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Wednesday, May 30, 2012

The New Europe - Chuck Missler

Syrian Diplomat Expulsions Counterproductive - Moscow

Russia believes the expulsion of Syrian ambassadors from a number of Western countries is counterproductive, a Foreign Ministry spokesman said on Wednesday.

“We can only comment on this decision…in the context of international efforts to achieve a peaceful resolution of the Syrian crisis,” said Alexander Lukashevich.

“From this perspective, the expulsion of Syrian ambassadors from the capitals of leading Western states is, in our view, a counterproductive move.”

The United States, Spain, Great Britain, Italy, Canada, France, Australia, Germany, Japan and other countries announced the expulsion of the Syrian ambassadors to their countries on Tuesday, in protest at last weekend's massacre in the town of Houla for which they blame Syrian President Bashar Assad's forces.

The killings on Friday in Houla in Homs province were one of the deadliest single events in the 15-month-old uprising against President Assad's rule. The UN said 49 children and 34 women were among the 108 people killed.

Russian Foreign Minister, Sergei Lavrov, claimed on Tuesday that “certain countries” were attempting to use the deaths in Houla as a “pretext” for a military operation against Assad’s forces, which have been armed in part by Russia. Lavrov also accused the head of the foreign-based opposition, Syrian National Council, of attempting to “incite a civil war” in the Middle East country.

Over 9,000 people have been killed in clashes between the government and opposition forces in Syria since the uprising against Assad began in March 2011, according to UN estimates.

RIA Novosti

Strange Sounds Continued

Not Even A Drill: US, S.Korean special operations pester Pyongyang

Internment Coming

Joseph Herrin (05-29-2012)

Stockade Doors at Andersonville Civil War Prison

Nearly three years ago I wrote an article entitled “Internment Coming.” Little did I know that in the two years following the post I would be brought before the courts and imprisoned on two separate occasions.

In 1999 Yahweh instructed me to begin using my first name, which is Joseph. Up until that time (I was 38 years old) my family and friends had all called me by my middle name of Bradley, or the shorter version Brad. The Spirit of Christ made it known to me that my first name was significant, and I was to use it. In the years since I have experienced many things that parallel the life of Joseph the son of Jacob. One of those parallels was being cast into jail.

Yahweh has testified to me for some years that I have been called to walk as a forerunner and explorer. I have been called to experience things that many more saints must endure in days ahead. Even as Joseph was a slave and prisoner in Egypt, and later his brethren were made slaves in the same nation, so too have I been selected by the Father to experience a number of things before my brothers and sisters in Christ in America. The time is coming when many of God’s people will have to pass through experiences similar to what I have passed through in the last 12 years. In the book of Revelation the following words are written concerning the last days before the return of Christ.

Revelation 13:9-10
If anyone has an ear, let him hear. If anyone is destined for captivity, to captivity he goes; if anyone kills with the sword, with the sword he must be killed. Here is the perseverance and the faith of the saints.

Did you note the last sentence? “Here is the perseverance and the faith of the saints.” These words are written to Christians, members of the body of Christ. Some are destined for captivity, and some are destined for the sword. To pass through these experiences while remaining steadfast will require both faith and perseverance.

Had you told me years ago that I would twice be brought before a judge and put in jail in America because my conscience would not permit me to disobey the will of the Father, I would have found such things hard to imagine. “What, here in America where most citizens self-profess to be Christians? How can these things be?” Let those with understanding hearts consider that Joseph was sold into slavery by his brothers who were shepherds put in charge of their father’s flocks. Joseph had earlier brought a report to his father of his brothers abusing their duties as shepherds of the flock. These things are a spiritual parable.

In the days at hand it will be brother who delivers up brother to death and imprisonment. Many who occupy positions as shepherds of the flocks of Christ will be the very ones to deliver the sheep over to the government for persecution.

Mark 13:12-13
"Brother will betray brother to death, and a father his child; and children will rise up against parents and have them put to death. You will be hated by all because of My name, but the one who endures to the end, he will be saved.”

Both those who are part of the saints’ natural and spiritual families will turn against them. The disciples of Christ who are surrendering their lives to be led of the Spirit will be persecuted by those relations, both natural and spiritual, who have not embraced a Spirit led life.

Galatians 4:29
But as at that time he who was born according to the flesh persecuted him who was born according to the Spirit, so it is now also.

There are Christians who walk according to the flesh. They will persecute their brothers and sisters in Yahshua as certainly as those who are strangers to the Spirit of Christ. For this reason, Christians must walk wisely in coming days. They must be wary of carnal brethren.

I do not doubt that those who read this blog will have a difficult time conceiving of a day approaching swiftly when they will be in peril of captivity, or death. I speak with assurance, knowing those things I have passed through, and the testimony of the Spirit that I have been chosen as a forerunner, that such things are indeed coming to the people of God.

I found it very sobering today to watch the following video. I urge you to watch itprayerfully. Understand that America has been given into the hands of evil men skilled in destruction. Liberty is about to be removed that the saints might be induced to grow in faith and perseverance, separating themselves from all sin. Although those who would persecute Yahweh’s remnant have evil in their hearts, God intends the experience for good. This was Joseph’s confession, and one I have myself echoed.

Prolonged Detention

An hour is approaching when the government will pro-actively arrest people. They will use profiling to determine who poses a threat to national security. Christians who hold allegiance to God, rather than the immoral government of man, will be among those deemed as threats. If you oppose abortion, homosexuality, or stand for truth and righteousness, you will face the threat of indefinite detention without trial or appeal.

The imprisonment many of God’s people will have to endure in the days ahead will be worse than what I passed through. As a forerunner I was given exceptional grace. When my Christian brothers and sisters were living lives of ease and pleasure, I was enduring reproach and persecution. This too was Joseph’s experience. His brothers were living as the prosperous sons of a wealthy father when Joseph was enduring slavery and imprisonment. Eleven sons of Jacob had great liberty and were following the course their soul dictated while Joseph was confined and restricted. Yet the day came for them to endure the same. They were enslaved and placed under harsh taskmasters and their labor was bitter. Yet, even in this, Yahweh’s eye was always upon them. The people multiplied greatly.

The Scriptures testify that there is an afflicted path that leads to life and few there are who find it. The apostle Paul declared:

Acts 14:22
"Through many tribulations we must enter the kingdom of God."

Is your faith strong enough to endure persecution? Can you remain steadfastly committed to obedience to Yahweh when you have home and possessions stripped from you? Will your faith remain steadfast when your obedience to Christ results in captivity? The days ahead will try many men’s hearts. Yahweh will not subject His children to such things for their destruction, but rather for their spiritual welfare.

James 1:2-4
Consider it all joy, my brethren, when you encounter various trials, knowing that the testing of your faith produces endurance. And let endurance have its perfect result, so that you may be perfect and complete, lacking in nothing.

Following is the post I shared three years ago on this topic. As stated, I was not aware that some months later I would be cast into prison. I believe in sharing this message again, there are those who read this who will find themselves in a matter of months facing similar things. I would assure you that as God was with Joseph in prison, and He was with me in both of my times of captivity, so too will He be with you. Be strong and courageous. Nothing can separate you from the love of Christ.

Internment Coming
Joseph Herrin (08-12-09)

Those things written here are shared as a word of prophecy for the body of Christ in America. There are times when I have a profound sense of the Father ordering my steps to communicate some truth, and the past couple days have brought forth a sobering message.

Randy and Kathy Furman, a precious brother and sister from Arizona, were in South Carolina to visit family. Since they were “close” by, they decided to drive down to Georgia and spend a day and a half with me...

As I considered what sites I might take Randy and Kathy to visit, one in particular came to mind, and it did so with a force that I recognized to be the inspiration of the Spirit of God. I sensed that we were to go together and visit Andersonville National Historic Site.


Andersonville is the site of a Civil War prison where Union troops were held in a large walled stockade. It has become associated with the greatest abuses of one American against another. The camp was operating only 14 months, and in that brief time 13,000 Union troops died. Among the causes of death were starvation, disease, exposure, vermin, and harsh treatment.

At its peak in August of 1864, 32,000 men were crowded into an area consisting of 26 acres.

Conditions were so terrible that they were burying up to 100 men a day in mass graves.

Lest some think it was only the South who treated their prisoners badly, they need only look into the history of Camp Douglas in Chicago, or Elmira Prison in New York. At Camp Douglas, the Union general in charge intentionally kept the men in a malnourished state to make them “manageable.” Starving and thirsty soldiers were warned that they would be shot for transgressions as slight as eating snow to quench their thirst. They were routinely tortured by hanging them by their thumbs, or making them “ride the rail.”

Riding the Rail

This form of torture would often leave men crippled, and it caused extreme pain to the genitals.

This inhumane treatment of one American by another was not widely known among the public. The media in that day did not have the scope and immediacy that is common today. Undoubtedly, if more had been known about what was going on inside these prison camps, there would have been significant public outcry.

We live in an hour in which there is less outrage by the public over inhumane treatment of mankind. The recent revelations of the shocking abuses at Abu Ghraib prison in Iraq, and the blatant and unapologetic endorsement of torture techniques such as waterboarding, have caused only a modest outcry. Even when it became known that President George W. Bush had authorized torture to be used on suspected terrorists, the employment of stress positions, sleep deprivation, and waterboarding continued unabated.

Such things do not bode well for the things that millions of Americans will soon suffer at the hands of their brothers. The concept in the minds of many that such atrocities could never happen in America, for we are too civilized, are instantly shattered when one takes a visit to Andersonville. The truth is, Americans have already manifested the willingness to treat one another in the most cruel and careless manner, and the Spirit is testifying that days akin to the great Civil War are returning to America. This time things will be much worse.

I have cited on numerous occasions the parallels between Abraham Lincoln and Barack Obama. The Obama campaign made much of the similarities during the Presidential race. Both men were Illinois politicians. Both came to power at a time when the nation was facing a great crisis. Both men were tall and lanky. Barack Obama even took his oath for the Presidency with his hand upon the same Bible used by Abraham Lincoln.

The Spirit has been testifying that America is about to experience a great fall. The Union will disintegrate. The country will be divided. The evidence of the fault lines upon which the fractures will occur are already visible. The recent democratic ads characterizing conservative protestors at town hall meetings as “the mob” reveal that the division is observed from the grassroots to the halls of Congress. Barack Obama’s ill chosen words saying that Cambridge, Massachusetts police acted stupidly in arresting a black Harvard professor resulted in a storm of response that was very much polarized along racial lines. This past week a prison in Chino, California was destroyed by inmates who rioted along racial lines, Hispanics against African Americans.

As millions of jobs are being lost and people’s unemployment benefits are ending, the number of unhappy, and often angry citizens of this nation are increasing. Arnold Schwarzenegger, the governor of the state of California, is proposing the early release of over 27,000 criminals from state prisons to reduce the budget for the Department of Corrections. These criminals will be turned back out on the streets in a state where employment is hard for skilled laborers to find. Those who are unskilled and have a criminal record will have little chance of finding employment, and crime will escalate.

I can foresee the day fast approaching when states petition the Federal government to use military bases and Federal troops to hold those they can no longer care for. Many of the pieces are already being set in place to pave the way for the government to begin acting as one massive police state.

One of the first acts of the current 111th Congress was to pass legislation to authorize and fund regional detention facilities across the nation. The legislation can be read at the governments websites.


An internet article reports the following:

Yes, U.S. Officials Are Quietly Preparing for BIG Trouble Ahead

A new report by the Army War College's Strategic Studies Institute states flatly the U.S. military must prepare for "a violent, strategic dislocation inside the United States" that could be provoked by "unforeseen economic collapse" or "loss of functioning political and legal order."

Late last year, The Washington Post noted the incoming Obama Administration is going to "earmark" at least 20,000 troops returning from Iraq to deal with "domestic emergencies." Since then, the Army Times has broken the story that the domestic emergency army unit has been increased to 80,000 troops, who are being trained right now in Georgia.
[Source: http://www.silverbearcafe.com/private/04.09/pandemonium.html]

Returning to the witness of the Spirit of Christ concerning these things, my friends who went with me to visit Andersonville had been reading the book The Heavenly Man, and had brought it with them. This is the remarkable story of a Chinese Christian who was arrested by the government and imprisoned. This is a scenario that is soon coming to America.

Yun's book claims both extreme persecutions and miracles of deliverance similar to ones found in the Biblical narrative. Despite a life of poverty in China, he since has spoken to thousands internationally, possibly millions, with the gospel message. Seen as a rebel among some Chinese for not joining the 'official' government-controlled Christian organization (see: Three-Self Patriotic Movement), he was imprisoned and tortured by the government authorities. His book claims that he became a highly wanted man across several provinces. He was finally arrested and sentenced to many years in prison. However, Yun continued his ministry while in prison, with more claims of miraculous results. As a result, many prisoners and even some prison officials reportedly became born-again Christians. Apparently, while he gained increasing favor from some officials, he also became a target of increased persecutions by others. He was repeatedly beaten and became severely malnourished. It is claimed that while in prison, Yun undertook a total fast without food or water for 74 days.

After many years in prison, he escaped from Zhengzhou Maximum Security prison from which it is reported that nobody had previously escaped. He described how he heard the voice of the Holy Spirit, telling him to simply walk out the heavily guarded prison gate. Risking being shot to death on the spot, he wrote later that he obeyed the voice, and walked straight through several prison doors that were somehow left open in front of many prison guards, across the prison yard and finally out of the main gate. Yun stated that it was as if he had become invisible to the guards who stared straight through him. Although many expressed doubts that such a thing could happen, some prison guards had apparently lost their jobs for this 'embarrassing mishap.' It is reported that the official investigation by the Chinese Government concluded that "Yun received no human help in his escape." It is claimed that these reports have been also confirmed by numerous prisoners who occupied the same prison cell as Yun. Apparently, he remains the only person to have escaped from this notorious maximum security prison.
[Source: http://en.wikipedia.org/wiki/Brother_Yun]

Our visit to Andersonville was a very sobering one. It was not a feel-good jaunt in the sunshine. A museum with many exhibits from prisoner camps across the world is located on the property. A film is played that shows the terrible suffering that many have endured, with personal testimonies and appalling photographic evidence...

It is difficult to comprehend those things that are coming to America, but the Spirit of Christ is testifying of them. He is speaking to His people that they might prepare their hearts and lives for the days ahead. Many are even now being directed by the Spirit to make preparations to flee in coming days. It is necessary that all the people of God be wholly surrendered to the direction of the Spirit. It is in God that we will find our safety and refuge.

The current series I have been publishing on Living Epistles - Testimonies of Faith, is intended to promote the faith of God’s people. We live in a nation where faith has been infrequently exercised. This must change. Will your faith be adequate to carry you through the days of distress that are approaching? If you are unsure, then begin seeking the Lord now that He might direct your steps to a more robust, practical faith. He is faithful, and His eyes are ever upon His children.

May you be blessed with peace and understanding in these days.

Let me end this post by strongly recommending the following audio broadcast that was aired on April 18th on the TruNews website. The testimonies of the various men, and what they are individually being led to do in preparation for the days ahead is instructive. I would specifically direct you to the testimony of Gary Kah and John Price.

Vladimir Putin 'rejects offer to attend White House'

Less than a week before Mr Putin's May 7 presidential inauguration, he received a missive from Mr Obama touching upon bilateral and international issues and inviting him to discuss them in a bilateral summit on the sidelines of the May 18-19 G8 summit, Putin's foreign policy aide Yury Ushakov said.

"Obama sent his letter on May 2," Mr Ushakov told a briefing. "He even proposed holding a separate meeting at the White House in Washington outside of the framework of the G8."

But the Russian strongman told him he would not be able to travel to the United States and instead sent his protégé and Kremlin predecessor Dmitry Medvedev to the summit at Obama's Camp David residence in Maryland.

The Kremlin said Mr Putin could not go because he was too busy forming a government after his inauguration. Analysts say the Kremlin's explanation for the cancellation of the talks does not hold water.

After Mr Putin's refusal to go the United States, the White House said Mr Obama would not attend the APEC summit Russia hosts in Vladivostok in September, which comes soon after the Democratic presidential nomination convention.

Putin's trip to Washington would have made the United States his first foreign destination upon the Kremlin comeback.

Ushakov denied the cancellation of the US visit was meant as a snub, saying Putin was keen to pursue "stable" relations with Washington and stressed that the Russian President wrote Mr Obama a long letter in return.

"It's a very substantial exchange," he said of the letters. "There are literally eight to nine pages there, both on our side and their side," he said.

Mr Obama and Mr Putin are now scheduled to meet on the sidelines of the G20 summit in Mexico next month.

"Vladimir Vladimirovich hopes for a most active development of stable, smooth, constructive relations with the American partners," Ushakov said. "It's important that the White House shares this attitude."

The Telegraph

Europe’s debtors must pawn their gold for Eurobond Redemption

Do you see...they say "you don't need gold", but they want it!!!

The German scheme -- known as the European Redemption Pact -- offers a form of "Eurobonds Lite" that can be squared with the German constitution and breaks the political logjam. It is a highly creative way out of the debt crisis, but is not a soft option for Italy, Spain, Portugal, and other states in trouble.

The plan is drafted by the German Council of Economic Experts and inspired by Alexander Hamilton’s Sinking Fund in the United States -- created in 1790 to clean up the morass of debts left by the Revolutionary War. Flourishing Virginia was comparable to Germany today.

Chancellor Angela Merkel shot down the proposals last November as "completely impossible", but Europe’s crisis has since festered, and her Christian Democrat party has since suffered crushing defeats in regional elections.

The Social Democrat opposition supports the idea. The Greens say they will block ratification of the EU Fiscal Compact in the German Bundesrat -- or upper house -- unless Mrs Merkel relents.

"The Redemption Pact cleverly combines the advantages of lower interest rates through joint European borrowing with a reduction of debt," says Green leader Jürgen Trittin. "Joint liability would be limited in both time and scale."

The plan splits the public debts of EMU states. Anything up to the Maastricht limit of 60pc of GDP would remain sovereign. Anything over 60pc would be transfered gradually into the redemption fund. This would be covered by joint bonds.

Italy would switch €958bn, Germany €578bn, France €498bn, and so forth. The total was €2.326 trillion as of November but is rising fast as Europe’s slump corrupts debt dynamics. The sinking fund would slowly retire debt over twenty years, using designated tithes akin to Germany’s "Solidarity Surcharge".

In effect, Germany would share its credit card to slash debt costs for Italy, Spain and others. Yet it is the exact opposition of fiscal union. While eurobonds are a federalising catalyst, the fund would be temporary and self-extinguishing. "The fund is a return to the discipline of Maastricht with sovereign control over budgets," said Dr Benjamin Weigert, the Council of Experts’s general-secretary.

The ingenious design gets around the German constitutional court, which ruled in September that the budgetary powers of the Bundestag cannot be alienated to any EU body under the Basic Law -- the founding text of Germany’s vibrant post-War democracy.

The court warned that open-ended liabilities are unconstitutional. The Bundestag may not establish "permanent mechanisms which result in an assumption of liability for other states’ voluntary decisions, especially if they have consequences whose impact is difficult to calculate," it ruled. Chief Justice Andreas Vosskuhle said that any major step towards EU fiscal union would require "a new constitution" and a referendum.

The fund implies a big sacrifice for Germany. Its interest costs on joint debt would be much higher than today’s safe-haven rate of 1.37pc on 10-year Bunds. Jefferies Fixed Income says it would cost 0.6pc of German GDP annually. The Council of Experts -- or `Five Wise Men’ -- argue that this would be modest compared to the growth adrenaline of rescusitating monetary union.

Yet it is not charity either. One official said a key motive is to relieve the European Central Bank of its duties as chief fire-fighter. "We have got to get the ECB out of the game of distributing money, and separate fiscal and monetary policy. Germany has only two votes on the ECB Council and has no way to control consolidation," he said.

Germany would have a lockhold over the fund, able to enforce discipline. Each state would have to pledge 20pc of their debt as collateral. "The assets could be taken from the country’s currency and gold reserves. The collateral nominated would only be used in the event that a country does not meet its payment obligations," said the proposal.

This demand could enflame opinion in Italy and Portugal. Both states have kept their bullion, resisting the rush to sell by Britain and others. Italy has 2,451 tonnes of gold, valued at €98bn in March.

Alessandro di Carpegna Brivio, a gold expert at Camperio Sim in Milan, said Italy should treat such proposals with care. "Everything being done at a European level is in the interests of Germany and France, to save their banks. It is not in the interest of Italy," he said.

"We should use our gold to take care of our own debt, collateralizing bonds above 100pc of GDP. That would be a far more targeted approach," he said.

David Marsh, author of books on the euro and the Bundesbank, said Germany is not yet ready for the redemption fund. "The Germans have to do something, but I don’t think it will happen before the elections next year. Spain will have to go through storm first," he said.

Ultimately, a sinking fund cannot tackle the root cause of the eurozone crisis. It may cap debt costs but it does not alter the intra-EMU currency misalignment between North and South, or help the Latin states close the chasm in labour competitiveness.

The South would still face the long grind of "internal devaluation" -- or wage deflation -- breaking societies on the wheel. Yet the Redemption Pact is at least a first step back from Purgatory.

The Telegraph

Summary of worldwide volcanic activity

The past week was dominated by the paroxysm at Fuego volcano on 20 May and ongoing strong explosive activity at Shiveluch in Kamchatka. The new Smithsonian / USGS Weekly Volcanic Activity Report was published today and is summarized as follows:

-- New activity ---

Fuego (Guatemala): paroxysm on 20 May (lava fountains, lava flows and pyroclastic flows)
Marapi (West Sumatra, Indonesia): small ash eruption on 18 May

--- Ongoing activity ---

Batu Tara (Komba Island, Indonesia): occasional ash eruptions reaching 2-3 km altitude
Cleveland (Aleutians): no changes/activity detected, alert remains at ORANGE
Dukono (Halmahera, Indonesia): ongoing occasional ash eruptions reaching 2-3 km altitude
Karmysky (Kamchatka): occasional weak ash eruptions reaching 2 km altitude, thermal anomaly
Kilauea (Hawai'i): active lava lake in Halema'uma'u crater and eastern Pu'u 'O'o crater floor, active lava flows advancing on coastal plain reaching 750 m from coast
Popocatépetl (Mexico): ongoing ash and steam venting up to 1.5 km height, occasional explosions with bombs ejected up to 800 m distance
Sakurajima (Japan): powerful vulcanian explosions, ash plumes up to 4 km height, bombs landing up to 1.8 km distance, occasional pyroclastic flows
Santiaguito (Guatemala): moderate ash explosions, ash fall and occasional lahars
Shiveluch (Kamchatka): strong explosive activity, large ash plumes up to 8-9 km altitude
Tungurahua (Ecuador): steam and ash venting, occasional explosions causing ash fall, lahars

Volcano Discovery

Wall Street stumbles as euro zone worry grows

Reuters) - Stocks dropped on Wednesday, as rising bond yields for Italy and Spain and the latest poll results in Greece worsened fears about a spiraling of the euro zone's debt crisis.

The region's fiscal woes sent the yield on the safe-haven 10-year U.S. Treasury note to the lowest in 60 years and the euro to its lowest level in 23 months against the dollar. U.S. equities have been closely tethered to the currency's fortunes, with a 50-day correlation between the euro and the S&P 500 index at 0.91.

"The longer they (Europeans) drag it out, the less severe are the ramifications of a break-up and then who actually ends up exiting - so much of this is unwritten it is hard to put any sort of odds on how this plays out," said Nathan Snyder, portfolio manager at Snow Capital Management in Sewickley, Pennsylvania.

Yields on 10-year Spanish bonds moved closer to the 7 percent level, a point at which other nations in the bloc were forced to seek a bailout.

Spain is expected to issue new bonds shortly in an effort to fund its troubled banks despite the increased borrowing costs.

Adding to the concern, Italian 10-year yields topped 6 percent for the first time since January at a bond sale, raising concerns the region is vulnerable to a contagion.

Investors were given cause for optimism after the European Commission said the euro zone should move toward a banking union, consider eurobonds and the direct recapitalization of banks from its permanent bailout fund as well as boost growth and cut debt.

But the cheering was short-lived after the latest poll from Greece showed the radical leftist SYRIZA party has taken the lead over the pro-bailout conservatives ahead of a national parliamentary election next month that may determine whether the debt-laden country stays in the euro zone.

"It seems inevitable the euro has got to break up, it's just how long can they drag it out and what are the ramifications," said Snyder of Snow Capital Management.

The CBOE Volatility index .VIX jumped more than 10 percent, its biggest spike since mid-April.

The PHLX oil service sector .OSX dropped 2.9 percent with U.S. crude down more than 2 percent as the euro zone's debt problems and signs China was not planning a large stimulus package stoking demand fears. National Oilwell Varco Inc (NOV.N) lost 2.6 percent to $68.19.

European shares were buffeted by the conflicting headlines, with the latest Greek poll pushing the FTSEurofirst 300 index .FTEU3 down more than 1 percent. .EU

The Dow Jones industrial average .DJI dropped 135.21 points, or 1.07 percent, to 12,445.48. The Standard & Poor's 500 Index .SPX lost 16.32 points, or 1.22 percent, to 1,316.10. The Nasdaq Composite Index .IXIC slumped 40.97 points, or 1.43 percent, to 2,830.02.

U.S. economic data showed contracts to purchase previously owned U.S. homes unexpectedly fell 5.5 percent in April to a four-month low, dealing a blow to more recent optimism the housing sector may have hit a bottom.

Research In Motion Ltd (RIM.TO) (RIMM.O) tumbled 10.6 percent to $10.05 as the biggest percentage decliner on the Nasdaq 100 .NDX index. The company hired bankers for a far-reaching strategic review and to look for partnerships as the BlackBerry-maker warned it would likely report a shock fiscal first-quarter operating loss.

Apple Inc (AAPL.O) slipped 0.9 percent to $567.14 after Chief Executive Tim Cook, speaking at the All Things Digital conference said technology for televisions was of "intense interest" but stressed the company's efforts would unfold gradually amid speculation the iPad and iPhone maker was on the brink of unveiling a revolutionary iTV. [ID:nL1E8GU081]

Macy's Inc (M.N) reported better than expected May same-store sales on Wednesday, helped by its growing e-commerce business. Shares slipped 2.9 percent to $37.86.

Pep Boys-Manny, Moe & Jack (PBY.N) plunged 21.7 percent to $8.68 in premarket after the automotive parts and service chain said the sale of the company to private equity firm Gores Group has been called off.

When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook

When The Derivatives Market Crashes (And It Will) U.S. Taxpayers Will Be On The Hook
Warren Buffett once said that derivatives are "financial weapons of mass destruction", and that statement is more true today than it ever has been before.  Recently, JP Morgan made national headlines when it announced that it was going to take a 2 billion dollar loss from derivatives trades gone bad.  Well, it turns out that JP Morgan did not tell us the whole truth.  As you will see later in this article, most analysts are estimating that the losses will eventually be far larger than 2 billion dollars.  But no matter how bad things get for JP Morgan, it will not be allowed to fail.  JP Morgan is the largest bank in the United States, so it is essentially the "granddaddy" of the too big to fail banks.  If JP Morgan gets to the point where it is about to collapse, the U.S. government and the Federal Reserve will rush in to save it.  Because of this "security blanket", banks such as JP Morgan feel free to take outrageous risks.  Today, JP Morgan has more exposure to derivatives than anyone else in the world.  If they win, they win big.  If they lose, U.S. taxpayers will be on the hook.  Not only that, but thanks to Dodd-Frank, U.S. taxpayers are on the hook for bailing out the major derivatives clearinghouses if there is ever a major derivatives crisis.  So when the derivatives market crashes (and it will) you and I will be left holding a gigantic bill.

Derivatives almost caused the complete collapse of insurance giant AIG back in 2008.  But instead of learning our lessons, the derivatives bubble has gotten even larger since that time.
Bloomberg article that was published last year contained a great quote from Mark Mobius about derivatives....
Mark Mobius, executive chairman of Templeton Asset Management’s emerging markets group, said another financial crisis is inevitable because the causes of the previous one haven’t been resolved.
“There is definitely going to be another financial crisis around the corner because we haven’t solved any of the things that caused the previous crisis,” Mobius said at the Foreign Correspondents’ Club of Japan in Tokyo today in response to a question about price swings. “Are the derivatives regulated? No. Are you still getting growth in derivatives? Yes.”
Never in the history of the world have we ever seen anything like this derivatives bubble.
But instead of getting it under control, we just allowed it to get bigger and bigger and bigger.
Now JP Morgan is in quite a bit of trouble.  A recent Daily Finance article summarized how JP Morgan got into this mess....
Bruno Iksil, a trader working in the bank's London office, placed a massive bet in the derivatives market. Derivatives "derive" their value from the value of an underlying asset, like stocks, bonds, currencies, or a market index. The specific type of derivative used in Iksil's bet was a credit default swap index, known as "CDX.NA.IG.9."
CDX.NA.IG.9 tracks a basket of corporate bonds. Iksil's positions on the index were so big (one report put it at $100 billion) that they were moving the market and interfering with other traders' positions. These annoyed traders -- hedge-fund managers -- dubbed Iksil "the London Whale" for his outsize bets.
So if the real number isn't 2 billion dollars, how much will JP Morgan eventually lose?
Morgan Stanley says that the losses could eventually reach 5 billion dollars.
The Independent is reporting that the losses could eventually reach 7 billion dollars.
One author featured on Zero Hedge suggested that the losses could ultimately reach 20 billion dollars....
Simple: because it knew with 100% certainty that if things turn out very, very badly, that the taxpayer, via the Fed, would come to its rescue. Luckily, things turned out only 80% bad. Although it is not over yet: if credit spreads soar, assuming at $200 million DV01, and a 100 bps move, JPM could suffer a $20 billion loss when all is said and done. But hey: at least "net" is not "gross" and we know, just know, that the SEC will get involved and make sure something like this never happens again.
The truth is that nobody really knows.  Everybody agrees that the losses will likely far exceed 2 billion dollars, but the real extent of the crisis will not be known until the trades play out.
According to the Huffington Post, JP Morgan recently sold 25 billion dollars of profitable securities to raise some cash.  The profit on the sale of those securities will be somewhere in the neighborhood of a billion dollars.
A billion dollars will help, but it will not be nearly enough.
Many are interpreting this move as a sign of panic by JP Morgan.
Meanwhile, JP Morgan CEO Jamie Dimon continues to do quite well.  In fact, his 23 million dollar pay package was recently approved by shareholders at an annual meeting.
Wouldn't you like to do your job badly and still make 23 million dollars?
Right now, JP Morgan is essentially in a "staring contest" with those on the other side of the derivatives trades that went bad.  This "staring contest" was described in a recent CNN article....
It's clear from public data filed with The Depository Trust & Clearing Corporation that JPMorgan Chase hasn't sold any of its positions yet. The DTCC tracks trading activity and sizes of positions on the IG9 and other indexes, and there haven't been any big moves since last week.
"Whatever the size was, it's clearly not something that you can call one or two dealers and sell," said Garth Friesen, a co-chief investment officer at AVM, a derivatives hedge fund that's not involved in these trades.
As soon as it becomes clear that JPMorgan Chase is unwinding its position, it will be obvious to players on every major trading desk. Hedge funds will immediately start piling into that index and buying protection, driving up the bank's losses.
Until then, it won't cost the hedge funds much to sit and wait.

JP Morgan is desperately hoping that the markets move in their favor.
If the markets move against JP Morgan in a big way it could potentially be absolutely catastrophic for the biggest bank in America.
An excerpt from an email that Steve Quayle recently received from an anonymous international banking source contained some chilling analysis of the situation....
The derivative market that JPM plays in is the CDX.NA.IG.9, when factions within their London office (London Whale) made overly leveraged swaps, hedge funds smelled blood and so did a few banks. You see any moves that JPM does here on out exposes their weakness further. Which they can not afford any more exposure thus they are not buying back any more shares which is the equivalent of cutting an artery in a pool full of sharks. The strategy they are taking right now is to sit through the storm and ride it out as they can do nothing else for any action will make them even more vulnerable. They can not absorb hits in both JPM SLV and CDX.NA.IG.9. Inactivity is not something they want to do it is something they have to do. There is no other choice for them.

So what will happen if JP Morgan loses too much money?
Well, it will beg the U.S. government and the Federal Reserve for money and the U.S. government and the Federal Reserve will comply.
There is no way that they are going to let the largest bank in America fail.
In addition, as I mentioned earlier, Dodd-Frank has put U.S. taxpayers on the hook for future bailouts of derivatives clearinghouses.  This was detailed in a recent Wall Street Journal article....
Little noticed is that on Tuesday Team Obama took its first formal steps toward putting taxpayers behind Wall Street derivatives trading — not behind banks that might make mistakes in derivatives markets, but behind the trading itself. Yes, the same crew that rails against the dangers of derivatives is quietly positioning these financial instruments directly above the taxpayer safety net.
One of the things that Dodd-Frank does is that it gives the Federal Reserve the power to provide "discount and borrowing privileges" to derivatives clearinghouses in the event of a major derivatives crisis.
This is what our politicians love to do.
They love to have the U.S. taxpayer guarantee everything.
Our politicians look at us as one giant insurance policy.
Apparently they believe that if anything in the financial world goes wrong that U.S. taxpayers should be the ones to clean up the mess.
But will we really have enough money to bail everyone out when the derivatives market crashes?
Today, the 9 largest banks in the United States have a total of more than 200 trillion dollars of exposure to derivatives.
That is approximately 3 times the size of the entire global economy.
The U.S. government is already nearly 16 trillion dollars in debt.
How in the world can we afford to keep bailing out the huge messes that Wall Street makes?
Sadly, most Americans have no idea how vulnerable our financial system really is.
It is a poorly constructed house of cards that could come crashing down at any time.
If you still have faith in our financial system you are being quite foolish and you will soon be bitterly, bitterly disappointed.
Economic Collapse