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The year 2008
bore my mark as the year the system broke. A public article addressed the
issues, laid out before the breakdown occurred in September of that year. The
consequences for the many failures, the desperate nationalizations, the hasty
scrambles to put financial sewage under USGovt ownership, the realization of
TARP as a vast slush fund for illegitimate bank rescues, the official
monetization plans put forth to prevent bond implosions, and much more
occurred in the year 2009 as a recognized aftermath. Here we are in 2010 and
the threats must again be laid out. A prelude was offered in an mid-December
article entitled "Full
Circle of Govt Debt Default" (CLICK HERE) where a global sovereign debt ruin in
vicious circle was displayed the sequence that started in the Untied States
and will end in the Untied States. Rather than make specific forecasts of
extreme events, a list is presented much like a smorgasbord. The odds are
100:1 in favor at least one extreme event occurring in this current calendar
year in my view. The odds are very high in favor of several events taking
place this year. The key here is that a great many extremely damaging and
highly disruptive events loom like giant gathering storm clouds that meet,
complete with lightning displays. More terrestrial types might consider
that a great many land mine explosives lie in the wide pathways ahead. At
least a few extreme craters will be formed. A few financial edifices will be
toppled. Great changes come, especially to the global power structures. This
time around, the stakes are bigger, and entire nations will face debt failure
and national realignment. The ripple effects will reshape the global
financial system.
The blind, the
deficient, and the compromised fail to fully appreciate and detect the
meaning of the Dubai debt default or the Iceland
financial failure. They actually believe these busts have been dealt with by
the very strength of the capitalist system. These default failures signify a
continuation of the credit market crisis that never went away. Instead,
accounting fraud was legalized. Instead, bloated bank toxic balance sheets
were permitted. Instead, sovereign debt finance by monetary expansion was
endorsed, i.e. monetization. Instead, stock equity sales to the nitwits
incapable of reading balance sheets was widespread. Instead, broader
statistical gimmickry of economic data was installed. Not a single meaningful
reform has taken place on US
soil, which guarantees the continuation of the credit crisis is assured. No
substantial reduction of US home loan balance sheets. No return of US
manufacturing. No liquidation of dead US
banks. No removal of Goldman Sachs from control of the USDept Treasury. No
disclosure of US Federal Reserve disbursements of over $1 trillion. No steps
to restore the Glass Steagall Act to create firewalls between the financial
sectors. No effort to prosecute for $trillion bond fraud. No initiative to
bring to light the deep criminal lace to Fannie Mae and AIG, now protected
under USGovt aegis. No attempt to rein in military spending and endless wars.
No movement to create a monetary system with a currency other than the
current debt denominated $20 bill coupons. Instead, with much greater
force, enthusiasm, and recklessness, the financial system hurtled deeper into
the Weimar chambers of commerce. Worse, most steps simply apply greater
doses of precisely what caused the problems with debt overload and excessive
monetary expansion. Worse doubly, most reforms grant even more power to those
responsible for the breakdowns and fraud perpetration. The Untied States is
being recognized internationally as a rogue nation moving headlong toward
communism, run by powerful syndicates, whose most prominent foreign policy is
explained by military hardware.
There is no shred
of the capitalist structural makeup remotely evident outside of Asia. We see
cronyism systems in the West, but worse, we see syndicate systems with
alleged cords of criminality. The discredit of the central bank franchise
system is barely noticed by the mainstream, which applauds the printing press
monetary operators without recognition of the repeat of Weimar chapters. Just
today, the New York Times formally posed the question of how the US Federal
Reserve can prevent the next asset bubble when it missed the last one. It
actually misses all asset bubbles, creates them all, and denies the existence
of each during formation. The signature signals of a failed central bank is a
lasting 0% rate and heavy monetization, called euphemistically Quantitative
Easing so as to make economist failure sound like some wondrous medical
prescription in high falluting nomenclature. How about the US Financial
Reform being called Economicus Moribundus and the vast printing of money in
monetary policy being called Whisky Delugius?
Let's review a
rather lengthy list of potential events. These are not wild raving
pronouncements. Each has some critical mass of likelihood. Each event is
presented like an ugly perverse budding shoot on the charred landscape,
easily representing an element of the Paradigm Shift. The global shift is
almost totally missed by the American leaders, the press networks, and the
people. My interpretation is that they live inside the US Dome of Perception,
and hardly ever pay attention to matters pertaining to the USDollar. They
instead regard it as a constant factor, quite erroneously. The list to follow
includes matters often considered sacred, due to the sanctity and inertness
of sovereign governments and their debt. The event closest to the Untied
States is the dreadful dismemberment of Mexico, which is Greece on steroids
and cocaine with the temperature turned up and the violence turned up, where
the law enforcement and military have both been compromised and infiltrated.
It is a tight race between the US and Mexico as to which nation is more
overrun by crime syndicates. The difference is the US has white collar crime,
while Mexico violent crime.
The following
events are presented as potential disasters looming, spanning the full
spectrum, each with triggers in numerous arenas. These are potential
disasters, not presented as forecasts, but rather as a list to beware for
nasty highly disruptive eruptions. They are loaded with a geopolitical
streak, in keeping with Paradigm Shift that signifies a powerful set of changes
in altered power. The one common trait all the following potential events
have is that they are systemic game change agents. The globe will be
reshaped by each and every event that comes to pass. They are not listed in
any order of likelihood, since they are all very much at risk of occurrence,
and integrally interconnected to a frightening degree. Each would heap
tremendous damage, disruption, and devastation, upon occurrence. One
should note that if one or two events occur, then others might occur with
domino effect from the chain reaction of chaos and opportunity. Note for
instance, how the Dubai default resulted in Greek Govt debt downgrade, with
no connection except possibly some ancient Greek statues in marble lined
parlors in Dubai edifices. The ripple effects will be felt for a full year,
just like Lehman, Fannie Mae, and AIG in the United States, just like
Northern Rock, Royal Bank of Scotland, and Lloyds in England. The triggers
have been ignited, and constant fallout comes. The process never stopped,
only the perception that it had stopped. The process can only stop when
liquidation and reform occur. Neither is remotely evident.
Use the following
scale for grading risk and effect. The likelihood of the event happening will
be shown as a percentage, with 0% the lowest and 100% a certainty. The impact
for each and every stated event would indeed be huge, extreme, and dangerous.
Many different sources have provided lists of extreme events for the new
current year, a tradition. Much lies in common for those who choose to think
ahead, instead of employing the common practice of putting a new less
credible layer of deception on the current landscape. The best among all the
sources seen in my view has been the Business Insider. Thanks to my own
circle of colleagues and confidants, who provided at least a couple of events
listed.
EXTREME WARNINGS FOR EXTREME TIMES
Saudi Royals
fall: The Saudi Arabian royal family would lose government
control to the Islamic Fundamentalists and is replaced. Scores of old royals
escape loaded with hundreds of billion$ in assets, conjuring up memories of
the Shah of Iran. Disruptions and instability spread across the entire
Persian Gulf. A clampdown of fundamentalist groups in other Gulf nations
invites backlash. Occupation forces in Iraq face renewed resistance. (chance:
20%)
China gains full
naval military capability: The Chinese Military would attain
aircraft carrier force with three carrier groups. In expert circles they call
it blue water capability. With this potential, including long range strike
potential, the balance of power in Asia is altered. Pressures are put as a
result toward changed alliances in key nations considered loyal to the West.
Certain strategic points gain attention, as focus is trained on the Mallacan
Straits, the Panama Canal, the Suez Canal, the Bosporus Straits, the access
routes to the Bering Sea, Australia, and South America. (chance: 30%)
Russian cuts off
natural gas to Eastern Europe: Russia would
enter a deep dispute with Eastern European nations, in particular Ukraine,
and cuts off the flow of natural gas. Disputes center on return to the
Russian fold from the independent factions encouraged by the Untied States
motivated by the many Color Revolutions. Caught in the middle, at the end of
the distribution lines, is Central Europe, whose ties forged by Germany to
Russia remain healthy and strong. Russia later forges an alliance with
Central Europe that results in some stability, as it becomes clear that
Russia has come of age as a peacemaker with further ramifications in time.
(chance: 50%)
Greece defaults
on its debt: Great problems would result for the
parent European Union, sure to fracture. Germany lets it go, does not cover
the Greek debt, but employs plausible deniability on minimal offered
assistance. A chain reaction begins, to reach the other vulnerable nations.
Portugal, Italy, and Spain teeter upon the event, soon to suffer their own
defaults, none aided. Even France suffers the ignominy of default, but is
aided by Germany in the end, unlike the PIGS nations. The crux of the matter
is refinance rollover of debt, which fails. The non-German EuroBonds then
rise in yields, enough to force a split in the Euro currency to form the Nordic
Core Euro. Default nations revert to their old former currencies and suffer
massive devaluations. (chance: 80%)
Mexico fails as a
state: The conditions in Mexico would become fully
recognized and openly discussed. Two factors are front & center. The rise
of the drug cartels in their control of the nation in numerous aspects is
already global news. The unexpected net import of crude oil that ruins the
nation's federal finances is not yet global news. The former has been
understood, but the loss of oil exports takes the region by total surprise.
Hyper-inflation then hits Mexico, which prints money to alleviate the federal
budget shortfall. Chaos results on numerous levels. Supply disruption hits
the US southern refineries. (chance: 70%)
Credit crisis relapse
hits the US banks: The Untied States would suffer a relapse
into a second round of bank failures, debt defaults, institutional
liquidations, corporate deaths, and market disruptions. The proximal cause is
the spread and continuation of the property decline, home foreclosures, and
commercial defaults. Numerous bank analysts continue to harp on commercial
mortgage loss risk after a 40% price decline, so far covered up by phony
accounting rules. Impaired assets sit as bank assets. A trigger is the USFed removal
from mortgage bond support, coupled with a powerful second downwave in
housing prices from Option ARMortgages. A solution is put forth for wide
USGovt purchase of housing inventory and the official advent of Fannie Mae as
landlord. The supply chain is disrupted in extreme ways, as commercial paper
grinds to a halt, and a deeper recession takes root. (chance: 40%)
The US supply
chain suddenly suffers disruptions: The economic
supply chain would be crippled by its two primary points of vulnerability.
The finance credit lines are tied to wounded commercial paper markets. The
actual tangible output supply comes from industries that struggle in credit
flow, unstable prices, burdensome regulations, worker shortages, and
constricted metal supply. Certain trucking firms have already shut down.
Gasoline refineries are below their 1990 capacity. Mexican oil supply is soon
to end. The lack of trained skilled experienced workers is chronic. (chance:
40%)
Fannie Mae is
revealed as a slush fund, toxic bond haven, and object of grand criminal
fraud coverup: Leaks would lead to calls for further
Congressional investigations of mortgage bond fraud and past presidential
pilferage. At the same time, various alerts would be given that the USGovt is
harboring a black hole certain to cost over $2 trillion in additional
bailouts, maybe up to $4 trillion. The prospect of wide USGovt home ownership
from default sparks research reports and great scrunity, even clamor by
younger members of Congress. The unlimited credit line to back USAgency debt
securities has opened the door to a nasty effect on perception of USTreasury
debt, as global perception of the actual USGovt debt ramps up 50%. Discussion
of default rises. (chance: 40%)
The real 911
story comes out: The full seamy story would be revealed
with many participants named. No further comment except that nation then
would become deeply divided in reaction, and international isolation would
result. The beneficiaries become the object of scrunity, criticism, and
investigation. Attention turns to the swine flu vaccination and global Cap
& Trade green taxes, each of which faces the harsh eye of investigation
in Europe. (chance: 20%)
Iran is attacked: Great
controversy would result from the direct attack of its nuclear facilities and
other targets. Controversy would stir from scattered unconfirmed reports of
involvement by various nations. Retaliation by Russia and China, long
promised, then comes in hidden ways not fully understood. In the aftermath,
the banks in the Mideast region are subjected to great scrutiny by several
global players, especially one US ally nation. (chance: 10%)
Japan suffers a
financial & economic crisis: A recession
would take grip, spreading to its financial markets. Reduced export trade
eliminated the trade surplus long ago. The Japanese Govt Bond then jumps
higher by 2% or 3% in bond yield. The rising Yen currency consequently runs
up 20% to 30% from the reverse of the Yen Carry Trade. Their export trade
grinds to a near halt, and major conglomerate banks announce insolvency. Then
China steps in. (chance: 40%)
UKGovt suffers a
debt downgrade: The United Kingdom would be the first
major industrialized nation to lose its high credit rating. The UKGilt bond
yields then rise above 6% without pause. The threat of sovereign debt default
is debated. The British Pound currency falls, which perversely aids the
USDollar. Shock waves extend to the Wall Street financial center. Later,
scrutiny comes to the USTreasury for its own downgrade and default risk.
(chance: 50%)
Talk swirls for
eliminating some central banks: Debate would
focus on the central bank role as cause for asset bubbles, and extensions to
the faulty nature of money itself. Analysts would cite money free from
anchors of asset backing. However, awareness rises of the impracticality of
central bank elimination, since debt liquidation and cleared decks cannot
occur without global depression. In the background is rampant discussion of
syndicate involvement and the risks of retaliation by the secretive banker
organizations. (chance: 10%)
China faces a
degree of chaos: Falling export trade, faltering bank
reserves, empty commercial buildings, rising unemployment, idle factories,
stalled construction projects, and restive population would contribute to a
national crisis that struggles to be told amidst press controls. Armed with a
$2500 billion war chest of reserves, China begins to convert assets into
tangible rescues, aid, and welfare. The Chinese crisis then ignites a global
sale of USTreasurys. As an offshoot to the chaos, the colonization of America
then begins, as China cashes in on its USAgency Mortgage Bonds. It exploits
it cut deal of Eminent Domain conversion of bonds into property. (chance: 20%)
Food prices soar
in the US: The divergence between official crop forecasts would
clash with the reality of crop failures and profound shortages this summer.
Being the greatest food production source, the US crisis spreads globally.
The deCarbonnel threat is realized, as foreign nations sell US$-based assets
in order to finance food supply purchases. China enters the fray as a buyer
of distressed farm property, amidst accusations of carpetbagger. (chance: 80%)
JPMorgan is
object of persistent rumors of gigantic credit derivative losses: The
slowly rising USTreasury Bond long-term yield would cause deep painful losses
to JPMorgan. Their abuse of Interest Rate Swap contracts becomes a topic of
debate. The monetization of USTreasurys becomes a topic of debate. The
ability for the USGovt to control its deficits and auxiliary (hidden) losses
becomes a topic of debate. Even bond fraud within JPM hallowed halls becomes
a topic of debate. To cover the losses, monetary inflation grows out of
control, and a USDollar decline ensues, taking the DX dollar index below the
70 level. (chance: 40%)
London metals
exchange shuts down: The venerable London Bullion Market Assn
would close, unable to fulfill gold orders. The varied stories continue
regarding unorthodox practices from the London metals exchange in the month
of December, like redemption of gold contracts in cash, like outsized demands
for gold delivery mainly by Chinese entities but increasingly by the Swiss,
like satisfaction of gold contracts with Street Tracks GLD shares, and much
more. Scrutiny with assays upon high volume delivery have been standard since
the tungsten gold story emerged, an indirect confirmation often ignored. The
supply chain with intermediaries suddenly halts, as they too have no gold
bullion to supply the LBMA. Companies shut down. Lawsuits result.
Prosecutions begin. Midlevel officials are arrested. Some turn state's
evidence. The gold price enters a state of extreme confusion, with vast
discrepancies between paper gold price and physical gold price. (chance: 70%)
GOLD & SILVER
START A NEW YEAR
Like after a
stormy night, the new year has arrived much like a new market with fresh
perspectives. The end of tax loss selling, accompanied by tax gain offsets,
has come. The beneficial effect is equally shared between gold and silver,
although the percentage gain from the recent reversals this week is larger
for silver. Not shown in the two graphs is the upward jump in today's prices.
They extended gains, with gold reaching the 1135 level, and silver reaching
the 18.1 level. The most important factors to keep in clear focus are why
gold is rising in a powerful upward trend in the first place. They have not
changed. There is no end in government spending, from the Untied States,
the UK, Europe, and Japan. There is no meaningful reform of any kind, surely
no remedy unless one considers padding banker balance sheets with taxpayer
funds as pre-requisite for remedy. There is only a rampant rabid race to grow
the money supply, to produce federal deficits, to expand the central bank balance
sheets. The real adjusted cost of money is negative after price inflation.
The 0% official rates have become fixtures, as central banks look
increasingly incompetent in justifying their continuation.
![](http://www.24hgold.com/24hpmdata/articles/2010/01/img/20100107CLA07542.jpg)
Notice the sharp
reversals since the new January month began. Long-term moving averages remain
in the uptrend, despite the orchestrated December correction. Investment
demand is skyrocketing, a story barely told in the Western press. The wide
band for the silver price hints of a strong price rise toward the 20 level on
the next upswing. It has already begun. The tumultuous 2010 year,
identified by at least a few key critical events listed above, will send the
gold & silver prices soaring. Those who believe the hype in the
previous month by the mainstream biased press will regret not climbing
aboard. This will be the year of magnificent crises that change the face of
the global financial structures. Debt will be dumped like a broken Vegas
gambler. Paper money will be discarded like yesterday's newspaper. With the
crude oil price at almost $83 per barrel, where are the Deflation
Knuckleheads now? They led some gold investors to exit before the push from
$900 to $1200. They remain legends only to the image in their own mirrors.
The crude oil price might actually come down somewhat in the coming month or
two, from scads of vessels loaded and sitting at sea. But gold & silver
are set to continue a powerful upward thrust in price, as the perversion of
money has become a desperate broad global pursuit. Most major currencies face
serious debasement. This is a great opportunity to join the Precious Metals
Locomotive after a pit stop. Targets are gold at $1375 and silver at $22.25 per
ounce.
![](http://www.24hgold.com/24hpmdata/articles/2010/01/img/20100107CLA07541.jpg)
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Jim Willie CB
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‘see’ what is happening, and you do this far better than the
economists! I can think of many areas in life now where the best exponent is
somebody not trained academically in that area.”
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Jim
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