Hat Trick Letter – květen 2010

THE EURO CURRENCY SPLIT IS NOT IMMINENT, BUT A NEWLY DESIGNED EURO CURRENCY FORMS THE TAIL OF A FORMAL LEGAL COMPLAINT. BOTH THE LISBON TREATY AND THE UNIFIED FINANCIAL BAILOUT MECHANISMS ARE BEING CHALLENGED IN THE GERMAN HIGH COURT. THE NEW EURO WILL BE SPLIT FROM A LATIN EURO CERTAIN TO BE TRASHED. THE NEW EURO IS PLANNED TO HAVE A GOLD COMPONENT. ITS LAUNCH IS SET FOR JUNE 2011 NEXT YEAR, NOT PUBLICLY KNOWN.

In an exchange last week, the German banker contact revealed that June 30th of 2011 is the date set in the construction of the Northern Euro, in the documents, in the formal support mechanisms in the FOREX and commodity markets, and in the contractual agreements with member nations tied to their central banks. The new accord will involve more autonomy, enforcement, and activity by member nation central banks in maintaining the balance among the Northern Euro, the Latin Euro, and other major currencies. Gone will be the bureaucratic Euro Central Bank, the centralized body located in Brussels Belgium. Although the German Bundesbank is the lead dog in the EuroCB sled, the central bank has been highly politicized. The new Northern Euro currency will be jointly managed. Strong cooperation has existed for decades between The Netherlands and Germany. The Benelux natios will partner for lead control of the new Euro. Expect the Northern Euro to rise in valuation strongly upon its launch versus the USDollar, something like 20% to 30% over three to six months. Expect the Latin Euro to fall in valuation, something like 20% to 50%, really, over three to six months. Pay close attention to the role played by Russia and Gold in the Northern Euro currency in the plan.

THE NEW NORTHERN EURO WILL EMERGE FROM THE EXISTING EURO CURRENCY, BUT WITH A GOLD COMPONENT. When pressed on the launch date, the German banker said no formal announcements ahead of time are being planned. It is expected in 14 months, with little advanced warning. My view is that crisis events could dictate an earlier launch, or at least more formal news of its imminent launch in order to achieve some greater currency stability. What is really needed is ‚When Issued‘ Northern Euro and Latin Euro currency trading vehicles. The new Northern Euro will provide intense, sudden, and powerful competition for the USDollar. When the New Euro arrives, the USDollar will resume its deep long-term decline. The US$ has benefited undeservedly from the Euro distress and disruptions in the perverse and vicious Competing Currency War. When the Northern Euro arrives, especially if it contains key commodity components like gold and crude oil, the US$ will suffer immediately enter a crisis stage. A run on the USTreasury Bond would then be extremely likely. The sequence will define the monetary crisis toward climax.

COMMERCIAL PROPERTY PRICES CONTINUE TO PLUNGE. THEIR PRICE DECLINE IS WORSE THAN RESIDENTIAL, WHICH HAS BEEN BUOYED BY FEDERAL PROGRAMS. THE COMMERCIAL ARENA IS RECEIVING STEADY COVERAGE AS A DISASTER ZONE. ITS SHORT-TERM FINANCE REQUIREMENTS HAVE FORCED THE ISSUE WITHOUT RECOURSE. $$$

The commercial real estate (CRE) sector is in turmoil. Commercial aggregate property values are not the listed $6 trillion nationwide on the balance sheets. Instead their value is closer to $3 trillion. Portfolios for the entire commercial market are close to being underwater on aggregate. The giant defaults in CRE bring on two unique problems not shared by the residential sector. No buyers can relieve the problem for CRE properties at the current prices. Then the banks holding the CRE loans use fictional mark to market methods at lofty exaggerated prices, elevated even though many of these current CRE note holders are delinquent on their loans. In most cases, regional banks are involved, not the big Wall Street banks. The regional banks lack the political connections and access to funds from the USTreasury and US Federal Reserve. Increasingly, these smaller banks are entering failure. They are largely insolvent. This is an issue of solvency, not liquidity. The crisis for commercial properties was late to make the headline news.

Commercial real estate is subject to stricter short-term refinancing windows, like five or seven years, much more so than residential loans. They tend to come due in full, and must be paid in full or refinanced every few years. Residential real estate loans typically have longer 30 year horizons. The due diligence exercised by banks on individual loan refinance decisions reveals that cash flow and loan to values do not pass the current tests. Thus the banks stop lending to cover the loan.

THE GOLDMAN SACHS SAGA CONTINUES. THEY STRUGGLE TO MAINTAIN THE CATBIRD SEAT. MY PERSONAL BELIEF IS THAT POWERFUL FOREIGN FORCES HAVE DEMANDED THAT THE USGOVT AND ITS LEGAL AUTHORITIES DEPOSE THE SYNDICATE KING, OR ELSE FACE A USTREASURY BOYCOTT. GSAX IS ON THE EXTREME DEFENSIVE. PANDORA’S BOX IS WIDE OPEN. CLASS ACTION LAWSUITS AND STATE PROSECUTION ARE NEXT. THE GSAX BOSSES MIGHT WANT TO CONSIDER THE IMPACT OF R.I.C.O LAWS.

A criminal probe has begun by the USDept Justice against Goldman Sachs to investigate criminal fraud on a historical scale that has done incalculable damage to the USEconomy, its financial structure, and the wealth of its citizens. The Attorney General office will continue the work of the SEC in the mortgage bond fraud civil lawsuit case, in order to evaluate pursuit of criminal charges. Some claim politicians are sharpening swords before the November Congressional elections. Perhaps, but justice is justice, and it is overdue. Not left out, Germany is reviewing legal action against Goldman Sachs. Europeans are simmering angry over the Wall Street contributions to the sovereign bond breakdown. Germany launched fraud charges tied to Collateralized Debt Obligations and the IKB ruin, which triggered the German banking system distress in 2008. Legal action is considered. Word came from a bank source in Germany. He said, „On a side note you might be interested to learn that Goldman Sachs might be declared a criminal organization. If that happens, a 90% likelihood in my opinion, then there will be Interpol arrest warrants issued for all GS executives globally. The bankers in London already had their passports lifted.“ WOW!!! That aint in the news!

EMERGENCY EXTENSIONS TO JOBLESS BENEFITS ARE SET TO END AT 99 WEEKS, AS A LIMIT HAS BEEN DETERMINED. OVER A MILLION AMERICANS ARE DUE TO FALL OFF THE INSURANCE WAGON RUN BY THE USGOVT. IMPACT TO THE USECONOMY IS TO BE IMMEDIATE.

Over a million US citizens are scheduled to lose emergency jobless benefits. When the USEconomic recession began in December 2007, the USCongress extended the length of unemployment benefits for the jobless a total of three times. Finally the USGovt has reached its limit. Without fanfare, without publicity, but with a cold stroke of hand, the USGovt has quietly drawn the line at 99 weeks of aid, called emergency extended benefits. Hundreds of thousands of Americans have already reached that mark. In coming months, the proejcted number of workers who will be cut off is estimated to exceed one million.

CHINA SHOWS INCREDIBLE MOXEY & COURAGE TO REQUIRE ALL ENCRYPTION SOFTWARE TO BE OPEN SOURCED. THE RESULT WOULD BE AN OPEN PROCESS FOR SUPPLIERS TO PROVE EFFECTIVENESS, AND LIKELY APPLY PRESSURE TOWARD AN INTERNATIONAL MOVEMENT OF LIKE KIND. THE CHINESE WOULD BE HATED FOR THIS DIRECTIVE BY THE POWERS THAT CONTROL THE U.S. AND U.K. AS WELL AS WESTERN EUROPE. TREMENDOUS ABUSE FOR EAVESDROPPING BY U.S. VENDORS IS THE HIDDEN TOPIC OF SCRUTINY.

The Chinese Govt rules came into force at the beginning of May, rules that require security vendors to disclose encryption information. The regulations mean that suppliers of six categories of products, including smart cards, firewall, and routers, will need to submit trade secrets to a government panel in order to receive a license to sell software products inside China. So far the strongest response has come from European Union officials, who have described the move as both protectionist and of high risk commercially. At issue is the unwanted disclosure of trade secrets and expertise from the government panel to local firms.