Jim Willie: PANIC, CONSOLIDATE, GAME OVER

Jim Willie CB                         September 18, 2008

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Jim Willie CB, editor of the “HAT TRICK LETTER”

Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise 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 compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

We are in historically unprecedented times. The foundation is being laid for a default of USTreasurys in the wake of the greatest regulatory failure in modern history, and the collapse of the US financial system. Anyone who cannot see that suffers from poor vision, chronic nostalgia, low mental wattage, a paycheck from Wall Street, a post in financial press media, or owning an Economics advanced degree. So many changes come with each passing day, not week, that it boggles the mind. Many of us predicted $100 updays for gold, and we almost saw one. The wheels came off the US financial wagon long ago, but only now that fact is being recognized. The monetization largesse finally has gone beyond the corrupt bailouts of fraud kings on Wall Street. My longstanding forecast has been that when the monetary inflation machinery spits output beyond the sanctimonious walls of the Wall Street whorehouses, INTO THE MAINSTREAM, that the gold price would rise substantially. That process has begun, starting with Fannie Mae & Freddie Mac, and now moving to AIG. Only when phony money floods the system where people live, not where the elite conmen with strangehold control the counterfeit processes, will gold shine. So many unexpected upcoming events will occur, enough to make a forecaster dream. Let’s begin with the most important. Much more details are provided to Hat Trick subscribers.

RAIDS OF INDIVIDUAL ACCOUNTS

This is so important a topic, that it deserves top billing!!! Hidden inside the AIG bailout funding package, surely hastily cobbled together, but carefully enough to include a totally corrupt clause, was a handy dandy clause that permits raids. The conglomerate financial firms are permitted at this point to use private individual brokerage account funds to relieve their own liquidity pressures. This represents unauthorized loans of your stock account assets. So next, if the conglomerate fails, your stock account is part of the bankruptcy process. Finally the corrupt USGovt and corrupt Wall Street houses are desperate enough to put into policy, stated by the US Federal Reserve, outlining the authorized raid of your money. Beware. A good route would be to remove your money, start a subscription here, and open a GoldMoney account, then purchase physical gold or preferably silver with my offered discount. That cannot be taken from you, and will rise 5x for gold and 10x for silver in the next two to three years. The actual evidence for legalized stock account raids by the financial firms can be found in recent articles in Financial Times and Wall Street Journal. So this is not a wild claim. The September 14th article on the Wall Street Journal entitled “Wall Street Crisis Hits Stocks” was the first exposure.

The runs on US banks are in progress. See Washington Mutual, where private email messages have been shared by WaMu bank officers. WaMu alone could deplete the entire Federal Deposit Insurance Corp fund for bank deposit coverage. Eventually the FDIC will compete for USGovt federal money for bailouts and nationalizations. Eventually, bank deposits will not receive 100 cents per dollar, in a compromise. Next the bank runs will push banks into failure, at a time when stock accounts are under raids, without broad public knowledge.

GOLD TAKES LEAD IN CURRENCY WORLD

Did anyone notice that on Wednesday the 17th, gold was up big, like over $50, silver was up big, like over 70 cents, but the USDollar was essentially flat, even up a smidgeon? By afternoon, the gold rise intensified, and the USDollar fell hard. THE MESSAGE IS CLEAR: GOLD IS LEADING MOVEMENTS IN CURRENCY PRICES. The world did flock to the USTreasurys, surely led by mangled confused central bankers who have lost control. However, gold is finally being seen as a safe haven. It will become highly amusing to observe a clueless cast of corrupted minds attempt to explain why gold vaults past the 1000 mark, and why silver vaults past the 20 mark. They will offer up reasons, and if lucky, they will touch on at most three or four of the twenty relevant reasons. Their confusion includes observation of the decline in the crude oil price. Their eye is off the monetary panic.

Moral hazard is just an obstacle to be side-stepped in such times. Today, Bill McCullum of PIMCO actually said “We should not give one thought to inflationary consequences.” He was referring to gargantuan rescue packages and now global lending lines to central bankers. And people wonder why gold shot up $80 yesterday, and why silver silver shot up over $1 yesterday. PREPARE IN THE VERY NEAR FUTURE FOR GOLD TO RISE OVER $100 ON SUCCESSIVE DAYS, AND FOR SILVER TO RISE OVER $2 ON SUCCESSIVE DAYS. Inflation is soon to be seen as the remedy to prevent monetary collapse. Gold just hit 900, and silver has reached 12.70 today. The euro has risen 500 basis points just since Friday morning. Gold is not rising sharply due to inflation concerns alone, although plenty of monetary inflation is set to continue flying through the money pipelines. THE REAL REASON WHY GOLD IS RISING IS FOR THREAT OF SYSTEMIC FINANCIAL FAILURE CENTERING IN THE UNTIED STATES.

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.