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In recent public articles, the
USTreasury Bond bubble was described, supported by Interest Rate Swaps to
produce artificial demand and to create an illusion of a flight to safety in toxic
USGovt Bonds. A Black Hole phenomenon was described, which will suck the
capital life out of most assets, celebrate the USTBond rally, and accelerate
the recession in the USEconomy. Numerous endgame signals were described, all
alarming in their own right, not a single signal being from the realm of
normalcy. Extreme danger is the warning. This week consider just a handful of
danger signposts, all screaming loudly of systemic breakdown. They are all
deeply disturbing signposts that complement the endgame signals with a
scattered pox of symptoms on the landscape. The Jackass is firm and rigid in
maintaining that ugly forecast made in late 2008, dismissed by many as
foolish and off the mark. No longer. The USGovt debt default in the form of a
massive forcible debt restructure is being considered by creditors in charge.
The USEconomy is imploding, and Money Velocity is falling. The true
protection in both an inflationary spiral and a deflationary spiral is GOLD.
The current storm center has a mix of both, a fast rise in the monetary
expansion coupled with a painful decline in the value of all things paper.
Never overlook that home prices are a consequence of paper games, not the
hard asset ploy. The USDollar is being pushed off its coveted throne as
global reserve currency. A system based upon GOLD is coming, designed to
manage trade settlement. The paper kings hope to impose a new and better
paper bond vehicle, and a new and better paper banking depot, but they are
failing miserably. They are on the extreme defensive. Their captains are
cutting deals to stay out of prison. Justice might actually be served. Watch
the LIBOR lawsuits, which will be a different kind of mushroom cloud.
USECONOMY IN GALLOPING RECESSION
Forget what the political
leadership claims on a USEconomic recovery. Reality could not be farther from
their claims, as their credibility is strained. Their deception and wishful
thinking put to public speeches could not have been more incorrect. The
domestic gasoline volume sales from refiners has fallen a ripe 50% since the
2007 peak. Notice that Quantitative Easing, the hyper monetary inflation
designed to purchase USTreasury Bonds and USAgency Bonds that almost no
global creditor wishes to buy, did not result in stimulus. Instead as my
claim has been, it results in capital destruction from rising costs,
vanishing profit margins, and retired equipment. Much more stimulus will have
to come, much more bond purchase, much bigger federal deficits, much more
currency debasement. The effect on the GOLD price will be huge, but only
after the blockades are removed that interfere with free markets.
LABOR MARKET IN TATTERS
The USEconomy requires around 140
thousand jobs to stay neutral, as population growth is absorbed. This
important point was often stated back in 2004 and 2005 and 2006. But it is
not made any longer, since the goal is to achieve 100k to 200k jobs. The
Non-Farm Jobs report is widely regarded to be a farce display, with a
powerful fudge factor that can bring about almost any final figure desired.
The Birth-Death Model is a travesty. Let this statistical analyst assure that
an auto-regressive integrated moving average model of 11th order is nonsense
in the Time Series arena of modeling artistry. The BDModel is designed to
track small business job growth, since the NFPayroll survey does not. Instead
the BDModel is used as a fudge factor with no bearing whatsoever on the
reality of small business climate. The Natl Federal of Independent Businesses
has its own measures, and in the last three years they have been uniformly
negative. Yet the BDModel continues to add jobs to the official estimate.
MONTH
|
ORIGINAL
|
REVISED
|
BDMODEL
|
NET
|
March
|
+153k
|
+133k
|
+90k
|
+43k
|
April
|
+115k
|
+68k
|
+206k
|
minus 138k
|
May
|
+69k
|
+77k
|
+204k
|
minus 127k
|
june
|
+80k
|
|
+124k
|
minus 44k
|
The table displays the trend in
revision downward, and removes the fallacious fabricated fiction that is the
Birth-Death Model fudge factor. The USGovt Bureau of Labor Statistics could not
tolerate posting a negative job growth number in consecutive months, to
reflect the true condition of the reeling USEconomy. So the fudge factor
enters the equation. Blatant deception, kind of like constantly updating the
seasonal factor adjustments in monthly statistics, another common gimmick.
MONEY SUPPLY CORRELATION
The correlation between the Gold
price and USGovt outstanding debt had been rather tight, like in a death
match wrestling. Then in 2011, the masters of the banking universe decided to
double down on their uneconomic naked short positions for Gold, and worse.
When the USFed or Euro Central Bank have taken bold steps that show both
desperation and a broken financial system, the hidden actions have been
intense since late 2011 and into year 2012. The massive Dollar Swap Facility
dispensed over $3 trillion over European banks. The entire QE dispensed more
than $2.5 trillion over US banks. The Operation Twist embarked on a new
approach that involved more secretive monetary expansion, but also
simultaneous with much higher volume cartel short positions for Gold futures
contracts. Correlation like what is shown between the Gold Price and
outstanding debt at the USTreasury are rare indeed outside the scientific
laboratory. Such is the power evident in hyper monetary inflation and the
elicited response.
The bank cartel has taken
extraordinary measures to hold down the Gold price during its Weimar fire
drills that scream of systemic failure. At every Bernanke speech, at every
FOMC minutes release, at every QE recent release, at every huge Dollar Swap
Facility tap (like Jack Daniels whisky), the naked short patrol comes out to
ambush the Gold price in increasingly bold fashion without any concern of
being noticed. It is all illegal, in a world of banker activity far removed
from proper. Expect the correlation to pick up once again, in big jumps back
over 70%. The Gold price will make huge strides before long, to reflect the
growth in outstanding USGovt debt and the growth in the USDollar monetary
base. The two are connected by a bond honored by Mother Nature of Economics.
USDOLLAR REBELLION
The rebellion is based in barter,
with the device the currency swap facility that enables trade. Another
important China swap facility was put to contract in ink, a renewal with
Brazil. These two large nations originally signed a swap deal in 2008, just
renewed. Brazil is more than twice the size of any Latin American nation,
only recently awakening. The USDollar epitaph is being etched within global
trade circles on an imperial headstone. The trap is closing, as trade
exclusive of the USDollar grows like a network, a veritable latticework that
spans the globe. The USDollar is gradually being dethroned as the world's
reserve currency, the push coming from a growing list of nations that hardly
qualify as Lilliputians. No longer is the so-called Dollar Exclusion Zone
confined to Asia. By signing a renewal deal on currency swap, Brazil has
promoted the renminbi (people's money) as a reserve currency by becoming the
biggest economy onboard with the barter swap table. Brazil and China
announced the BRL 60 billion (=US$29B) local currency swap after a bilateral
meeting between the two leaders. The Brazilian Real and the Chinese Yuan will
enjoy a handshake to enable trade, all outside the fractured tainted US$
realm.
The message is clear. Trade
dictates banking practices and reserves management, since the banks are lined
up to make payment on vast trade contracts. China is not only fertilizing
the global landscape for the Yuan to become a reserve currency, it is locking
out the tired currency soon to be de-throned. The United States exports bonds
(usually either fraudridden or bubbly), military hardware (full spectrum
dominance, exhaustion, backfire), and food products (some genetically
modified). While China dispatches trade representatives and dealmakers across
the world, the USGovt dispatches tax collectors from the USDept Treasury,
along with security agents whose mission is better understood by Al Capone in
nefarious activity. Hint: it resembles talcum powder but has a very different
effect on the human body. Without benefit of laundering facilities, the US
banks would have collapsed a few years ago.
Consider the recent headlines
just in the last few months:
- "World's
Second (China) and Third Largest (Japan) Economies to Bypass Dollar,
Engage in Direct Currency Trade"
- "China
and Russia Drop Dollar in Bilateral Trade"
- "China
and Iran to Bypass Dollar, Plan Oil Barter System"
- "India
and Japan sign new $15 billion currency Swap Agreement"
- "Iran
& Russia Replace Dollar with Rial & Ruble in Trade"
- "India
Joins Asian Dollar Exclusion Zone, Will Transact with Iran in Rupees."
- "China
and Chile to Establish Strategic Partnership, Launch Currency Swap and
Settle in Renminbi"
CENTRAL BANK ZERO WALL OF SHAME
On July 5th, the Euro Central
Bank showed both failure and desperation. They cut the official rate to 0.75%
to join the other failures. The Bank of England stayed put at 0.50% and the
USFed is stuck firmly at 0.25%, while the Bank of Japan has been at or near
0% for almost 20 years. The clowns sitting as central bank heads talk of Exit
Strategy, when they should instead talk about resignation, post mortems on
the dead economies and banking system they reign over with arrogance and rain
over with toxic liquidity. They cannot pull back the reins on the powerful
team of horses going down the hill. They have exhausted their entire arsenal
of weapons, yet remain boastful about their vigor and strength. They are
impotent. Their central bank franchise system is an utter failure. They have
morphed into facilitators to the Weimar Engineering Corp, managing over the
worthless paper Printing Pre$$ Publications, the toxic distribution Dollar
Swap Facility Warehouse, the Budget Austerity poison pill medicine cabinet,
and the Financial Engineering suicide toolkit. Their latest is complicity
with the LIBOR price rigging fraud. The LIBOR field agents like Barclays
and JPMorgan and Deutsche Bank are mere executors of the rigging, in order to
maintain a matched rate with the artificial near 0% benchmark dictated by the
central banks themselves. The Bank of England and USFed will be dragged into
the lawsuits, where they will claim executive privilege.
LIBOR LAWSUITS
The attorneys and aggrieved
victims are lined up, as perhaps over 900 thousand lawsuits will come. That
is how many adjustable rate mortgages were arranged from 2005 to 2009, with
underwriting banks serving the complaints. The army of US legal beagles is on
the job. The lost income to the victims is obvious. The lawsuits will
eventually target the central banks. The fraud reaches into the $trillions
easily, when all the derivatives are factored in. Think many $trillions
in volume times small percentages skimmed illegally. The mainstream press
carefully avoids such topics. Do a GOOGLE search of "municipal lawsuits
LIBOR" to produce 21.1 million hits. This story will be gathering momentum
for several months, and be in the headlines a year from now.
ALLOCATED GOLD ACCOUNTS
The sequence of financial
scandals must be noted. It is difficult to discern exactly the forces behind
the sequence of cases, but the chain of dominos on effects is intense and
blatant. This chain will continue until a systemic collapse is visible to
expert and commoner alike. The LIBOR scandal is the latest link in the chain.
The corruption channel is full. The exposure is glaring. The fan to
distribute shame is revved up. The scandal is widening. The pressure is
mounting. The bankers have never been on the defensive this much for alleged
corruption, accused corruption, and admitted corruption. Their most
vulnerable points are under attack. Big damage is done in recent months.
Event #1 was MFGlobal. Event #2 was JPMorgue losses tied to IRSwaps. Event #3
is LIBOR price rigging. They are all related, from vast insolvency and
illiquidity that built over three years time. Other events will come, only
later to discern their connection to the sequence. My firm belief is for
event #6 to be Gold Allocated Account raid scandal. The bankers have
improperly accessed at least 20 thousand tons of allocated gold, replacing
them with gold certificates without permission or knowledge of by the account
holder. The volume of raids could be as much as 40 thousand tons. My gold
trader source is adamant about the level of raids, and expects a scandal to
shake the Western world banking system to the core, resulting in massive
prosecution. This deadly chain all began with Lehman Brothers, whose
killjob involved a pure skate on the deeply corrupt and mischievous activity
that should have resulted in a gigantic scandal in 2009 and 2010. Yet US
regulators ignored the produced criminal fraud evidence, and the clock moves
on. In truth, event #0 was the TARP Fund and the $700 billion gift never
fully scrutinized or prosecuted for its fiduciary violations and extortion
angles.
WHEN THE ALLOCATED GOLD SCANDAL
HITS, THE GOLD PRICE WILL RISE TO MULTIPLES OF THE CURRENT PRICE. IT WILL
BREAK RANKS FROM THE PAPER CLUTCHES AND PHONY PRICE DISCOVERY METHODS. THE
GOLD PRICE WILL EASE PAST THE $5000 PER OUNCE MARK, AND TAKE SILVER ON A
GREAT UPWARD RIDE. YOU SEE: THE BANKERS WILL HAVE TO REPLACE THE GOLD BY OPEN
MARKET PURCHASES AS RESTITUTION!!
The events will continue to occur
in a sequence, probably managed much more than we are told. My suspicion is a
new sheriff is in town, who stepped off a jetplane a few months ago from an Eastern
location. Some suspect the Western castle dwellers are staging a systemic
collapse in order to impose a new centralized government. It would not be
pretty, nor permit rights or liberty, and be described as a debt slavery
serfdom. My belief is that the Western strategy is backfiring, as
de-centralization is occurring, the exact opposite. The primary secure safe
haven is Gold, always has been Gold, and always will be Gold. The experiment
since 1971 when the Gold Standard was unilaterally broken by the United
States is coming to a conclusion. The wreckage is complete and a great
tragedy. A new system will emerge, but only when the current system is in a
shambles and the main captains in the banking sector have found other
employment, perhaps making license plates and presiding over a system where
cigarettes serve as legal tender in a closed system. My suggestion is for
human teeth to be a better medium of exchange. Let's hope they are kept deep
underwater, where in time they can sleep with the fishes.
THE HAT TRICK LETTER PROFITS IN THE CURRENT
CRISIS.
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