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History is being
made. The American public has never been so nervous, perhaps fearful of
something dreadful and imminent. The global monetary system is crumbling. The
typical stimulus has failed to jumpstart the USEconomy. The 20 months of near
0% short-term official interest rate has failed to revive the moribund US
housing market. The phony FASB accounting rules has failed to accomplish
anything except a stay of execution for the big US
banks, which do not lend much. In fact, the US
banks are largely dead entities showing enough life for to receive USGovt
largesse aid. Witness the failure of the US
financial sector. Witness the climax chapter of failure for the Fascist
Business Model. The US
banker brain trust, which possesses only a modicum of economic wisdom,
analytic prowess, or foresight, finds itself in a desperate corner. Their
talk of an Exit Strategy in the last several months was summarily dismissed
as nonsense, propaganda, and wishful thinking by the Jackass here on a
consistent irrefutable basis. The US Federal Reserve is ready to embark
on the second round of Quantitative Easing. The monetization of US$-based
bonds of many types will be done on a second initiative, on cue. Here is the
irony, the stupidity, the insanity, the recklessness, the tragedy. What
failed, they will do again, maybe even bigger! At risk is global confidence
and trust, hardly a zero cost item.
The urgency of
the QE2 Launch will be made quite clear by the Hologram Leaders occupying
positions of power, after they digest the latest housing data. The July
existing housing sales fell by 27.2% in a single month. The July new home
sales fell by 12.4% in concert. Few analysts operating with USGovt service
badges anticipated that the empty-headed home buyer credit of $8000 would rob
forward sales and leave an autumn vacuum in home demand. It did. Check out
the silver price, which touched $19 today on Wednesday. And at $1240, the
gold price is poised to make new highs any day. My near-term targets are
$23.5 for silver and $1300 for gold. Energy prices are soft but precious
metals prices are strong. Think heterogeneity!
The QE2 is pure
cancer within the monetary body. Foreign creditors are walking away, making
distance from the USTreasurys, and especially the USAgency Mortgage Bonds.
The USFed and USDept Treasury are therefore being isolated. Their USTreasury
auctions are often disguised failures, but with the benefit of a falling US
stock market, the bond demand has risen. The cancer of QE2 cannot be
emphasized enough. My forecast a few months ago was for NO Exit
Strategy implemented. The USFed balance sheet will NOT be reduced.
Interest rates will NOT be permitted higher. My forecast was for an
embarrassing About-Face in policy, and a hasty desperate announcement and
implementation of a powerful new round of Quantitative Easing. We are seeing
it unfold, exactly as forecasted. In fact, my call is for ZIRP and QE, the
cancerous twins of Zero Interest Rate Policy and its Printing Pre$$ twin, to
become permanent residents of the White House and USFed, an incredible
pox, blemish, and badge of shame to the nation. The twins scream rot and ruin.
These shills and
carnival barker policy makers need a fresh new education. The two most
important indicators in my book are continued home foreclosures and renewed
rising jobless claims. The rest of the forecasting challenge is remarkably
easy. The nitwit barkers prefer to focus on inflation expectorations,
encouraged by the wondrous USTBond rally. What nitwits, unable to read simple
signals! What charlatans, pretenders to the thrones! What heretics, ignorant
of economic principles! See the August special report that criticizes,
exposes, and castrates the clueless cast of American economists. The
latest revelation was the $120k payment to Frederic Mishkin for writing
about the "Financial Stability In Iceland"
in March 2006 whose title was changed to "Financial Instability In Iceland
after Iceland
collapsed. Mishkin did no research, almost admitted as much in an ugly
exposure to these clowns operating in economist suits. See the Zero Hedge
video (CLICK HERE). My contention is that Mishkin has no
economic skills, and does not understand what money is, just like many on the
Federal Reserve Board, whose misguided brain stems extend to most regional
governors. Mishkin appears in this instance to be a bonafide whore. One
exception might be Hoenig, who has warned of the perils of new monetary
expansion. He recently said, "I wish free money was really free, and
that there was a painless way to move from severe recession and high leverage
to robust and sustainable economic growth, but there is no shortcut."
Hoenig of the Kansas City Fed has emerged as an ideological rival to
Bernanke. Hoenig might soon need to be ousted for lack of patriotism and
obedience to the fascist throng.
Let me make a
paradoxical point: THE UNITED STATES WILL BEGIN A RECOVERY WHEN THE TOO BIG
TO FAIL BANKS ARE PLOWED UNDER. They are blocking remedy and restructure.
They are resisting liquidation of badly impaired assets. They do not lend
money, as their credit engines are broken, since they are dead entities that
occupy space in the US
financial sector. They cast large long shadows. Their removal from the scene
of the crime would surely light a fuse of credit derivative accidents, the
likes of which the world has never seen. Let's try THAT experiment!! Why the
leading economists cannot see that credit is down since the big banks are
dead is beyond me. One might regard the conclusion is too ugly to
contemplate. The entire US
financial chapter since 1996, when Greenspan proclaimed irrational exuberance
had taken hold of the land, has been ugly, perverse, and ruinous. The nation
had its chance to right the US Ship of Financial State in 1987, and instead
chose to produce, nurture, encourage, justify, and bless as good a sequence
of asset bubbles, while the industrial base was dispatched to Asia.
The USEconomy thus replaced legitimate income with grandiose debt sources,
followed by national insolvency.
GOLD & SILVER
DIVERGE FROM COMMODITIES
The impact from
the cancer and desperation of QE2, the next undermine of the USDollar (and
other major currencies), can be seen in the price of Gold. Better yet, watch
the price of silver, whose price movement has actually been leading gold
upward. This week, for the first time in perhaps a decade, silver defied
the industrial metals and economically dependent energy sector. Silver is
money. Both copper and crude oil fell in price, but silver rose strongly. By
the day's end, gold was pulled up by silver. And this happened on a week
that features options expiration, which usually sees a strong naked short
pounce by JPMorgan, of course to make America strong and liberty
exportable. Witness the beginning of outright visible lost control by the
syndicate.
Watch the
Gold/Oil ratio, which is poised to rise noticeably. Gold is the commodity
king, since money. The galloping recession will take down the crude oil
price, as demand falls. The natural gas price fell 3% just today on
Wednesday. Hedging against the USDollar risk aside, the energy prices have
been weak. By contrast, the gold price has risen from direct demand in
response to monetary system risk and lost confidence in that monetary system.
The global revolt against the USDollar continues quietly. The government
bonds are gradually being considered trash backed by yet more bad paper
dispensed by government approved printing houses. My analysis has
long pointed to the advantages of silver over gold. Gold fights the political
wars, but silver rides in on a shiny white glowing horse to win most gains.
The supply factors favor silver. The demand factors favor silver. The
shortage is acute for silver.
Again, basic
economic thought process not within the mental caverns of US economists. The
desperate action to launch QE2 will be quite evident in the coming weeks. It
will even become a national priority. The bankers and politicians will rush
to destroy whatever credibility remains in the USDollar, or any fiat paper
currency. The challenge to banking leaders will be to conceal their
desperation and panic. They have had no options or alternatives for
almost two years, now painfully evident. The impact of the launch will be extremely
damaging to the prestige of the USFed in general and Chairman Bernanke in
particular. He has not understood much of any events, surely has proffered a
string of errant views and obtuse forecasts. Witness the discredit of the
central bank franchise system. Fiat paper money is dissolving before our
eyes. Notice the assaults on sovereign debt in Europe, a trend which will hit
the US shores, all in time. Economists do not expect it, since the American
bankers possess the Printing Pre$$. They will be blindsided by Gold, which
pulls the carpet from under the US$-based foundation inside its very
structure. The Gold bull market will outlast the USTreasury Bond bubble
run. The key word to be heard in the next few months will be
CONFIDENCE, as in the absence of it when viewing the US financial helm.
The Powerz in
charge will choose inflation over any combination of reform, restructure, and
replacement of the helm. A recovery could have possibly
been in our grasp, maybe in the future after much pain from adjustment.
Unfortunately for the bankers in unchallenged power, the respect, prestige,
and faith in the US Federal Reserve will fade like a sea mist after the QE
launch. Its christening will be done in deep shame with a bottle of acid. The
level of respect is approaching rock bottom, the lowest in decades. Even Alan
Greenspan expects slippage and sputters as the housing market resumes its
powerful decline. The next recession for the USEconomy could very easily
result in a USTreasury default. Scenarios for precisely such a default are
mapped out in the August Hat Trick Letter.
IMMINENT GOLD & SILVER PRICE
MOVES
Gold & Silver
are entering the most favorable season of the year, autumn. Big gains should
be expected. Signals are omnipresent for substantial price gains. Shortages
exist and are profound. Demand is on the strong rise on a global basis. Lost
confidence and faith in the fiat paper system is slowly vanishing. It
would be nice to see the investment community add to positions and put on new
positions before the breakout, not afterwards, and be more successful. The
return of the USEconomic recession and the simultaneous QE2 Launch will mark
a major turning point for gold & silver. Fear is on the rise. The
precious metals offer an alternative to conventional nutball strategies, a
successful one. Check out the track record for gold, the best asset in the
1990 decade. That fact is not mentioned or cited much by the financial press
networks. Their
sponsors object.
MANY SIDES OF
MONETARY CANCER
Cancer is a
strong word. It conjures up images of internal broken functions, nasty
growths, blockage of organs, twisted lives, pain, and death. Yes, that sounds
right for describing the USDollar and its flagship the USTreasury Bond, with
the accompanying destroyer in Fannie Mae. The word cancer fits perfectly. It
has brought a removal of US industry. It has brought a wave of bond fraud
centered upon mortgages. It has brought endless war, paid by foreigners. It
has brought insolvency to US households. It has brought insolvency to the US
banks. It has brought a tumor of REO homes seized by foreclosures and put the
US bank balance sheets. It has brought a bloated wrecked USFed balance sheet.
It has brought chronic $1.5 trillion USGovt deficits. It has brought a mass
of Food Stamp recipients. It has brought Wall Street control of the USGovt
finance ministries. It has brought a Black of Hole of tainted money. It has
brought diverse toxic bonds. It has brought blockage of any independent audit
of the USFed assets or activity. Yes, that qualifies as the many sides of
cancer.
Consider the next
new cancerous faces of the Quantitative Easing. They new policies and
features will be so ugly as to reshape the entire American landscape. They
will do to the US financial and economic pastures what the Gulf of Mexico oil
volcano did to the Southern Shores. These concepts are covered in the August
issue of the Hat Trick Letter in greater detail. They are bizarre complicated
concepts. They strike dead the heart of US capitalism, and offer a unique
brand of fascism and collectivism as a result, with an overtone of
desperation. They paint a path toward systemic failure. At the end of that
bitter road and death march is the USTreasury Default event, forecasted by
the Jackass in September 2008. It earned ridicule, but soon will earn
respect, like several other important past forecasts. The path was clear
almost two years ago that the US banking system died that month. The obituary
cited Lehman Brothers, Fannie Mae, and American Intl Group as pall bearers.
The banking system death is undeniable to the enlightened. It will soon be
clear enough to the masses after the next leg down in housing.
1) Stiglitz
urges another USGovt stimulus program. The last one was hollow. The
next should be lackluster and meager, but maybe more on the mark. True reform
and broad liquidations are pre-requisites, as they will not be done for
preparing the economic topsoil. Bankers will block it. Expect USGovt
"beans & rice" handouts rather than conditions for job
creation. They should really try capital expenditure immediate writeoffs and
job creation tax credits instead, with a slew of obtrusive federal
regulations swept aside. Too much capitalist wisdom with such ideas. More
ineffective wasteful federal programs and misdirected altering of parameters
on the control panel will only aggravate the effect of the QE2 Launch, a
typical preface.
2) Former
Treasury Secy Rubin argues against a large scale stimulus plan, and instead
for deficit reduction. This economic Rasputin presided over the removal,
lease, and sales of the national gold treasury. He led the deregulation
movement that opened the door to profound bond fraud. He sat on the Citigroup
board when it expanded recklessly into many domains, resulting in the
wreckage of the corporation. That qualified him to serve as mentor and chief
puppeteer to Geithner and Summers, who run the USDept Treasury and White
House Council of Economic Advisors. Clearly, Rubin has a different agenda. A
constant state of sluggishness might work best for Rubin. He advocates
deficit reduction as his main priority, and proclaims a goal of restoring
confidence. The nation is way past deficit reduction concepts, but should
focus rather on collapse avoidance. Confidence can be restored, and better
economic performance enabled, only if the current Elite banks are plowed
under, much of their impaired assets are liquidated, Goldman Sachs is removed
from control of the USDollar altogether, and stern prosecution of colossal
criminal bond fraud occurs. That would produce confidence.
3) QE2 will be
more cancerous than QE1, as full dependence upon monetary inflation will
come. The official interest rate cannot be reduced. QE2 will produce
three major effects, all ruinous. All debt is subject to coverage by new
money, all to be eligible. Next comes hyper-inflation, as confidence in all
things paper evaporates and a great tipping point is breached. The arrival of
QE2 will produce three major effects. A) The reliance upon new money growth
to monetize rapidly growing debt in the US financial system will undermine
all things US$-related. The continued artificial support of the USTreasury
Bonds will transfer risk to the USDollar. B) Whatever respect and prestige in
the USFed will vanish quickly. The bravado of helicopter drops will seen
hollow, amateurish, and invite mockery in the open among respected brain
trust. C) The smartest people in the room will begin to declare that the
current global monetary system is irreparably broken, and that past and
future response, even if amplified, will be doomed to fail. We are on the doorstep
of hyper-inflation.
4) The FDIC
will soon launch what could grow into a vast securitization initiative.
It is better described as the QE2 from the rear guard, not well noticed.
Since broke, the FDIC has resorted to selling packaged credit assets from
failed banks in order to raise cash, new securities with USGovt guarantees.
Apparently, viable banks are harder to find for buying much of any assets.
The FDIC two years ago served as an investment banker harlot for Wall Street
acquisitions. Then it became a matchmaker, finally a liquidator, now a bond
issuer. All the while the Deposit Insurance Fund runs more negative each
month. Be sure that the Printing Pre$$ of monetization is behind the scheme,
no longer well disguised, since the FDIC is so closely aligned with the other
engineers of bond management within the USGovt (see Fannie Mae). The FDIC bond
securities are more monetization.
5) Mortgage
relief might be the destination for the next mammoth monetary expansion.
The StLouis Fed was permitted to leak the story. James Bullard of the St
Louis Fed wrote a breif white paper entitled "Seven Faces of The
Peril" in he urged the USFed should immediately restart the purchase
of USTreasurys if the deflation scenario takes deeper root, as in QE2. He
correctly concludes the high risk of a Japanese-style deflationary outcome in
the United States. Next came the speculation by both Morgan Stanley and
Merrill Lynch in their concurrent release of analyst reports. They surmised
that Fannie Mae and the Federal Housing Admin might be preparing an imminent
launch of broad sweeping initiative. The proposed plan would feature an
instant automatic refinance program for troubled mortgage loans. It would
take millions of borrowers to current market rates overnight. It would stop
short of reducing the loan balances of under-water mortgages, those suffering
negative equity. In the process, $46 billion of consumer savings per year
would be created, from basic reduction of monthly payments.
6) The loan
modification pathways will possibly be expanded, maybe meaningfully.
Operations have expanded whereby fraudulent home loans have been warehoused
in Fannie Mae, under the USGovt roof and aegis for two years. Even the
bankers might give pressure to revamp home loans in a skein of modification
plans, in reaction to widespread non-payment from strategic default. A major
challenge must be dealt with. They must avoid the close examination of
massive mortgage bond fraud for at least $2 trillion on home loans. Such
scrutiny might uncover a multi-$trillion Fannie Mae clearinghouse of fraud
that links several major fraud schemes. Recall that on Christmas Eve 2009,
the Treasury Department waived a $400 billion limit on financial assistance
to the failed fat duo Fannie & Freddie, pledging an unlimited credit
line. The sewage treatment plant will surely devise more clever projects to
handle the toxic waste, since very large liquidity plumbing is promised.
7) QE2 will
feature Fannie Mae rental homes, a new vibrant toxic business. Except a
major blemish will build further, as defiant non-payment of mortgages will
flourish, from strategic voluntary defaults. Look for Fannie Mae to gather in
hundreds of thousands, even millions of broken mortgages. They will attempt
to build a business subsidiary of the most queer type. An ulterior motive is
to bail out big banks but not reveal doing so. A desperation is sinking in
with USGovt proposals, perhaps in direct response to open fear of civil
disobedience. Consider that 250 thousand Bank of America mortgage holders are
paying nothing on self-driven strike actions. My forecast made in 2004 and
2005 was for the advent of a bizarre perverse Fannie Home Rental program. Now
we see people forfeit title to their homes, lose their equity, but remain in
the same home as renters making small monthly payments. The housing market
would prevent the dumping of properties on an already bloated housing market.
The Fannie Mae investors could have earned a dividend from rent payments,
except that FNM stock issues were de-listed. Homeowners are increasingly not
making monthly payments, daring the bank to foreclose on the property,
challenging them to produce the property title. In many cases, the banks
cannot produce the title, because the MERS database is a nightmare of spun spaghetti.
The courts have ruled MERS has no legal standing in any foreclosure
displacement of occupants. Rumors swirl with gathering strength and
persistence. The USGovt might soon take over all failing home mortgages,
and have their titles signed over to the USGovt. Then people would lease
the properties to the people who occupy them according to pay scales, in
collectivist fashion consistent with the presidential ideology.
Jim Willie CB
Home
: Golden
Jackass website
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