-- Posted Friday, 20 June 2008 | Digg This Article
| Source: GoldSeek.com
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
“The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks. (emphasis added)
“A very nasty period is soon to be upon us – be prepared,” said Bob Janjuah, the bank’s credit strategist.
Ambrose Evans-Pritchard, The Telegraph, London, Wednesday, June 17, 2008
Identifying profit opportunities requires, first, that one have a credible Economic Forecast.
Economic Realities
A cold hard look at Economic Realities indicates that the most credible Economic Forecast is for increasing Stagflation, probably metamorphosing into a deepening Hyperinflationary Recession, or even Depression, over the next three or four years.
Why?
The primary causes are the U.S. Fed’s (still ongoing) flooding of the economy in recent years with easy money (with M3 increasing at over 16% annually - - nearly a 4 year doubling time) and flooding the markets with excessive credit. This ongoing flooding (far in excess of GDP growth) virtually guarantees Hyperinflation for many months to come.
Market Intervention and Bogus Statistics
Of course, the Necessary Consequence of Hyperinflation of Money and Credit is Hyperinflation of Prices. We are already seeing that in record prices for Food and Energy.
Real Consumer Price Inflation is now at about 11.8% annualized (according to shadowstats.com) and there is no sign of a significant abatement.
Of course, The Fed-led Cartel* and its Allies and Agents are likely to continue their attempts to mask this inflation with Bogus Statistics (the latest Official CPI number is about 4%), just as The Cartel continues its Interventions to maintain the Equities Markets Artificial Elevations.
*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers and Allies to read Deepcaster’s January, 2008 Letter containing a summary overview of Intervention entitled “Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast” at www.deepcaster.com>LatestLetter. 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.”
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Given this worsening Hyperinflation, The Fed dare not lower rates much more. Indeed, they have recently suggested as much - - one of their few pronouncements which appears to be both transparent and credible.
The U.S. economy is already contracting - - Real GDP is already contracting by about 2%/year, according to the credible calculations of shadowstats.com. (Even the Official GDP shows a declining rate of increase from over 4% at the end of 1999 to a mere (ostensibly positive) rate of just over 2% in 2008.)
Refusal to ease rates further will only increase the Momentum of the Contraction. Couple that with the freezing and general de-leveraging already occurring in the credit and derivatives markets, and the momentum for Economic Contraction becomes overwhelming and might well be unstoppable.
Assets That Aren’t
Moreover, the prospects are slim-to-none for U.S. headquartered businesses-in-general having or achieving the capacity to catalyze an economic turnaround. Indeed, ten major companies have more “Level 3” Assets than capital. They are (as a percentage of total shareholder equity):
Bear Stearns 313.97%
Morgan Stanley 234.88%
Merrill Lynch 225.4%
Goldman Sachs 191.56%
Lehman 171.18%
Fannie Mae 161.47%
Northwest Air 142.02%
Citigroup 125.06%
Prudential 119.36%
Hartford 108.52%
Remember that the essence of a Level 3 Asset is that it has “no observable input.” That is, the company which owns a Level 3 Asset also determines its ostensible value.
Companies having a significant portion of their portfolios in Level 3 Assets claim that they are valuing these Assets by “Marking to (their subjective) Model.” Deepcaster’s view is that this is “Marking to Myth.”
A number of Level 3 Assets have, unsurprisingly, recently tended to be illiquid.
Reality Check: That which is illiquid has no market and therefore no market value.
Indeed, these harsh realities, and the consequences for consumers of Hyperinflation and a contracting economy, are starting to percolate into the mainstream consulting and media worlds.
““Suddenly consumers are focused on buying what they have to have as opposed to buying what they want to have,” said Howard Davidowitz, Chairman of Davidowitz & Associates, a New York retail consulting and investment-banking firm. “This is a permanent change for Americans who will face a declining standard of living over the next 20 years,” he added. (emphasis added)
Jennifer Waters, MarketWatch, June 17, 2008
Emerging Markets Offer No Refuge
Regarding a possible Economic Revival generated by Emerging Markets, some pundits still harbor the delusion that “Emerging Markets” have sufficient momentum to save the world from an economic slump. But economies the world over are slowing down as reflected in China’s Equity Markets have which have slumped nearly 50% in the past 8 months and India’s which have slumped over 20%. If anything, the emerging markets slowdown adds to downside momentum.
In the U.S., frankly, it looks as if The Cartel* is the major force which has kept the equities markets artificially elevated. But in order to achieve this they have had to boost their Main Manipulative Tool - - The Repo Pool - - by 500% in just 5 years. (See Deepcaster’s January, 2008 Letter regarding the “Repo Pool,” Market Intervention and Data Manipulation at www.deepcaster.com)
But worse yet, much evidence points to the conclusion that The Fed-led Cartel is also The Main Force in hyper-inflating prices in certain Key Sectors. And it appears this is achieved not just through easy money (via M3 inflation) and easy credit. Rather, it appears to result from Active Cartel Intervention to boost prices in Key Markets, such as, in the past few months, Energy, for example.
Perhaps some of our readers have thought high-energy prices were the product of collusion among major oil companies, or by OPEC. The evidence indicates that that conclusion is flat wrong and has been wrong for several years!
Remember that there are over $7 trillion in OTC (i.e. dark liquidity) Derivatives available for use in manipulating commodities alone, as reported by The Cartel Bankers’ Central Bank - - the Bank for International Settlements (www.bis.org, Path: Statistics>Derivatives>Table 19 and ff.).
It is already clear that The Fed-led Cartel funnels its “Repo Pool Juice” through Primary Dealers in order to control the Equities Markets. We have long thought Crude Oil (and other Commodities) prices were similarly manipulated by The Cartel (using a chunk of the aforementioned $7 trillion in OTC derivatives).
Thus it came as no surprise to us when the recent Congressional testimony of former CFTC Official, and now Professor of Law, Michael Greenberger suggested that Goldman Sachs was a primary force in controlling prices in the Crude Oil and Natural Gas market.
We encourage our readers to speculate regarding whether this “controlling” is conducted for another entity or entities and, if so, which entity? In answering this question, consider that Goldman Sachs is a Primary Dealer for the (private, for-profit) U.S. Federal Reserve.
Considering the foregoing, one can anticipate that all the aforementioned negative Trends-In-Being are likely to converge for a Very Bad Ending, and that that Ending will have been largely facilitated by The Fed-led Cartel.
Indeed, the Very Bad Ending already appears to be beginning. The markets have generated five Hindenburg Omens - - a stock market crash harbinger - - in June, 2008 alone. These indicate a 25% probability of a serious stock market crash in the next few months.
The foregoing Gloomy Scenario is most unpleasant. However, one can profit (and protect one’s wealth as well) from this situation as it develops. One alternative is to employ the increasing variety of “short” Exchange Traded Funds for hedging and/or profit. Of course, the timing of one’s entrance into and exit from the Funds is crucial. In this connection, attention to the Interventionals, as well as the Fundamentals and Technicals, is crucial.
Indeed, this “gloomy” scenario has provided Deepcaster with a profit opportunity recommendation contained in his latest Alert posted at www.deepcaster.com. The recommendation is a company designed to profit in bad times and become increasingly profitable as bad times worsen.
The Cartel’s Nefarious “End Game”
Yet surely The Fed-led Cartel has sufficient talent to have a Plan, an “End Game,” as it were, in which all this does not come to an entirely Bad Ending, at least for The Cartel and their Allies.
And so they do. Various international elite organizations and well-connected individuals increasingly reveal the outlines of The Cartel’s likely “End Game.” And so it is that Deepcaster, and a few others, have exposed this Plan as it has been revealed piecemeal in recent years. (See Deepcaster’s 8/13/06 Alert “Massive Financial/Geopolitical Scheme Not Reported by Big Media” in the Alerts Cache at www.deepcaster.com.) Indeed, this ‘End Game’ scheme has so many negative aspects that a Resolution which opposes it has been introduced (H. Res. 40, Goode R-VA) in the United States Congress.
The most recent tidbit which served to “flesh out” our earlier description of the Cartel’s Nefarious End Game Plan comes from Nobel Laureate economist Robert Mundell. Mundell, who travels regularly to China and advises its senior officials, has noted increasing Chinese concern to protect the value of its $1.6 trillion Foreign Exchange Reserves hoard, much of which is held in depreciating U.S Dollars. Even though the Chinese Yuan is pegged to the U.S. Dollar, Mundell notes that the Chinese are concerned about the rapid loss of purchasing power of the U.S. Dollar which, of course, diminishes the value of the Foreign Exchange Reserves which they hold.
Not surprisingly, the well-connected Mundell’s suggestion for “solving” this problem is consistent with The Cartel’s End Game. Specifically, Mundell suggests “what you need to have is an International Monetary Fund that is going to take some of these excess Dollars put them into a substitution account inside the IMF or some other institution, and then use that and create a new international currency… This kind of proposal would be very acceptable inside China. The Chinese are thinking in terms of this.” (emphasis added)
Indeed, one of the several Key Components of the multifaceted Cartel ‘End Game’ is the replacement of the U.S. Dollar with a new currency - - the Amero. Needless to say, one aspect of this plan is for the Fed-led Cartel to create and control the Amero just as it creates and controls the U.S. Dollar.
Of course, replacement of the U.S. Dollar by the Amero as the World’s Reserve Currency would entail The Cartel’s continued active price suppression of Gold and Silver and a concomitant rejection of Gold and Silver linked currencies. For more details on this Nefarious Plan, see Deepcaster’s June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations” in the Letters Archive at www.deepcaster.com.
As more and more details of this nefarious ‘End Game’ plan are revealed, it becomes ever clearer that its successful implementation would not be in most investors’ best interest, or indeed in the interest of citizens of countries around the world.
Indeed, if The Cartel’s End Game Plan is successfully implemented, it will most assuredly be implemented in a manner to advance the interests of the Fed-led Cartel. Whether it will be successfully implemented depends on the actions or inaction of investors/citizens around the world.
Deepcaster
June 20, 2008
DEEPCASTER LLC
www.deepcaster.com
DEEPCASTER FORTRESS ASSETS LETTER
DEEPCASTER HIGH POTENTIAL SPECULATOR
Wealth Preservation Wealth Enhancement
Financial and Geopolitical Intelligence
Gravitas, Pietas, Virtus
-- Posted Friday, 20 June 2008 | Digg This Article | Source: GoldSeek.com
