What factors are key to gold rising? Perhaps because
the US
financial system is imploding. Perhaps because the USGovt nationalization
demands are accelerating. Perhaps because the threat of default for
USTreasurys is seen as inevitable, even imminent. Perhaps because nitwits who
have highjacked the White House and USMilitary are planning something truly
reckless on the military front in Iran.
Perhaps because the US Federal Reserve is depleted and secretly insolvent,
even as they put word out of an INFINITE BALANCE SHEET. Perhaps because
enormous demand has come in physical gold & silver, despite the low price
set by corrupt US PaperHangers. Perhaps because fear has entered the room
globally.
CONSOLIDATION AMONG THE
DEAD
The financial firms are not just dead, they are corrupt to the core.
Perhaps one or two Wall Street firms will be left standing in a year or more.
Has anyone figured out why foreign pursuit of Wall Street firms is blocked?
Partly because foreigners cannot assess the value of such complicated opaque
assets, intertwined within nests of acid pits. The other reason is that US
banking authorities wish to keep the protected corrupt evidence within the Manhattan
fold. The South Koreans wanted a piece of Lehman Brothers, the best
pieces. But they would have had access to evidence needed eventually in
criminal prosecutions. See the KfW case of €300 million theft, possibly
soon to emerge against Lehman crooks. The German insurance titans wanted a
piece of AIG, the dead insurance giant. But they would have been handed
access to evidence of extreme vulnerability or criminality. Why were officers
at Lehman permitted to remove box after box from their building, when it
should be treated as a crime scene with yellow cordon tape? The answer has to
do with the Fascist Business Model, the merger of state with business, where
the syndicate facilitates fraud in deep collusion.
Why did Morgan Stanley stock go down hard after they
announced early their quarterly earnings? Possibly because nobody believes
they are honest. Morgan Stanley might be kept afloat longer, so as to enable
theft of brokerage account funds. Lehman does not have private stock
accounts, mostly bonds of the acidic type. So Lehman is free to enter the
trash heap of liquidation and the de-bone process for assets. Meat is to be
separated from bone. John Mack of Morgan Stanley had better be careful, as he
appeals for a Chinese role in a merger. That could give the Chinese an
important toe-hold in US
mortgage bond ownership. They are looking to convert mammoth USTBond garbage
paper into hard assets, as a foundation to a possible migration of one
hundred thousand to one million elite Chinese, to California,
Arizona, Las Vegas,
and Florida.
It is called colonization.
The moral of the consolidation story is that the dead are marrying the
dead. The Bank of America merger with Merrill Lynch struck me as hilarious.
Each is dead from insolvency. Each has big counter-party risk from coverage
of failed bonds. So they will now serve as each other’s guarantor
of counter-party risk? Not in this world! Imagine two fat men absent
of musculature tossed overboard a ship. They tell each other, “Stand
on my shoulders and you will be fine for breathing in this vast sea.”
They both sink. The end game for such ludicrous indefensible consolidation is
that the Wall Street fraudulent corporations go down all together. A friend
called last night from the analyst community. He wondered aloud that nobody
could expect the speed of the breakdown. My response was to point out a
strong message mentioned here repeatedly. Since the Bear Stearns bailout
killjob merger by JPMorgan, all Wall Street investment banks are aligned in
similar fashion, with common bond risk and common counter-party risk. So
when one Wall Street firm goes down, several will immediately go down, and
AIG is the umbilical cord to the Main Street economy. This point was
borne out as wickedly true when the Lehman funding bailout failed. The
parties trying to bail them out, offering funds, all found themselves as
subject to writedowns immediately. The funds they offered were not available,
since the loop of price reality reduced the level of the offered funds!!!
That means they are all in the same boat, and if one fails, they all fail. So
the system will desperately attempt to avoid any failing. Thus, the entire
system fails.
As simple citizens, people should be concerned that the US Federal
Reserve and US Dept of Treasury have begun to take actions far outside their
own legal powers. The bailout of AIG was made illegally. The USFed cannot act
to aid non-bank entities. Senator Jim Bunning has drafted Congressional
legislation to limit the USFed action outside the banking realm. The system
is losing control, especially with the law.
The parade of doomed deals continues. Talks have begun for JPMorgan
taking over Washington Mutual. Could the JPMorgan ‘Garbage Can’
be inadequate soon? Bank of America has entered talks to take over Merrill
Lynch, apparently striking a deal. Could BOA serve as the alternative
‘Garbage Can’ next, whose service would be as squire to JPMorgan?
Now Morgan Stanley is in talks to take over Wachovia. The disaster du jour
today seems to be State Street, which was down over 50%. The dominos are
falling. THE MESSAGE IS CLEAR: THE DEAD ARE MARRYING THE DEAD. It is unclear
what music to play at such events. My suggestion is something from “Phantom
of the Opera” would be apt.
A SHORT ‘TOLD YOU
SO’ HERE
The US financial sector became unglued this week. In
last week’s article, the point was made that the financial system had
just that one week to lift the USDollar, to raid private accounts with games
like yanked credit and a raft of paper naked short gold & silver future
contracts. Then next week the brown excrement hits the fan. Over the weekend,
deals were attempted to be forged into the night. Nobody seemed to ask the
question why they were all acting like in an emergency. What emergency? A
condition ordered by whom? My maintained point is that the Bank For Intl
Settlements ordered the US bankers to fix it or flush it!
Big news was expected from my analysis, and my Hat Trick Letter newsletter.
We got it! By the way, AIG was not on the radar for numerous analysts. It was
on my radar, a secondary radar. The big banks are primary for my observation
and monitor. WE ARE WITNESSING A CONCENTRATION OF RISK, OF RUINED
CORPORATIONS, AND OF THEIR ACIDIC BALANCE SHEETS THAT IS SO GREAT THAT THE
RISK OF US FINANCIAL IMPLOSION GROWS BY THE DAY !!!
Blame for speculators continues, as nitwit players within the fraud
centers accuse others of speculation, and threaten prosecution by their
watchdogs on leash. Recent research failed to disclose any collusion or
illegal activity in the crude oil market. That does not stop continued
claims, with hue & cry. These criminals are pathetic, if not consistent.
Just when failed regulation is at the core of the financial crisis, Wall
Street conmen and clueless Congressional legislators argue for more
regulation and control, when the regulators and controllers deserve prison
terms. Instead, prosecute the regulators and controllers, and begin with Alan
Greenspan, and his knights of the Stupid Table at the Federal Reserve.
The financial crisis continues each day. Last Friday the currency
markets smelled what was cited in broad terms as the end of the OPEN WINDOW
for the US banks. The euro currency rose over 220 basis points that Friday,
and the pound sterling rose over 330 basis points. Gold and silver firmed in
price. Something tipped them off, like huge flows of private money out of the
Untied States. This week, AIG and Merrill Lynch and Morgan Stanley dominate
the news. On two different days this week, the NYSE Dow Jones Industrial
index fell over 400 points. Today, when the Dow Jones Index was up 170
points, in a phone call to a trusted friend, we both agreed that the index
would turn negative before the afternoon, and close down. So far, that call
looks correct, as it was minus 100 points before now being up 50 to 60 points.
By the way, important option put stock positions are in place against
Goldman Sachs. They point to a strong likelihood of the GSax stock falling to
80 or 85 imminently. The knock on GSax is that they have lied about their
subprime mortgage exposure, and soon will be forced to come clean. The
‘GS’ stock shares plummeted from 160 in early September, now to
under 100. Justice is served. My guess is their executives will profit
privately from shorting their own stock. Even their 6-month corporate paper
must pay out 20% in bond yield in order to attract funds.
UNIVERSAL MONETARY
INFLATION
OK, so finally the US Federal Reserve has opened the monetary spigots
to England, to Europe, to Switzerland, to Japan, and later to Canada. Not
only is the monetary spigot overflowing inside the Untied States, it is
overflowing from the US to the world. At least to the world affected
(infected) by US control. The total central bank infusions of liquidity
(translated: phony money) is $180 billion in the last several hours alone!!
This huge amount is not enough to quiet the LIBOR or the 2-year USTreasury
swaps. Gold is rising versus the pound sterling, the euro, the yen, and
Canadian Dollar, aka the loonie. This trend is new and powerful. Central
bankers are growing desperate. Their measures to open numerous lending
facilities have not stopped lending constraints. Even commercial paper has
fallen by $52 billion last week.
Clownish anchors and analysts cannot seem to comprehend what is going
on with the central bankers, liquidity injections, market tanking, USDollar
decline, and gold & silver zoom. They wonder why the USDollar would
continue to fall after central bankers reacted responsibly. BECAUSE THE
USTREASURY IS DOOMED FROM INSOLVENT BANKS, EXTREME DEMANDS FROM
NATIONALIZATION, AND RECESSION, AGAINST A BACKDROP OF ENDLESS WAR FOR PRIVATE
SYNDICATE BENEFIT. It is obvious! Gold smells a systemic failure.
FOREIGN CREDITORS UNITE
A hidden initiative has been in progress for the last two weeks.
Foreigners are forced to supply credit for the Untied States. Nations led by
Russia, China, Arabs, and Japanese are meeting to form a formal committee.
They have a common purpose, to maintain and manage massive US$-based debt
securities in danger. Their continued credit support is hampered by three
magnificent factors, each a show stopper. 1) The US banks are insolvent, 2)
The Wall Street bankers export fraudulent bonds, and 3) The USMilitary has
acted with chronic aggression in violation of established contracts,
international treaties, and disrespect for sovereign boundaries. So they
are working to organize a committee of giant USTreasury Bond creditors. They
wish to confront the US debtor with a single voice. Regard this important
step as a prelude to possible default of the USTreasurys. It is
one thing to be in trouble from insolvency. Add corruption from export of
fraud, and you have a bigger problem. Throw in military aggression, complete
with misreporting by a controlled press, and you have a crisis in need of
almost immediate remedy. My argument has been made for four years, that
foreign held US debt creates a threat to national sovereignty. Since when are
the Chinese our friends and allies? They are business partners turned rivals,
now adversaries. Since when are Russians our friends and allies? They are
energy and metals suppliers, betrayed by treaty violations, now adversaries,
even on the military front. Since when are Arabs our friends and allies? For
three decades an uneasy partnership has been in existence, one that has
turned into a blatant protection racket. The endless concocted war on
terrorism is seen by Arabs as a war on Islam.
USTREASURYS AT RISK
Don’t be fooled by the drop in USTBond yields. That is a symptom
of collapse in my view. Yesterday, it was with great disillusion yet
satisfaction that my eyes and ears witnessed an interview by a Standard &
Poor analyst. He said there was no imminent danger of a USTreasury debt
security downgrade, but he did say that if pushed, the S&P would put them
on NEGATIVE WATCH. Interpret that to mean the USTreasurys will soon be
downgraded. Never is a denial of such importance made without coming to fact
and fruition later. Why else is the topic even discussed? This line of
thinking is basic when ripping the BS from US financial propaganda. Notice
the Credit Default Swap price for USTreasury Notes. The price is around 0.24%
for the AAA-rated USGovt debt. Without colossal continued corrupt pressure
against the ratings agencies by the US thugs in financial orifices, the
USGovt debt would have been downgraded immediately with the launch of the
Iraq and Afghan Wars, or years earlier. The Shock & Awe should have been
reflected in USTBond risk.
CHECK OUT THE 1-MONTH
USTBILL YIELD
The US bankers have lost control badly. Even ill-equipped USFed
Chairman Bernanke admitted recently as having lost control. He spoke to
economist David Hale at a Florida financial conference last week. Bernanke
said, “We have lost control. We cannot stabilize the dollar. We
cannot control commodity prices.” The age of central bank control,
ala Soviet Politburo, is coming to an end. GOLD RECOGNIZES IT. Check out the
1-month USTreasury Bill yield. Incredibly, it closed under 0.1% yesterday.
This ultra short-term bond yield testifies to lost control and the advent of
extreme conditions, the prelude to an historical storm. Just what should the
USTreasury maturity yield curve look like before a default? Let me check, and
get back to you. Ooops, no precedent! The TED Spread (difference between
USTreasury and EuroDollar yield) has jumped up, another signal of banking
turmoil. In recent days, the tight grip control of certain commodities has
been lost by the Evil Ones. Even Morgan Stanley has been forced to close down
its trading desks at the Platts Window, where they trade crude oil. The
USCongress is equally lost. Today, a quote came from Senate Majority Leader
Harry Reid. They are unlikely to pass new legislation to overhaul financial
regulations this year. He said, “No one knows what to do. We are in new
territory, this is a different game. [Neither Federal Reserve Chairman Ben
Bernanke nor Treasury Secretary Henry Paulson] know what to do, but they are
trying to come up with ideas.” Gee! Maybe the chief architects of
this grand failure have a solution? They should be ignored then imprisoned.
Perhaps they are seeking final opportunities to steal, raid, and pilfer from
the public till during the final months of this Administration.
The 2-year USTBill yield has also plummeted, but not as drastically.
It is now far below the official USFed Fed Funds 2.0% rate. Some thought the
USFed might cut rates in an act of desperation this week, me included. My
guess is for two reasons, why they did not. 1) They did not want to project
an impression of lost control, not after the Fannie Mae & Freddie Mac
bailout, not after the failed Lehman Brothers deal, not after the shotgun
wedding for Bank of America & Merrill Lynch, not after the secret eloped
marriage in the works for JPMorgan & Washington Mutual, not after the merger
of cadavers planned between Morgan Stanley & Wachovia. And 2) the Bank
For Intl Settlements in Switzerland might have forbidden a USFed rate cut. My
maintained position is firm, that the BIS ordered the US to fix it or flush
it! Let’s watch to see if the 2-year TBill yield continues lower, a
signal of even more lost control.
THE USELESS INFLATION VS
DEFLATION DEBATE
My greatest impatience is shown for those who
attempt to argue whether inflation or deflation is winning, and where we
stand. Such pursuits of chasing one’s tail serves to illuminate nothing
and to waste time. We have both, will continue to have both, as both
intensify. The key is for monetary inflation to enter the mainstream, which
is underway finally. One can benefit little from putting the unique crisis
into convenient cans for purposes of organization. This is not simple, and
people should not attempt to simplify the ongoing collapse of the Great
American Experiment in Counterfeit Monetary Systems. To be sure, we have gone
past a tipping point. The move to flood the monetary pools of phony money
beyond Wall Street is the big event. To be sure, the bankruptcies and deep
insolvent events are accelerating. To be sure, the desperation for attempted
mergers is palpable. To be sure, central bank activity with lending,
swapping, and even accepting stock equity as collateral is a sign of total
absence of any safeguard toward respect of moral hazard.
Looking for inflation vs deflation labels when the failure and default
of USTBonds and receivership occur TOTALLY MISSES WHAT IS GOING ON. This is a
death event for the US finances, US banking system, USEconomy structure, and
USTreasurys, all rolled together like a gigantic vortex hurricane. Looking
for (in) vs (de)flation in this environment is like observing color schemes
on walking dead as they attempt to merge at a ceremony. They are of DEAD
PARTIES ATTEMPTING TO SHARE COUNTER-PARTY RISK. Looking for (in) vs
(de)flation when dead partners are marrying is like DECIDING WHETHER A
HONEYMOON SHOULD TAKE PLACE IN THE CARIBBEAN OR FRENCH COAST. They both go to
the recycling cemetery instead. The place to be now is in gold and silver,
preferably silver since central banks own none and because silver has strong
industrial demand. Besides, a silver default of sorts has been in effect for
several months.
It is with pleasure to attend again the upcoming Cambridge House
conference in Toronto on October 4 and 5. Thankfully, my Frequent Flyer miles
were used to cover the airfare from Costa Rica, where the rainy season is
coming close to an end. POR FIN! Is that inflationary or deflationary? With
absolute certainty, one can say WHO CARES?
Buy gold, buy silver, do NOT use borrowed money or leverage, and rest
comfortably at night, since it cannot be taken from you. Then patiently wait
for gravity to work, for night to follow day, for evil to be unmasked, for
foreign creditors to arrive with hatchets.
THE HAT TRICK LETTER
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Jim Willie CB
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