Wednesday, July 1, 2015

WWII did not get the US out of the Great Depression. And WW 3 Won’t “Help” the Current Global Financial Meltdown…

Wars, Besides Destroying Countless Innocent Lives,  Destroy Wealth – Yours…

It’s time to drive a stake through the heart of this wealth-sucking vampire once and for all…

Wars DO NOT “help” the economy. Only the war profiteers profit and they do so at the cost of everyone else, including YOU!

The facts are in this short video:

NEXT GREECE MAY BE IN USA: Lurking Debt Threatens Cities, States… Businesses Shuttered… Residents Living Day To Day…

NEXT GREECE MAY BE IN USA…
The fear was that elevated pension costs, in cities like Chicago, might push these public entities into insolvency, wiping out much of the holdings of municipal-bond investors.
Once a sleepy corner of the municipal bond market — often not even properly reflected on cities’ balance sheets — public pensions have recently turned into the biggest headache for taxpayers and municipal-bond investors, threatening to bring down the finances of U.S. cities and states.
In some places, like Puerto Rico, Illinois, New Jersey and Chicago, entire balance sheets of cities or states hang in the balance.
Detroit, as well as three Californian cities — Vallejo, Stockton and San Bernardino — had to declare bankruptcy because of their overwhelming pension costs.
In those cases, the courtroom turned into a brutal battlefield pitting bond investors trying to save the money they invested in those cities’ municipal bonds on one side. And on the other side have been public employees trying to save the dwindling pensions that were promised to them.
Recent cases have shown that bond investors are clearly losing this battle.
In the bankruptcies of Detroit, Vallejo, Stockton and San Bernardino, bondholders have faced losses of up to 99% of their holdings, according to a Moody’s report dated May 18. Meanwhile all three California cities chose to preserve full pensions for their employees, while Detroit only cut pensions by approximately 18%.
http://www.marketwatch.com/story/these-lurking-debts-may-turn-us-cities-states-into-greece-2015-06-30

Reality hits San Juan streets amid Puerto Rico debt woes…

The signs of a struggling economy can be seen in the shuttered restaurants and bars in previously thriving Old San Juan. In the faces of business owners who spend much of their day trying to coax customers through the doors. In statistics that show the island’s population has plunged over the past decade. And in the sense of indifference from people who can’t afford to leave and have become used to a hard life.
“Were not going up or down; we’re stuck,” said Rosa Arias, a spunky 70-year-old who stopped earning an income three years ago as a babysitter when the parents of those children lost their own jobs. “I manage to eat and sleep, but that’s it. I live day to day.”
Arias’ existence is part of the “harsh reality” outlined Monday night by Gov. Alejandro García Padilla, who said the U.S. territory can’t pay back some $72 billion in public debt and called on Puerto Ricans to share in making sacrifices.
Puerto Rico’s dilemma is sure to affect the international financial system, which is already wobbling from the economic turmoil in Greece.
http://www.miamiherald.com/news/nation-world/national/article25818208.html

Fallout Will Hit Florida…

As WLRN has reported this year, the U.S. commonwealth of Puerto Rico is staggering under $73 billion in debt. The Caribbean island’s governor is giving a speech this afternoon to announce it’s unpayable. And that could have a significant economic impact here in South Florida.
How bad is Puerto Rico’s financial crisis? Its debt load equals three-fourths of its entire economy. Governor Alejandro García Padilla has conceded that Puerto Rico can no longer make payments on a debt that massive.
Annual trade between Florida and Puerto Rico is about $2 billion. Bankruptcy attorney Charles Tatelbaum of the Fort Lauderdale law firm Tripp Scott says Puerto Rico’s collapse will hit Florida.
“Florida businesses and especially South Florida businesses are the largest provider of goods and services to Puerto Rico,” says Tatelbaum. “When the government can’t pay its bills, it cannot pay those vendors who sell to the government. But more importantly it can’t pay the Puerto Rican businesses that deal with the government, who in turn cannot pay their Florida suppliers.”
http://wlrn.org/post/puerto-ricos-crushing-debt-unpayable-and-fallout-will-hit-florida

Greece Over the Brink

It has been obvious for some time that the creation of the euro was a terrible mistake. Europe never had the preconditions for a successful single currency — above all, the kind of fiscal and banking union that, for example, ensures that when a housing bubble in Florida bursts, Washington automatically protects seniors against any threat to their medical care or their bank deposits.
Leaving a currency union is, however, a much harder and more frightening decision than never entering in the first place, and until now even the Continent’s most troubled economies have repeatedly stepped back from the brink. Again and again, governments have submitted to creditors’ demands for harsh austerity, while the European Central Bank has managed to contain market panic.
But the situation in Greece has now reached what looks like a point of no return. Banks are temporarily closed and the government has imposed capital controls — limits on the movement of funds out of the country. It seems highly likely that the government will soon have to start paying pensions and wages in scrip, in effect creating a parallel currency. And next week the country will hold a referendum on whether to accept the demands of the “troika” — the institutions representing creditor interests — for yet more austerity.
Greece should vote “no,” and the Greek government should be ready, if necessary, to leave the euro.
To understand why I say this, you need to realize that most — not all, but most — of what you’ve heard about Greek profligacy and irresponsibility is false. Yes, the Greek government was spending beyond its means in the late 2000s. But since then it has repeatedly slashed spending and raised taxes. Government employment has fallen more than 25 percent, and pensions (which were indeed much too generous) have been cut sharply. If you add up all the austerity measures, they have been more than enough to eliminate the original deficit and turn it into a large surplus.
So why didn’t this happen? Because the Greek economy collapsed, largely as a result of those very austerity measures, dragging revenues down with it.
And this collapse, in turn, had a lot to do with the euro, which trapped Greece in an economic straitjacket. Cases of successful austerity, in which countries rein in deficits without bringing on a depression, typically involve large currency devaluations that make their exports more competitive. This is what happened, for example, in Canada in the 1990s, and to an important extent it’s what happened in Iceland more recently. But Greece, without its own currency, didn’t have that option.
So have I just made the case for “Grexit” — Greek exit from the euro? Not necessarily. The problem with Grexit has always been the risk of financial chaos, of a banking system disrupted by panicked withdrawals and of business hobbled both by banking troubles and by uncertainty over the legal status of debts. That’s why successive Greek governments have acceded to austerity demands, and why even Syriza, the ruling leftist coalition, was willing to accept the austerity that has already been imposed. All it asked for was, in effect, a standstill on further austerity.
This is, and presumably was intended to be, an offer Alexis Tsipras, the Greek prime minister, can’t accept, because it would destroy his political reason for being. The purpose must therefore be to drive him from office, which will probably happen if Greek voters fear confrontation with the troika enough to vote yes next week.
But they shouldn’t, for three reasons. First, we now know that ever-harsher austerity is a dead end: after five years Greece is in worse shape than ever. Second, much and perhaps most of the feared chaos from Grexit has already happened. With banks closed and capital controls imposed, there’s not that much more damage to be done.
Finally, acceding to the troika’s ultimatum would represent the final abandonment of any pretense of Greek independence. Don’t be taken in by claims that troika officials are just technocrats explaining to the ignorant Greeks what must be done. These supposed technocrats are in fact fantasists who have disregarded everything we know about macroeconomics, and have been wrong every step of the way. This isn’t about analysis, it’s about power — the power of the creditors to pull the plug on the Greek economy, which persists as long as euro exit is considered unthinkable.
So it’s time to put an end to this unthinkability. Otherwise Greece will face endless austerity, and a depression with no hint of an end.

LEAKED NSA DOCUMENT French Government Official Says French Economy In "Dire Straits", "Worse Than Anyone Can Imagine"

Wikileaks has released a new batch of NSA intercepts. Among them is an intercepted communication which reveals that then French Finance Minister Pierre Moscovici believes the French economic situation was far worse, as of mid-2012, than perceived.



Moscovici who served as French finance minister until 2014 and is now the European commissioner for Economic and Financial Affairs, Taxation and Customs,said the French economic situation was "worse than anyone [could] imagine and drastic measures [would] have to be taken in the next two years”. 
French Finance Minister Says Economy in Dire Straits, Predicts Two Atrocious Years Ahead (TS//SI//NF) (TS//SI//NF) The French economic situation is worse than anyone can imagine and drastic measures will have to be taken in the next 2 years, according to Finance, Economy, and Trade Minister Pierre Moscovici.
On 19 July, Moscovici, under pressure to reestablish a preretirement unemployment supplement known as the AER, warned that the situation is dire. Upon learning that there are no funds available for the AER, French Senator Martial Bourquin warned Moscovici that without the AER program the ruling Socialist Party will have a rough time in the industrial basin of the country, with voters turning to the rightwing National Front. Moscovici disagreed, asserting that the inability to reinstitute the AER will have no impact in electoral terms, besides, the situation with faltering automaker PSA Peugeot Citroen is more important than the AER.
(COMMENT: PSA has announced plans to close assembly plants  and lay off some 8,000 workers.)
Moscovici warned that the 2013 budget is not going to be a "good news budget," with the government needing to find at least an additional 33 billion euros ($39.9 billion). Nor will 2014 be a good year. Bourquin persisted, warning that the Socialist Party will find itself in a situation similar to that of Socialist former Spanish President Zapatero, who was widely criticized for his handling of his country's debt situation. Moscovici countered that it was not Zapatero whose behavior the French government would emulate, but rather Social Democrat former German Chancellor Gerhard Schroeder.
(COMMENT: Schroeder, chancellor from 1998 to 2005, was widely credited with helping to restore German competitiveness. He favored shifting from pure austerity measures to measures that encourage economic growth and advocated a common EU financial policy.)
Unconventional
French diplomatic

Here's Moscovici's take on the Greek crisis:


Here is his comment on the NSA spying on him:

The Google translation:

 I strongly condemn intolerable plays #NSA and formally request the accounts. Relations between allies must rest on #confiance

Report Finds 100+ Walmart.com Products Labeled “Made In U.S.A.” That Were Made Elsewhere


Story-Image-1.3While there is no official review process required for labeling a product as “Made in the U.S.A.,” a company can get into legal trouble for misusing that label, as doing so may constitute false advertising. A new report from an advertising watchdog group claims that Walmart’s website has more than 100 examples of products incorrectly marketed as made in America.
According to a letter [PDF] recently sent by the group Truth In Advertising to Walmart CEO Doug McMillon, “Walmart’s website is mired in USA labeling errors.”
Among the items singled out in the letter are Walmart’s Equate store-brand makeup sponges in the image at the top of this story. TINA says these were given the Made in the U.S.A. label on Walmart.com even though the product’s own packaging clearly states that they were “Made in China.”
Another Equate-brand product called out by TINA are these teeth-whitening strips that the company simultaneously lists as made in America while declaring in the product details that they are imported form outside the country:
Story-Image-3.2
In response to the TINA letter, Walmart told the group that manufacturing for both of these products was recently moved to the U.S. but that some stores may still contain versions made overseas and not all the information on the website is correct. Regardless, both items no longer carry the patriotic marketing message.
It wasn’t just store-brand items that got the false “Made in U.S.A.” labels, according to the report. TINA’s letter gives the example of an Almay eyeliner that states the product is made and assembled here in the U.S., even though the packaging declares that it is “Made in Germany.” Walmart says that the country of origin information comes from the supplier.
“False made in USA labeling on Walmart’s website has misled consumers looking to purchase American-made products,’’ said TINA.org Executive Director Bonnie Patten. “The largest retailer in the world should have made sure its American-made claims were accurate before affixing made in USA labels on the products. Until Walmart cleans up this mess, consumers cannot rely on Walmart with regard to where a product is really made when shopping on the site.”
============
UPDATE: When reached for comment, a rep for Walmart provided the following statement to Consumerist —
“We are continually working to improve our website listings and information. We are undertaking a more extensive quality assurance review to help eliminate these coding errors. Based on our initial internal review, we believe these errors are limited to a small percentage of items and we are confident in the overall integrity of the information on our website.”
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A more detailed report [PDF] commissioned by TINA looked at the actual “Made in the U.S.A.” labeling on Walmart.com and found a number of issues.
This report noted that Walmart does little to differentiate its “Made in the U.S.A.” label from its “Assembled in the U.S.A.” label, even though the two labels have very different standards in the eyes of the Federal Trade Commission.
madevsassembled
“The legibility of the text at the top of the label, which can be either ‘Made in the’ or ‘Assembled in the’, is marginal even for people with excellent or corrected vision, due both to the text’s small size and the low contrast of light blue text on a white background,” writes the report’s author, Dr. Jeff Johnson, who notes that the problem is exacerbated for farsighted people or those looking at the site on a small-format screen. “If such people have not seen it earlier in larger format (e.g., on a product page), they would be unable to determine what it says. Even consumers who have seen that text already in larger format would, in search results, have trouble distinguishing ‘Made in the USA’ from ‘Assembled in the USA’.”

Top 4 employment sectors in the United States pay $10 an hour or less: The uneven recovery being led by low wage labor.

It is hard to believe but we are now “officially” six years into this recovery.  For most Americans, it doesn’t feel anything like a recovery and that label appears to be a misnomer.  Americans need only look at their paychecks and the cost of living to realize that yes, things are getting tougher.  There appears to be a global race to the bottom when it comes to wages.  Most of the jobs added since the recovery hit have come in the form of low wage service sector jobs with scant benefits, if any.  The top four employment sectors in the United States are all in the service sector and all pay $10 an hour or less.  The math begins to get murky because you have so many older Americans depending on Social Security as their primary source of retirement income while our young labor force is earning less and therefore paying smaller amounts into the Social Security pool.  The recovery has been very uneven and when we look at the numbers today, we continue to find that the trend is continuing.
The low wage recovery
There are a few theories as to why this trend is happening.  First, we have outsourced a large part of our manufacturing labor force to places like China.  It is simply too hard to compete in places where they have no worker’s protections or rights.  So it is no surprise then that the service sector that requires physical people to be present is growing and representing a larger source of our employment work force.
Can you live on $10 an hour and raise a family?  Millions of families do and this is why dollar stores are so prolific around the nation.  You don’t see them advertising on television or getting any glamor spot in trendy magazines but they plaster the heartland.  First, let us look at the top four employment fields:
largest-sectors1
Source:  BLS
This is interesting.  The number one employment field in the US is retail salesperson with 4.4 million people working in this sector.  Then, you have cashiers with 3.3 million working in this field.  Food servers and food preparation workers comes in third with 3 million workers.  Finally you have office clerks coming in fourth with 2.8 million workers.  In fact, the only job out of the top 10 that pays a living wage is that of registered nurses.  Of course this requires going to college and that road is becoming more expensive by the day.
Is this trend getting better?  Not really if we look at net jobs gained and lost since the recession hit:
NetChangeinOccupationalEmployment
Here is an interesting look.  You’ll notice the massive number of mid-wage jobs that were lost and simply never came back.  The bulk of job growth since the recession ended has come in the form of low wage jobs.  This is a graphic representation of the middle class disappearing.  You will find that many college graduates are working in low wage jobs:
low wage jobs and college
1 out of 4 retail and amusement park workers have a college degree.  1 in 6 bartenders has a college degree.  And you wonder why so many Americans are having a tough time paying back their college debt.  Of course this is for people that are working.  Many young Americans are working part-time or not working at all in our massive “not in the labor force” category that is ignored.
Where does this all go?  It is hard to say.  We live in an interconnected global economy.  You see how a tiny country like Greece can shake up global markets.  China’s correcting stock and real estate market will have an impact here in the US.  With the global correction, you see how the US dollar is getting strong as a safe haven.  Which means our exports will get more expensive relative to other countries.  Which means it will be tougher for our goods to compete in a global landscape.  Cheap products here filling up Wal-Marts and dollar stores but more uncertainty when it comes to wage stability.  This seems to be a global trend.

Greece Defaults! Is Puerto Rico Next?


After saying they would never consider capital on Sunday morning, the Greek govt instituted them that night, closing banks for a week. It appears certain that they will default on Tuesday’s payment before Thursday referendum on what to do about the debt. As markets plunged in reaction, Puerto Rico announced it could not mathematically repay their debt.
http://www.infowars.com/greece-crisis…
https://twitter.com/yanisvaroufakis/s…
http://money.cnn.com/2015/06/28/news/…
http://www.wsj.com/articles/european-…

Fund Manager Warns Puerto Rico Default May Trigger A “Black Swan” Derivatives Melt-Down

It is highly probable that the crashing stocks of MBIA, AMBAC and AGO are the alarm bells of a black swan landing. And, of course, no one has been talking about them…. until today.  
Although these firms are somewhat obscure and small compared to the size of the majority of financial companies, they are highly leveraged with massive off-balance-sheet liabilities for which they have zero hope of covering in the event of even relatively small bond defaults.   In other words, these firms are the ones most likely to set off the next financial collapse triggered by their counterparty defaults.


Submitted by PM Fund Manager Dave Kranzler, Investment Research Dynamics:
I really had not been paying much attention to the Puerto Rico debt situation.  After all, $72 billion in debt that might go bad – big deal.  The Fed can print up $72 billion in credit lines with the push of a button.
But a friend of mine happened to mention to me today (Monday) that MBIA’s stock was down over 23% and Assured Guaranty’s stock was down over 13%.  That woke me up.

MBI guarantees $4.5 billion in par amount of Puerto Rico muni paper.  As of it’s latest 10-Q (March 31, 2015), MBI showed a book value of $3.9 billion. Puerto Rico alone could more than wipe out MBI’s net worth.  But that’s only a portion of the story. The bigger part of the story is buried off-balance sheet in the footnotes in opaque financial structures called Variable Interest Entities (VIE’s). Remember those from 2008?  I remember them vividly.
The VIEs are the off-balance sheet vehicles that triggered the massive chain of counterparty defaults which de facto collapsed the U.S. financial system in 2008.  The VIEs are where the credit default swaps and other nebulous forms of OTC derivatives bet slither around.
Companies like MBI and AMBAC underwrite  credit “enhancement” guarantees on these massive cesspools of debt – and the associated derivatives that are “wrapped around” the debt structures – and stick them in VIEs.  MBI’s 10-K has several pages of footnotes which vaguely describe the contents of its VIEs.   The problem is that MBI and its ilk are thinly capitalized relative to the potential size of the liabilities they face if the credit markets become volatile to the downside.

Toxicity plus toxicity does not equal purification.  But VIEs that contain off-balance sheet debt and derivative guaranteed equals toxicity cubed, at least.   In other words, whatever MBI lists as its “net” credit exposure in its financials, take that number and, at the very least, triple it.
But wait, the story gets even better.  As it turns out Warburg Pincus, one of the loftiest private equity firms on Wall Street,  is by far MBI’s largest shareholder.  Warburg announced a little over five weeks ago that it was going to unload 60% of its stake via over the counter negotiated sales – LINK.   The firm has been unloading these shares since May 18th.  We won’t know how successful this effort has been until the selling is completed.
Does Warburg Pincus sound recently familiar?   It’s the firm that hired “Turbo Tax” Tim Geithner shortly after he left his post as Treasury Secretary.   Remember, Geithner was head of the NY Fed at the time of the 2008 financial collapse.  In other words, he knows where a lot of the bodies in the financial system are buried.  I have no doubt that Geithner has played a significant role in advising Warburg on the need to unload its exposure to MBIA.  Anyone who takes the other side of this trade is a complete idiot.  
But this story isn’t just about MBI.  It’s about the companies that, along with MBIA, provide “insurance” for bonds and derivatives.  These firms have assumed potential liabilities that dwarf their ability to cover them.  Not just in the worst case scenario.  I believe Puerto Rico’s financial demise could trigger the dreaded financial nuclear daisy chain of counterparty defaults.
The problem with creating “actuarial” payout models for insurance guarantees on financial assets, and this especially true for derivatives, is that the outcome is pretty much binomial.  Either the assets pay off or they become worthless or near worthless.  Furthermore, with the extreme degree of Central Bank intervention, which has enabled literal financial zombies to continue living and has enveloped the entire financial system with opacity, it’s impossible to model in expectations on, and potential sources of, counterparty default risk.  It’s like lightening.  It can unexpectedly strike anywhere – just ask Hank Paulson and Goldman Sachs…
This is exactly what occurred in 2008.  Only this time around the problem is significantly greater than it was in 2008.  Global debt and gross derivatives outstanding are much bigger than in 2008.   And, except for the Plan B hyperinflation of the money supply, Central Banks are out of bullets.
I believe it is highly probable that the crashing stocks of MBIA, AMBAC and AGO are the alarm bells of a black swan landing.  And, of course, no one has been talking about them until today.  Although these firms are somewhat obscure and small compared to the size of the majority of financial companies, they are highly leveraged with massive off-balance-sheet liabilities for which they have zero hope of covering in the event of even relatively small bond defaults.   In other words, these firms are the ones most likely to set off the next financial collapse triggered by their counter-party defaults.

For U.S., Puerto Rico Bigger Tragedy than Greece:



Bond Insurers Crash, Hit by Puerto Rico’s Default Shrapnel

Source: Wolf Street

On Monday, Puerto Rico’s government released a report that gave the municipal bond market the willies.
Written by former World Bank and IMF economists, it vivisects Puerto Rico’s finances, lays out the basic fact that the nearly $73 billion in bonds that the US commonwealth has outstanding, amounting to nearly 70% of its GDP, are of dubious value, and offers a debt restructuring strategy.
The report is decorated with financial doom and gloom: Outmigration has caused the population to drop nearly 8% since 2006 to 3.5 million today, even while the debt kept ballooning. It contained this choice passage:
The single most telling statistic in Puerto Rico is that only 40% of the adult population – versus 63% on the US mainland – is employed or looking for work; the rest are economically idle or working in the grey economy. In an economy with an abundance of unskilled labor, the reasons boil down to two.
– Employers are disinclined to hire workers because (a) the US federal minimum wage is very high relative to the local average (full-time employment at the minimum wage is equivalent to 77% of per capita income, versus 28% on the mainland) and a more binding constraint on employment (28% of hourly workers in Puerto Rico earn $8.50 or less versus only 3% on the mainland); and (b) local regulations pertaining to overtime, paid vacation, and dismissal are costly and more onerous than on the US mainland.
– Workers are disinclined to take up jobs because the welfare system provides generous benefits that often exceed what minimum wage employment yields; one estimate shows that a household of three eligible for food stamps, AFDC, Medicaid and utilities subsidies could receive $1,743 per month – as compared to a minimum wage earner’s take-home earnings of $1,159. The result of all of the above is massive underutilization of labor, foregone output, and waning competitiveness.
To fix this situation, bondholders are now asked to step up to the plate.
Governor Alejandro García Padilla told the New York Times that “the debt is not payable,” that there “is no other option,” that this “is not politics” but “math.” His administration is trying not to default, he said. “But we have to make the economy grow. If not, we will be in a death spiral.”
These are not the soothing words the bond market has been yearning for.
Puerto Rico is unlikely to make the debt payment due Wednesday, and if it can’t raise new money by selling additional debt, though it already can’t service its existing debt, the government said it might have to shut down by September, which would entail furloughs and other cash-preserving measures. Some analysts figured it could run out of money as early as July.
Ratings agency Fitch, upon hearing the good news on Monday, cut Puerto Rico’s general obligation bonds to CC, deep into junk territory, and kept it on Rating Watch negative, with further downgrades looming, to reflect, as Fitch said, its “belief that default of some kind appears probable….”
Beyond GOs – which Puerto Rico’s constitution says must be paid before government employees get paid – there are billions of dollars in bonds that public utilities and other entities have sold. On top of its bonds, it faces $37 billion in pension obligations. But unlike Detroit, the largest municipal bankruptcy in US history, Puerto Rico cannot use a bankruptcy process to shed its debts. It can only negotiate with creditors to restructure them.
Puerto Rico’s $73 billion in bonds are a lot of paper to spread around. Investors were lured with tax advantages, now obviated by events. If you own municipal bond mutual funds, chances are you own Puerto Rico bonds, though hedge funds have been buying them too. And those bonds just plunged on Monday.
But beyond bond funds, someone else is getting hit. Remember the bond insurers that were being shredded by the housing bust because they’d insured mortgage backed securities? They got hit again insuring junk.
Shares of bond insurers Ambac Financial dropped 11.9% on Monday. They’re down 26% from their 52-week high in January, and 43% from their lofty levels in February 2014.
Shares of Assured Guaranty fell 13.3% on Monday. After zigzagging up to their post-financial-crisis high just a week ago, they have plunged 19.4% in four trading days.
And MBIA, which insures about one-fifth of Puerto Rico’s municipal bonds, plunged 23.4% on Monday. MBIA was a highflyer before the Financial Crisis, trading at over $70 a share in late 2006,  before it all collapsed. Now, shares have crashed 33% over the past 5 trading days to $6.37 a share.
Analysts seemed surprised.
“Our buy ratings on Assured Guaranty and MBIA were predicated on our belief that the governor was going to do everything in his power to continue to repay [Puerto Rico’s] debt,” Mark Palmer, an analyst at the brokerage firm BTIG, told the Wall Street Journalafter he belatedly downgraded Assured Guaranty and MBIA to neutral from buy, and maintained his neutral rating on Ambac.
Turns out, today everything changed. “A lot of the thinking about how Puerto Rico could dig itself out of the hole is no longer applicable,” he said.
Barclays could not rule out “scenarios in which multiple Puerto Rico issuers restructure their debt, which could cause significant loss” for MBIA and Ambac. Net charges of $750 million or more would degrade the insurers’ capital bases, which could lead to downgrades and diminished abilities to write new business, Barclays’ analysts told theWall Street Journal, adding, “The current market value of uninsured Puerto Rico bonds suggests losses of this magnitude are at least possible.”
But these bonds are not the only municipal bonds Ambac, Assured Guaranty, and MBIA have insured. More hits, with echoes of the mortgage crisis, are waiting to happen.
Puerto Rico is the largest hiccup so far in the municipal bond market, preceded by the bankruptcies in recent years of Detroit, MI; Vallejo, San Bernardino, Stockton, and Mammoth Lakes, CA; Jefferson County, AL. Harrisburg, PA; Central Falls, RI; and Boise County, ID. Others, crushed by debts and pension obligations, are limping in that direction too.
When Meredith Whitney, who’d ridden to fame in 2007 on a prescient report about Citi, predicted in December 2010 that there would be “a spate of municipal-bond defaults,” namely, “50 to 100 sizable defaults, or more,” amounting to “hundreds of billions of dollars’ worth of defaults,” she only got the timing wrong. These things get kicked down the road for years until there’s no more road left. And then a default happens “suddenly.”

Evidence suggests that the US economy is muddling through, rather than falling off a cliff. But in many places, people think we’ve never left the recession behind. Turns out, they have good reason to feel that way. Read…  The Crucial Thing to Know About This Economy

The American Worker: Crushed Again by the Overwhelming Power of Corporatism


Closed by clker.com
There's a song that includes this phrase: "Kick 'em when they're down, Kick 'em when they're stiff, Kick 'em all around." Well that's what has just happened very recently when the massive global corporations that now rule America were, once again, given free license to kick American workers when they're down.
The American worker, already hemorrhaging from corporate administered beatings over several decades, has just received what may be a knockout punch by President Obama and his team of corporate bullies who have combined their power to successfully force Fast Track legislation for the TPP (Trans-Pacific Partnership Agreement) through Congress.
If this TPP gets fully approved and its provisions are put into effect as planned then it has the potential to open up large new markets in Asia for U.S. corporations. But does anyone believe that these corporations are going to take this opportunity to hire American workers? You can bet that they will hire more overseas ultra-cheap labor in various countries; and when they produce and then sell these slave-manufactured products across these new markets their profits will reach new highs; the sky is the limit for these masters of Corporatism and they have this president to thank for this great gift.
Is this what America needs right now when our manufacturing sector is on life support and our workers are in a state of shock? Let's make this very clear; if you are against the American worker then you are against this country. The further decimation of this country's manufacturing sector, its workforce, and its middle class is unconscionable; we will soon see this president smiling broadly as he signs this disgraceful TPP trade agreement into law, sending his corporate friends into a state of ecstasy. But what's left of the American workforce will not be smiling; they will be devastated.
An American president who truly loved his country and its people would have done everything in his power to stop the continued dismemberment of this most important foundation of America that has seen the closure of some 70,000 factories in the last 14 years. He and his predecessor G.W. Bush did no such thing. And all the while this has been going on the "servants of the people" in this Congress have looked the other way. All of them should hang their heads in shame and disgrace.
Did we hear President Obama go before the American people and explain what this TPP is all about? Did he take extra pains to tell the American workers that this agreement will create new jobs here in this country and that they should have no reason to fear it? He did not because he knows it will not happen. He explained nothing; the entire process was secretive; everything in it was developed by this president and the corporations of America behind closed doors.
When we think about Mr. Obama's record in office what would ever have us believe that he has been the champion of American workers, that he has been in their corner, fighting alongside them to defend and expand their rights? Do we see any evidence of that? What great job initiatives has he launched? Have we seen him put immense pressure on U.S. corporations to hire more American workers? Has he done anything of any kind for workers? The answer to every one of these questions is a resounding NO. What we clearly see is a president who has, instead, sold out these workers.
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This will be Mr. Obama's historical legacy; how he failed his country and its workers in their greatest time of need,
Those workers now face a stark future; more unemployment, more low-paying jobs, more applicants for food stamps, a much lower standard of living, and a lot more home foreclosures. Yes, this is what the current president of this country has done in his role as the chief facilitator of the objectives of the corporate world.
Here's an excerpt from Senator Ted Kennedy's passionate speech in 2007 blasting Republicans for their stonewalling of legislation involving a raise in the minimum wage. That speech, originally aimed at Republicans, and the questions that were asked, should now be re-directed at Mr. Obama. I have altered the words in bold type to refer to this president.
Message to President Obama:
"What is the price, we ask you? What is the price that you want from these working men and women? What cost? How much more do we have to give to the private sector and to business? How many billion dollars more, are you asking, are you requiring? "When does the greed stop, we ask you? That's the question and that's the issue."
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How has this rampant greed metastasized within the body of America? Well here's a recent statement by Senator Bernie Sanders which illustrates the high degree of greed present in this nation and where the bulk of this country's wealth is concentrated. "Meanwhile, the wealthiest people and the largest corporations are doing phenomenally well. Today, 99 percent of all new income is going to the top 1 percent, while the top one-tenth of 1 percent own almost as much wealth as the bottom 40 percent. In the last two years, the wealthiest 14 people in this country increased their wealth by $157 billion. That increase is more than is owned by the bottom 130 million Americans -- combined."
The America in which we live has now become the Land of the uber-rich and the Home of the victims of Corporatism. As the wealth continues to flow upward to the top of the income spectrum the misery and hopelessness flows downward into the lives of more and more Americans. The most troublesome aspect of this current lopsided ownership of wealth is that those in control of this government can see what's happening, they see those millions of Americans suffering and, yet, they refuse to do anything about it. They just don't give a damn about their fellow Americans; that is just plain despicable.
These masters of Corporatism will use the TPP and the TTIP and whatever other trade agreements the U.S. government comes up with in the future to try to completely dominate the vast Asian markets. And of course their profits will be generated largely by their use of slave labor. But who knows, some day these Corporatists just might consider restoring some manufacturing in America; that is, when American workers become so desperate that they will gladly work for the same wages as their Chinese counterparts.
Right now these workers have been dumped overboard by the corporations of America with the acquiescence of this government and Mr. Obama. The American worker, which no longer is an integral part of the process by which products of value are produced for domestic sale and export to other countries, has become an endangered species; and if this backward-thinking government, filled with heartless, corporate-controlled politicians, continues to refuse to reverse this situation, these workers will become extinct.
It's as simple as this; if a country, in this case America, has a government and a business sector that, collectively, refuse to provide meaningful, productive employment for the vast majority of those Americans desperately needing jobs, then that country has no future; its downward descent will rapidly escalate and become permanent; and the American dream will no longer have any meaning.
Michael Payne

Greece’s Banks Shut Down Today, U.S.’s Shut Down Tomorrow? It’s Time To Get Money Out Of The System! | Bix Weir


IN THIS INTERVIEW:
– Greece’s banks shut down today, along with Greece’s stock and bond market ?0:13
– Europe to collapse first, then crisis hits the entire world ?4:51
– It’s time to get money out of the system! ?6:07
– Precious metal market still 100% manipulated ?9:59
– Bitcoin to rise during the collapse? ?12:19
Viewers Questions:
– BitGold? ?14:51
– Will the COMEX run out of gold and settle in cash? ?17:51
– Will the silver price fall because of lowered industrial demand during the economic collapse? ?20:19
– Could a debt-settlement between the world’s governments prevent a collapse? ?22:56

+++ Greek debt crisis - live updates +++

Greek premier Alexis Tsipras was reported to have considered a last-ditch proposal from the head of the European Commission to avoid a default. A midnight deadline expired with no news of a deal. Read the latest here.
All updates in Universal Coordinated Time (UTC)
23.25 This concludes our ticker for now. We've rounded up events in the run-down to the Greek default and we'll be covering the latest on the implications throughout Wednesday. So many questions remain to be answered. Can Greece now remain a part of the eurozone? Will Sunday's referendum, for Greeks to decide on the terms of the creditors' most recent bailout offer, go ahead as planned?
22:27 Spokesman for the IMF Gerry Rice says the Fund received a request to have the repayment of the debt extended, but said that it had not yet been ruled upon by the IMF's board. The request was set to be passed to the board "in due course," said Rice.
22:09 The IMF confirms that the debt due by Greece has not been paid. Failure to meet the payment means that the country officially falls into default. "We have informed our executive board that Greece is now in arrears and can only receive IMF financing once the arrears are cleared," said IMF spokesman Gerry Rice. The missed payment is the largest in the Fund's history.
22:00 Midnight deadline (CET) passes for Greece to make its 1.6-billion-euro ($1.8 billion) repayment to the IMF. It means that the country's international bailout formally expires and the country loses access to emergency funding.
20:50 The ratings agency Fitch has cut the country's credit rating further within the junk status category, from the CCC grading to CC-, which is one notch above the level where Fitch believes default would be inevitable. "The breakdown of the negotiations between the Greek government and its creditors has significantly increased the risk that Greece will not be able to honour its debt obligations in the coming months, including bonds held by the private sector," Fitch said in a statement.
19:08 The chairman of the Eurogroup, Jeroen Dijsselbloem, told Reuters news agency that Greece would have to change its stance toward its international creditors if its eurozone partners were to consider giving any more financial assistance. Speaking after an emergency teleconference of eurozone finance ministers, he said it was too late to extend Greece's current bailout program as requested by Athens, and that any new program might impose tougher conditions than the previous one. He also confirmed that Greece was set to default on a payment to the IMF due by midnight.
18:21 A Greek official confirms that the eurozone finance ministers' meeting has ended, and says it will continue on Wednesday morning. He spoke on condition of anonymity and gave no details.
18:14 After participating in a teleconference of eurozone finance ministers to debate a new proposal from Athens, Finnish Finance Minister Alexander Stubb wrote on Twitter that no short-term extension of Greece's bailout or debt haircut for the country was possible.
17:07 US President Barack Obama said the current situation in Greece should not be "a major shock" to the US economic system, but that officials had been monitoring events. He admitted, however, that the crisis could be painful for Greece and significantly affect European growth.
16:35 Europe's main indexes registered clear losses as hopes faded of a last-minute deal to prevent Greece defaulting on its payment to the International Monetary Fund due at the stroke of midnight. (We wonder whether they're accounting for the extra second.) Frankfurt's DAX 30 lost 1.25 percent, the CAC 40 in Paris sank 1.63, while Rome and Madrid fell by 0.48 and 0.78 percent respectively.
16:12 DW analysis of events so far from our correspondent Andrea Rönsberg in Brussels.
15.04 German Chancellor Angela Merkel said Germany would not consider the third bailout package proposed by the Greek government before the referendum in Greece on Sunday. "No new proposal can be discussed by Germany before a referendum," she said in comments reported by participants at a parliamentary party meeting of the CDU/CSU. Greek Prime Minister Alexis Tsipras has requested a two-year rescue deal, and a short extension to Greece's current bailout program to avoid a "technical default," with Athens due to make a 1.6 billion euro ($1.8 billion) payment to the IMF in just hours.
14:36 The eurozone's finance ministers - known as the Eurogroup - will hold a telephone conference to debate Greece's latest request for aid at 17:00 UTC, the group's head Jeroen Dijsselbloem said on his Twitter account.
14:30 US stocks rose in early trading amid speculation that Athens was mulling a last-minute deal to break a stalemate with its international creditors. The S & P 500 index and the Dow Jones industrial average both climbed 0.4 percent, while the Nasdaz composite went up 0.6 percent. This follows the US market's worst day of the year on Monday after talks between Greece and its creditors broke down.
14:15 German Chancellor Angela Merkel told lawmakers that she did not expect any new developments on Greece on Tuesday, as time was too short to allow necessary procedures, such as German parliamentary approval, to take place. In remarks reported by two participants at the meeting, she said it was important for the 18 other eurozone countries to stand together, adding that while compromise between partners was important, there should be no compromise for its own sake.
13:51 The office of Greek Prime Minister Alexis Tsipras says the government in Athens has proposed a two-year deal with Europe's bailout fund, the European Stability Mechanism. The deal would "fully cover its (Greece's) fiscal needs with the simultaneous restructuring of debt," according to the office. It also said that the government would seek "until the end" to find a way of remaining within the eurozone and remain at the negotiating table to this end. Concrete detail was not provided. The proposal came hours before Athens was set to default on a loan to the International Monetary Fund (IMF).
13:30 The German Confederation of Trade Unions (DGB) has called for a financial lifeline to be extended to Greece until after the referendum on Sunday, and for the 1.5 billion ($1.7 billion) dollar loan instalment due to the IMF on Tuesday to be postponed. DGB chief Reiner Hoffmann and the chairman of the Greek General Confederation of Greek Workers (GSEE) called on all parties in a joint statement to "avoid a Grexit with all possible means."
13:28 The mayor of Athens, Giorgios Kaminis, has called on Greek citizens to vote in favor of the economic reform program demanded by Greece's international creditors in Sunday's referendum, Greek television says. Kaminis said the referendum would polarize the population.
12:35 In a letter published in Britain's "Financial Times" newspaper, 19 top-flight economists, including US Nobel Prize winner Joseph Stiglitz and French economist Thomas Picketty, call on European leaders to enable Greece to repay the 1.6 billion euros ($1.8 billion) it owes to the IMF. The letter demands for "a fresh start" for Greece, pointing out that the IMF's own researchers had discredited the austerity policy demanded of Athens, and that the new Greek government had committed to carry out wide-ranging reforms if given the chance to do so.
11:45 German Chancellor Angela Merkel tells reporters in Berlin that she sees no chance for a last-minute deal with Greece before the end of this Tuesday. Merkel says "the program will expire at midnight Central European Time" and that she has seen no indications of a breakthrough with Greece.
11:17 Finance Minister Yanis Varoufakis confirms that Greece will not make its payment due by the end of Tuesday to the International Monetary Fund. When asked while walking into the Finance Ministry whether Greece would pay the 1.6 billion euros due to the IMF, Varoufakis replies "no."
10:43 European stock markets trim losses amid speculation of a possible last-minute deal pull Greece back from the brink of default.
09:37 The Greek daily paper "Kathimerini" reports that Prime Minister Tsipras is considering the offer from the European Commission.
07:07 The Reuters news agency reports that European Commission President Jean-Claude Juncker has made a last-ditch offer to Greek Prime Minister Alexis Tsipras to save the country from default, expected by the end of Tuesday when an International Monetary Fund repayment worth 1.6 billion euros ($1.8 billion) comes due.
To unlock the funds, not only would Tsipras have to accept the creditors' conditions - something that he has so far refused to do - but he would also have to reverse his recommendation for next Sunday's referendum on the bailout package, recommending that Greeks accept, rather than reject the financial aid. The final stipulation is that he responds positively in time for Juncker to convene a meeting of finance ministers before the end of Tuesday.
tj, pfd, rc/msh (Reuters, AP, AFP, dpa)

US dollar will not survive 2015

Editor’s note: by ‘survive’ we are referring to the fact that the US dollar will soon lose major purchasing power. Just like it has lost over 98% since the Federal Reserve came into being in 1913.
By Jim Willie, GoldenJackass.com
In the closing months of 2014, on numerous occasions the position was put forth that as the days of January stacked up, toward the end of the month and going into February, that the global financial structures would show severe strain, widespread disruptions, and possible signs of cracks in breakdown.
The forecasts were clearly stated and repeated. Even the present flow of events has been shocking, despite the expectation.
The forecast certainly has proven correct.
The disruptive events and pace of systemic breakdown are surely going to continue. The year will go down in history as extremely messy, extremely chaotic, and extremely important in the demise of the USDollar.
US dollar burning
Check the 7-year cycle for an amazing sequence that goes back to the 1973 Arab Oil Embargo, the 1980 Gold & Silver Hunt Brothers peak, the 1987 Black Monday, the 1994 Irrational Exuberance with ensuing Asian Meltdown, the 2001 Inside 9/11 Job, and the 2008 Lehman failure. The Year 2015 will be known for the USDollar demise with full fireworks, set up with Ukraine and the European repeat of Waterloo. A quickening pace of events is highly indicative in two natural types in nature, namely the lead up to a natural earthquake, and the lead up to a human childbirth.
KEY ACCELERANT EVENTS
The forecast about fast acceleration of events into the January month has occurred on schedule. Normally a very big event occurs every several weeks, or every few months. In just the last three weeks ten have taken place of significance. The pace has quickened in an alarming fashion. The Great Quickening has commenced. Something big ugly and nasty this way comes. The events are worth emphasis, since each has enormous implications and fallout.
  1. Russia jumped off the Petro-Dollar recycle wagon. Their entire oil trade will not be kept in USDollars. Instead, it will be exchanged immediately into Rubles. Expect some to be converted into RMB for their bilateral trade with China. The Russian action is an integral part of the demise of the Petro-Dollar. They react to US-led boycott.
  1. The Swiss removed the 120 Euro peg to their Franc currency. For over three years their central bank had maintained a hoard of paper mache Euro currencies that accumulated perhaps as much as 800 billion Euros. It became unsustainable. They ran a long USDollar trade with short Gold, which finally will go into reverse. The Langley crew had billions in SWFrancs stuffed in shrink wrapped palettes. They profited handsomely. The Swiss seem to have opened the gates of hell for the Gold market, and might have been slammed with a Gold margin call as leased gold bullion dried up.
  1. The Greeks have prepared to exit the European Union and to default on debt. Their defiant Syriza party won a mandate, a clear leftist majority. Next comes some severe disruption. They might print money to pay off their external debt, which would be an ironic justice. Expect great repercussions within Greece into Europe, at the same time the Russians are passing a gas pipeline as carrot to Greece. With the pipeline will come valuable fees to the Greek nation. They will leave the European Union, with almost certainty. They will soon export food products to Russia, lifting the economy.
  1. The Euro Central Bank announced details on their newest QE tampering. They are to pile on the bond and asset purchases, with a clever attempt to avoid it being corrosive unsterilized by means of cooperative gestures with member nations. Regardless of the details, the Germans are harsh critics of the Draghi procedures. The opposition has shaped up between the EuroCB and the Bundesbank. The Jackass is certain that Germany will leave the EU, leave the common Euro, and eventually leave NATO. The objection to the Draghi QE decision will lead to a major crisis in the European Union.
  1. King Abdullah died and the transition for the royal family begins. He has been replaced by formerly crown prince Salman, who suffers from senile dementia, and will have a terrible time to hold power. The battle for succession has just begun, as rival tribes vie for power, after several decades of being excluded. The events inside Saudi boundaries will increase, turn more violent, and be highly disruptive. Pressure for reform will be fierce and unending.
  1. Merkel has offered a trade union proposal to Russia, which discards the US-led TTIP trade pact. At the Davos Economic Summit, the German Chancellor actually offered a trade pact with Russia which implicitly rejected the US-led TransAtlantic Trade & Investment Partnership. The ironic part is that Merkel has proposed exactly what Russia & China have been developing for two years, known as the Eurasian Trade Zone. Germany is looking for a way out of the European Union.
  1. The German watchdog financial cop BaFin found no improper manipulation in the gold market. They mean from the DeutscheBank perspective. This decision is a setback for the camp that opposes corrupt markets in bond values, currency exchange rates, bank accounting. The backlash could come from numerous flanks, all of which seek justice and fair markets. Market rigging seems never to cease as the climax nears. In Germany, two camps are divided. The politicians are dominated by the banker elite, although loud rumblings come from the ministers levels. The industrial captains manage commerce, and wish to avoid profound economic damage. The US alliance is no longer working toward German benefit. The industrial camp will prevail, but with a huge battle and many unknowns to come.
  1. The Swiss have set up a major RMB trading center in Zurich. An interesting competition is certain to unfold as London, Zurich, and Frankfurt compete for Chinese financial flow in RMB terms. Refer to currency exchange, bond issuance, and direct investment (FDI). While London has the tradition and Zurich has the prestige, the Germans have been hand-picked by the Kremlin and Beijing to serve as the cradle and crucible for European linkage to Asia. The industrial ties to Russia and China extend from Germany, along with huge and growing trade and investment.
  1. The details for Gazprom pipeline extension through Turkey have been revealed, by way of the Black Sea, with volume stated in the plans. In a brilliant stroke, Gazprom decided abruptly to cut off Ukraine on the pipeline construction. It will not pass through Eastern Europe, where USGovt bribery, threats, and corrupt business plans were taking place to block plans. Instead, the pipeline will pass through Turkey, with announced hub on the Greek border. It is being dubbed Turk Stream. The construction will take at least 18 months. In the meantime, the European nations will have to struggle to find a way to connect to its gas lines, and to avoid wreckage from their errant destructive US alliance.
  1. The USEconomy had an enormous miss in expected Durable Good orders. The list of job cuts and project cutbacks in the US, Canadian, British, and European Economies was six pages in length for a recent work toward the January Hat Trick Letter. It was refined to a few pages. It is a veritable procession of business failure from failed monetary and economic policy failure. The USEconomy is stuck in a multi-year powerful recession. QE aggravates the economic deterioration. Numerous major name corporations are making utterly huge astonishing job cuts, the most recent being IBM. Big banks and energy related firms dominate in such news.
Events are flowing extremely rapidly, even at a dizzying pace. It is not remotely possibly to anticipate the next critical event, but one can surely expect something every two to three days recently, something of urgent important with extreme consequence.
In addition to the above events, the US & Canadian shale oil & gas sector is shutting down, without a single event to point to. The shale subprime debt implosion is imminent, already have triggered. The damage will be progressively worse over time.
The 2015 year is off with a very unstable bang, exactly as expected. Notice that none of the above events pertain to the BRICS Alliance.
Their movement will enforce the Global Paradigm Shift to bring about a return of the Gold Standard. Since the US-UK bankers control the financial sector in FOREX currencies and sovereign bonds and banking systems, the East will make steadfast progress in bring back the Gold Standard from the trade ramps. Details to above events, the universal disruption, and the BRICS initiatives are covered in the Hat Trick Letter.
KING DOLLAR PILLAR BREAKDOWN
With the acceleration of events in progress and in view, the pressures will grow against the entire King Dollar Court, the corrupt fortresses in Wall Street and London Centre, the crime syndicate hive. The USDollar will not survive the year. It might not vanish this year, but will surely show its eventual destination in the dustbin of  history.
The four legs of the Petro-Dollar might be described as being the banking system, the FOREX currencies, the sovereign bonds, and crude oil.
  1. After the Lehman killjob crisis failure, the banking system turned insolvent. Thanks to the FASB accounting rules that were bent, the banks have continued as hollow reed pillars. They have been on the one side been settling law suits and investor claims, while on the other side been kept liquid by means of narco money laundering (confirmed by the United Nations). If one big Western bank enters failure, the entire set of big banks will risk failure simultaneously in direct contagion.
  2. The major currencies are in a grand disruption right here right now. The rush into the USD for settling derivatives and as safe haven has rattled the FOREX worse than at any time in recent history, perhaps including the 1995 Asian Meltdown. The emerging market debt involves several $trillion in volume, all of which rose on the balance for the debt burden. Defaults lie directly ahead. The USEconomy will be greatly victimized by the higher USD valuation, with respect to stock and property investments, in addition to export trade.
  3. The sovereign bonds are being supported by Quantitative Easing, the highly corrosive monetary policy by the US Federal Reserve. Other central banks had been well coordinated at the Bank of England, the European Central Bank, and the Bank of Japan. If not direct money printing, it is their usage of Dollar Swap Facilities. In the last couple months, evidence has grown that the major central banks are on their own, acting to preserve their economies, and taking action with local motive. The USGovt raided the Japanese $1.2 trillion pension fund. The Swiss ensured that all nations will break the coordinated monetary policy with the USFed.
  4. The connection between the USDollar and Crude Oil price has been broken, in ways not described or reported in the press. A vast system of FOREX derivatives are being dissolved that connect to the Crude Oil price, resulting on lost control. The rising USD and falling oil price is evidence of the breakdown. The relationship between the USGovt and the Saudis has deteriorated to alarming levels, despite the photo ops on display to deceive. The Saudis have been working on monthly conferences with the Beijing leaders, in what could be called a lovefest for economic cooperation and financial joining at the oil hip. The Saudis and other Gulf Emirate nations will be working to convert their combined $2.2 trillion in sovereign wealth funds into diversified assets, led by Gold. These Arabs will work to replace their Gold bullion stolen in Swiss banks.
USDOLLAR DEATH FORETOLD
The high exchange rates seen to favor the USDollar does not mean it is strong. The global movement in fast clear trend is the wider usage of Chinese RMB. On at least 20 different bilateral conduits, the Chinese trade is almost exclusively done in RMB terms. The Yuan Swap Facility with numerous nations like Australia and New Zealand, lately Switzerland, Germany, and Canada, and several smaller Asian nations assures steadily higher RMB trade settlement. Even US corporations are fast converting USDollars to RMB which assure their import supply lines. The standard of USD trade settlement is going away.
The USDollar is dying like a rocket, shooting upward. Methinks the Petro-Dollar linkages are all broken. As a result, the USD rises, and correspondingly oil falls. Most people attach motive to the price movement. Doing so is erroneously. Instead, the price mechanisms are broken, predominantly a structural effect across most financial markets in an alarming development. The lost control is being manifested in a higher USDX index. It is paradoxically evidence of a dying King Dollar and a failure of its court.
Huge pressures are building. The year 2015 will be when the system openly breaks down, when steadfast US allies break ranks from the King Dollar Court, and work to enable their nations to survive. The year 2015 will be when the entire world (East & West) openly calls for the retirement of the USDollar in order to end the destruction, fraud, madness, war, and chaos. The USFed with its corrosive QE has hastened the major nations of the world to rush toward implementation of the Gold Standard. They must install it from the trade ramps, not the financial ramps. They are in race with time, since their economies are faltering.
Mahatma Gandhi was a sage. He has a famous quote best presented in summary form. “Seven Deadly Sins: Wealth without work, Pleasure without conscience, Science without humanity, Knowledge without character, Politics without principle, Commerce without morality, Worship without sacrifice.” Without any hesitation, equivocation, or doubt, all these important sins are growing trends and priorities in modern United States.
London Paul summarized well the current path of disruption and powerful change. “The so-called experts have thrived in a world which was all about obfuscation. As this paradigm collapses, they are desperately trying to hang onto a totally failed construct and refuse to accept the reality of what is coming. The alternative terrifies them to their very core. Greece was a clear indication that the masses are waking up in significant numbers to the insanity of a cabal agenda of death, destruction, and grand larceny all wrapped as being in our best interests. When I have spoken before about a time which will be savage and uncompromising, it was in my opinion a realistic assessment of what is coming. However, when we get through the other side, the world will transform out of recognition and in ways that would seem impossible from our current frame of reference. So we continue to accumulate Gold & Silver to protect ourselves against the financial carnage that is coming. Humanity is going to go through a very sharp learning curve and will have to work together for common goals and aspirations as it should always have been. Necessity is the mother of invention and we will all have to go through that process of total reinvention. The level of ruthless manipulation to divide and conquer humanity for decades and beyond will become clear and it will truly shock humanity.”
GOLD RALLY IN FOREIGN CURRENCY
The gold market is rallying in the Yen terms, in the Euro terms, and in the CanDollar terms. The Swiss have ignited a global gold rally. They very likely covered a short gold position in a complex arbitrage trade. Notice the gold price decline from the $1900/oz level began at about the same time the Swiss announced their Euro 120 peg in late 2011. Notice the gold reversal has begun exactly at the time of the Swiss de-peg decision. It might be easy to conclude that the Swiss National Bank financed their Euro peg by crushing the Gold market. In the three and a half years during their peg, the gold price lost one third of its value on the corrupt COMEX market. With the Swiss lit fuse, no turning back. The reversals are significant. In Switzerland, the people have been given a hefty gold price discount due to the rising SWFranc currency. The Gold price in USD terms will be the last event, the ultimate event in confirmation.
HUNGARY BOTH SMART & HOT SPOT
The Jackass has no problem admitting an error. They can be valuable learning opportunities. The last big error was made in expecting a higher USTreasury Bond yield in 2011. Big error indeed, as the learning curve featured forced comprehension of the powerful Interest Rate Swap derivatives. With Morgan Stanley putting on $8.5 trillion in IRSwaps in a mere six months time going into end 2010, the USTreasurys rallied with rising price and falling yield. This contrary event occurred despite greater USGovt debt, fewer USTBond investors, and a debt rating downgrade. The paradox is explained with the vast IRSwap machinery. Thanks to Rob Kirby, the Jackass learned more about the derivatives and the fabricated bond demand from computers, managed by JPMorguen. Too bad Bill Gross of PIMCO did not hire Kirby as a consultant.
The latest error is minor, but interesting. The Jackass had stated recently in reports that Poland, Hungary, and other Eastern European nations were all exposed to home mortgages in Swiss Franc denomination. With a rising SWFranc exchange rate, their aggregate mortgage debt balances will be damaged from having risen in amount. They will have a higher debt burden suddenly. The Polish are exposed. However, in a three step process, the Hungarians side stepped the risk in a very clever adept maneuver. The Orban Admin forced the banks to convert all foreign currency denominated property mortgages into Hungarian Forint (HUF) mortgages. Note that the switcharoo took place just a couple of months before the Swiss central bank de-peg. The HUF is not pegged to any currency including the USDollar or Euro. The correction was given by a sharp Hungarian Hat Trick Letter client, who has been valuable not only with respect to matters pertaining to his country like the South Stream Gazprom pipeline project, but also to events in nearby Ukraine. Prime Minister Viktor Orban might be at risk. He has fended off the USGovt fascist pressures to block the Gazprom pipeline. He has gone on an independent path. He might be a Langley target. Maybe Budapest will be treated to some public shootings or explosions by yet more lone gunmen, like in Paris following the President Hollande comments in opposition to continued Russian sanctions.
CONCLUSION
People had better prepare themselves for some conclusion events, certain to occur with fireworks. The USDollar is soon to go away, put to rest, killed off. Its rise signals its demise. The hidden dismantle of the Petro-Dollar mechanism has been eerie, mysterious, and full of intrigue. The Gold Standard will return, but through the trade window. The solution to the untreated Global Financial Crisis is the gold route. The Eurasian Trade Zone will be built upon the gold route, and see a revival of the Silk Road. It cannot be stopped, not even by war. The safe haven is not the USDollar, but rather Gold & Silver bars & coins, otherwise defined as money.
The crisis is better described as the Global Monetary War. Any nation wishing to establish trade or a monetary system centered upon gold is branded a rogue nation, subject to extreme propaganda. This is precisely why Russia is being vilified, since they want no more USDollar in trade or banking, and lead a global movement to discard the USD as global reserve currency. The solution is with precious metals as the core to banking, trade, and currency, even wealth preservation. The new 2015 year will be exciting. As the Jackass forecasted, 2014 did indeed end much differently from the way it began. The agents of change are working at hyper-speed now. The USDollar is doomed, and its captains are running for their lives. They are not worth bargaining with in magnanimous cut deals. Better to treat them like fire ants and bothersome fleas and diseased rodents and rabid dogs. The return of Gold to its primacy is long overdue.
SOURCE

Will Puerto Rico Cause An Inadvertent “Black Swan” Derivatives Melt-Down?

I really had not been paying much attention to the Puerto Rico debt situation.  After all, $72 billion in debt that might go bad – big deal.  The Fed can print up $72 billion in credit lines with the push of a button.
But a friend of mine happened to mention to me today (Monday) that MBIA’s stock was down over 23% and Assured Guaranty’s stock was down over 13%.  That woke me up.
MBIAMBI guarantees $4.5 billion in par amount of Puerto Rico muni paper.  As of it’s latest 10-Q (March 31, 2015), MBI showed a book value of $3.9 billion. Puerto Rico alone could more than wipe out MBI’s net worth.  But that’s only a portion of the story. The bigger part of the story is buried off-balance sheet in the footnotes in opaque financial structures called Variable Interest Entities (VIE’s). Remember those from 2008?  I remember them vividly.
The VIEs are the off-balance sheet vehicles that triggered the massive chain of counterparty defaults which de facto collapsed the U.S. financial system in 2008.  The VIEs are where the credit default swaps and other nebulous forms of OTC derivatives bet slither around.
Companies like MBI and AMBAC underwrite  credit “enhancement” guarantees on these massive cesspools of debt – and the associated derivatives that are “wrapped around” the debt structures – and stick them in VIEs.  MBI’s 10-K has several pages of footnotes which vaguely describe the contents of its VIEs.   The problem is that MBI and its ilk are thinly capitalized relative to the potential size of the liabilities they face if the credit markets become volatile to the downside.

Toxicity plus toxicity does not equal purification.  But VIEs that contain off-balance sheet debt and derivative guaranteed equals toxicity cubed, at least.   In other words, whatever MBI lists as its “net” credit exposure in its financials, take that number and, at the very least, triple it.
But wait, the story gets even better.  As it turns out Warburg Pincus, one of the loftiest private equity firms on Wall Street,  is by far MBI’s largest shareholder.  Warburg announced a little over five weeks ago that it was going to unload 60% of its stake via over the counter negotiated sales – LINK.   The firm has been unloading these shares since May 18th.  We won’t know how successful this effort has been until the selling is completed.
Does Warburg Pincus sound recently familiar?   It’s the firm that hired “Turbo Tax” Tim Geithner shortly after he left his post as Treasury Secretary.   Remember, Geithner was head of the NY Fed at the time of the 2008 financial collapse.  In other words, he knows where a lot of the bodies in the financial system are buried.  I have no doubt that Geithner has played a significant role in advising Warburg on the need to unload its exposure to MBIA.  Anyone who takes the other side of this trade is a complete idiot.  
But this story isn’t just about MBI.  It’s about the companies that, along with MBIA, provide “insurance” for bonds and derivatives.  These firms have assumed potential liabilities that dwarf their ability to cover them.  Not just in the worst case scenario.  I believe Puerto Rico’s financial demise could trigger the dreaded financial nuclear daisy chain of counterparty defaults.
The problem with creating “actuarial” payout models for insurance guarantees on financial assets, and this especially true for derivatives, is that the outcome is pretty much binomial.  Either the assets pay off or they become worthless or near worthless.  Furthermore, with the extreme degree of Central Bank intervention, which has enabled literal financial zombies to continue living and has enveloped the entire financial system with opacity, it’s impossible to model in expectations on, and potential sources of, counterparty default risk.  It’s like lightening.  It can unexpectedly strike anywhere – just ask Hank Paulson and Goldman Sachs…
This is exactly what occurred in 2008.  Only this time around the problem is significantly greater than it was in 2008.  Global debt and gross derivatives outstanding are much bigger than in 2008.   And, except for the Plan B hyperinflation of the money supply, Central Banks are out of bullets.
I believe it is highly probable that the crashing stocks of MBIA, AMBAC and AGO are the alarm bells of a black swan landing.  And, of course, no one has been talking about them until today.  Although these firms are somewhat obscure and small compared to the size of the majority of financial companies, they are highly leveraged with massive off-balance-sheet liabilities for which they have zero hope of covering in the event of even relatively small bond defaults.   In other words, these firms are the ones most likely to set off the next financial collapse triggered by their counterparty defaults.