Hat Trick Letter – srpen 2009

Deriváty – Derivatives

MAJOR SCANDALS COMETH. THE PRIMARY POINT OF VULNERABILITY IS THE NARCOTICS TRAFFICKING, MONEY LAUNDERING, AND BANK COMPLICITY. September and October should prove to be super-charged with events unfolding, gradually recognized. The grapevine of connected communications has been mentioning a major upcoming historical scandal from US soil planned for exposure in the coming weeks or months that involves an ex-USPresident, major US banks, and US security establishment, possibly linked to the Mexican Govt. Its magnitude is reportedly in the hundreds of billion$, maybe trillion$. That would put it as multiples greater than the Madoff Scandal, and on par with the Wall Street bond fraud (still unprosecuted). Details are lacking, but in my view that spells Papa Bush, narcotics trafficking under USMilitary cloak, and money laundering with possible aid of Calderon south of the border, spanning more than two decades.

SOON TO HIT WILL BE A MAJOR SCANDAL ON CREDIT DERIVATIVES, WARNS THE MADOFF WHISTLEBLOWER. HE WAS IGNORED BEFORE AND WILL BE IGNORED AGAIN. New credit derivative scandals will make Bernie Madoff’s $65 billion fraud ‘look like small-time‘ in the words of Harry Markopolos.

Budoucí ztráty bank (komerční hypotéky) – Future Bank Losses (Commercial Mortgages)

COMMERCIAL MORTGAGES WILL JOIN THE RESIDENTIAL DISASTER IN THE NEXT FEW WEEKS, NOT MONTHS. FALLING PROPERTY VALUES AND IMPOSSIBLE REFINANCE CONDITIONS RENDER THE COMMERCIAL SPACE A KILL ZONE, DESPITE REASONABLY DECENT LOAN PERFORMANCE RECORDS.

The $3.5 trillion commercial real estate (CRE) market is fast in deterioration. The default rate has doubled on loans for apartment buildings, office buildings, housing complexes, strip malls, hotels, and hospitals in the last year. A colossal amount of commercial loans must be rolled over this year into refinancing. Most will not qualify, and will go belly-up. Some already have. Banks will not lend to refinance loans when property values have dropped so precipitously, since loan-to-value ratios are terrible. Prices in commercial real estate have fallen almost 40% from the peak in 2007, according to the MIT Center for Real Estate. They continue to plunge. Data from Moodys Investors Service confirms the decline rates. Analysts expect that commercial mortgage backed securities (CMBS) and their associated derivatives (leveraged bonds, Collateralized Debt Obligations) will explode in the next several months, the initial impact felt within weeks. The forecast is for an additional $1.5 trillion ($1500 billion) in losses on Wall Street. Bank analysts selling bank stocks conveniently overlook these forecasted losses.

Bankovní prázdniny v USA – Bank Holidays

AN UPDATE ON THE POTENTIAL US BANK SHUTDOWN. THE TRIGGER EVENT MIGHT BE THE 2^ND QUARTER F.D.I.C. OFFICIAL REPORT, WHICH SHOULD CONTAIN A LIST OF 500 TO 1000 TROUBLED BANKS SOON TO FAIL, AND STATUS OF ITS NEARLY DEPLETED FUND. RELEASE IS SET FOR TUESDAY AUGUST 25^TH. MORE DETAILS INCLUDE A PLAN TO FEDERALIZE POLICE & HOSPITALS NATIONWIDE. TALK SWIRLS AMONG MILITARY SOURCES OF A POSSIBLE USMILITARY COUP THIS AUTUMN, WHICH WOULD PRESERVE SYNDICATE POWER AND KEEP FOREIGNERS OUT. THE BANK HOLIDAY IS A PRELUDE TO USTREASURY DEFAULT.

The FDIC report could reveal the worsened insolvency of the US banking system generally, causing major ripple shock waves, revealing their broken condition. A number of US Embassies have been instructed to load up on local currencies. Either US banks will not be available to dispense USDollars, or perhaps foreign sources may not accept USDollars.

INTERPRETATION OF THE TIMING AND RISK, WITH SCHEDULED EVENTS TO CONSIDER LEADING TOWARD A SYSTEMIC BREAKDOWN. A MASSIVE JUGGLING ACT HAS ENDURED FOR MONTHS, WITH THE RISK OF ACCIDENTS RISING EXPONENTIALLY, LEADING TO INEVITABLE EVENTS. AN IMPORTANT CULLING OF ROTTEN ELEMENTS IS SET TO BE DONE, PERHAPS SUDDENLY, AND ONE MUST HOPE EFFECTIVELY. A CAREFUL LOOK SHOWS SEVERAL KEY SIGNALS.

It is my belief that a first bank holiday will last only 3 to 5 days. It could serve as a trial event, my guess. Later it will become clear that the USTreasurys have technically defaulted, that the US bank system is indeed dead, and the supply of USDollars will be impossible to maintain. Then comes the scary longer bank holiday, later on, unsure when. Do not be fooled by the end of the first shutdown. The second shutdown might endure for 30 to 60 days, maybe 3 to 6 months.

Budoucí ekonomický vývoj USA – Future Development of US economy

DEFLATION TRIGGERS HYPER-INFLATION, ACCORDING TO PRECEDENT IN ARGENTINA LESS THAN 10 YEARS AGO. THE SO-CALLED DEFLATION IN ASSET PRICES AND JOB INCOME LOSS IS THE FIRST STEP, WHILE FIERY PRICE INFLATION IS THE SECOND STEP, IN FULL RESPONSE TO PUBLIC POLICY AND MONETARY POLICY. FEW SEEM TO REALIZE THAT CURRENT POLICY LEADS TO PRICE INFLATION.

If Quantitative Easing is brought to an end this year or even in 2010, the interest rates in the United States would zoom past 10% and head toward 15%, maybe even 20%. The result would be destruction of the housing market, ruin of banks that hold mortgages, an economy in a ruinous tailspin, and the uncontrollable explosions from credit derivatives (like Interest Rate Swaps), enough to bring 10 years of darkness to the United States. If a Super Sovereign Currency is endorsed, the USDollar would become just another currency. The US$ would not be used in trade settlements globally, and it would not be held in USTreasury Bond instruments as global reserve accounts. The USDollar would be forced to trade in the FOREX on its own merits, namely as a Third World currency. Its value would drop by 50% at least.

Zlato + devizový trh – GOLD + FOREX

A sage contact who forewarned of the September 2008 sequence of failures and crisis almost one year ago sent a message of update this weekend. He said, „We are in the middle of the breakdown. Just watch the US budget disaster that is killing all and everything. Things are coming apart at the seams since the entire global banking system is breaking down. Trade is breaking down as well due to banks being in shock freeze. This shock freeze will not go away, it will destroy the system. Different systems will soon spring up to facilitate trade. We shall see the tail end of the financial economic political hurricane touch down sometime at end of August and early September with an never ending downward spiral that will destroy assets on a grand scale. I still expect the breakdown to be in the time frame we have been discussing. The pump and dump market manipulations by the BOYZ are fascinating to witness. Its like watching a head kill shot in slow motion. Only real hard assets will survive, Gold, Silver and a basket of essential commodities grouped around this precious metal core.“

Notice the anticipated timeframe, an anniversary of the crisis last year. My response to him was brief and simple, but to the point. „I notice tectonic shifts in the currencys in the last two weeks. The USDollar is stuck in a tight range, soon to exit in unstable fashion. The British Pound Sterling moves up and down with much volatility. More US banks are falling. Big ones like Colonial and Guaranty just died. Soon much bigger ones will fail. The types of credit losses are soon to broaden into Commercial and Prime Option ARM mortgages. Banks are still in a nightmarish situation, unprepared, while clown leaders proclaim an end to the storm.“

A HUGE SCARY FOREX DISCOUNT IS BEING USED RIGHT NOW BY MARKET INTERMEDIARIES FOR CASH CURRENCY TRANSACTIONS. THIS IS A CLEAR LOUD PREVIEW OF FUTURE US$ AND BRITISH POUND STERLING DEVALUATION. THE DISCOUNTS PROBABLY OCCUR ON GRAND ACQUISITIONS, SPENDING US & UK DEBT, IN CONVERSION TO HARD ASSETS. Last week, my email INBOX was abuzz. A query came from me to a reliable regular banker contact with connections to Europe, Asia, and the Persian Gulf. My query specifically commented on the frenetic British Pound Sterling, which has risen or fallen by almost 200 basis points on a several days in the last week or more. It shows great unstability, my point, likely a prelude such as any initial tremors before a big earthquake. What came back was a shock, as news of actual liquidation activity have come his way.

***He wrote, „Really substantial transactions in buying USDollar are done at a 38% discount, and British Pound Sterling are done at a 42% discount. The big off market transaction guys are already factoring in the coming devaluation. Hundreds of billions are involved, including outright cash transactions where those discounts are being applied.“ ***WOW!! He had mentioned just days before in another exchange that a big event comes on the near horizon having to do with angry USGovt creditors. They have run out of patience. They feel the USGovt pays no heed to their concerns, in displayed arrogance.

The global banker said a coordinated group of foreign creditors are planning to sell several hundred billion in USTreasurys in the months of September and October. If executed, then a US bank holiday is assured, and a significant devaluation of the USDollar comes. We might even see the first hint of a temporary USTreasury default. In the same line of exchanged communications, that also involved a couple other fellows who are respected, questions came as to when this charade would end. The US$ had bounced yet again on vaporous news and heavy interventions. My comment was simple: GOLD WILL RISE AND THE USDOLLAR WILL FALL, IN A POWERFUL WAY, WHEN CHINA DICTATES IT, WHEN CHINA IS READY, WHEN CHINA DECIDES IT. My connected banker contact agreed totally. Furthermore, Chinese agency organizations have been gathering considerable information from the Gold Anti-Trust Action committee, probably to make the case that the USDollar is not legitimate even on US Constitutional terms. When they slam the US$, they will likely make the case for an illegitimate USDollar operating as the currency by a financial sector ripe with corruption and fraud.