| Surmounting the (Financial) Armageddon | |
| Wpisał: DeepCaster | |
| 28.02.2010. | |
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Surmounting The Armageddon http://www.financialsense.com/fsu/editorials/deepcaster/2010/0226.html by DeepCaster LLC, deepcaster.com | February 26, 2010 “Wherever we look at the world economy today, we see a wall of risk…and potential financial catastrophe. We see a large number of virtually bankrupt major sovereign states (US, UK, Spain, Italy, Greece, Japan and many more) teetering atop a financial system that is bankrupt, but is temporarily kept alive with phony valuations and unlimited money printing… Governments like the US and the UK are committed to printing increasing amounts of worthless paper money in order to finance their growing deficits. The consequence of this rescue mission will be a hyperinflationary depression in many countries, due to many currencies becoming worthless. The list of countries at risk of bankruptcy is increasing by the day. The acronym used to be PIGS (Portugal, Ireland, Greece and Spain). It is now PIIGSJUKUS and growing. The main contenders are currently: USA, UK, Japan, Spain, Italy, Greece, Ireland, France, Portugal, Baltic States, Eastern Europe and many more. On a proper accounting basis all of these countries are already bankrupt...” “The Sovereign Debt Disaster” “U.S. Rep. Darrell Issa…placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG. These were the deals that pushed the insurer to the brink of insolvency -- and were eventually paid in full at taxpayer expense. The New York Fed, which secretly engineered the bailout, prevented the full publication of the document for more than a year… The public can now see for the first time how poorly the securities performed, with losses exceeding 75 percent of their notional value in some cases. Compounding this, the document and Bloomberg data demonstrate that the banks that bought the swaps from AIG are mostly the same firms that underwrote the CDOs in the first place… …Goldman Sachs underwrote $17.2 billion of the $62.1 billion in CDOs that AIG insured -- more than any other investment bank. The list shows that the $21.2 billion in CDOs minted after 2005, mostly based on prime and commercial mortgages, performed as badly as or worse than the earlier subprime vintages… …Philip Angelides, chairman of the Financial Crisis Inquiry Commission, at a hearing held by his panel on Jan. 13, questioned how banks could underwrite poisonous securities and then bet against them. ‘It sounds to me a little bit like selling a car with faulty brakes and then buying an insurance policy on the buyer of those cars’… E-mails between Fed and AIG officials that Issa released in January show that the efforts to keep Schedule A under wraps came from the New York Fed… AIG paid its counterparties -- the banks -- the full value of the contracts… (at taxpayer expense! – ed.) …Paris-based Societe Generale got the biggest payout from AIG, or $16.5 billion, followed by Goldman Sachs, which got $14 billion, and then Deutsche Bank and Merrill Lynch…” (emphasis added) “Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs” “…the Federal Reserve Bank continues working with the Mexican government to make it easier for illegal aliens to export US money to their homeland. The Fed is currently devising several programs that will extend banking services to illegal aliens… …The Federal Reserve Bank is aiding lawbreakers in moving their cash around in the US and Mexico. This obviously includes the myriad alien gangs and more than 50,000 gang members who are involved in narcotics trafficking, identity theft, homicides, and other criminal activity… ‘Directo a Mexico,’ the name of the program, enables US commercial banks to make money transfers for Mexican workers through the Federal Reserve's own automated clearinghouse…” “Corruption at Federal Reserve Bank goes unnoticed” “Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit. No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg…” “Goldman Sachs, Greece Didn’t Disclose Swap Contract” “Many of the banks that helped Greece create derivatives that concealed its borrowing are betting on default, hoping to make additional profit from the nation's financial troubles… Banks' and hedge funds' purchases of credit default swaps on Greek bonds are driving up the cost of borrowing that Greece needs to roll over its maturing debt…” “Report: Banks that hid Greece's debt aim to profit from default” “America's Founding Fathers were afraid of any concentration of power in the republic. They were particularly afraid that banking interests could hijack our fledgling democracy. And yet today, 234 years later, our Founding Fathers' worst fears have come true. Wall Street's stranglehold on the economy threatens our very prosperity, and the future of a truly democratic republic…” “Wall Street’s Stranglehold on the Economy Is Choking Americans” “What does not kill me, makes me stronger.” F.W. Nietzsche The inexorable Momentum of Destructive Megatrends is impelling us toward an Economic and Markets Armageddon, about which we and a few other notable commentators have been writing for some time. The Denouement will not be at all pretty or short-lived. Thus with the foregoing as Context we sketch an all-too-likely, in our view, Scenario of Coming Events and Consequences, and lay out key Guidelines for coping and profiting. Many of the themes about which we have previously written are now coming to a head, as the foregoing indicates. Thus we reiterate and weave them together in the following Scenario and recapitulate Guidelines for Profit and Protection. Scenario Athens, Greece, Cradle of Western Civilization, awakens on an early Spring Morning in 2010 and is forced to acknowledge that no effective Bailout is coming. Greece can thus no longer pay interest on its Megaloans, nor can it obtain new loans. Greece defaults on its Sovereign Debt. The Unions call a National Strike. Greece, the country, is in chaos, and is de facto expelled from the EU. If Greece’s relatively small GDP were the only issue, the Sovereign Debt Default would not matter much (from an economic perspective) to the EU, or the world, except that it foreshadows more Sovereign Debt defaults by Italy (worse off than Greece), and, Spain, Portugal, and, finally France and perhaps even some or all “Major Nations” on the von Greyerz list of the de facto bankrupt, above. Greece is thus a Catalyst. (Other Nations’ Sovereign Debt Defaults could serve equally well.) Subsequently a Tidal Wave of Sovereign Default Ripple Effects Cascades around the world, affecting most those economies and markets which most allowed themselves to be ensnared by the Lethal Cocktail of Globalism (as opposed to Internationalism) and “Free Trade” (as opposed to Fair Trade). The least self-reliant are shown to be the most vulnerable. Again, late in 2010, Mega-Financial Institutions which are holders of the increasingly Toxic Sovereign Debt clamor for more bailouts. But Stark Reality raises the question “Bailouts by whom, with what, and how?” Consequently Credit Markets freeze, again, by the end of 2010. The FDIC, which already had a $20.9 billion deficit as of February 23, 2010 is unable to prevent hundreds more U.S. small and medium size banks from failing. Central Banks respond by printing even more Fiat Currency while simultaneously increasing demands for One Global Currency, de facto, a Major step toward World Government of, by, and for The International Banker Cartel.* Simultaneously, the Fed-led Cartel* of Central Bankers allies, and Agents direct the full force of their Market Intervention and Manipulation Regime developed over decades toward their ‘End Game’ goals. See “Surmounting The Cartel’s ‘End Game’ Juggernaut” (9/25/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com for more details. *We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably. Massive Fiat Currency printing impels Hyperinflation to rear its ugly head in earnest. The Weimar Scenario Unfolds in countries around the World and reveals that long-suppressed-truths are coming home to roost. The Hyperinflationary Depression, long hidden by bogus official statistics (see below), is revealed to the world. Truths and Consequences Among the long suppressed truths that increasingly force themselves upon general public awareness as 2010 proceeds is the fact that major Official Statistics have been bogus for several years. Indeed, the entire Official Statistics Production Machinery has been revealed as generating bogus numbers as demonstrated by Shadowstats.com. Consider the following Real Numbers from Shadowstats.com which calculates the Real Numbers for the U.S.A. the way they were calculated in the 1980’s and 1990’s before Official Data Manipulation began in earnest. Official Numbers vs. Real Numbers Annual Consumer Price Inflation reported February 19, 2010 U.S. Unemployment reported February 5, 2010 U.S. GDP Annual Growth/Decline reported January 29, 2010 And consider that the U.S. Dollar has lost one third of its purchasing power in the last 8 years, thanks primarily to the deleterious policies of the private for-profit Federal Reserve. And consider also that the Financial Accounting Standards Board’s decision to allow financial institutions to value their portfolios according to a “Mark to Model” standard (i.e. falsely) rather than “Mark to Market” allows a Great Deception as to the True Value of those portfolios. Were portfolios required to be Marked to Market, a number of financial institutions would be shown to be bankrupt. Considered together, the foregoing numbers (and those below) reveal a Stealthy Transfer of Wealth and Power from Citizens around the world to The Cartel. Long-time Citizens in the U.S. (and elsewhere) know this, at least intuitively – Two wage-earners are required today to support a family at the same standard of living in the U.S. as one wage-earner could sustain in 1972. Given the impending Disaster it is not surprising that The Cartel has an “End Game” to absolve themselves of responsibility and to allow others to “take the hit”. In order to stave off the Day of Reckoning (which, we reiterate, is coming mainly as a consequence of The Fed’s decade-long dramatic monetary inflation and “easy credit” policies), and to implement its own ‘End Game’, the Fed-led Cartel* of Key Central Bankers and Favored Financial Institutions has created, and for the past several years has operated, an extraordinary “financial regime” built on dramatically, increasing trillions of dollars (nearly $600 trillion according to the Central Bankers Bank (BIS) report as of December, 2008 - - see www.bis.org (path: statistics>derivatives>Table 19 and ff.) of Dark OTC Derivatives available for the manipulation of major markets ranging from Precious Metals to Crude Oil and Energy, to Equities and Strategic Commodities (see Deepcaster’s July, 2008 Letter at www.deepcaster.com). The Magnitude of the Wealth Transfer this Regime has facilitated is staggering. For example, BIS Table 19 reveals that in the six months from June, 2008 to December, 2008 when investors were losing Trillions in the Market Crash, the Mega-Financial Institutions gained some $11.9 Trillion. To be sure The Cartel’s massive and increasing use of derivatives to intervene (Overtly and Covertly via Primary Dealers) in a wide variety of markets (and especially to suppress the prices of Gold and Silver) is fraught with danger (e.g. through actual and prospective counterparty (and sovereign nation) failure as we are now seeing, as well as prospective Systemic Failure). Deepcaster, Warren Buffett and Jim Sinclair have pointed out the dangers of OTC derivatives. Indeed, Buffett calls them “toxic” … ”weapons of financial destruction” and Sinclair has aptly described the financial system as “sitting on a… trembling mountain of derivatives … think Weimar Republic.” Unfortunately, Deepcaster, Jim Sinclair, and Warren Buffett are correct. “How will all the above manifest itself in your life? The answer: “All you own will shrink...your income, assets, net worth, will shrink year after year in real terms inflation adjusted and possibly also nominally.” HS Letter, April 27, 2008 Harry Schultz, Eminence Grise of the Newsletter writing Fraternity sees the Threat to Profits and Wealth posed by the Fed-led Cartel* quite clearly. The Cartel* ‘End Game’, as Deepcaster has named it, apparently involves Stealthily transferring ever more Wealth and Power to The Cartel at the expense of Investors/Citizens around the world. (See elsewhere in this Letter, and “Coping with the Superpower Cartel Threat” (1/30/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.) Of course, The Fed-led Cartel’s increasing Power and Profits have been threatened by Rep Ron Paul’s ‘Audit the Fed’ Bill (H.R. 1207) which fortunately has garnered two thirds Majority of the U.S. House of Representatives as co-sponsors and over half of the Senate on a companion Bill. Unfortunately, it has been dramatically watered down in Congress this session. Even so, the private for-profit Fed has predictably responded to the Audit Threat with a not-so-veiled counter-Threat delivered via Chairman Bernanke’s Testimony to Congress last year. “Federal Reserve chairman Ben Bernanke unleashed an alarming veiled threat of financial terrorism when he was questioned by Rep. Duncan on Thursday about his response to the fact that a majority of Congress (is) co-sponsoring Ron Pauls H.R. 1207 bill to audit the Federal Reserve. Bernanke clearly regarded the bills intent as hostile to the institution he represents: “My concern about the legislation is that if the GAO is auditing not only the operational aspects of the programs and the details of the programs but making judgments about our policy decisions (it) would effectively be a takeover of policy by the Congress and a repudiation of the Federal Reserve (which) would be highly destructive to the stability of the financial system, the Dollar and our national economic situation.” The brunt of Bernankes statement is as crystal clear as a threat from a common street thug -- back off from the Fed, or the economy gets it. The chairman clearly implies that any attempt to restore monetary powers constitutionally granted to the Congress would be seen as a takeover and that the defensive and repudiated Fed would respond destructively. Of course Congress’ constitutional power over money is enumerated in Article I, Section 8 of the U.S. Constitution: ‘The Congress shall have power To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;’ “ “Bernanke Threatens Economic Collapse If Fed Audited” Deepcaster has described in detail key aspects of The Cartel’s apparent ‘End Game’ in its June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations “ and its August 13, 2006 Alert “Massive Financial-Geopolitical Scheme Not Reported by Big Media” posted in the “Archives” at www.deepcaster.com. Fortunately, a Bill was introduced in the last session U.S. Congress (H.Con.Res.40), which opposes this nefarious scheme. Prologue to The Strategy designed for Profit and Protection Key aspects of the ‘End Game’ plan that have been implemented through various departments of the U.S. government agencies and NGOs. We repeat a critical fact: Masking the True State of the Economy and Financial Markets, is a central aspect of The Cartel Regime – Data Manipulation (coupled with Markets Manipulation). Consider certain Real Numbers from Shadowstats.com which we mentioned above. And consider the FASB’s decision to allow “Mark to Model” valuations. We emphasize, Real U.S. GDP “growth” is a negative number -- about a negative 4.6%, according to shadowstats.com, as opposed to Official Figures showing just a positive 0.1%. That the U.S. economy (about 25% of the international economy) is headed in the direction of Serious Stagflation (a Kondratieff Winter) is pretty clear from the very credible shadowstats.com statistics cited above. Predictions of Recovery any time soon are a combination of Media Hype and Fed “Communications policy”. In sum since, the U.S. Dollar’s purchasing power has declined over 30% in the past 8 years, it appears that The Cartel expects (and likely are even pushing) the U.S. Dollar to go into further and further decline, over the medium term, and to continue their other policies, until there is a “No-Salvation, No-Return Systemic Crisis.” It would appear that The Cartel-charted-course toward a Stagflationary Recession/Depression, and thus toward the further implementation of their “End Game,” is on course. For more details on the ‘End Game’ see the articles referred to above. The Cartel is still potent as evidenced by its delivering $50 down days at the beginning of December, 2009, and, again, at the beginning of February, 2010. Consider John William’s comments regarding where Gold and Silver “should” be if they were again to hit their inflation-adjusted 1980 highs (and, we add, were their prices not manipulated): In like manner, the all-time high price for silver in January 1980 of $49.45 per troy ounce…has not been hit since, including in terms of inflation-adjusted dollars. Based on inflation through January 2010, the 1980 silver price peak would be $138 per troy ounce, based on not-seasonally-adjusted-CPI-adjusted dollars, and would be $429 per troy ounce in terms of SGS-Alternate-CPI-adjusted dollars.” (emphasis added) “Annual Inflation 2.6% (CPI-U), 3.3% (CPI-W), 9.8% (SGS) Quarterly Inflation Shifted from Fourth- to Second-Quarter 2009 Economy Keeps Bottom-Bouncing as Intensified Contraction Nears” Commentary Number 280: January CPI, PPI, Housing Starts, Production Thus, unfortunately, the Solution does not lie in Straight-out Precious Metals Purchases (i.e. without regard to Timing or Asset Form) or in Buying and Holding Quality Equities for the long term, but rather in a Strategy. The Strategy – Guidelines for Identifying Opportunities for Profit and Protection Hedge for Profit. Above all, it will be most important not only to hedge one’s portfolios, and to lighten up considerably on the long side, but also to hedge for profit. Get the Real Data. As many Investors suspect, Crucial Official Government and Agency Economic and Financial Data are of highly questionable validity. The Data set forth above from shadowstats.com is a good starting point. Take Account of both Overt and Covert Cartel Intervention. Many of these same investors who suspect Official Statistics also rightly suspect that the private-for-profit U.S. Federal Reserve and/or Central Banks overtly and covertly manipulate Major Markets. But they might not be aware that covert Market Interventions and Data Manipulation are likely far more pervasive than generally believed, as detailed in Deepcaster’s articles mentioned above. Recognize that the “Buy and Hold” strategy rarely succeeds anymore. The Eminence Grise of Newsletter writers, Harry Schultz perhaps put it the best when he stated that “buy and hold no longer works anymore, even with Gold.” Recent Market Developments should suffice to demonstrate this principle! Indeed The Dow was at about its current level of 10,000ish, a decade ago. And, adjusted for Official inflation Dow stockholders have actually lost over 30% of the purchasing power of The Dow’s dollar-value. Adjusted for Real Inflation Dow-holders have lost much more. Track the Covert Interventionals as well as the Technicals and Fundamentals and Overt Interventionals. Tracking the Footprints, as it were, of the Covert Interventionals (e.g. the Repo and TSLF Pools) daily can often, but not always, give one excellent clues about The Cartel’s next likely Interventional Move - - such clues are essential to preserving wealth and making profits. Deepcaster’s tracking of The Interventionals, for example, allowed him to recommend five short positions going into September, 2008, (i.e. before the Market Crash) all of which he has subsequently recommended be profitably liquidated. Deepcaster’s recent article “Cartel Angst Equals Investor Advantage” (9/18/2009 can be found in the ‘Articles by Deepcaster’ at www.deepcaster.com) lays out a specific strategy for use in investing and trading in the heavily manipulated Gold and Silver Market. Perhaps most important, be prepared to go both long and short Major Market Sectors - - long near the bottoms of Interim Takedowns and short near Sector Tops. The Interventionals are essential to helping identify these tops and bottoms. In Deepcaster’s view, it will be increasingly difficult to achieve a net profit for one’s portfolio if one is unwilling and/or unable to “go short” as well as “long”. Be aware of and Active in the overall Geopolitical Landscape in order to gain an adequate understanding of how that Landscape might affect the present and future direction of the Markets. It is essential that one understand the motivations of the major players in the market and the resources at their disposal. Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets and/or Retirement Accounts only to have those assets effectively de-valued by Cartel Takedowns, U.S. Dollar Devaluation and other Cartel actions. This is extremely injurious to many average citizens in many countries who are saving for the rainy day or retirement and have their retirement and/or reserves effectively taken from them. In order to help prevent this and similar outrages, we recommend taking three steps: Become involved in the movement to Audit and then abolish the private-for-profit U.S. Federal Reserve as Deepcaster, former Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. The ‘Audit The Fed’ Bill is H.R. 1207 (and has over 200 co-sponsors) and S604 in the Senate; and The Abolish The Fed Bill is H.R. 2755.Unfortunately these bills have been watered down in this session of Congress. www.carryingcapacity.org is a nonprofit organization which actively supports these bills. Join the Gold AntiTrust Action Committee, which works to eliminate the manipulation of the Gold and Silver markets (www.gata.org). GATA is a nonprofit organization, which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities. Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game” in “Coping with Power Moves in the Cartel's 'End Game' “ (04/24/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Clearly (and the recent U.S. Dollar bounce) The Cartel is sacrificing the U.S. Dollar over the long-term to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever. See Deepcaster’s July 2008 Letter in the ‘Latest Letter’ Archives at www.deepcaster.com. Additional insights and details regarding the foregoing Strategy, which are essential to profiting from The Cartel’s Policies, are laid out in Deepcaster’s article of 3/06/09 entitled “Investor Advantage: Revisiting The Cartel’s ‘End Game’ ” in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. Details of the Strategy designed to profit in spite of Cartel Intervention specifically in the Precious Metals markets are described in “Defeating The Cartel…With Profit” (3/28/2008) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com . Indeed, the Key Point of the Strategy for Protection and Profit is careful attention not only to the Fundamentals and Technicals but also to the Interventionals. These Overt and Covert Cartel-generated Interventions have the power to move markets as those who study the matter can attest. In sum, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover, engaging in the Actions suggested above can help prevent The Cartel’s obtaining Superpower status, and aid in achieving wealth protection and profits as well. |
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| Zmieniony ( 28.02.2010. ) |