to explain the move in gold over $1600 and then $1700 per ounce. The mainstream news has been deeply involved in a delicate balancing act. They must report the news, but it is almost all very bullish for the precious metals. A new financial mini-disaster unfolds almost every week. Last two weeks were Greece. The next week might be Portugal. They must report the news, but it paints a picture of a broken monetary system with debased currencies. They must report the news, but it openly provides the gory blow by blow details of ruined sovereign debt. The United States debt situation is Greece times one hundred.

This week, the loquacious jackass will permit some lovely pictures to tell the story. Three graphs adequately tell of a grand opportunity to latch onto the powerful Gold Train with a super-charged Silver Scout. Who were the smart buyers back in September of 2007? The false phony deceptive mainstream message then was that the subprime mortgage problem was contained. That was the first major stumbling block by the hapless witless clueless USFed Chairman Bernanke. He has made not a single correct economic or financial system analytic call. Who were the smart buyers back in October of 2008? The false phony deceptive mainstream message then was that a TARP solution was being put in place to save the US banking system. The solution turned out to be basic largesse to the big US banks, enabling purchase of preferred shares, enabling outsized executive bonuses, and enabling secretive bailouts of banks across the globe. Without the Financial Accounting Standards Board allowance for insolvent banks to continue to dictate the value of their own balance sheets, otherwise known as systemic accounting fraud, the big US banks would have been liquidated. The entire Too Big To Fail principle is actually a battle cry to avoid solutions, to protect the banking elite that was mostly responsible for multiple $trillion bond fraud and mortgage fraud. Without any reservation, it can be said that TBTF means No Solution, no remedy, no recovery, and no attempt at anything remotely resembling a road to economic recovery. In my view, TBTF is the epitaph on the USEconomy and the nameplate on the USTreasury Bond default. So who were the dummies who ignored the opportunity to buy gold and especially silver in September 2007 and October 2008? The majority of them listened and trusted the mainstream news, the Wall Street misdirection, and all their fallacious messages.


A big hat tip to internet contributor RG, whose message was relayed by the Midas Report. Consider verbatim his message, in which he gleefully proclaims to be calling all Rocketeers of the Happy Silver Ship. The goodfellow RG wrote, “The latest Commitment of Traders Report for silver is now screaming out at full volume BUY BUY BUY. In fact, the Commercial Short-Long Ratio that I have already bored you with at great length in recent correspondence is now down at a multi-year super extreme of 1.79. Below is an up-to-date chart of the COT picture. In summary there have only been four other weeks in this whole bull cycle where the ratio has dropped below 1.80, four weeks. The first two weeks of these was the 28th August 2007 and the following week of the 4th September 2007. The second tranche was the 21st October 2008 and the following week 28th October 2008. If you study below both the chart of silver over that period and also the HUI gold mining index, you can see how these extreme lows below 1.80 in the ratio coincided on both occasions very markedly with a bottom in both the silver price and the mining index. On each occasion this proved to be a multi-year opportunity to take positions in both the metal and the precious metal mining stocks. Each time the price of silver rose by some 60% to 90% within a six month period! And the HUI index rose some 90% to 160%. Folks, there is no such thing as a risk-free trade. There is no such thing as a free lunch. And there is no such thing as a one-way bet. However, there are certain times in an investment cycle when an outstanding opportunity presents itself and advantage should be taken. The evidence above shows very clearly the historic correlation between an extreme low below 1.80 on the Commercial Short-Long Ratio and a multi-month bottoming in the price of both silver and the precious metal mining stocks. I have been trading the precious metal sector since 2003 and I would consider this to be one of perhaps four of the most suitable buying opportunities within the last eight years! The man RG makes a compelling argument, without providing the background factors that push the gold & silver prices upward. He simply points out the COT signal and the resulting performance after two significant lows were registered in precious metals prices. Very convincing inded. Thanks to RG also for the fine chart.

Note the green arrow in September 2007, a strong signal when silver was at a $12/oz price. Note the green arrow in October 2008, a strong signal when silver was just above the $9/oz price. The same type of signal is identified with yet another strong signal here & now in July 2011 with silver price at $35-36/oz. It is ready for the next big upleg. This time gold might lead, but as usual silver will follow and run fast and hard making yet more breathtaking gains. The great springtime consolidation is over. The power merchants have spent their ammunition with no lasting reversals, only pause with consolidation. They must manage unending financial crisis without motive toward remedy or solution. The climb has begun. Eager investors have waited and will wait no longer. The Chinese have already begun to re-enter the gold & silver markets armed and loaded with a $3 trillion war chest. Hong Kong exchanges await the precious metals trade. Lawsuits against the tainted SLV and GLD funds are in progress. A little more backfilling might be required. The fundamentals are incredibly powerful and bullish for both precious metals. The global monetary and sovereign debt situation is in ruins, crumbling more with each passing month. If corrupt henchmen are not in charge, then clowns and charlatans are at the USGovt, its finance ministries, the USFed itself, the many regulatory bodies, and so much more.


Consider the silver price move from the two points in the past. The move up by 50% in six months to March 2008 was interrupted by the Wall Street meltdown, followed by the insolvent collapse of the US banking system. Those who bought all the way down from $20 to the bargain price of $9.5 were amply rewarded. The key was to avoid leverage, paper contracts, and the mainstream nonsense spouted daily with errant focus and deceptive view. The sudden banking system insolvency in 2008 was followed by grand orchestrated attacks on the entire anti-USDollar trade. Hardly a hedge fund was not attacked by their own creditors and brokers on Wall Street, incredibly desperate to stay afloat. They found relief in white pixie dust. The US banks collapsed but did not suffer failure. Instead, with FASB aid, coupled with TARP confiscated funds, they continue to limp along as Grand Zombies. The silver price gain since October 2008 has been on the order of 4-fold, almost 300%. This is a stunning gain. The same will be said when silver surpasses the $100 price level. The ruin of major currencies in falsely posed money forms, the parade of USGovt debt, the hapless unfixable condition of the USEconomy, the submerged US households, and the US banks suffering from shadow home inventory coupled with investor lawsuit marred by defiant default in legal challenge, these over-arching factors assure much greater ruin of money. They assure a march to $100 silver. Many naysayers will be silent a year from now.

Ditto for the gold price moves, but the size of the gains are much less. The shape of the chart is very similar though. The springtime correction was not as great, but the gold gain was only half the silver gain. The crumbling global monetary system is the primary push factor for gold, not price inflation. The quality and substance of money is under scrutiny and question. In the next year or more, the price inflation factor will be put more in the forefront. Investors and households will be forced to seek out true inflation hedges, if not hedges against personal ruin.


The future holds many crucial factors to be extremely important. The Greek Govt debt bandaid will prove again to be pathetic and useless, buying a little time, while it aids the big European banks in toxic asset redemption. The bag holder is the Euro Central Bank, going down the tubes with its outsized Southern European sovereign debt and deep losses. The debt contagion will spread to Portugal next, then Spain and Italy. Those two large nations, spared the shame and focus up until now, will deliver two lethal deadly blows in the near future. When these two large columns fall on the European bank offices, the Germans will finally announce their exit plan. The Euro Central Bank just hiked interest rates by 25 basis points to 1.5% in defiance of the USFed. My Jackass forecast made in early 2009 was that the USFed would be dead last in hiking rates, and that call seems correct. The big US banks have troubles in court. They actually believe a mere $8.5 billion can permit them to walk away from well over $1 trillion in bond fraud. They want bond fraud and mortgage contract fraud forgiveness with limits on restitution and penalties. Their executives in New York City and London still enjoy $200 lunches. Not a single settlement deal will stick, not when investors and individuals are winning every single court challenge against the banks. The municipal bond and auction bond fraud deals will follow. The budget battle within the chambers of the USGovt has exposed the polarization, corruption, ineptitude, lack of leadership, and inability to avoid the catastrophe. It is simply too broken to fix. Taxes cannot be raised due to economic fragility. Entitlements cannot be cut due to public outcry and dependence. War cannot end since too profitable to the syndicate. Deficits will pile up regardless of any accords. Whatever progress is made will serve as tiny down payment for a bigger problem just a few months ahead. The next news item to anticipate is flirtation with USTreasury auction failures, against a backdrop of absconded USGovt worker pension funds. It is no wonder Treasury Secy Geithner wants to leave town. The next QE initiative will come in response to an auction failure, as buyers have vanished and primary bond dealers are under extreme distress. The lousy auctions last week were the telling indicator, largely ignored by the blind in the madding crowds. The US states are falling like flies in the summer heat, trapped inside window frames. Their extraordinary measures to avoid default have become almost a tragic comedy. Talk has come of splitting California into two states, of silicon and latin stripes. Illinois and New Jersey are basket cases. Wisconsin is a war zone.

The USEconomy sputters down the hill over the cliff with lost brake systems and no functioning engine. The industrial base has been forfeited in its core. Legitimate income was replaced by debt which defaulted. Then lastly consider the assault on global crude oil supply, the silly futile release from strategic petroleum reserves, following the Gulf of Mexico shutdown. The elite want $150 crude oil. The oil release effect has been forgotten already in just two weeks. With all the positive factors toward gold & silver, by the middle of next year in 2012, one must wonder what motivated people not to invest in precious metals after seeing the strong COT signal once more. The smart ones among us have learned long ago to ignore the Wall Street sell side artisans, to ignore the USGovt wrecking ball managers, to ignore the equity stock analysts whose paper game has turned into a leveraged valuation bonfire. Money faces ruin, as Gold & Silver offer preservation and growth during the greatest transfer of wealth in over a century. Recall the barons who exploited the Great Depression, whose names are part of the elite landscape of banking and politics and philanthropy.


From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

“I look forward to your newsletter more than all the rest each month as you seem to have the best grasp of what is going on.”

(ScottN in Washington)

When I initially read your writings, they provoked a wide range of emotions in me from fear and anger to outright laughter. Initially some of your predictions ranged from the ridiculous to impossible. Yet time and again, over the past five years, I have watched with incredulity as they came true. Your analysis contains cogent analysis that benefits from a solid network of private contacts coupled with your scouring of the internet for information.”

(PaulM in Missouri)

“Your analysis is absolutely superior to anything available out there. Like no other publication, yours places a premium on telling the truth and provides a true macro perspective with forecasts that are uncannily accurate. I eagerly await each month’s issues and spend hours reading and studying them. Many times I go back and re-read the most current issue just make sure I did not miss anything the first time!”

(DevM from Virginia)

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at For personal questions about subscriptions, contact him at


[Contrary Investors Cafe]

The Collapse of Nations All by The Hand of Corrupt Bankers

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by Bob Chapman

June 18 2011: Pensions borrowed (plundered) from heavily, nobody wants QE3, debt used to wage war, Fed Chair Bernanke acts like an elitist, a short term debt limit to deal with, a Greek default could bring the Euro down, a disease of debt, IMF pessimistic.

As far as we can discern the US Treasury thus far has spent and borrowed about $100 billion from the federal pension accounts. Unless there is a vote on the cash debt extension prior to August 2nd, government will probably have borrowed some $250 billion to $300 billion. The Treasury is paying virtually no interest on this debt. Three-month Treasury bills are currently yielding zero percent. Our question is how will the funds be generated to fulfill the Treasury’s obligation to the pension fund? What happens if on August 2nd if legislation is not passed? Does this go on forever? We will keep you apprised on new developments.

The current situation regarding the state of recovery in the US has turned from precarious to dismal and as we predicted a year ago May we will have to be treated to QE3 something no one really wants, but as we said before it is inevitable. The Fed and their controllers, the member bank owners of the Fed, know the present approach doesn’t work and it is only a matter of time, as a result of their policies, when more stimulus will be needed, which in turn leads to more inflation.

Due to the current state of affairs Fed Chairman Bernanke has been making one appearance on TV after another. He gets grilled over and over again and he doesn’t like the public reception at all. He shouldn’t, as more and more observers see that two quantitative easings haven’t worked. They cost at least $3.6 trillion in funds created out of thin air, and all they have done is prolong the agony. The flip side is the policy has caused higher inflation. What else can one expect when deficits astound and the Fed has to buy $1.6 trillion in Treasury bonds. A large percentage of this debt is used to wage perpetual war for perpetual peace. During this process the President has bypassed the Constitution and is deliberately repressing the freedoms of American citizens. There no longer is a separation of powers, but virtual dictatorship bought and paid for by Wall Street and banking.

It should be firmly implanted in your mind that your masters in government and those controlling government brazenly and arrogantly believe that they know better what is good for you, than you do. That is why when they speak to you their answers are dripping with condescension – as if to say, how dare you question what we tell you. Fed Chairman, Mr. Bernanke, is a perfect example of this. He, others and his predecessors have created a false economy based upon perpetual debt and upon money and credit being created out of thin air. Today that is accompanied with zero interest rates, a combination that in time can only bring a falling dollar, inflation and a collapsing economy. Mr. Bernanke appears to believe that an increased supply of money has little or no effect on the comparison between money and the prices of goods. He has to be living in a fairy tale land. Thinking such as this can only end up making a bad economic situation worse.

For more than a month the US has been faced with the task of extending the short-term debt limit. The game that is being played is that one side wants to cut the deficit and the other side does not. In reality both sides do not want to cut anything, or should we say the elitists who control these supposed representatives of the people do not want anything cut. They want the game to continue, so they can continue to loot the economy, an interesting take on this sideshow is if Treasury debt is not increased the situation grinds to a standstill.

Congress, the President and the so-called negotiators want an increase in this short-term debt of $2.4 trillion. That would be a short-term debt limit of $16.7 trillion to carry the debt limit past the next election. The offset of reduced spending is to come over the next ten years. How ridiculous and ludicrous. Do they really expect us to buy this charade?

The most recent strategy by the elitists is to keep Japan’s problems under wraps. Just do not let it into the media, even though some Japanese officials say the island could become uninhabitable. This is also why President Obama went to see Chancellor Merkel in Berlin. He urged her to make a deal to settle the Greek problem. He doesn’t understand that such a deal would make her and her party, the CDU, unelectable for a long time. The German citizens want Greece cut loose. They’ll take the losses and the result is many banks will go under. The President is as well trying to bolster his approval ratings.

The propaganda is flowing to keep Americans from panicking in the face of not recovering, no short-term debt extension, municipal and state failures and Europe starting to collapse. The elitists are in serious trouble due to these problems. The icing on the cake for them is the disaster that the Bilderberg meeting turned into in Switzerland.

US consumer confidence is lower now than it was at the beginning of the credit crisis. That isn’t unexpected when unemployment is rising, retail is falling and the manufacturing numbers out of Chicago and New York are falling steeply.

What professionals for the most part do not seem to understand is that the events of 2006/07 have never been solved. On February 2009 the inflationary depression began. There has now been a double dip since then. What we have witnessed is slight revivals caused by the injection of money and credit. Unemployment is close to the same level it was 2-1/2 to 3 years ago. That phenomenon has been the same in the UK and Europe. In the UK the Bank of England and in Europe the ECB are doing the same thing the Fed is doing and that is buying government debt by creating money and credit out of thin air. The City of London, Wall Street and Frankfurt would have you believe these injections into the systems were working, when in fact all they have done is temporarily bail out Wall Street and the City of London and the European financial centers as well as the governments involved. Nothing has been done to structurally assist the system and put people back to work. What readers have to understand is that what has been done to these economies does not work and the participants know it doesn’t work. Professionals, who are not connected with the elitists, have panicked, because they do not understand what is going on – what is being done to them. The market was ripe to fall, but there is another important factor, Wall Street wants a short-term debt extension with little or no spending cutbacks. The new conservatives say no, we are not going to do that. The market will be taken lower until these representatives see the light. How far are they willing to take the market down, probably to between 8,500 to 10,000 on the Dow, or until Congress gives them what they want. In the meantime they will attack commodities, gold and silver, so no one can profit. Unfortunately for them, that isn’t working this time. They are lower, but come back every time they are artificially pushed down. We believe that is what this market correction is all about. Wall Street will take the market down as far as they have to in order to get what they want. In the meantime the Middle East and Europe are in turmoil and wars abound in a number of Middle Eastern countries. Those on the inside understand that the market is fueled by major deficit spending and the injection of money and credit, as government inflates debt away. The economy and the market for the last two years have not justified stock prices at the level they have maintained during that period. The same is true for the UK and Europe.

Most of the professionals do not understand what is really going on and what is being done to them and their clients. Data is weak and getting weaker as economic statistics continue to fall and point to more problems ahead. This is ample justification for a falling market to aid the deliberate reduction in prices. We must remember that the only bastion of gains for the public left is the market. If it comes down Congress will hear from constituents loud and clear. That is what is supposed to force the issue on passing the short-term debt extension.

As a reaction to this free spending foreign governments have slowed or stopped their purchase of Treasury and Agency bonds leaving the job to the Fed. This problem is going to worsen as we go forward. Now it is not only foreign governments that are slowing purchases, but also American households as well. They are selling more than $1 trillion annually and sales are increasing, as mom, pop and hedge funds dump government paper.

As QE2 nears an end investors are getting emotional. It is called panic. They can expect little from the FOMC next week, Europe can expect the same from the EU meeting the following week. Greece is in a state of revolution and there is no agreement in sight. In fact, the banks, governments, the EU and the IMF cannot agree on anything. The Greeks want a break in terms. If they do not get one it is default.

We predicted Greece would pursue these ends and we told them to do so several times on radio, TV and in the press. A Greek default will not only bring the euro down, it will take down the European banking system and that was our intention from the beginning.

Greece and the other countries in financial and economic trouble should have never been included in the euro zone. They simply were not qualified and the solvent countries not only knew that, but also stood by as these countries cooked the books with the help of JPMorgan, Goldman Sachs and Citigroup. We wrote about it 11 years ago, but no one was listening.

The Greeks after a year of austerity have had enough of it, and are in no mood to give away their country to the bankers. An interest in the telecom company was recently sold to the Germans for $0.30 on the dollar. The Greeks are not going to stand still for anymore such sweetheart deals. When Greece entered the euro zone on January 1, 2001, they were happy to have an austerity program for entry in as much as they had the highest inflation rate in Europe. Their deficits were higher than any other EU country at that time, but the bank and sovereign loans kept coming, because it was political. The EU and the euro zone were to be the template for the new world currency and the new world government. That is why Greece and others were rushed into the euro zone. Then there was the novel and stupid concept of one interest for all, which we said at the time guaranteed disaster, and that is what we have ten years later.

We have recommended the purchase of gold and silver coins, bullion and shares since June 2000, after we got subscribers and others out of the stock market in the second week of April 2000, two weeks after the top. We did the same thing at Dow 14,000 and predicted a bottom at 6,600. The fall was to 6,550. We got subscribers out of the real estate market starting in June of 2005. As you can see we have been on top of things all those years. The call on the destruction of the euro we hope will be our best call yet. The perceived risk from our point of view is that Greece will default and leave the euro to be followed by Ireland and Portugal and later Belgium, Spain and Italy. It will probably take two to three years for this to become reality. Germans do not want the euro and never have wanted it. We believe within three years every country will be back with their own currencies and the dream of one world government for now in Europe will be a dead issue.

The Greek fallout will take down a number of too big to fail European banks, and could cause serious harm to lender countries. These mistakes will not be anything they will do again, anytime soon. We do not believe the Fed will be able to bail out European banks this time. The American public won’t stand for it after having to go to federal appellate court and traverse two years to find out the Fed lied and overstepped its charter by being banker to the world. The problems in the US are similar to those of Europe and it is only a matter of time before the US financially blows up. If Greek yields can go to 17-1/2%, so can yields in all countries in trouble, and there are plenty of them. The taxpayers in the US, UK and Europe are fed up with paying the bill for all of this speculation and mad political escapades. That will soon come to an end. It has too, as bankruptcy seems to be the only option. Three-month Treasury bills yield zero percent, and 2-year bills yield 0.40%, as the 10’s yield 2.91%. There now is only one way for yields to go and that is up. There is a limit to credit creation, but we are not at the juncture as yet. It is probably two years off, perhaps three years.

One of the aspects of the debt disease we haven’t really discussed is the fallout from Greece if and when it goes under. Thirty-three European banks hold large amounts of bonds in the PIIG countries, and they could all go under if the 5 or 6 weak countries go bankrupt. In addition, there are the countries and others who are loaded with these bonds. Like the Fed the ECB has been bailing out banks and it is against the rules, so that could put the officers in legal jeopardy. The very fact that these bankers broke the rules is onerous. The big question is are they headed for jail? If they have made mistakes the taxpayer has to pay the bills. We believe they should be in jail. The bill for exposure to the debt of the 5 financially weak nations could be $625 billion. The ECB has done the same thing the Fed has done and that is bankroll insolvent banks by buying the toxic waste they own and putting it on their balance sheets, which the public get to pay for. It is the socialization of corporate debt, fascist style. Most of the garbage has no value or little value. We always wonder what prices the Fed and the ECB pay for the soiled merchandise. Both refuse to tell us.

It is said the ECB is using 24 to 1 leverage with only $116 billion in capital and reserves. If assets fall 4.25% its entire capital base would be wiped out. That could easily happen if Greece and the other four PIIGS default. We call that ominous because none of the problem countries want to repay the debt to a gaggle of bankers who are nothing but criminals. Our take is the 5 will eventually default and perhaps Belgium as well. That means the ECB is insolvent and the major banks throughout the euro zone are as well, including many central banks. Professionals do not have a clue about how serious this is to the entire world financial system. Perhaps we are wrong. The ECB only has $268 billion in Greek bonds. That is simply a trifle for such big socialist hitters. Yet, it is double their capital base.

A Greek default would put 94% of the direct losses on European creditors and 5% would be shared by US creditors. The other side of the equation is US companies making some 90% of all losses being owed by US writers of default insurance. These US banks have sold $120 billion of credit default swaps to European banks. These are the banks that are too big to fail, which American taxpayers will have to pick up the losses for. Have those US banks hedged their exposure? We do not know, but we do know what they have done is irrational and incompetent. That is unless the US or the Fed had to for some reason guarantee losses. Something similar to what we suspected in the US banks’ sale of toxic waste to these same European banks. If the Fed, the Treasury and the Exchange Stabilization Fund are audited we will find out. These numbers are staggering, but their exposure to $100 billion in Irish debt is equally as onerous.

Such speculation and secret deals have to come to an end if we are going to survive financially. We definitely need to re-pass the Glass-Steagall Act that we fought hard to protect 13 years ago.

We can promise you that if Greece defaults eventually the ECB will be insolvent. We have dreamed of that day for 12 years. The destruction of the ECB and the euro zone, which would in part destroy the Illuminist drive into world government.

We think in order to avoid such a catastrophe the ECB would simply print more money as the Fed has, prolonging the agony. The real bailout mechanism would be France and Germany to put up their gold to save the euro zone and the euro. That is if the US allows Germany to have their gold. We can promise you that if the politicians of these two countries attempted to use their countries gold as collateral or propose its sale they would be lynched.

Like the Fed, the ECB has no credibility left. It is obvious that these two central banks only mission is to save the financial system that owns them. When are people going to smarten up? The ECB and the bankers thought Greece and the Greek people would be a pushover. The bankers thought they would just move in and loot the country. Once the Greeks were educated on the issues they made the proper choices. That is why we spent so much time on radio, TV and in the press there. Now they know the truth and the bankers, the euro and the EU are screwed. The ECB, as a result, is dead meat whether they realize it or not.

World debt is unpayable, especially that of the US, UK and the euro zone. The only solution is collapse. There can be no saving the system. It is only a matter of time and what the catalyst is. It could be Greece.

The International Monetary Fund cut its forecast for U.S. economic growth on Friday and warned Washington and debt-ridden European countries that they are “playing with fire” unless they take immediate steps to reduce their budget deficits. The IMF, in its regular assessment of global economic prospects, said bigger threats to growth had emerged since its previous report in April, citing the euro zone debt crisis and signs of overheating in emerging market economies.

The Washington-based global lender forecast that U.S. gross domestic product would grow a tepid 2.5 percent this year and 2.7 percent in 2012. In its forecast just two months ago, it had expected 2.8 percent and 2.9 percent growth, respectively.

Overall, the IMF slightly lowered its 2011 global growth forecast to 4.3 percent, down from 4.4 percent in April. Its forecast for 2012 growth remained unchanged at 4.5 percent.

The IMF said it was slightly more optimistic about the euro area’s growth prospects this year, but a lack of political leadership in dealing with Europe’s debt crisis and the wrangling over budget in the United States could create major financial volatility in coming months.

“You cannot afford to have a world economy where these important decisions are postponed because you’re really playing with fire,” said Jose Vinals, director of the IMF’s monetary and capital markets department.

“We have now entered very clearly into a new phase of the (global) crisis, which is, I would say, the political phase of the crisis,” he said in an interview in Sao Paulo, where the updates to the IMF’s World Economic Outlook and Global Financial Stability Report were published.

In the United States, the political problems include a fight over raising the legal ceiling on the nation’s debt. A first-ever U.S. default would roil markets and Fitch Ratings said even a “technical” default would jeopardize the country’s AAA rating.

Olivier Blanchard, the fund’s chief economist, told reporters that while the risk of a double-dip recession in the United States is small, growth is unlikely to be fast enough to quickly bring down the 9.1 percent U.S. unemployment rate.

The IMF said the outlook for the U.S. budget deficit this year has improved somewhat due to higher-than-expected revenues. In a separate report, it forecast a deficit of 9.9 percent of GDP — still high, but better than the deficit of 10.8 percent of GDP it foresaw in April.

U.S. securities regulators are weighing civil fraud charges against some credit-rating companies for their role in developing the mortgage-bond deals that helped unleash the financial crisis, according to people familiar with the matter.

The Securities and Exchange Commission’s long-running probe into the deals has widened to the major credit-rating firms, including Standard & Poor’s, the people said.

The leading ratings companies have been criticized by lawmakers as “key enablers” of the financial meltdown, helping to fuel the $1 trillion Wall Street mortgage-securities machine before the boom ended.

But the major ratings firms have largely avoided any regulatory crackdown. [From our point of view they should be charged criminally. Bob] ~from lots of points of of view!!!! ~jude/rockingjude

[Project World Awareness]