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May 15, 2012

the derivative situation ‘guarantees quantitative easing to infinity


From Jim Sinclair - May 15, 2012
Dear CIGAs,
John Embry has paid me a great compliment. Please check out the article below.
Jim
Embry – This is One of the Greatest Statements of All-Time
With global stock markets tumbling, along with gold and silver, today King World News interviewed John Embry, Chief Investment Strategist of the $10 billion strong Sprott Asset Management.  Embry discussed gold and other major markets, but first, here is what Embry had to say regarding recent derivatives turmoil:  “This makes me very uncomfortable because I’ve always been very wary of the whole derivative situation.  I believe the notional value of the outstanding derivatives is comfortably north of one quadrillion dollars.  The Bank of International Settlements changed the definition, so they said there is only $700 trillion worth of them, rather than one quadrillion.”
John Embry continues:
But it doesn’t make any difference, these (derivatives) are many, many multiples of the world GDP.  If these things get in any trouble, and I think the JP Morgan thing may be the first sign of significant trouble again, it’s fantastically important to the whole financial situation.  In a rational market the gold price should have been up $100, not down $40 in the wake of this.
I would defer to Jim Sinclair, who I have the utmost respect for on this one.  He has said for a long time that the derivative situation ‘guarantees quantitative easing to infinity,’ which is one of the great statements of all-time….
“I think this JP Morgan revelation just confirms that everything Jim’s been saying for a long time on this subject is dead right.  The fact that we will have QE to infinity would suggest that an intelligent person would be buying every single ounce of gold and silver he can get his hands on at these prices.
They are trying to sell this idea that gold goes down on the ‘risk off’ trades that we are experiencing now.  And that the ‘risk off’ buyers all go running into the US dollar and the US bond market.  I think those are two of the riskiest things on the planet.  But somehow they are still getting this ‘Pavlovian response’ that when things are bad out there, you should sell your gold and buy US bonds.  It’s ridiculous.
It’s important, at this time, that people who have been around, and have a pretty good grasp of what’s unfolding, should express their views to the public just to counteract the propaganda they are receiving from mainstream media.  It’s tough enough out there without being lied to all of the time.”
Jim Sinclair’s Commentary
Do not be discouraged by the gold enemies within and outside of the community. No problems have been solved. In fact they have gotten worse.
Stay the course!
A whale in the waters of negative yields By Bill Gross
In nature, the mighty whale depends upon the lowly plankton for its survival and the same analogy rightly applies to global developed economies, which have dominated trade and finance at the expense of developing nations. Now the tides may be turning as once minuscule global economies find themselves in possession of a plethora of reserves. The hunted may be turning into the hunter and the global monetary system, which has evolved and morphed over the past century – but always in the direction of easier, cheaper and more abundant credit – may have reached a point at which it can no longer operate in the same way. Major changes to our global monetary system may lie on a visible horizon.
The struggle between financial whales and plankton – powerful reserve-ladened creditors and much weaker debt-ladened borrowers – is significantly dependent on the successful functioning of how the world conducts and pays for commerce (our global monetary system). Historically, several different systems have been employed but they have either been commodity-based systems – gold and silver primarily – or a fiat system – paper money. After rejecting the gold standard at Bretton Woods in 1944, developed nations accepted a hybrid based on dollar convertibility and the fixing of gold at $35 per ounce.
When that was overwhelmed by US fiscal deficits and dollar printing in the late 1960s, President Nixon ushered in a rather loosely defined system that was still dollar-dependent for trade and monetary transactions but relied on the consolidated “good behaviour” of G7 central banks to print money parsimoniously and to target inflation close to 2 per cent.
Heartened by Paul Volcker in 1979, markets and economies gradually accepted this implicit promise and global credit markets and their economies grew like baby whales, swallowing up tonnes of debt-related plankton as they matured. The global monetary system seemed to be working smoothly, and instead of Shamu, it was labelled the “great moderation”.

Another Signpost On The Road To Inflation



Europe’s leaders — that is to say German Chancellor Angela Merkel and the bureaucrats running the various eurozone agencies from Brussels — have looked into the abyss and don’t like what they see. Specifically, a default and departure by even a relatively insignificant country like Greece might start a contagion that cripples or destroys the whole eurozone.
So despite the posturing now going on about a Greek exit being manageable and that there should be no give in core country demands for peripheral austerity, that’s just for show. The bureaucracy will do just about anything to avoid finding out what’s on the other side of a Greek departure. Today the hints of a softening began:
Greece Gets Hint of Leeway From Euro Officials
European governments hinted at giving Greece extra time to meet budget-cut targets, as long as the financially stricken country’s feuding politicians put together a ruling coalition committed to austerity.
Calling talk of a Greek pullout from the euro “nonsense” and “propaganda,” Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid.
“The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday. “If there are dramatic changes in circumstances, we wouldn’t close ourselves off to a debate over extending the deadlines.”
Some thoughts
When eurozone bureaucrats describe a Greek departure as “nonsense” and “propaganda” that’s of course what they have to say to avoid giving up the game immediately. They know a Greek exit is possible and maybe inevitable, but to keep it from becoming a self-fulfilling prophecy they have to pretend that things are under control. Always assume heated denials from government officials are lies because most of the time they are.
Before this is resolved, the eurozone will make some truly breathtaking offers of leniency to Greece, but by then it will be clear that if Greece accepts, the cost of extending the same deal to Spain and Portugal will be ruinous — or highly inflationary.
Looked at another way, if Greece does leave the eurozone, then the headlines will stay the same, but with Spain and Portugal in place of Greece. The crisis can’t end until all the PIIGS countries are made solvent, which is to say until the ECB buys up all their debt.
The probable result: by year-end the currency war will be in full swing, with the ECB, the Fed, and the Bank of Japan operating in helicopter mode. The precious metals markets haven’t begun to anticipate this yet, but they will, once the Greek negotiations get down to specifics.

The Pendulum Shift: Rocks, Hard Places, and Elections


    
"Plus ça change, plus c'est la même chose" say the French, and that is what people must be thinking on the streets of Paris as the real significance of this month's French presidential election sinks in. The French have reasons to be skeptical of François Hollande, a President-elect who couldn't even make it past his first week before intimating that he would use a summer audit of state coffers as an excuse to renege on his election spending promises. The very media that were promoting Hollande so heavily as an anti-Sarkozy who would shake up the status quo in the Eurozone are now admitting in surprisingly frank terms that every major Western leader in the NATO countries, "from Blair to Cameron to Obama to Mario Monti in Italy," Merkel and Hollande included, are that specific type of well-heeled globalist that the establishment praises as "centrist pragmatists." In other words, willful servants of the drive toward unelected, unaccountable regional government.
           
Indeed, reading between the lines it seems that the same banking establishment that has been ruling the EU from its inception, and which has openly begun to assume control in recent years has merely replaced a politically dead horse with one that can help them sprint their agenda further down the track. Among Hollande's key ideas: using the European Investment Bank (EIB) to underwrite infrastructure projects, and using the European Stability Mechanism (ESM) as a conduit for distributing European Central Bank (ECB) loans to faltering countries. In other words, Hollande's action plan consists of propping up and attempting to legitimize the very regional banks and institutions that have perpetuated the Euro mess thus far. Now the EU itself is even attempting to use the momentum from Hollande's victory to expand its budget in the coming years.
           
No surprise, then, that Hollande's first high-level meeting as head of state comes not with Merkel or another fellow national leader, but Hermann von Rompuy, the unelected, unaccountable European Council President who was vetted by the Bilderberg Group at a closed-door dinner meeting before being appointed to run the Eurocracy. Nor is it surprising that Hollande was a spokesman for Lionel Jospin--the former president of France and himself a Bilderberg attendee. Nor that key Hollande advisor Manuel Valls is likewise a Bilderberg attendee who has argued for the European Commission assuming control of the national budgets of individual EU member states. In many ways it seems Hollande's insider pedigree is at least as frightening as Sarkozy's.
           
Why is it, then, that despite all of the pomp and circumstance, and all of the election promises and rhetoric, the public ends up voting for substantially the same thing every time? How can it be that voters can shift from right-wing to left-wing and end up with the same old "centrist pragmatist" promising to grow the super state at the expense of the people yet again? Could it be that the elections are set up to present a false dialectic that means the public has about as much chance of voting in a truly revolutionary politician as a craps player at a crooked casino has of rolling a seven with his loaded dice? It may happen occasionally, but in the end the house always wins.
           
If so, then surely this is not merely a French nor even a European phenomenon. The continuity of agenda between successive American presidents--even ones of supposedly opposing ideologies--has been noted for decades. Like Hollande, Obama ran a campaign promising "Change" but ended up delivering more of the same...literally. More Guantanamo, more Afghan war, more drone strikes in Pakistan and Yemen, more prosecution of whistleblowers, more immunity for CIA torturers and Wall Street fraudclosure perpetrators, more TSA abuses and DHS overreach. If Obama is Bush on steroids, then one can only wonder what the country would devolve into under Romney, assuming any difference in foreign policy or the domestic police state rollout could be detected at all.
           
In a type of perverse Catch-22, the very idea of electing Hollande as some sort of "savior of Europe" itself ensures the perpetuation of the EU status quo, regardless of what policies he advocates within that framework. Whether calling for stricter austerity as a condition for EFSF bailouts or arguing for the ECB to open up the spigots for the ESM, it all serves to empower Brussels at the expense of the citizens of the European nations. That the French electorate's choice of Monsieur Hollande is expected to have an impact on the crises playing out in Greece and Spain and Italy and Ireland and the other EU member states should at the very least give the citizens of those countries pause for thought. Where is the space in the media analysis of this election to question why the French voters should have such an inordinate sway over Europe, or even whether the European Union should exist at all? Of course there is no space for that type of analysis, because this is how the rigged political game is played: give the voters a choice between growing the EU in the name of austerity or growing the EU in the name of socialism and let them fight it out amongst each other. Either way, the EU wins and no one ever thinks to question the game itself.
           
In one of those strange synchronicities of world events that plays itself out from time to time, a number of elections are taking place around the globe that further prove the rule that the more things change, the more they stay the same. In Syria the first multiparty elections in five decades took place this week in the midst of a foreign-funded insurgency. The combined weight of the "international community" (read Turkey, the U.S., Israel, and the other so-called "Friends of Syria") has been thrown at this election to ensure that it fails completely to derail the festering civil war in the country. As if to underscore the point, another deadly explosion ripped through Damascus on Thursday, killing dozens and wounding hundreds, but the international newswires were putting the Syrian government's description of the perpetrators as "terrorists" in quotation marks within minutes of the story breaking, as if the insurgency that is admittedly armed, trained and supplied by foreign hostile forces is somehow not acting as terrorists when killing civilians. In this case it certainly doesn't matter how many Syrians cast a ballot, nor for whom they cast it, nothing is going to get in the way of the regime change that the foreign interventionists have decided is the only allowable outcome in the country.
           
Meanwhile Egypt's presidential election drama took yet another turn this week as an administrative court ruled that the entire election would have to be suspended due to a technicality involving the Supreme Elections Commission calling for voters to head to the polls on May 23rd, something the court alleges only the ruling military council has the authority to order. Although the decision will almost certainly be overturned by a higher court, it throws yet another wrench in the works of the Egyptian election saga. That saga began earlier this year when the Muslim Brotherhood took control of Parliament during parliamentary elections, a victory that turned out to be less significant than first believed as the still-ruling military junta has prevented the Brotherhood from even choosing their own cabinet. In Egypt, too, the people cast votes for a system that--at least until this point--remains very much the same.
           
Russia, too, is still dealing with the fallout of its own presidential elections earlier this month, as protests against Vladimir Putin's third presidential victory continue to linger on the streets of Moscow. More interesting than the relatively meager protests are the breathless coverage they have received from the very media that has been openly and uniformly denouncing the Russian political system and the elections themselves ever since Putin's intention to run again was announced. Oddly unreported in those media mouthpieces that seem to have suddenly become intensely interested in Russian politics is the recently-exposed video of key (US State Department NED-funded) opposition activists lining up to meet with newly appointed US Ambassador to Russia, Michael McFaul. Hounded by the Russian media outside of the secret, closed-door meetings, the activists could not explain what they were doing meeting with the US Ambassador, nor why they were being openly funded by the National Endowment for Democracy, choosing to accuse those reporters of some vague conspiracy to undermine their credibility. In Russia, too, it seems that the Russian public are free to vote for any candidate they want...just so long as that candidate has been approved by the NATO powers. Otherwise, every dissenter in the land will be given as big a megaphone as they need in the Western press to air their grievances with the government.
           
The other obvious election story this week is from Greece, where an indecisive vote last Sunday left no one with a clear majority, and each party in turn scrambling in vain to put together a coalition government. As of press time it was all but certain that no deal would be reached and the Greek people would be forced to head back to the polls. In essence, the Greeks would have in their hands the chance to do something truly meaningful with their vote: to kick the bums out and put in place a party that will actually send the EU packing, perhaps taking Greece out of the Eurozone altogether. Now the once-unthinkable (in the establishment media) idea that the Greece should leave the Euro--or should never have even entered it in the first place--is not just being talked about, but is increasingly being taken as common sense. Never mind that this publication has been saying this for years, and calling the Euro for the failed globalist overreach that it is; if The Economist and Bloomberg are talking about it, now it is suddenly fit to be taken seriously. Of course it is an obvious choice and always has been.
           
If Greece returns to the Drachma and defaults on the debt that their previous puppet governments tried to sign the nation onto, there will be pain, but it is at least conceivable that they can begin steps to devalue their currency and turn the situation around. This is precisely what the Icelandic people did when they faced their own crisis in the wake of their banking collapse and, lo and behold, they are now the feel-good economic story that everyone would be talking about...if that story didn't go against the phony socialist/austerity debate that the Eurocrats want to use to limit the scope of the argument. The only alternative to Greece leaving the Euro would be a continuation of the status quo: a long, steady decline pumped up by injections from the EFSF (which just celebrated its second birthday with understandably little fanfare). In effect, the game plan in Brussels is to keep applying cosmetics to the rotting cadaver that is the Eurozone, D.O.A. since its D.O.B.
           
In Greece, we have the possibility of seeing an election that amounts to something more important than a people with their back against the wall casting a ballot between running their ship of state into a rock or a hard place. There is a third way, and Greece has the opportunity to set an example for that path that will potentially disrupt the seemingly inevitable rollout of the Eurocratic dictatorship of Brussels.
           
I'm not sure if they say "Plus ça change, plus c'est la même chose" in Greek, but I like to think they have an opposite expression.  


Greeks Going To New Elections Since They Want Infinite Bailout Cake And Eat It Too

What pathetic brainwashed spoiled brats europinkos sheeple are: they just want infinite bailouts so that everybody can suck from the ultra-corrupted state tit, and now they are lost when the bill is due and they cannot even imagine a way out of state's and fiat money's dependence. From now on everything is possible in PIIGS. 

The #1 Question That Greeks Will Be Asking In The Next Elections


Greek leaders today failed to reach an agreement on forming a new government after elections on May 6 upset the historical political hierarchy, despite attempts by the three leading parties and the Greek president to form governments.
That means Greeks will return to the polls next month to vote again. While early polls continue to show anger at Germany and the austerity programs imposed by international creditors, ultimately the voting will come down to a single question:
Is the euro worth the cost of austerity?
Early polls by Real News show leftist anti-bailout party SYRIZA currently leading the race for public opinion, with 25.5 percent of the vote in comparison to conservative New Democracy's 21 percent and Socialist PASOK's 14.6 percent. However, such polls are often drastically wrong, and much can change ahead of the next vote.
While Greece will receive its next tranche of bailout aid this month, the disbursement of further aid is contingent upon approval of spending cuts in 2013 and 2014. Should the Greek government fail to approve such measures, it will likely face a full-scale default on its debt as early as July. At this point, it would likely be forced to leave the euro currency, given its irreverence for euro area policies and the huge losses the European public sector would stomach in the "hard" restructuring.
Support for SYRIZA has accumulated behind its rejection of any new austerity measures, and in particular the so-called "Memorandum of Understanding" signed by leaders in February to make way for approval of the second Greek bailout. The party has argued that current bailout agreements must be significantly renegotiated and that the economic reforms that have exacerbated Greece's six-year economic downturn must be stopped.
At the same time, an overwhelming majority of Greeks still advocate membership in the euro currency. But according to EU leaders—and as German Finance Minister Wolfgang Schaeuble reiterated today—Greece will not be allowed to stay in the euro currency unless it implements its unpopular austerity program.
Thus, Europe and Greece are engaging in a high-stakes game of chicken. There is plenty of time for one side to make a concession to the other, however the opposing ideological perspectives in the Greek and German populaces suggest that one side might flinch too late.
Statements by EU leaders indicate that they are warming to the idea of a Greek exit from the eurozone, as they argue that they can contain the effects of a default on the rest of the euro system. While this very well could require stronger efforts to ensure that countries like Italy, Spain, Ireland, and Portugal do not follow in Greece's footsteps, the diminutive size of the Greek economy suggests that Europe is not bluffing.
If EU leaders continue to make the basics of the bailout program a criterion for euro membership, then we are likely to see a dramatic shift in voter support, as Greeks consider the ramifications of defying Europe. Ultimately, this will come down to a question of whether or not it is worth it for Greece to stay in the euro, and public opinion suggests that it still might be a while before Greeks are willing to completely abandon the plan.


NOW READ: This Is Why Germany Has Zero Desire To Fix Anything In Europe >
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Stay of execution for Greece in the offing

With Greece’s expected new leader staunchly opposing austerity, voices are rising all over Europe to give the Greeks a stay of execution, writes Darrell Delamaide.




 

Gerald Celente on CapitalAccount, May 14, 2012

From CapitalAccount, May 14, 2012:


   


 Welcome to Capital Account. What we are seeing across the Western world is exactly what happens when faith in the systems of governance and commerce are shaken to such a degree that the emerging cracks in the foundation appear too large and the holes too gaping to fix by traditional means. Nowhere is this more obvious than in Greece, where a system-wide reset seems the only realistic outcome at this point. The inability of politicians to form a viable government is only the latest act in this national drama. Deposit and capital flight, a collapse in domestic investment, and a paralyzing debt burden have weighed on a Greek economy in the throes of a dark social depression unlike anything the country has seen in recent generations. And with similarly-indebted neighbors facing bailouts and austerity, it's not hard to imagine a similar trajectory for other economies. So as the cracks within western societies and their economies grow larger and deeper, the divide between the real economy and the one inhabited by the financiers grows equally with it. Last week, we learned that JP Morgan, the largest Wall Street bank to have emerged from the crisis of 2008 not only unscathed, but enriched and bigger than ever before, announced a hole of its own on its balance sheet of more than $2 billion dollars. But not to worry, because cracks on Wall Street can always be fixed with the glue of more easy money, deregulation and monopoly privilege. Holes can be filled with the endless support of central banks, who stand ready to enrich our feudal banking oligopoly at the expense of the systems of government and commerce that built the same wealth that is now being extracted with an ease and efficiency reminiscent of an industrial assembly line. Jamie Dimon, the CEO of America's largest bank by assets, made an appearance on NBC's Meet the Press this Sunday. Downplaying the impact of the two billion dollar loss that JP Morgan recorded from its risky bets, the loss that turned out NOT to be the tempest in the teapot he had previously blow it off as, Dimon said the bank will still earn a lot of money this quarter. Banks are supposed to earn money by helping the economy grow. They make money from that growth. Making money while the rest of the economy suffers isn't earning money, it's extracting it, it's stealing it, and that's a theme we see on both sides of the Atlantic. We see it from bank bailouts in the eurozone disguised as bailouts for societies to the casino capitalism of Wall Street banks disguised as legitimate business. We speak to Gerald Celente, Founder of Trends Research Institute & Publisher of the Trends Journal about it all. Plus, the US Department of Justice can't tell you how many criminals have been prosecuted in the financial crisis because they don't keep track and a Facebook co-founder ditches his US citizenship for residency in Singapore. Demetri, Lauren and Shannon give you their two cents on today's "Loose Change."

The dangerous power of political lies


When I started this blog in 2006, one of the main drivers was to discuss the intersection of business and politics. With hindsight, in the midst of a leveraged fulled boom and several years of stable Labour government in the UK, this was not a topic high on many peoples' agendas.

How much has changed since, here we are 6 years later and there is a visceral fight to the death between politicians and the markets. In Europe, populist politicians, ignorant of anything economic, have led a campaign of 'anti-austerity'. As if there is some kind of valid choice. Of course, the people are also not well informed and it is part of human nature to hope there is a better answer to all life's challenges - the cancer can be cured, the relationship saved, the house afforded etc.

But now to peddle this fantasy is a dangerous lie. There is a simple choice, repay debts or default. Promising instead 'Growth' is a nonsense. Governments cannot create growth, only can they create the environment for it. Of course, this does nto stop Governments trying, which is why the size of the state rises inexorably across European countries as Governments try to deliver on their impossible promises.

The limits of this attempt have now been discovered. Vast monies have been spent on welfare states with 50% of GDP coming from Governments who at most raise 40% in taxes. No more can this be sustained without the reductions in Government spending. This is of course very painful for the populations.

The alternative though is default and Euro exit, not some dreamland 'third way.' Thus this promise of an end to austerity is the worst kind of fantasy - lying to gain votes and then potentially tipping countries into an economic darkness for which they are unprepared. Here sits the Greek Party Syriza. Europe has a history of this, the last great depression of the 1930's also led to populist, nationalist, socialist governments to come to power. Promising people an economic fairy tale they could not deliver on.

The collapse in Greece is however, sadly, to be expected. Too far gone are the debt dynamics to save Greece and too incompetent the Government structures to be trusted with another bailout (but, yet it may come in one scenario).

With all this populist outrage across the channel, the UK has its own promoters too. The siren calls of the Labour party and its Union masters mimic the same tune - no cuts! no austerity! nothing to change! tax the rich! create growth with greater debt!

For many people, this is the nirvana mix in the current economic dark days. Why should we have worse schools, hospitals etc, why can't things be different?

Yet of course, Labour have no alternative, no different policy. Darling's predictions pre-election 2010 and Osborne's response have been similar to within a few percentage points. So this outrage is entirely manufactured - the job of opposition, perhaps one might say with a shrug of the shoulders.

The Tories for their part, with the Lib Dems, have a terrible hand to play and are doing an average job - when we needed an excellent Government. But even so, the damage caused by Labour lies is telling. The people believe in wishful fantasy alternative, not aware that Britain and Greece share many of the same, frightening, economic statistics. Only the Pound and the Printing presses (and the City, able to secure money for its host nation whilst turning a blind eye in a way that Eurozone states could not expect) keep the UK relatively afloat.

So finally, the Great Lie; The Euro. A political project without economic merit, which has sunk the periphery nations of Europe and enriched Germany and the northern states. A credible plan to end the currency area over a 2 year period is needed. The markets and economics cry out for this. Instead, Politicians proceed as if this is impossible - when even now discussing kicking out Greece. A Grexit will lead to a run on Portugal and Spain - so bad is this end that another bailout would be much cheaper. The lie though must continue, Europe is a single currency area and countries and adjust internally, even whilst demand collapses. A complete fantasy - but an acceptable one. Greeks still want Euro's, even after the tragedy it has inflicted on the Country - there we have it in pure essence, the power of political lies.

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supremacist racist genocidal apocalyptic cults surveillance Survivalism SVADs sweden Swine Flu syria Taliban Tamiflu TAPI taxes tea party technocracy Tennessee TEOTWAWKI terrorism Thailand The Fourth Turning the left The Mogambo Guru Thirdworldization TIPS tiranny torture totalitarism toxic assets toxic waste trade deficit trade war treason Treasuries Bubble Tri-Border Area Trickle down trolls tsa tunisia Turkey uganda UK Ukraine UN underclass upper class US $ US army US bonds seized US debt US elections US gulags US hunger US secessionists US Treasuries US666 useful idiots vaccines VAT vatican Venezuela vets vietghanistan Vietnam violent conflicts virii Voodoo war war crimes WAR CRIMINALS war on drugs war party war pimps war propaganda warfare warfare state wars water WB wealth distribution web bot weed Weimar weird welfare white collar criminals White phosphorous WHO who rules Wikileaks wikipedia witch hunt WMD working poors world bank world economy world hegemony world reserve currency world trade WTF WTO WW3 xe Xinjiang Yemen Yuan Yugoslavia Zimbabwe zionism zionist trolls zious
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