Really Really Free Market ::

Could be a good outreach event...they seem predisposed to breaking away
from the current money system. Sort of a local version of what Phil
sent out some days ago...see below the section on bartering.


Jim Willie CB February 19, 2009

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altered and damaged the world financial system, urgently pushed after
the removed anchor of money to gold. Analysis features Gold, Crude Oil,
USDollar, Treasury bonds, and inter-market dynamics with the US Economy
and US Federal Reserve monetary policy.

The World Economic Forum took place in Davos Switzerland last week. The
global picture enabled a nice snapshot of sentiment, fault for the
crisis, blame doled out, the vacuum of leadership, the perks for
blunderers in a country club setting (instead of prison), and warnings
on a potential situation that could spiral out of control. Amidst all
the finger pointing, surprisingly little blame was given to themselves,
the corporate chieftains in attendance. Let's be clear! The Davos Forum
was a funeral wake, and Putin rode in on a white horse to announce there
is a new sheriff in town!! Davos afforded a unique opportunity for
Russian self-styled leader Vladimir Putin to storm the forum stage and
to steal the show. Putin presented a basic Blueprint for what should be
called 'The Post-US World' as the United States and United Kingdom have
lost the mantle of leadership and control. They lost it from failed
economic policy, wrecked banking systems, fraud-ridden bond markets,
corrupted debt ratings agencies, abuse of IMF & World Bank, and the
severe backfire of economies that depended upon housing bubbles.
Inflation turned on its haughty financial engineers! Nations with
insolvent banks, insolvent households, corporations in liquidation,
economies in near collapse, they tend not to be good owners and
custodians of the global reserve currency!!!

Davos provided a flashpoint for a profound change in global leadership.
The whimpering US-UK-EU bankers have been shamed. Then after the finger
pointing, insults, hand wringing, and gut wrenching, Putin rode in on a
white horse carrying a banner. Chinese Premier Wen Jiabao provided the
confirmation to what Putin laid out, like a second of a formal motion.
Wen Jiabao proceeded from the Davos stage to four European capitals to
seal the new path and its legitimacy. The barter system has been
launched in quiet, while the Western press continues not to comprehend a
ruptured status quo limping along. It cannot; it will not; the
transition is on. Not only will the USDollar not provide the global
highway for all to travel, but new barter systems will be dominant soon
in working around the commodity price systems dominated by the US-UK
corrupt price discovery systems. The other painful consequence to the
new system soon taking root is that the global commodity supply routes
will bypass the US destinations, enough to create mammoth shortages.
Such is the fate of a nation thrust to the Third World. Its people and
its leaders still do not realize it, as denial is ensconced in hope. The
US credit supply has already been severed and cut almost completely off.
Reliance upon the printing press to finance its own debts is a primary
trait of a Third World nation, a shocking fact soon to be recognized.

The February Hat Trick Letter Crisis Update covers in detail the Putin
plan and the Davos Meeting. Since the autumn, the regular macro-economic
reports and gold & currency reports have been accompanied by frequent
reports on the crisis for unique coverage. The Crisis Update this month
also covers Obama's Opening Opus, not at all a promising start. He has
surrounded himself with yet more Elite insiders who are in part
responsible for the current failure and who are likely to continue the
welfare raids for the Elite. The Crisis Update also covers many aspects
of the Martial Law Threat. Those who think 'Never in America' need to
catch up with what is happening, preparations being made, anecdotes from
the field, hints of revolt from the states, and the dire straights that
states find themselves, like in California. The martial law threat comes
from economic disintegration more than anything else.

The USDollar is essentially dead, the Davos Forum its funeral wake. It
is enjoying a physical erection in the medical morgue, a rise in a death
dance ceremony. US leaders refuse to accept the reality. They
desperately need its continuation for assistance in funding the USGovt
monstrous deficits. Western leaders struggle to admit the reality.
Russian leaders, Chinese leaders, and Arab leaders (more quietly) openly
admit the reality. Read the billboards, as the Davos Forum offered an
entire row of them to observe. THE BEST STRESS METER IS NOW GOLD. Notice
how gold rose all through the Davos Forum gathering. Nothing was solved.
The Putin Blueprint for the 'Post-US World' shook up the currency
markets, as gold reacted. The gold price is breaking out in all major
currencies, except in USDollar terms. It just hit a new euro high.

A cherished contact with deep global experience had some very strong
words about Davos and the Putin Blueprint. He made additional comments
about the Wen trip across major European capitals. In an important
message, he said, "Read in between the lines of Putin's speech and you
find all the hints you want. The Chinese and Russians are burying the US
alive. The Japanese, Germans, and Gulf States keep a very low profile
for the moment. The decisions have been made: wait for 2010. They will
use the unfolding chaos to introduce the new currency basket and trade
rules... There is a brand new system being designed that will borrow
from the past and apply 21st century tools for barter / counter trade /
excess capacity etc. An Exchange Platform will cut out the banks
altogether... [Chinese Premier] Wen delivered his speech in Davos and
went straight to Berlin where they put the final touch on the new world
currency basket, sponsored by Berlin-Moscow-Beijing-Tokyo-Riyadh. Moscow
and Berlin already have a massive counter trade / barter trade agreement
in place, and Beijing was eager to joint that platform as well." The new
global currencies are planned for launch in

January 2010. They will be launched amidst growing chaos. Events up to
that time will be tumultuous.

The gold price has completed an important U-shaped reversal. Its low of
710 and top at 980 indicate a target of 1250 next. Notice the crossovers
of the crucial moving average series. Both the 50-day MA and 100-day MA
have run above the 200-day MA, very bullish. Technical chart traders use
them to direct traffic flow. The cyclicals are aligned with strength.
The fundamentals could not be better for gold than at any time in a few
decades. All major governments are ruining their currencies in a
desperate attempt to avoid economic collapse after bank system
insolvency has rendered their nations hostage to dangerous accommodative
monetary policies. All major currencies are now at risk simultaneously.
The gold price breakout over 1000 again could come when the Dow Jones
Industrial Index and the S&P500 index each breach critical support. They
have been dancing at that support for days. The USEconomic field has
become a swamp, and it is sinking. It should sink the US stock market.

The USDollar should not be the true focus of attention. Paradoxically,
as it dies a horrible death, its reserve currency status ensures it
might be last to crumble. All other currencies are at risk, except
perhaps the Japanese yen. The focus of attention should be directed to
gold & silver. The pundits, anchors, and supposed experts believe that
the rise in the gold price means that price inflation is an imminent but
hidden threat. THEY ARE SO WRONG. The threat is of a collapsed global
financial foundation, complete with rising chaos from no current viable
alternative, as the Untied States finds itself tossed into a dungeon.
The process is slow, but the pace is accelerating. The signpost in the
dungeon is marked 'Third World' with full shame. The charges will go
without trial, as the marketplace is brutal. But bank ruin,
institutional corruption, exported bond fraud, permission of counterfeit
rings, protection of crime syndicates, and abused global reserve
currency custodial responsibility lie at the core. Most scrutiny of
charges will be conducted much later, when too late, in an examination
of the wreckage.

My analysis has been very consistent in its message. The broken bank
system, crippled households, endless housing decline, corporations in
retreat, and federal debt that cannot be financed by foreign creditors,
these work together to guarantee that the Untied States does not just
enter the Third World, but that the US will be thrust quickly into the
Third World. Imagine a criminal in old colonial times being thrown down
a staircase into a dirty dank dungeon, landing with many bruises, a
bloody mouth, and perhaps a broken arm. The new US leadership is already
making huge errors. Their lack of integrity is for now a well-kept
secret, since the camp they emerged from is foul. Third World nations
are not known for integrity or sound judgment. At a time when the US,
UK, and European banks face dire need for bailouts and rescues, one
might consider the specter of entire nations requiring bailouts, not
just their banks. Iceland gave notice. Watch in horror as the risk rises
for failures of states.

As a reminder, the USGovt federal budget deficit this year should hit
15% of the national GDP size, more than double anything ever witnessed,
and more than double what usually causes a 25% to 30% currency
correction. This time will be no different. The gold price has
responded. Given the turmoil in foreign lands, with their own attendant
currency threats, the USDollar is the not concurrent indicator of gold
anymore, a topic addressed two weeks ago. GOLD IS RESPONDING, ALONG WITH
SILVER. Even the knucklehead financial media and lamebrain financial
sector managers have noticed.

A senior adviser to Dmitry Medvedev criticized the magnitude of the new
USGovt economic rescue package and projected budget deficit, claiming it
would draw heavily from other global markets. Igor Yurgens heads a think
tank to advise Medvedev. He said, "What is discouraging is Obama's
statement that [the USGovt] is going to run a $1 trillion deficit for
years to come. For us, that means that all the free liquidity in the
world will run into American Treasury Bills. Of course, [Obama] expects
the Chinese or Russians to buy USTreasury bills. That is pretty selfish
and philosophically, it is protectionism." The reality is that foreign
creditors have already announced to key USCongressional members that
they will not be purchasing any USTreasury Bonds for several months.
Whether active boycott or inability from lack of trade surplus, it does
not matter. Dire straits come to the US shores very soon.

If the retarded Stimulus Bill is Obama's first blunder of domestic
policy, then refusal to attend the Davos Forum himself was his first
foreign policy blunder. Newly inaugurated Barack Obama could have
traveled to Switzerland and met numerous finance ministers, bank
leaders, and iconic individuals, even Vladimir Putin, Dmitry Medvedev,
and Wen Jiabao. Instead, he sent greenhorn Timmy Geithner, the Treasury
Secretary. Timmy shot his mouth off right away and lost global respect
instantly. He repeated the oft-used and extremely old tired saw that
China was manipulating its yuan currency. This angered the Chinese
again, at a time when the US leaders need their creditors in full gear.
Recall that Geithner's stupid comment came only a couple weeks after an
even more stupid comment was made by outgoing Treasury Secy Henry
Paulson. Hanky told the Chinese that they are mostly to blame for the
global banking meltdown because their trade surpluses had grown too big,
and they invested too much in USTreasury Bonds and USAgency Mortgage
bonds. The Chinese shot back in anger and defiance to call that
'Gangster Logic' rightly. The integrity of US leaders is declining as
fast as their judgment exercised. Already, the Chinese have no respect
for the new US Financial Dream Team.

The message behind the actions was extremely loud. Chancellor of
Exchequer Alistair Darling and Foreign Minister David Millibrand decided
to cancel their trip to Davos. They stated publicly that certain people
they wished to meet at Davos had canceled their trip and would not
attend. They stated publicly about how affairs in the United Kingdom
were pressing, the emergency too important to leave home. What a crock!
The only guests who canceled their trips were the British. Perhaps the
UK delegation planned to attend Davos and only meet among themselves.
The nixed meetings planned with attendees might have been dominated by
angry European Union finance ministers. Europeans are launching Currency
War salvos at the British. Maybe the British did not want to be the
subject of broad European criticism. The other important consequence of
the British canceled plans was that the members of the Untied States
contingency were left all alone, exposed to take the heat of criticism.
The US & UK were united when they ruled the roost from corrupt
platforms. They are divided as they fall.

The Russians realized the vacuum of banking and political leadership.
Vladimir Putin took the high road actually. His criticism of the US
failure and corruption was implied. He let the decimation of Wall Street
firms, their colossal losses, and their calamitous fall from grace speak
for themselves. He would not permit anyone in attendance to yack about
how Putin droned on and on about US failure. Failure is painfully
obvious for almost all to see. He skipped over much direct criticism to
offer solutions, a sign of leadership. No, Putin was the only bright
spot in Davos. Putin offered a Blueprint for the next decade, for the
'Post-US World' where the US-UK corrupt tag team does not control the
helm or sit at the catbird seat. Vladimir Putin and Dmitry Medvedev
served as dominant figures over a gloomy forum. A Putin spokesman
actually told reporters "This is Davos under the Russian flag." More
accurately, the Davos Forum gave Russia, and to some extent China, a
chance to exert leadership.

The overriding theme of the Putin plan is a new multi-polar world, where
power is shared and no longer concentrated in a dangerous fashion. Putin
was as specific as required for a blueprint, which typically does not
need to go into great detail. It requires a new structure. When an
entire system is shattered, one needs a foundation with large structural
descriptions as planks. Putin gave it. He is not a hero, but rather a
man who realizes the disorder in progress and the dire need for new
direction. The USDollar-based system is dead. Within the vacuum, the
global financial and economic system is slowly collapsing. Actually, my
view is that the USEconomy is accelerating in its breakdown, unlikely to
last through the summer without some very clear evidence of failure. The
untold story is that the global system failure has pitted two groups of
powerful billionaires against each other. Putin represents a force that
pursues greater equitability in commerce, trade, and banking with
multi-polar power centers. His opposite force pursues greater
concentrated power, more fascist towers, and a beneficial reduction in
world population. This thorny topic is given occasional coverage in the
Hat Trick Letter, yet is highly controversial and risky to discuss.
Broad strokes rather than detail are my choice.

Putin openly questioned the reliability of the USDollar as a global
reserve currency. He all but said it is dead in the water for that role.
He called the one reserve currency a danger to the world economy, in
fact! He acknowledged that globalization has multiplied the destructive
force, so that the US-UK crises have touched all nations and everyone.
To be sure, other nations are epicenters for crisis like Spain. Several
nations are feeling the impact of the shocks from the crisis epicenters,
like Germany, Russia, and China. Some specific criticism was given.
Putin talked about the disproportion between the scale of financial
operations and fundamental value of assets. That means huge US-UK
financial flows in trading centers against a backdrop of miniscule
current valuation of the bank centers. The US & UK bank sectors are
insolvent. Putin talked about the differences between the increased
burden of international loans and source collateral. That means the
Western nations, led by the US & UK, but also Southern Europe, have
outsized debt burdens against a backdrop of near nil collateral, a stark
trait of insolvency, if not bankruptcy. Putin attacked indirectly the
Untied States for printing money with abandon, consuming what Asian
factories produce, while Asians respond by saving money in the form of
government debt securities. Putin warned the global leaders not merely
to treat the symptoms, which is precisely what they are doing, but to
work toward serious reform.

Putin warned of blind faith in the omnipotent power of states, and the
distorted concentration of assets in the hands of the states. That might
be a slap at the central bankers, who are serving as quasi-bank systems
unto themselves in a desperate action. Their biggest new ledger item is
Dollar Currency Swap. Putin warned that unbridled growth of budget
deficits and public debts is destructive. In essence, Putin urged a
return to free enterprise principles. The Western leaders are moving
toward socialism and fascism. What irony that former KGB leader from the
Soviet Union was lecturing the West on the benefits of embrace for
capitalism and free enterprise!!!

Putin was specific in key areas. He did not lay out many details to
flesh out his planks. He kept some close to his vest. The barter accords
are a work in progress, actually a revolutionary shift. He was not going
to offer up details of his 'End Run' plans. But he offered four main
recommendations that make a great deal of sense, a starting point:

1. Get real and declare hopeless debt securities as bad assets, and
write them off. The current crisis will only be prolonged unless the
balance sheets are cleaned up. A liquidation process is essential. (The
refusal for banks to come clean has resulted in extreme constipation for
the credit system, while the patient slowly falls into mud.)
2. Get rid of virtual money, exaggerated reports, and dubious
credit ratings on financial securities. He wishes for fundamental asset
values to be determined by the ability to generate added value, apart
from subjective models. (He refers indirectly to credit derivatives and
futures contracts, the artificial mechanisms to control price
structures, those onerous devices that act as pseudo-money.)
3. Get away from the single reserve currency system, which he
regards as dangerous. Instead, install several strong reserve currencies
in a smooth and irreversible switch. (This is the unofficial death knell
of the USDollar itself, for alternatives in usage.)
4. Get currency reliability for foreign reserves management, which
can be used by other states. This can be achieved by enabling more open
monetary policies, and enforcing economic and financial discipline.
(This will enable regional stability and cooperation.)

Putin openly called the current unipolar world obsolete, referring
indirectly to the US-UK dominance. This is as close as one could come to
hearing that the current system is one step from the scrap heap.
Unfortunately, chaos reigns as leadership is absent, insolvency rains
down as economic troubles all over, and no leaders seem capable of
pulling back the reins. Putin urged a new system of global regulators,
an obvious slap at the unspeakably corrupt Securities & Exchange
Commission (for stocks) and the unspeakably corrupt Commodity Futures
Trading Commission (for commodities). Each is a lapdog steeped in
conflict of interest, paid to look the other way to criminal activity,
with no urge to prosecute their friends. The SEC and CFTC have been team
players for the four major US-based crime syndicates in order for them
to conduct their business. They are parasites to the system, while the
syndicates spread cancers. Putin all but said to eliminate the Intl
Monetary Fund and World Bank. Putin wants to see shared technology
across borders. This is a slap against the US, which refuses to export
advanced computer technology and telecommunications technology.

Putin made a comment about possible energy shortages and obstructed
growth prospects, but urged constructive inter-dependence. This could be
regarded as a threat, and should be taken as a claim for leadership.
Putin reminded the group of his recommendation in 2006 for cooperation
among energy suppliers, consumers, and transit countries. These
suggestions fell on deaf ears over two years ago, but now after the
Ukraine incidents, their time has clearly come. Putin wants a new
international legal framework for energy security, with clear-cut legal
statutes. Some of what Putin mentions comes as a reaction to US
financial sources that are exerting extreme force on energy prices with
political motive. Putin openly called for a balanced price determination
system free from the vagaries of financial derivative instruments.

One might detect a theme in much of what Putin urges for new systems.
Putin pursues a new energy framework to possibly serve as the foundation
for a new financial structural foundation. This is a natural
progression, based upon a solvent foundation, that would play into
Russian strength. See the February reports for details. However, hard
assets and natural resources must supplant the corrupt networks that
control price systems in the current broken apparatuses. Putin is
attempting to fill a dangerous vacuum. The Western leaders are caught in
a vise, caught in a policy pattern toward more of the same ineffective
elixirs. Putin also delivered stern warnings about NATO, whose broken
treaties cause great stress. The nettlesome trend toward NATO inclusion
for former Soviet Republics has also caused great stress. Expect
extremely loud backfires on this front, as Ukraine will probably be used
as a display case for Russian power. They will destroy the Ukrainian
political structure, punish them for permitting themselves to be used as
US puppets, and probably carve the nation into territories. Other
Eastern European nations had better take notice.

New important barter systems are soon to spring up. Just this week,
China entering the on-ramp to the barter system highway by lending
Russia $25 billion in return for a guaranteed 20 years of energy supply.
It is not so much a loan, as an initial stake in a new trade system. My
sources indicate that two bilateral barter accords are in progress, soon
to be made public. The Russians have another bilateral barter plan with
Germany, soon to be hatched. These plans will catch the Untied States
off guard, and isolate the US. The pricing for commodity resources will
circumvent the US-UK corrupted systems. In the process, the US will find
itself outside looking in. Commodity supply routes will be redirected
from Russia to China, from Canada to China, from Australia to China, and
from Venezuela (as well as the Andes region) to China.

Chinese Premier Wen Jiabao was more clever in his acute criticism of the
United States. He made scathing comments at Davos about the
'inappropriate macroeconomic policies' and the 'unsustainable model of
development characterized by prolonged low savings and high consumption'
of some unnamed countries. Wen attacked 'blind pursuit of profit' by
financial institutions and their 'lack of self-discipline' by them.
After speaking at the World Economic Forum, where he echoed the
criticism laid out by Putin, he went on an important trip across Europe.
Wen traveled to four major European capitals, whose significance is
enormous. He met with Swiss leaders in Bern, with German leaders in
Berlin, with Spanish leaders in Madrid, and with European Union leaders
in Belgium. One should interpret this not as an endorsement of the
status quo, as reported by the US press media, but rather as an
announcement of the new structure to conform to the Putin Blueprint for
a Post-US World. The entrenched and defensive US-based and UK-based
press media have no interest in mentioning a new framework. Loss of the
current framework represents an invitation to the Third World. China has
no interest in furthering the status quo. Wen served notice to European