The Devaluation of the US Dollar
by Jim Willie, CB. Editor, Hat Trick Letter | April 22, 2010Print
The need is urgent. The recognition is broad. Supply & Demand of American debt paper demand price adjustment. The USGovt avoids the topic like the plague. The billboard fact of the matter, as USCongressional politicians like to say, is that the USDollar must be take a downward revaluation of significant magnitude in order to even begin to offer a semblance of equilibrium and balance. Natural forces are aligned against those in power who resist the adjustment. Imbalances are too magnificent. They invite continued global revolt and financial insurrection.
Coming out of the once revered New York Fed, now just a stepping stone from Goldman Sachs to the power center, is William Dudley. He hints of big USDollar devaluation, from a sideways message. The US bankers have very limited options, given the perverse systemic insolvency, and the sluggish if not moribund economy. Goldman Sachs alumnus William Dudley hints at the endgame, rather than Exit Strategy, involving a steep USDollar devaluation. He seems to concede the near permanent near 0% official interest rate. Dudley spoke of FOREX pressure to push the USDollar exchange rate down. Whether it is planned or forced upon them, the US$ is heading lower and Dudley seems to acknowledge the fact. The endgame is inevitable, due to colossal deficits, huge unfunded obligations, and the desperate need to stimulate the moribund USEconomy. He might even be implicitly urging Americans to stop saving. Dudley lays out the failed effects of monetary policy when he said, "What I would like to do today is to explain in some detail the logic underlying this expectation that economic conditions will warrant exceptionally low levels of the federal funds rate for an extended period. There has to be a further demand impulse, be it a decline in household saving rates, a rise in business investment relative to profits, a further expansion of fiscal stimulus, or an improvement in the net trade balance via an increase in exports relative to imports. The fact that our foreign indebtedness is for the most part denominated in our own currency is a huge advantage in the event the dollar were to come under significant downward pressure."
The New York Fed is hardly a bastion of leadership or integrity these days, not after its prominent role in producing a Wall Street meltdown from unbridled bond fraud in the last few years, complete with September 2008 climax. If truth be known, that is when the US financial structure died, never to be revived. Fresh toxic USDollars, swirling among fresh toxic USTreasury paper, laced with improperly accounted for mortgage securities among the financial firm assets, burdened by heaps of foreclosed properties sitting on bank balance sheets, is NOT the formula in the US witch's cauldron for any revival, resuscitation, or recovery in the US banking system. In fact, the Jackass will go so far as to claim that the US Federal Reserve and USDept Treasury have not made a single attempt to reform, remedy, or restore health to the US banking system. They have done everything conceivable to enable vast channels to flow to Wall Street firms, to divert away from US Main Street firms, and to steer official reform to give the financial ruling body even more power, after they brought about a collapse with their wondrous financial engineering. Their reform initiatives actually tighten their grip of power and control. One of the most funny, yet tragically true assessments in the last few years about the financial engineering topic came from former USFed Chairman Paul Volcker. He said the only meaningful contribution by the financial sector in the last 20 years was the automatic teller machine. He has been marginalized, if not silenced, since he made critical remarks, as part of his counsel to reinstate the Glass Steagal Act that separates large financial sectors.
Prospects look bleak for the USGovt finances, which must greatly devaluate the USDollar and accept lower value for its sovereign debt in the form of USTreasurys. Action must be taken, if not from higher long-term interest rates, then from a lower US$ exchange rate. In fact, a higher interest rate imposes damage to foreign creditors and Wall Street speculators, surely to USEconomy participants. It raises USGovt borrowing costs too. But a US$ devaluation harms foreign creditors and USEconomy participants from higher import costs, higher commodity prices. The US$ devaluation spares Wall Street the most pain, which can short the US DX index with advanced notice and insider information, their speciality. Worse, the USDollar must be devalued according to the federal guarantees for mortgage agency debt (see Fannie Mae & Freddie Mac) and credit derivative backstops (see JPMorgan and AIG, but also Fannie Mae). Implications to gold are immediate and powerful, once monetization is no longer hidden. Gold is ready for a quantum jump upward in price.
RICKARDS, GOLD & GRAND PRESSURES
Jim Rickards is cited in the Hat Trick Letter at times. As senior managing director for market intelligence at Omnis, he commands respect. His viewpoint is usually high level but effective, without too many details, but with aggregate arguments containing much credibility and legitimate force. He describes the gold market, the USDollar, the debt situation in the United States, and the Chinese angle. He begins with a preface. The perverse aspect of the USDollar is that since it is the global reserve currency, its USGovt debt is not priced like a Third World debt security, with interest rate near 10%. Instead, the near 0% rate creates unsustainable forces in the credit market, while it encourages a global revolt against the USDollar. The adjustment process will propel the Gold price much higher, multiples higher.
The following are points made by Rickards in synopsis, elaborated upon by my commentary. He explains that obviously not enough gold & silver exists to cover the physical demand if holders of paper certificates in unallocated accounts demand delivery. He refers to the now open admissions that 100:1 leverage is used in gold inventory management at the metals exchanges. For every gold ounce in inventory, 100 gold ounces are claimed in futures contracts held. He all but describes a plank of any Ponzi Scheme. The fractional practice mimics the commercial banks with reserves and loans outstanding, a shared lethal flaw. For banks, they admit their fractional banking practice, but not the gold bankers who appear to run a criminal syndicate. Most likely only a small fraction of claims could be covered with the practical physical supply available, Rickards admits. Cash settlement would have to be enforced in the majority of cases, known as technical default. The terms of cash settlements would not be advantageous, to say the least. In fact, he omits to mention that the widespread policy used since December in London has been for cash settlement of long gold futures contracts, with a 25% bonus. That item was mentioned three months ago by the Jackass, and confirmed at the CFTC hearings. We have before us a technical gold default in London, without the publicity. The hitmen already arrived at the London exchange, demanding gold delivery and laying waste to their inventory, whose demands were based upon distrust.
The price of forced cash settlement, to relieve and unwind the huge undisclosed leverage (called fraud by most), would be set as of a record date, limited the effect of a run on gold & silver. Rickards points out the failure to properly reward paper gold investors with such settlement dictums. Months of settlement for shams like the SPDR StreetTracks GLD and Barclays SLV fund would take place, even as the gold & silver prices would zoom upward. That redemption price would be much less than the current physical price, which would continue to run higher apart from the defaulted settlement of the paper claims process. In other words, the settlement in cash would be both a contract violation of owning physical metal and a denial that claims the best price, basic contract fraud, a technicality Rickards spares the exchanges in accusation. There is more here than meets the eye, based upon technicalities. If holding metal holdings are in an unallocated account, they are likely to be considered an unsecured creditor position and used with banker discretion (read: leased & sold). The fractional banking techniques have been revealed, laden with risk. The 100:1 leverage is reckless no matter what commodity or asset it involves, leaving little room for error. The gold bankers are in a bind of their own making.
Move to the impact on the USDollar and the official US debt obligations. In no way can the existing real USGovt debt be paid off without inflating the currency in which the debt is held, even to the point of hyper-inflation. Rickards regards the risk as unavoidable, since valuation of a national currency must eventually reflect its fundamentals. Furthermore, if the USFed's mortgage assets were marked to market, the USFed itself would be declared insolvent (a point made months ago by the Hat Trick Letter, confirmed by Rickards). Anything involving paper claims payable in USDollars (stocks, bonds) is a 'Rope of Sand' in his words, a complete illusion that is fraught with risk. A $5500 gold price per ounce would be sufficient to back up the money supply (M1) as an alternative to hyper-inflation and an inflationary issuance of the currency. Either powerful price inflation is permitted, or a five-fold rise in the Gold price is permitted, in his opinion. A great point!! The pressures are unavoidable, and alternative directions might not exist. He presents a gold target price is $5000 to $10,000 per troy ounce in current issue USDollars. The break point will be when the US debt can no longer be rolled over, from REPOs or formal USTreasury auctions. He does not make the comparison. This is the typical Third World debt risk factor, which US Presidents (like Clinton & Bush II) and USFed Chairmen (like Greenspan & Bernanke) ignored for years. The Rubin Doctrine calls for putting off today's crisis by mortgaging the future. At the pace seen, the USGovt will not be in any position to finance its debt or honor its future obligations without taking drastic action on the backing or nature of the currency. Debt must be discounted via the US$ currency in denomination.
The gold picture in China has turned powerfully positive for the Gold price, in the view of Rickards. China needs about 4000 tonnes of gold for a proper reserves ratio, but only has 1000 tonnes today in possession. China cannot fulfill this goal even by taking all of its domestic production for the next 10 years. They wish to take the IMF gold from pledges, but political resistance is clear. They wish not to push up the Gold price from open market accumulation in gigantic volumes. He overlooks that official Chinese gold ownership extends far beyond the Peoples Bank of China and Sovereign Wealth Funds. My sources tell of the Chinese owning 3x to 5x more gold than 'Officially' proclaimed, something either overlooked or ignored by Rickards. The Chinese people are showing a strong preference to hold gold personally, not as part of lunatic funds managed and corrupted by fund managers as in the West. Their public purchase investment is mammoth, a major element of global gold demand, outlined in the Hat Trick Letter.
An aside. The Chinese do not favor or manage Exchange Traded Funds, the greatest single device in the last ten years to control, corrupt, and negate the public demand factor. Just look at the natural gas price and its ETFund performance, that does not reflect any parallel track path. The ETFunds lately have served as great price control devices, principally by Goldman Sachs. Toss in their GS Commodity Fund, whose abusive control was demonstrated in the summer of 2004 leading to the presidential re-election. The GLD gold Exchange Traded Fund is widely criticized for defrauding at both ends. They provide gold bullion to London, thus assisting in gold delivery demands, which constitutes the illicit removal of investor gold. They provide GLD shares to the London and COMEX, thus offsetting gold short contracts, which constitutes illicit share dilution. Investor GLD lawsuits should come, but their investors in my opinion are among the most lazy and dopey and gullible in existence. The fine print of their ETFunds might actually contain murky language that permits such burning the fund at both ends, with metal and shares. In time, the GLD and SLV funds will be gutted. Greenlight Capital had a recent epiphany and exited GLD in favor of real physical gold rather than its illusion. Others will follow, unless they remain lazy and dopey and gullible.
From 1950 to 1980, Rickards mentions how the USTreasury gold supply declined from 20,000 to 8000 tonnes, basically moving a large amount from the United States to Europe, where the elite reside who control the US central bank. The Chinese are frustrated that they cannot obtain sufficient gold at reasonable prices as Europe did. Beijing leaders wish to survive the currency wars and the reworking of international finance. Private ownership of gold is of paramount importance to their entire society at all levels of power. Rickards believes that holding investor gold in a bank correlates the investor to the banking system, and puts the investor at the mercy of the banker whims, the very risks which must be avoided. These are the points made by Rickards.
RESPONSE TO RICKARDS & LONG-TERM CAPITAL MGMT
My response is one merged with the thoughts of Aaron Krowne of the Morgage Lender Implode website (CLICK HERE) that branched into other imploding entities like home builders. He is an informal trusted colleague. The Rickards argument contains two major oversights. One cannot call them so much flaws as important points not mentioned, maybe overlooked, but certainly important. My focus has been steadily on the second point, the grotesque extension to debt through obligations beyond what Rickards describes. Permit Krowne to make the points, which will be elaborated upon.
Aaron Krowne said, "Rickards is extremely generous on two points: (1) that the USGovt actually has 8000 tonnes of real non-debased gold, (2) that M1 is a useful numerator against which to measure dollar solvency, given the USGovt's short-term liabilities. Even just at the federal, public, acknowledged level, these liabilities already well exceed M1. Then start adding in Fannie & Freddie obligations, AIG, other bailout obligations, the general deficit spending, state & local government obligations, and the picture darkens considerably." Notice the term non-debased gold to mean not tungsten bars with gold plating. The tungsten issue is slowly turning red hot. Hong Kong banks have been the initial fraud victims. The industry response has been quiet, calculated, and thorough. The Germans have revealed some actual tungsten gold bars. Evidence and pathways have gradually been determined. Details are not best presented publicly, since dangerous. Some parallel pathways exist with narcotics routes since the 1992 time period.
Debate is spirited over the actual gold in possession by the USGovt and USTreasury. Harken back to the Boss Tweed and Tammany Hall corruption within the New York City halls. The cartoons helped to bring down the Tweed ring. The New York Post featured an excellent cartoon themselves. Reports from parties directly involved indicate that Fort Knox contains no gold anymore. Reports indicate that what little gold remains is being guarded at West Point, the USArmy Academy. A close look at the official USGovt gold ledger reveals massive exports of Gold Equivalents, supposedly of recycled floor droppings at the USMint and elsewhere. They probably refer to payback on gold leased last decade from Europe, a nice cover-up. A close look at the official USGovt gold ledger reveals the mysterious 'Deep Storage Gold' which might imply gold bullion held in vault facilities half a mile underground. The ugly truth is that the deep storage gold claimed by the USGovt is unmined gold in the form of raw mineral ore, housed in mountainsides, yet to be processed. So the USGovt backs the USDollar with unmined gold ore at 1 to 10 grams per metric tonne contained under the Rocky Mountain range and the Sierra Nevada range. What a sham! What a shame! Notice the trend of foreign nations demanding the return of their gold bullion from US and London, held in custodial accounts. See Switzerland, see Dubai, see Hong Kong. They suspect, based upon direct independent audits (not revealed) that their gold bullion had been illegally leased, sold, and replaced with paper certificates. Thus the gold physical shortages lately. Thus the hidden war with Union Bank of Switzerland.
The debt that must eventually be monetized is not just its partial reflection in the money supply, but all federally guaranteed debt. The commitment of USGovt debt must go beyond running federal debt total, and into nationalization of agency debt and credit derivative risk. They must be factored also into the USDollar and Gold price. So far, it has not in any scintilla or meaningful way. Thus the destabilizing events to come in a US$-based monetary crisis. Check the recent colossal Fannie Mae losses, funded by the USGovt. Check the recent colossal AIG losses, funded by the USGovt. Check, if you could, the ongoing recent colossal JPMorgan losses from credit derivatives, funded by the USGovt. The complexity of the fraud has become a cross between a tragedy and comedy. The monetization of USTreasurys is obvious to any analyst or auditor with any professional skill. The official USGovt bond inventory has in recent months contained an unusual suspect ledger item. They actually claim that close to $100 billion in new USTreasury purchase has come from a new party called 'Household' which one is led to believe is Fannie Mae or large pension funds, or even US households buying bank certificates of deposits. The mortgage sewage plant and pension funds and households are after all flush with billion$ in cash, what rubbish! This is naked USTBond monetization accounting. The April Hat Trick Letter contains much more information on the fires burning possibly out of control on credit derivatives, a point raised in the last article about Dangerous Signposts, namely the long-term interest rates and the crude oil price.
The conclusion is that grossly insufficient gold exists to back the USGovt debts, and those debts must include USGovt obligations to direct funds into the nationalized Black Holes, thus resulting in tremendous extraordinary pressure for a significant USDollar devaluation. The cutting edge is the ongoing endless outsized USTreasury auctions. To call it a heavy weight of oversupply is a gross under-statement. It is 20 tonnes of bricks dumped on the 3-bedroom house from a construction crane, which itself might soon be subject to bank repossession. This is where the pressure is exerted. This is where the monetization relieves the pressure. This is the area next exposed, for both overwhelming debt issuance in supply, and hidden monetization revealed. Recall that before the USCongress, USFed Chairman Bernanke stood before them and claimed the USFed was not printing money to purchase new debt. This was a bold lie, but not under oath.
Rob Kirby is much less generous, and provides an angle to a greater perspective. He assists in revealing the past track record of Rickards, who must be careful in what he says. Kirby implicitly reveals why Rickards speaks in such general tones. Kirby said, "Rather humorous that Rickards, former legal counsel to LongTerm Capital Mgmt, would be giving all of us talking points regarding the root of our financial problems and how to patch things up, ten years or more after his former firm nearly brought down the world's financial system. His LTCM firm was bailed out, allegedly, because they were SHORT some 300 tonnes of borrowed sovereign Italian gold bullion, something which nobody from LTCM has ever addressed publicly, to the best of my knowledge. [Some research reveals that] Goldman Sachs employess literally made a MAD DASH from the doors of LTCM and SCOFFED all the computers and relevant data when they were placed into receivership. When low lifes Greenspan & Rubin assembled a vaunted team of banks and investment banks at the New York Fed and read them the riot act how LTCM had to be BAILED OUT, they were told they would all share proportionately in the costs. It was BEAR STEARNS who said, NOT A CHANCE we participate in bailing out this renegade firm." Fast forward ten years later, and Bear Stearns was targeted, destroyed, and carved up, labeled by Wall Street a failure. The LTCM episode provided motive to kill Bear Stearns, which retained its maverick status. Kirby mentioned further than Rickards is sworn to secrecy, sold out to the Dark Side years ago, and might be a prominent figure if he ever wrote his memoirs to recount those days late in the 1990 decade. My view is more generous, that Rickards is attempting to promote gold without angering his former Wall Street masters and earn banishment from the financial world or worse, a hanging in his own living room like the Chief Financial Officer of Freddie Mac in early 2008.
GOLD ON EDGE OF SPRINGBOARD LEAP UPWARD
Events in the last few weeks have conspired to create a powerfully explosive environment, one hostile to currencies in general, the USDollar in particular, and favorable to the Gold price. Major changes have occurred in the psychology of the gold market. Slowly over time, and with much unmasking in the last month, the gold market is being perceived as yet another Wall Street conjured Ponzi Scheme. It is no different from the privately run Madoff Scheme. It is no different from the Mortgage Bond Scheme. It is no different from the TARP Scheme. It is no different from the Iraq Reconstruction Fund Scheme. It is no different from the Credit Derivatives Scheme. The US financial sector is an amalgam of fraudulent Ponzi Schemes. The gold market has price rigs, price suppression, naked shorting, pitifully low inventory, and protection offered to the Wall Street perpetrators by the USGovt and UKGovt. The Gold price has begun to rise despite the USDollar holding its ground against very weak alternative currencies. The primary locus of foreign revolt against the corrupted US ship at sea, listing badly and taking on water, might be the Gold price. It is both the nexus and weak link in the defense of fiat paper money.
The MACD (moving average convergence divergence) cyclical indicator shows great promise with an upward bias. The moving averages in general have offered support, the 100-day MA (in red) and the 200-day MA (in green) showing upward trends. The major change in gold psychology is apparent to the alert observers, soon to the entire investor community. A reversal pattern is evident, from the Dubai and Greek debt response in January, February, and March. The reversal Cup & Handle contains a positive strong neckline, a loud bullish signal. A perverse benefit given the USDollar early in 2010 will be seen soon as a loan of goodwill to be paid back in full, amidst the backdrop of recognized Wall Street fraud led by Goldman Sachs. The curious aspect of the revelations has been how much JPMorgan had escaped the spotlight of fraud, until the CFTC hearings where their illegal activity and arrogant boasts made the news. Next comes the backlash!
LACK OF EXIT STRATEGY OPTIONS
The Euro Central Bank and Bank of England held interest fixed in the last couple weeks, amidst the Greek crisis. The EuroCB is trapped, just like the USFed. Europe is trapped by sovereign debt. England is trapped by its federal debt and need for stimulus. The United States is trapped by mortgage debt and its own federal debt, as well as need for stimulus. The Australians saw fit to hike by 25 basis points, a world apart, as commodity prices remain firm. The European Central Bank left its benchmark interest rate at a record low of 1.0% for the 11th month in a row. Recession, sovereign debt to the South, and the need for stimulus are the dominant themes for continued accommodation. The spread between Greek and German debt is widening, in fact worse than the first glimmer of the credit crisis a few months ago. The Greek Govt 10-year bond yield went over 4.4% points above the German Bund benchmark, the highest level ever since the Euro currency was launched in 1999. Adding stress to strain, the Greek 2-year bond spread has moved up 1.2% in consistent manner. A key point was made in bank policy by Trichet. The EuroCB head told the European Parliament that so-called collateral crisis measures will not be abandoned at the end of 2010 as originally planned. The EuroCB will continue to accept lower rated government bonds as collateral from banks. It will swap garbage for government backed debt securities, but soon no more US$-based toxic bonds. Watch the Credit Default Swap data and one can see the next target nation might be France, not Italy and Spain as many analysts have anticipated.
CRUSHING WEIGHT OF LOST INTEGRITY
The stream of events in the last four years casts extremely bad light on the US financial system, soon to reflect lower value. The subprime mortgage bonds were not isolated in damage done or loans gone bad. The prime mortgages, the Option ARMs, the second mortgages, the commercials, they almost all sport delinquencies and defaults that rival the subprimes. Details are shown in the last few Hat Trick Letter reports. The TARP Fund episode was an open extortion exercise, perpetrated on a hapless yet compromised USCongress, which now makes its own futile efforts to at least achieve disclosure of what the $700 billion or $500 remaining billion went. The US Supreme Court appears to be running interference for the US Federal Reserve, in blocking legal attempts to force disclosure of the USFed balance sheet, and disclosure of the TARP Fund disbursements. The overseas wars involve their own black eyes, what with $50 billion missing from the Iraq Reconstruction Fund. The United Nations drug task forces have pointed a finger at the US Security Establishment as funneling money into the US banking system, without which they claim the US banks would have collapsed in the autumn 2008. The nationalizations of Fannie Mae and American Intl Group took place amidst widespread charges of fraud, both in mortgage bonds and credit derivatives. Lawsuits were thwarted. The Credit Default Swap, an invention of Wall Street, has come under fire. It is being blamed for some distress in the European Govt debt markets. The CDSwap contract is under fire inside the United States even more so. Imagine a financial instrument that benefits from the implosion of financial firms, caused by policies and actions taken by the designers of the instruments. Only in America!
Now we have the Goldman Sachs fraud civil suit case. A closer check would raise suspicion from numerous corners. Five key red flags are raised, each worthy of future investigations. 1) The Securities & Exchange Commission announced the fraud charges during a time when the Inspector General report was due for release. 2) The SEC fraud charges were announced during the time when a vote is soon coming for the Financial Reform Bill before the USCongress. 3) The SEC fraud charges were announced during the middle of the day, during stock market trading activity, a sharp break from proper information release. 4) Worse, the SEC gave Goldman Sachs a tipoff in the two weeks beforehand of the fraud charges to be made public. 5) Goldman Sachs has been privately accused of profiting from the adjustment in stock price due to its own problems. Stories are numerous of large S&P stock index puts purchased. Stories are numerous of a suspiciously high volume of 'Out of Money' stock option puts on GS, the Goldman Sachs stock share. They turned out to rise 140-fold, yet not much official talk about them.
In the following weeks we will see how much Goldman Sachs earned from their own legal challenges. In fact, a source informs me that his legal beagles regard the Paulson Abacus case as perhaps the weakest of all potential fraud cases against GSax. It might be designed to fail and be rejected by the courts. In fact, they mention that GSax might revert to a private investment bank, now that the TARP Funds were taken and returned, its commercial bank sham status no longer needed. The need instead is for privacy and no more prying eyes. GSax will not escape the lawsuits, but might face criminal charges. Watch the Germans, who are angry at being defrauded. Germany seems in many ways to act as the spearhead to disrupt, dislodge, and dismantle the US-UK streak of corporate fraud perpetrated by those wearing USGovt & UKGovt suits. The Goldman Sachs fraud case, and cases to follow, will render severe damage to the image of the USDollar, the USTreasury, and the USGovt leadership that is dominated by the GSax alumni. My belief is that the fraud charges have opened Pandora's Box, for other complaints, other lawsuits, even class action lawsuits to be handled in federal court. The whiff of Pandora will be next seen in Germany from a broad swift response.
The White House connection to Goldman Sachs is not as clear as the USDept Treasury control by GSax. While GSax lawyers negotiated with the SEC over the high profile risk filled civil fraud charges, the GSax CEO Lloyd Blankfein visited the White House at least four times. White House logs show that Blankfein traveled to the national capital for at least two events with President Obama. Furthermore, the Obama 2008 presidential campaign received $995 thousand in donations from the GSax political action committee, its employees, and their relatives. The response included appointment of yet another GSax alumnus as Treasury Secretary, Tim Geithner. Worse, GSax has retained former Obama White House counsel Gregory Craig as a member of its legal team. The GSax connections to the White House and the Obama Admin are raising a lot of eyebrows. Influence is clear, as it might be bought. Watch the financial regulation overhaul grant even more power to Wall Street firms and more impunity for their actions. See the McClatchy Washington Bureau article entitled "Goldman White House Connections Raise Eyebrows" (CLICK HERE).
The crushing weight of lost integrity is vast. My suspicion is that the greatest impact from the Goldman Sachs stream of lawsuits and felony charges, complete with potential restitution attempts, will be on the USDollar and not the GS stock price or its balance sheet. What comes next is the survival reactions by nations under deep distress, weakend by sluggish if not moribund economies, weakened by exported toxic bonds from Wall Street, weakened by Credit Default Swap attacks lodged by Wall Street and London firms, weakened by years of accepted USTreasurys as legitimate payment for exported finished products, weakened by broad usage of the USDollar within their banking system. The Jackass maintains a firm conviction that the first few nations that break ranks from the USDollar embrace will become the leading nations in the next chapter. A shock this way comes, from a Paradigm Shift in progress, recognized across the world, but not in the United States or England. A sudden USGovt-led devaluation could come soon, ordered by the United States banking and government leaders. It might turn out to be a vain arrogant maneuver to achieve instant stability, to maintain chokehold control, and to attempt to prevent creditor abandonment.
A grand backfire comes, since numerous platforms and paper support beams can no longer bear the weight of US insolvency, US dishonesty, and US arrogance. A grand backlash comes. My best sources warn to expect flash events. Either the US will attempt to control the sudden rash of events, or foreign sources (dominated by US creditors) will pull the rug from under the US-UK controllers. The maestros in New York and London are fast losing control and credibility. The next victim front & center is information flow. The CFTC hearings to reveal the gold & silver market rigs is one item. The empty gold vaults at the London Bullion Market Assn is another item. The insider trading schemes in flash trading mechanisms by Goldman Sachs is another item. The involvement of Wall Street firms in European debt machinations is another item. The revealed USTreasury monetization and accounting is another item. The usage of the IMF and World Bank as financial weapons is another item. The narcotics trafficking under USGovt and USMilitary aegis is another item, complete with Wall Street money laundering. These highly important factors are all recent exposures of the US information machine losing its grip. These factors combine to invite a global response. It will be felt and realized eventually in the USDollar. The Euro is nowhere near as weak and fraught with insolvency as the USDollar, not to mention deep pervasive fraud. Time will prove this out.
Copyright © 2010 Jim Willie, CB
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a Ph.D. 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.
Jim Willie CB is the editor of the �HAT TRICK LETTER� Use the below link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise like a cantilever during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by heretical central bankers and charlatan economic advisors, whose interference has irreversibly altered and damaged the world financial system. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy. A tad of relevant geopolitics is covered as well. Articles in this series are promotional, an unabashed gesture to induce readers to subscribe.