Gold and Silver Breakout as Fascist Business

Model Crumbles, Mortgage Market Fraud

By Jim Willie CB – Market Oracle

Some significant events are in progress, extremely important developments in

the grand pathogenesis that reflects the deep decay and deterioration in the US
financial structure. The most recent events pertaining to mortgage loans, home
foreclosures, and disclosed fraud carry great potential to open extremely wide
cracks in the American social order. Revealed systemic fraud is slowly coming
into the open. Civil disobedience has already entered the arena of popular
protest. However, the recent events surrounding illegal home foreclosure seizure
of properties elevates the exposed fraud to a very clear high new level. This is a
boil ready to break open, releasing financial puss.

The cases where people have been removed from their homes, even when no
bank loan exists (as in owned free & clear), by means of fraudulent, forged, and
counterfeited documents, has finally provoked RICO law provisions. Witness
organized crime extended from Wall Street, whose roots lie most likely in Fannie
Mae itself. The legal industry has finally joined the fray in class action lawsuits.
Defense citing errors made have been met with accusations of fraud, quite a
different game.

The Racketing Racketeer Influenced & Corrupt Organizations Act of 1970 was
designed to fight organized crime. RICO has been invoked in class action
lawsuits in at least two states in the past month, each related to mortgage fraud,
securities fraud, and illegal property seizures. At the center of the firestorm lie
JPMorgan Chase, Bank of America, and GMAC (now called Ally). Little did the
USCongress realize that RICO laws might be used to fight profoundly deep
criminal fraud on Wall Street. When the criminal activity is tracked with some
forensic analysis, the roots are found with REMICs, those perverse
financial instruments that functioned as umbilical cords to Fannie Mae in
past years, acting like powerful centrifuges. They fed the housing bubble and
mortgage finance bubble, each valued over $10 trillion in size. Bear in mind that
RICO has been used primarily against mafias and crime organizations dealing
with gambling, drugs, and prostitution, where property seizures are routinely
carried out. Abuses have been seen in states like Florida, where motorboat
owners guilty of owning small bags of marijuana have lost their boats in legal
seizure. It seems that selective enforcement is obvious. The target within the
crosshairs has moved to Wall Street banks and Fannie Mae under the USGovt
protective wing. These are dangerous times.

Recent cases threaten to encourage the Strategic Defaults and highly

charged Civil Disobedience which could actually contribute in powerful
ways to commercial chaos, popular disorder, public disruptions, creeping
distrust, and even systemic failure. Hundreds of thousands of people are not
making their mortgage payments, intentionally stopping payments, many when
they do have the ability. Over 250 thousand Bank of American mortgage holders
have stopped making monthly payments, in open defiance and some financial
distress. The topic of Strategic Default, together with challenges (even with
attorneys) to the banks to produce legal property titles, has grown sharply in
practice. The RICO cases underway threaten to toss an accelerant on that fire.
Henry David Thoreau would certainly be observing closely, perhaps smiling, at
the current developments of citizen action against corrupt bank practices,
mortgage bond fraud, and forgery of securities as well as critical legal
documents. His essay had a profound effect on me when young, when cruel
abuses were observed within my catholic school locally and the Vietnam War
globally. Of course, the Jackass does not sponsor, endorse, or encourage any
such action, believing that the highest level bankers should receive their due.
The question is what is due? Objective reporting of the news, such as the viral
news of the fraudulent home foreclosures, seems to have escaped the
mainstream news, a consistent theme that hints of syndicate sympathy or
culpability. The last thing a network news systems wants is to encourage civil
disobedience. They prefer to promote vast herds of docile sheep.

For four years, the Jackass has claimed that Fannie Mae lies at the core of a
grand criminal fraud enterprise, serving as the central clearing house for USGovt
agency sponsors of magnificent fraud. Their tools are mortgage loans, mortgage
bonds, REMICs, and more recently the MERS title database. Real Estate
Mortgage Investment Conduits were a necessary piece to the housing and
mortgage bubble, from which extends colossal fraud. The REMIC acted like a
mortgage futures contract, clear of any supervision or regulatory oversight and
thus permitting an open door government green light signal to systemic fraud.
Imagine a leveraged futures contract on twin bubbles where unbridled fraud was
common. Recall that $1500 billion went missing from 1988 to 2000 in two HUD
regional offices. One was Houston and the other was Oklahoma City, the home
grounds for sitting presidents. The missing funds have fed black bag funds and
diverse illicit financial operations. Few connect any association between the
pyrotechnic events in April 1995 by Timothy McVeigh to big rooted branches and
critical data records, an open question. The entire set of prima facie and secunda
facie and tertia facie aspects of the mushrooming story are to be covered in the
October Hat Trick Letter reports. But honestly, this is a huge moving target,
whose capture is better described as herding cats on an open field.

M.E.R.S. DATABASE -- THE WEAK LINK

The mushroom has a primary point of vulnerability that has received very little
attention. The Mortgage Electronic Registration Systems (MERS) was originally
an innovative process that simplified the way mortgage ownership and servicing
rights were originated, sold, and tracked. MERS is a property title database,
intended by Wall Street and Fannie Mae to serve as a repository that kept order
when mortgage bonds were traded fast and furious. In recent court cases in at
least three states, the MERS database failed to attain legal standing in
mortgage foreclosure challenges. The holder of the note (home loan) could
not combine with the MERS database (title holder) to win property seizure. The
system began to unravel. Now in at least one state, the MERS database is
directly cited in a criminal fraud class action lawsuit that invokes the RICO
statutes. MERS is the financial system's Achilles Heel. Maybe a big bank like
Bank of America might collapse, fall into ruin, and dissolve from proof of
racketeering, its assets confiscated by aggrieved parties to fraud. Obviously,
Bank of America along with several other big banks have been dead for a long
time, since October 2008 in my estimation. If not for the lax and complicit
accounting rules by the Financial Accounting Standards Board, which permit
banks to declare their own fictitious value for their balance sheet assets, imposed
in April 2009, the big banks would undergo liquidation. They cling to control of the
USGovt financial purse, its USDollar printing press, its conduits to financial
centers, and its extended arm to legal prosecution control. Big bank liquidation is
tantamount to liquidation of the entire US financial structure, its power and
privilege, in plain words.

MERS has gained unwanted damaging attention in the legal arenas, and it
will not go away. The class action lawsuits will establish the high ground, grow
in number, and gain attention. The proof of the malfeasance, fraud, and forgery
will be incredibly easy, breathtaking in implications, and shocking to the sleepy
public. The risk of civil disobedience is acute. The directly associated risk of
commercial degradation from contract law moving toward a field of abandonment
is also acute. The domino effect carries risk to the business and thus the social
fabric of the American society. The United States is on the verge of events
leading to potential systemic failure. Few attribute causality to the Fascist
Business Model broad implementation and secretive endorsement, but it
lies at the center. The permitted criminal activity, not just with bond fraud,
mortgage fraud, and property theft, extends far beyond white collar crimes. Take
for instance the suspicious suicide of Freddy Mac CFO David Kellermann, found
hanging by the neck in his Virginia living room in April 2009. He knew too much
and wanted out, some believe. His suicide probably had assistance. My sources
tell of a wave of middle level murders, where bankers have been systematically
eliminated. The victims knew too much about the money trails, but lacked a
critical level of protective support from rank. They are the dead mules. They were
high enough to have knowledge, but not high enough to avoid being expendable.
MERS is the errant tool. RICO is the thick cloud. Fannie Mae (FNM) is the grand
sewage pit laced with fraud. The news is rarely reported unless they must since it
is already widely known. The mainstream news finds itself competing desperately
with the competent intrepid internet sources. In a strange attempt to force an
equation from a disorderly situation, let it be simply stated that

MERS + RICO + FNM = CHAOS + FAILURE + DEFAULT

FASCIST BUSINESS MODEL CRUMBLES

One is left to wonder if it is possible that foreign creditors can invoke RICO laws
and take over USGovt assets as part of a USTreasury default process? They
might do so agency by agency, but start with the helm on Wall Street. By next
year, national parks and lands will be sold off to creditors. The deep fraud is easy
to prove. Identification of the participants is much more difficult. The movement of
prosecution and perhaps restitution will begin with private homeowners, the
vassals in the lost field of dreams. A crucial connection on legal obligation is
the formal USGovt guarantee of USAgency Mortgage Bonds, which make
them full blood brothers to USTreasury Bonds. They just pay a different yield,
although we are witnessing a convergence between mortgage rates and
USTreasury yields. The Fannie Mae cesspool is certain to drag down the global
confidence and prestige of the USTreasury Bond itself, a process underway.
Perhaps the USCongress can hastily include a rider on some war appropriation
bill or jobless insurance bill or some other bill that is approved but not examined,
which exempts USGovt agencies and Wall Street firms from RICO prosecution,
even ex-post facto to cover past pecadillos. Harken back to Hank Paulson as
USTreasury Secretary, trying to explain Wall Street bond fraud as errors of
judgment. The ploy did gain some traction, but the recent lawsuits over mortgage
fraud, forged foreclosure documents, and more, run the risk of opening the RICO
window to the organized crime that is central to the US financial system. Its three
loci of activity are the USFed, Goldman Sachs, and JPMorgan. This is just the
financial wing of the syndicate. Apart from that is the war wing, with a common
conduit in the USFed.

At great risk is ruin of the threads, tissue, and fiber of the nation. Many have
called it the moral hazard in countless citations. The USDollar rests on the faith
and trust of the USGovt. Enter systemic fraud and organized criminal activity,
demonstrated in open court cases, and POOF, the faith and trust vanish. The
USGovt might block some cases for national security reasons, the standard
blanket to cover prevalent criminal behavior, a precedent started by Nixon. The
same trust and faith underpin the USTreasury Bond complex, the debt securities
for the USGovt debt. When the Fannie Mae failed toxic pool was adopted
hookline & sinker in September 2008, the USTreasurys took on added risk,
infecgted by the spread of toxic tissue and corrupted threads and absent moral
fibers.

The original roots of the Fascist Business Model are difficult to trace in the
United States. They could be from Big Oil, Wall Street Finance, Defense
Contractors, even Big Pharma, but with timing in the 1970 or 1980 decades. The
Vietnam War and deficit financing went hand in hand, a little recognized
phenomenon. Full blossom of the business model, identified by a merger of the
state with large corporate interests, took on new meaning after September 2001,
when national security trumped everything, including the US Constitution, and
certainly civil liberties. What came was license to commit financial crimes with
impunity, provided the locus of criminal operations was a large corporation with
direct association with the USGovt. Witness the ruinous fruit of the tight embrace
endemic to the fascist business model. Witness the lack of prosecution for the
perpetrators of criminal fraud. In fact, the larger the crime, the closer to zero is
the likelihood of prosecution. Witness the popular backlash in civil disobedience
from non-payment of mortgage bills. Witness the entrance finally into the arena
of state courts, even some Supreme Courts like in Florida, Kansas, and
elsewhere. Again, the defendant banks claim errors and mistakes, when the
prosecutors are screaming fraud, forgery, theft, and corruption. A series of public
spectacles comes soon.

The Fascist Business Model is so broadly affecting the USEconomy, like a grand
latticework, that it is considered part of the American landscape, even grudgingly
accepted as part of the system. It is diverse. A culture of fraud is engrained
nationally, clearly perceived from foreign vantage points. See Halliburton and the
missing $50 billion from the Iraq Reconstruction Fund. The firm is tied to former
Vice President Cheney, and is the object of endless fraud accusations,
prosecutions, and settlements related to the wars and their provided services.
See Goldman Sachs and the 2004 reduction of the unleaded gasoline portion to
the GS Commodity Index they manage, as the percentage was taken from 9% to
2%. Coordinated were drops in the price of gasoline, crude oil, and diesel. For
some unexplained reason, the USMilitary decided to sell huge amounts of crude
oil and diesel fuel at the exact time following the Goldman Sachs index
alterations. The events occurred leading to the re-election of Bush Jr. The
USMilitary, few realize, is the largest consumer of crude oil and diesel on the
planet. See the Seven Sisters from Big Oil and the steady friendships forged with
Saudi Arabia and points on the Persian Gulf. See the Citigroup tipoffs to Prince
Al-Waleed, whose investments thrived for a while. See the cozy relationships
between certain Big Pharma firms and the Swine Flu vaccines. See the British
Petroleum oil disaster in the Gulf of Mexico. This one is trickier. The US
Environmental Protection Agency engaged in numerous ocean water data
tampering examples. Clean-up crews were photographed in numerous instances
dumping dead fish, each punishable by a $10 thousand fine, ostensibly with BP
at risk. The EPA levied no fines.

The US Coast Guard was involved cordoning off numerous sites where dead
whales were disposed of. The public was not permitted nearby access, but that
did not stop intrepid photographers from capturing the events on film. Again, BP
was at risk of heavy fines imposed. The most egregious violations involve
Goldman Sachs and JPMorgan, the agents for the USFed and USDept Treasury.
Past actions featured gold leasing from Fort Knox (now empty), for the benefit of
Wall Street gold short positions and corresponding USTreasury Bond long
leveraged positions. That chapter was labeled the Decade of Prosperity. Insider
trading and numerous illicit financial schemes prevail, while front running of
policy is constant. These have become important income sources for the twin
towers of syndicate finance. See Working Group for Financial Markets, hardly run
by an independent pristine office. They operate with full impunity and even
access to FBI usage. Refer to the UNIX box and stolen software taken from
Goldman Sachs offices in 2009, retrieved dutifully by the FBI, a powerful
sophisticated illicit tool used to read incoming stock trade orders.

The quintessential core of the Fascist Business Model is not the merger,
but the conquest of the USDept Treasury by Goldman Sachs. New Treasury
Secretaries must come from the marbled halls of Goldman Sachs with full
pedigree in order to perpetuate entrenched ongoing activities, including vast role
programs under the USGovt roof, in particular the Fannie Mae clearing house
operations. Observe the Wall Street mortgage bond fraud, conflict of interest,
counterfeit bonds, naked bond shorting, high frequency trade skimming, hidden
monetization of USTreasury auctions, and the MERS database reliance. The
MERS database and countless home foreclosures are at the center of legal
investigations. Even a sitting US Senator has called for investigation of
JPMorgan, Bank of America, and GMAC, regardless of their size, prominence,
influence, or prestige. Not a single conviction has come to the elite in South
Manhattan for criminal felonies of grotesque type. Again, if the theft or fraud is in
the $billions, then chalk it up to extreme skill, outstanding research, exclusive
pedigree, and a tradition of excellence, but never felony actions or shades of
malfeasance. The TARP Fund has been declared a victory, saving the US
human strain from depression and extinction. Please! Give me a break! Not
mentioned in the TARP Fund disbursement is the payoffs for foreign investors
extorting money from culpable Wall Street firms, even rumors of payoffs to quiet
the death threats to Wall Street executives. The $700 billion did not go to
mortgage portfolio relief, but instead to Wall Street firm preferred bank stock, the
stuff of family fortunes and trust funds, vigorously protected. The TARP Funds
still remain without an independent audit. As Paul Volcker said in his
unprecedented diatribe harangue last week, the Financial Regulatory Overhaul
Bill started out with strong motive to reduce the US Federal Reserve powers, but
ended up giving it even more power. Credit goes to the $200 million lobby budget
by Wall Street firms handed to the USCongress, the biggest pack of losers, petty
thieves, influence peddlers, compromised hacks, and babbling idiots perhaps in
existence.

At great risk is the breakdown of faith and trust in the USDollar and
USTreasury Bond internationally, from a climax collapse of the Fascist
Business Model itself. The deep hidden costs of the Fascist Business
Model are diverse inefficiency, layered cost to the privileged
corporatocracy, crushed middle class, interrupted capital formation, lost
income engines, and the social effect of a recognized two-tier justice
system. The primary threads of criminal fraud serve as its hallmark glue for
cohesion. At great risk is the breakdown of contract law and legal obligation, a
cornerstone of American commerce, even commerce globally. At risk is the
revenue stream for the big banks, many of which are dirty up their ears in bond
fraud creation, misrepresentation of bond sales, predatory lending, duplicate
mortgage titles in bond securities, document forgery, and disguised property
theft. If a significant portion of the American public decides to scoff at their legal
obligation to pay on loans, initially here with home loans, but later possibly with
car loans and credit card loans, then the US financial system will plunge into
darkness and surely collapse.

The nation is at the doorstep of systemic failure, greatly at risk of the social
accelerant of Civil Disobedience tossed on the fires of anger from betrayal,
and despair from loss. Capitalism has failed in the United States of America,
simply put. Its capitalist spirit was crushed by unsound money managed by a
squatting central bank, raids upon the national gold treasury, abandonment of
industry, wretched economic theories, labor union backlash, the high cost of
military pursuit, price inflation (in particular labor) from war expenditures, and
banking policy that encouraged a series of asset bubbles. The population is
vulnerable to disseminated disease like the Swine Flu, vulnerable to poverty from
wrecked wealth engines and wrecked wealth repositories, vulnerable to foreign
blockade of imported supplies, vulnerable to resistance to high crimes being
declared terrorist activities, vulnerable to information restrictions from internet
censorship, vulnerable to incarceration of the dispossessed in FEMA Camps,
and vulnerable to police suppression against efforts toward survival. The nation
has never been closer to class war in its history. The nation is witnessing a
climax of a systemic debt cycle. The Macro credit cycle is in the process of
declaring the USGovt debt condition as unfixable and growing worse each year,
a macro bankruptcy process at work. We finally see the USGovt dealing
unsuccessfully with insolvency. Inescapable is the Macro credit cycle, where the
USEconomy is drowning in oceans of debt, the US banks are stuck with toxic
debt, the US households are weighed down by excess debt, US industry with its
legitimate income is long gone to Asia, and the USGovt new debt issuance is as
much a burden as debt service. The nation is plunging slowly into the Third
World. Systemic failure has advanced in a grand tragic pathogenesis. The
escalating gold price is urgent response.

GOLD & SILVER BREAKOUT

The increasingly visible vote of no confidence in the fast failing USGovt financial
structure, and in the missing capital formation apparatus that was once Wall
Street, and in the entire avalanche of paper in a valuation charade, is the GOLD
& SILVER PRICE. Both metals are breaking out to the upside. They are
registering votes of NO CONFIDENCE. They are putting investments in portfolios
to hedge against MONETARY SYSTEM BREAKDOWN. They are insurance
policies for private wealth, to protect from erosion of money through sponsored
sanctioned monetary inflation. The problem with the current strategy of
monetizing debt and inflating debt to a reduced level, is that it betrays creditors. It
forces a debt writedown on creditor investments in USTreasurys and US$-based
securities. It invites retaliation in trade war, whose financial expression is
COMPETING CURRENCY WAR.
The financial friction is reaching a higher level each month. On Tuesday, the
Bank of Japan announced a cut to 0% interest rate, this being done a full 20
years after their financial crisis stuck them with the dead-end 0% interest rate.
The advantage of a trade surplus helped Japan for two decades. That surplus
has disappeared, handed over to their Asian rival China. The two nations are in
hot disputes in the last month. The ramping Competing Currency War is
better described as a race to the bottom, in which only GOLD & SILVER
win. Anyone wondering why an inert metal would prevail over investment in a
financial structure is simply obtuse and of dull mind. Gold represents money in a
land where money has been systematically ruined. Money today is nothing more
than debt in disguise, and legal tender is nothing but denominated debt. The
system is on the verge of failure, complete with failure of state, due to the
cancerous nature of its faulty money. The high priest apologists have run out of
lunatic justifications for their sequence of failed theories. Gold & Silver are
refuges.

My forecasts in the past have been for a $1300 gold price, now achieved. My
forecasts in the past have been for a $21.50 silver price, now achieved. The two
precious metal markets are in a clearly recognized bull market breakout. The big
banks are on the defensive, covering shorts, almost their entire positions being
underwater. They will strive to shove their portfolios into some USGovt closet,
like Fannie Mae or AIG or a hidden USDept Treasury offshore firm. The drivel
and deceptive commentary has become humorous, about gold being in a bubble.
Be amused by the desperate displays of propaganda and denial of the sinking
ship, upon whose dismantled helm such analysts stand to glorify themselves.

 The gold market represents a hedge against the USTreasury bubble.

 The gold market represents a hedge against the breakdown of the
monetary system.
 The gold market represents a hedge against coordinated wreckage of the
currencies by the central banks, resulting in uniformly lower purchase
power of money.
 The gold market represents a hedge against a ripple effect from a global
spread of sovereign debt writedowns, defaults, and their extension to the
currency system.
 The gold market represents a hedge against the insolvent banks.
 The gold market represents a hedge against an extended banking system
shutdown.
 The gold market represents a hedge against heightened trade war and
great destruction.
 The gold market represents a hedge against the loss of wealth, plainly
stated.
 The gold market represents a hedge against the US systemic failure in
progress.
 The gold market represents a hedge against the inevitable USTreasury
default, whatever final form it takes.
  The gold market represents a safe harbor for money, since it is true money.

Gold & Silver are investments in legitimate money. Gold & Silver are votes of NO
against criminal syndicates. Gold & Silver are votes of NO against fraudulent
money that permits big banks to print their profit schedules. Gold & Silver are
investments in bullion whose price in no way properly reflects the obscene
shortages and contract naked shorting by official chambers. Gold & Silver are
investments in grossly under-priced bullion whose move toward equilibrium will
bring about price advances of multiples higher, not just hefty percentages higher,
like $3000 gold and $80 silver. Support of the US$ DX index at the 78 level is not
holding. A further slide below 77 will invite calls for direct global USDollar
intervention, and another upward thrust in the Gold price. The huge move in
the Gold price over $25 and the huge move in the Silver price over $1.00 in a
single day on Tuesday was triggered by the Bank of Japan, which registered
commitment to the Competing Currency War. The issue is not inflation versus
deflation, but rather of systemic breakdown and the revelation of tainted money,
if not lost store of value. The officials cannot admit it, since that would be an
admission of their failure. The Gold price will show a mid-term top only when
anything is fixed. The USTreasury Bond rally is a loud signal of systemic failure.
There is liquidity all around, supposed at zero cost, but it is all hemlock. It is not
INFLATE OR DIE, but rather INFLATE AND DEFAULT. The stock market is the
distraction steeped in irrelevance, since stocks could rally, but money is going
worthless.

In case sleepy observers have not noticed, Team Obama in the economic dugout
just disbanded. Nobody is left except a junior Senator posing as President,
whose words are impressive but actions echo inside great voids. In his hip
pocket is found a copy of "Dialectical of Materialism" without much public notice.
The helm is empty. The Ship of State is adrift, a derelict vessel. Peter Orszag is
gone (broken budget, spiraling deficits). Christina Romer is gone (wise mediocrity
but ignored). Lawrence Summers is gone (loser preppy). Cindi Sparks is gone
(stimulus plan architect). One can only hope that Tim Geithner departs too.
Although not on any economist team, the exit of Rahm Emanuel should be
interpreted as meaning that Obama is a political liability. Running for Chicago
Mayor might raise difficult questions on his resume, best not asked, since he
wears two hats. The legacy of US economic counselors in the past two or three
decades has been heresy reinforced by stupidity, wrapped in rationalization,
embellished by nonsensical obfuscation, touted as erudite, ignorant of history. In
the current pathogenesis of systemic failure and debt default, Gold wins! The
only question is how the dead will litter the battlefield.