In post-close futures trading, the Nikkei has dropped by another couple hundred points, and has dropped below 14,000.

As Japan has indicated, when bonds start to plunge, it’s not good for stocks. Today the Japanese Bond market fell and the Nikkei plunged 7%. The entire market down 7%… despite the Bank of Japan funneling $19 billion into it to hold things together.
This is what it looks like when a Central Bank begins to lose control. And what’s happening in Japan today will be coming to the US in the not so distant future.

If you think the Fed is not terrified of this, think again. The Fed has pumped over $1 trillion into foreign banks, hoping to stop the mess from getting to the US. As Japan is showing us, the Fed will fail.

Investors, take note… the financial system is sending us major warnings…

If you are not already preparing for a potential market collapse, now is the time to be doing so.

"What they're doing represents 70% of what the Fed is doing here with an economy 1/3 the size of ours"

There's a fatalism, he says, in everyone he talks to in Japan. Their thinking is changing, and the way they talk to him about debt is changing. They already spend 50% of tax revenue on debt service.

"If rates go up, it's game over."

There are no scandals in Washington. There is simply a turnover.

We are preparing for an escalation of the global financial war. The old team is simply being told to step aside. Make way for the killers.

When G-7 concluded their emergency meeting in London last weekend, they announced that they were going to target tax havens. What does this mean? After months of G-7 central banks buying mortgage bonds and equities, the hunt for capital is on. Of course, we knew the tax havens were in the crosshairs already – only intelligence agencies can dump out the kind of leaks we have been seeing over the last month leading up to the G-7 meeting.

However, the seriousness of the capital moves underway were underscored by the swiftness with which a "scandal" was trumped up and ready to go at the IRS, with headlines on Monday morning, the leadership was out on Wednesday and a new acting from OMB in at the IRS on Thursday. Wonder who the new commissioner will be? That is being sorted out now. It will be someone masterful at legal warfare – "lawfare."

A serious attack on the offshore havens, sufficient to direct $20-30 trillion in the direction that the G-7 wish it to go will also require the right kind of leadership at DOJ. Yes, Holder is certainly willing to play ball – he has done a perfectly adequate job supplying guns to the Mexican drug cartels and beating up on the Swiss. However, someone with international experience who is a lot meaner and trusted in certain congressional quarters is preferred. After all, asserting jurisdiction over $32 trillion is one amazing squabble.

If a serious attack on the tax havens is in the works, the moves of capital will be unprecedented. The question of global uninsured deposits could be an ongoing drama – perhaps explaining the enormous shifts of precious metals out of the ETFs and the improvement in the real estate markets. Someone is looking to get out of insecure bank deposits and into tangibles. However, imagine what could happen if numerous jurisdictions are forced to sell their precious metals the way that Cyprus was. We are now in a world where all asset classes can take turns in the doghouse – and they can do so at lightening speed with little warning.

The G-7 is extending and tightening up their jurisdiction. They are planning very significant shifts. This is BIG.

A week before the recent BRICS summit in Durban, the Kremlin administration has silently produced a document (PDF) which describes the Russian strategy in the context of BRICS cooperation. The document makes for a fascinating read for anyone brave enough to plow through the dense Russian legalese. The strategy has been designed in the “inner circle” of Vladimir Putin’s team, so it is safe to assume that it represents the official view on the BRICS future.

In Russia, politics are Byzantine; the fact that the Kremlin decided not to hide the document or leak it to a chosen few journalists, but publish it outright is a very strong signal, a very vocal angry signal directed at the US. A signal that the Western media chose to ignore.

In the recitals section of the document, the authors point out that “there is a common desire of the BRICS partners to reform the outdated global financial and economic framework that doesn’t take into account the growing economic weight of the emerging markets.” Moreover, the Russian strategists view the BRICS as a tool to reform the way the world is being governed. Then the document hammers home its message:

Russia assumes that, given enough political will of the leadership of the BRICS countries to advance their cooperation, this alliance can become one of the key elements of a new system for global governance, primarily in the economic and financial domains.

Move aside New World Order! The BRICS are coming to change the world.

The goals are clear. In the section titled “Strategic goals,” the first point on the BRICS’ agenda is the reform of the world financial system in order to make it “fairer, more stable, and more efficient.” In the later chapters, it is spelled clearly that this “reform” is actually a dismantling of the dollar system.

Vedomosti reports that Sergey Glaziev, the economic mastermind behind the Eurasian Union, sent an official report to Kremlin, stating the necessity of a radical revamp of Russia’s economic policy in the wake of the second wave of global economic crisis. “Unknown sources” have provided the media with the contents of this highly controversial document, igniting a fierce debate in the press and blogosphere.

Glaziev’s report features apocalyptic predictions in regard to the state of the world economy but the most interesting part of the text refers to the so-called “currency wars”. Basically, one of the most influential advisors of the Russian president accuses both the US and EU of “legalized aggression” through unbridled monetary emission. Vedomosti cites several fragments from the report, “As a key point of their anti-crisis policy, they are refinancing their banks using negative real interest rates” and meanwhile “1.5 trillion dollars, 1.2 trillion euros and comparable amounts of yen and pounds are used to finance debt pyramids and acquire real assets across the world”. Western banks are accused of blocking their debtors in “debt traps”, with the ultimate goal of “obtaining political control” and “seizing the real assets” of the debtors.

Sergey Glaziev considers that such a policy is actually a form of legalized aggression and that the world is in a state of financial war. According to the conclusions of this report Russia “cannot win this war” without some major changes in its own economic strategy. Vedomosti reports that Vladimir Putin assembled a crack team of experts from Russian Academy of Science with a mission to create a brand new economic policy. Glaziev is reported to be the team’s liaison in the president’s administration, while the team itself is led by Alexander Nekipelov, a member of Rosneft’s board of directors.

According to the preliminary conclusions of this team, a radical revamp of Russia’s economic policy could lead to spectacular results. Glaziev’s report indicates the following key elements required for sustainable growth: radical increase of the savings rate, investment in breakthrough technologies (up to 4% of the GDP), and creation of a strong and self-sufficient banking system. Although the nation’s economy is considered a top priority, national problems cannot be solved without mitigating some of the global risks. According to the Russian media, the report contains a warning regarding the risks of a global military conflict, “The conservation logic of the current financial and political system leads to a further escalation of military and political tensions, including the start of major war”. There are solutions mentioned which serve as recommendations to avoid this outcome. A reform of the global financial system, spearheaded by Russia, is reported to be one of those solutions. It remains to be seen whether this initiative will gain support from other developing countries.