Golden Jackass: Some
competent analysts claim the United States and Western nations are
stuck in the eye of the hurricane. Maybe so, but the internal stresses
are so great that they will move beyond the eye into a zone of clearly
apparent destruction soon. Some aware analysts believe the bond
monetization plans will lift the financial markets. Maybe so, but the
ensuing and continuing damage to the economies is profound from rising
cost structures. Some awakening analysts no longer look to the USFed as a
source of solutions. They see the central bank as increasingly
desperate, pushing the same levers that accomplished nothing in the
past. In fact, the failing central bank franchise system is visible in
the open for all to see, with the embarrassment noticeable when the good
chairman speaks as high priest of hollow dogma. New money backed by
nothing swims around, financing the USGovt deficits, redeeming toxic
bonds, adding nothing to the capital base. In the background is a
pernicious effect, having come full circle. The Chinese industrial
expansion since year 2000 came largely at the expense of the Western
economies. They forfeited thousands of factories in the mindless pursuit
of lower costs, while overlooking the abandoned wealth engines that
produced legitimate income. In the last couple years, the Western
economies have served as weakened customers for the Chinese production.
The effect finally has slammed China, which complains of weaker US and
European demand. Any trip through Spain will demonstrate that smaller
Spanish factories and mills are shut down, with Chinese imports in
replacement, as local shops stock mainly Chinese products.
The
global financial system is empty of ideas, has no solutions, and is
rotting on the vine.
The solution is a new trade payment system centered
upon Gold, no longer on the toxic USDollar. The solution is a banking
system that turns its back on USTreasury Bonds, the delinquent
foreclosed step-child of the US Federal Reserve. The list of extreme
symptoms and hidden menaces is as long as a roll of fiat toilet paper.
It reads like a bad novel, like an endless nightmare, like an obituary.
The distortions are far past extreme. The United States is locked in a
trade war with China, the financial battles played out in the financial
ministries and the press, the actual hot war played out in Southern
Africa among smugglers. All Chinese
investment within the United States has been secretly banned. So watch
the Softbank bid to acquire a major stake in Sprint Nextel. The
dependence upon Plunge Protection Team props and High Frequency Flash
trading to keep stocks up is extreme. The phenomenon is reported
regularly, but is no longer news since it is engrained as a constant
feature.
The
charred financial and economic landscape has transformed so radically
since 2008, that aberrant distorted disconfigured bizarre and twisted
are considered as normal. The nation has become a surreal depiction
economically, financially, politically, and ethically in the last
decade, since September 2001. The former USFed Chairman Greenspan was
wise to walk away and retire with laurels from knighthood. His work was
done. The Bernanke Fed will be known as the Weimar engineers and Mafia
bagholders. Even Greenspan could not image the extreme measures required
by the central bank, with assorted liquidity facilities (none worked),
TARP Fund enabling (pure bait & switch deceptive fraud), hidden bond
monetization (drained fuel), bloated toxic balance sheet (never to find
value), massive narco money laundering (fully dependent for survival),
rafts of mortgage lawsuits (motive for QE3), rising food & energy
costs (painful consequence), and much more (not reported in the
subservient financial press).
Review
some of the extreme features that serve as prevalent signposts
scattered across the American landscape, none of which existed in the
1990 decade. The US is stuck in an end road heading over the cliff. Many
like the Jackass argue that given the profound widespread insolvency,
the nation is descending after having gone over the cliff. It is not
approaching a fiscal cliff. It has fallen over it, ever since the Budget
Super Committee formulated by the USCongress disbanded in utter failure
on the public stage with zero progress on anything. The USGovt spending
is so out of control, the political process so broken, that the fascist
collectivist nation could not make a New Politburo council work. The
broken financial apparatus should be more recognizable. Spending is
rabid out of control. The bond monetization is the only defense to
prevent a USGovt debt default. The ZIRP birds chip at 0% frequency, due
to interest rate derivatives working around the clock under great
strain, with no buyers and $trillion deficits as far as the eye can see.
The national perspectives are usually late in coming. Eventually the
broken national machinery will be understood and perceived. The pundits
and experts did not notice the subprime mortgage crisis until 12 to 18
months after it struck. They spent the following year denying its crisis
and wreckage. The pundits and experts did not notice the housing market
bust until 12 to 18 months beyond peak. They spent the following year
denying its crisis and wreckage. Perception inside the United States is
not a strong suit. Accurate perceptions are almost considered
unpatriotic.
EMPTY QUANTITATIVE EASING SOLUTION
The
ultra-low near 0% interest rate environment is a massive wet blanket on
the USEconomy. The Zero Interest Rate Policy has an undercurrent to
makes for higher costs, lower profit, business segment shutdown, job
cuts, and lower income. It remains the biggest blind spot among US
economists, whom the Jackass has very little if any respect for,
deservedly. The absent foreign bond demand provides a constant motive to
conduct the next QE program. The dependence upon monetization to
finance the USGovt deficits is slowly entering the mindset of financial
analysts and investment managers. The QE3 should be called Global QE or
more accurately QE to Infinity, since all the major central banks have
joined, whether out of enthusiasm or pressure. They wish to avoid a
currency war, so a coordinated currency debasement is the active plan.
That approach leaves them all vulnerable to simultaneous rising
commodity costs, only kept down by a deteriorating economic base.
Such is the bitter fruit of failed central bank franchise systems. Witness the unlimited USFed and EuroCB and Japanese bond purchases, to prevent a collapse. The Interest
Rate Swap device is heavily used to hold down USTBond yields, amidst
unending $1.4 trillion annual deficits, low bond demand, and lost global
prestige. The hidden motive for the next QE3
round is to cover bury and remove the mortgage fraud that acts as a
gigantic logjam on the financial structure and foreign flows. The
criticism grows on the theme of questionable quality of new money, the
toxic paper to replace toxic paper. The frustration grows on the theme
of better quality and higher subordinated debt to replace toxic debt.
Solutions are nowhere.
ECONOMY DISTORTIONS
The
USEconomy has been stuck in a powerful recession of at least minus 3%
since 2008, with only extreme statistical gimmickry and outright
accounting fraud to pull up the reported growth. The only
sector with rising profits is the banking sector, due to USFed bond
purchases, due to the easy USTreasury carry trade, due to the accounting
fraud on mortgage portfolios (still no mark to market), due to the lack
of derivative contract accounting altogether, due to the convenient
debt value adjustment scam. The short home sales are not
adequately counted in housing market price data, enabling the charlatans
to claim a recovery just in time for the presidential election. Shiller
seems like a dope with his blind eye to the excluded short sales in the
index that bears his name, and to the racked up home inventory from
foreclosures. Hundreds of thousands of homeowners do not pay anything on
monthly mortgage, the new scoff-law crowd. They are increasingly
challenging the big US banks to produce title, a story the press does
not cover any longer since so volatile and visceral.
The
Federal Housing Admin (step-father to Fannie Mae) has quietly ramped up
subprime home loans, but all under the USGovt auspices. The 3% or 5%
down payments are no problem for loans. Step right up. The car market is
propped by the next subprime push, with banks practically ordered to
extend easy loans to buyers. Some loans are for seven to eight years,
and go negative equity in the first few months. The crude
oil price remains over $90 per barrel despite a powerful entrenched
recession, due to USDollar hedging. Tangible investment stubbornly
remains a fixture in global portfolio management, as distrust for the
USDollar continues. The deadly decline in California state sales
tax receipts, down 40% from July 2011 to July 2012, in my view serves as
the most deadly of highly visible signposts. The land of rotten fruits
and bitter nuts is being racked by gasoline shortages.
LABOR MARKET STRAINS
Nowhere is the damage to the US systems more visible than the labor market. It is hard to hide millions
of jobless workers. It is hard to hide the shuttered factories whose
business went to China and the Pacific Rim. The jobs data is an exercise
in deception and fiction. The deception is with the unemployment rate,
which runs steadily at 16% to 17% even on the official U6 statistic, but
runs steadily at 22% to 23% in the Shadow Govt Statistics that reflects
the world in which we live. The deception is with the jobless claims
data, since 99 weeks is the limit, and millions of workers have passed
the limit, unable to collect more insurance, no longer counted in the
official reports. They are like abandoned Missing in Action soldiers
left behind to rot in Vietnam, denied to exist, suffering still.
The
fiction lies with the Birth Death Model, transformed into the main new
employer in fantasy land, lifting the Jobs Report. Several hundred
thousand new fictitious jobs appear almost monthly, surely to be
corrected in March when nobody is looking. Most of what the President
claims as job growth is derived from the BDModel, complete with Cheshire
Cat as the guard in a Wonderland. The National Federation of
Independent Businesses routinely contradicts the official USGovt
propaganda about a robust small business sector. The Birth Death Model
is designed to factor in the missing small businesses from the sampling
process. It has become a fudge factor to the extreme. Around 50% of new
college graduates cannot find work, deeply frustrated and disillusioned.
Over 3 million young people are fast losing faith in the system, adults
living with parents. They will serve as the demonstrators on the
street, if the nation ever wakes up. The nation of Spain had 2500
demonstrations in 2011 that took place in Madrid alone. The United
States is fast asleep, flouridated, awash with propaganda, deceived in
almost every area of life.
FASCISM TAKES DEEP ROOT
Notice
how the narco and oil wars are off limits for discussion and debate.
Soldiers are recruited from the poor parts of the archipelago of
troubled cities and towns, with hope of income and job opportunity,
maybe college later, but with rising likelihood of a missing arm or leg
where the benefits kick in. The war has an ugly statistic that the
monger merchants cannot escape. More soldier suicides (active and
retired) occur than battlefield deaths. The soldier corps is being
depleted, as soldiers are ordered into endless returns of tours, victims
of the fine print on induction contracts. The United States as a nation
slowly abandons both the Constitution and Capitalism. The legal
authorities have begun to brand advocates of the former as terrorists,
and advocates of the latter as uncaring. The last chapter of any failed
democracy is surely fascism. The dependence by US big banks upon narco
money laundering for survival is becoming well documented, but still a
secret inside the US. In the European corners and the United Nations,
the dependence is well known. The Too Big To Fail mantra that supports
and upholds the big broken banks is losing its luster and appeal. The
tough questions being argued pertain to how to break up the big US
banks, what parts to save, how to redeem their toxic balance sheets,
where to merge their viable parts. Chris Whalen made some outstanding
points recently, claiming that no Wall Street firm is earning money on
their bond inventory. Their carry trade profits are down by over 50%. The
big US banks in Whalen's opinion will break up from internal stresses,
like basic lack of income and high operating costs that include bloated
incomes.
The
nation has suffered massively from the merger of preferred big business
and the state, the lace of fascism. The big corporations, led by the
banks, are given license to commit financial fraud and open thefts. The
list from MFGlobal, Peregrine Financial, hundreds of mortgage bond fraud
cases, and thousands of mortgage contract fraud cases, litter the
landscape for all to see. They are joined by new LIBOR lawsuits that
will keep the courts busy for years, until laws are passed to forbid
such lawsuits, decreed in the national security interest. Not so easily
seen are the deep trenches of bond counterfeit, like with JPMorgan in
collusion with Cantor Fitzgerald, whose handiwork was conveniently
buried late in September 2001 in South Manhattan.
The
negative correlation between Exit Polls and precinct level president
votes in 2004 and 2008 highlighted the vote rigging as stark statistical
evidence. Any competent statistical analyst can see the anomalies, if
attention is focused and eyes are open. Statistical analyses were easy
for spotting the vote fraud, since the correlation for over 30 years had
been over 90%. No longer is the correlation high in the swing states,
where vote fraud is the new normal. This is a key trait of a Third World
Nation, of which the United States leads in sophistication. Chavez in
Venezuela has nothing on the White House victors. Watch Florida, Ohio,
and now Virginia as the important swing states. These three states might
not be enough, as the horrendous economy usually accounts for a sudden
5% swing against the incumbent.
GOLD
The
USDollar being abandoned slowly in global trade. In the process the
important currency is losing its prestige. After more isolation, its
global reserve status will be lost in an expedience to bring about a
solution to the pernicious relentless unforgiving global monetary war
which is falsely called the global financial crisis. This is a war to
defend both the USDollar and its merchants who rely upon fraud and war,
an important ally being the Saudis, whose House has turned seriously
unstable. What irony if the
House of Saud were to fall victim to the Arab Spring sequence that was
spawned by Quantitative Easing by the USFed and fast rising food prices.
The Petro-Dollar defacto standard sits in the Saudi shrinking shadow.
The USDollar will be surrounded, then isolated, then sink with the rest
of the fiat paper currencies. The great Gold accumulation movement is
fast underway, picking up speed. The New York and London bankers are in
fast retreat, delivering their precious gold bars to Eastern entities,
as they are being systematically drained of their gold assets. The New
York and London bankers are seeking desperate measures to move Silver
behind the curtains, in order to meet demands and avert a nasty default.
They will not be able to avert a Gold or Silver default unless they
conduct another MFGlobal account theft. Too many are watching for such a
theft.
In
the process, the derivative machinery is straining, wheezing, and
giving off burned oil smoke. The JPMorgan CIO strains have not gone
away. Only the more vigorous accounting fraud has kept the strains,
losses, and rot out of view. The priorities are clear. JPMorgan refuses
to deliver Silver, choosing instead to steal accounts that seek
delivery. Bear in mind that labor strikes and government confiscations
are in high gear among gold mining firms in South America and South
Africa. The trend bodes well for the physical Gold price, but bodes
poorly for the mining stock share prices. The Jackass forecast stands
firm, that the physical Gold price will suffer a significant divergence
from the corrupted paper Gold price dominated by the futures contracts,
where naked shorting is the permitted normal practice. In time the COMEX
will not sell Gold or Silver futures contracts, since no precious metal
in inventory. Anyone who expects the Commodity Futures Trading
Commission to enforce the law, obstruct the naked shorting, reduce the
outsized uneconomic commercial short positions, and prosecute private
account thefts, well, is a moron at worst and a fool at best.
The
Gold price has been doing important technical work for the last month.
On the surface the price movement looks boring if not weak, with lost
momentum. That is typical of the brief phase when consolidation takes
place, while building the right side handle. The downside risk is to
1720 (daily basis) or 1750 (weekly basis), really no big deal. The
recently announced and detailed QE3 initiative is incredibly bullish
for Gold, providing the bull market the most wonderful fuel that is
supercharged by the permanent 0% rate. The paper mache merchants who
defend the indefensible broken USDollar are redoubling their naked
shorting. It will not be enough. They must outlaw alternatives to the
USDollar and force USTBond ownership. They cannot do so but they might
try. Hence the Gold price will rise.
The
extreme Gold price breakout will be fast powered by the realization of
the QE3 arrival, its unsterilized nature, and its much greater volume
than previewed. The keys are both lack of sterilization and outsized
volume. The USFed is fast running out of dry powder in USTBills, which
means the bond monetization will be done with fresh money and not
proceeds from sale. This is hyper monetary inflation of the worst order,
akin to Weimar times. The volume of bond purchases within the QE3
framework will be between three and five times larger than announced. No
rational bond buyers remain. Even the official bond dealers are facing
extinction. See Cantor Fitzgerald, one of the biggest bond scum peddlers
on the planet, a key accomplice for JPMorgan in the removal of both
Enron fraud and USTreasury Bond fraud back in the dark days of autumn
2001. Their repository building fell in structural sympathy.
Source
banzai7
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