-- Posted Friday, 15 August 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
Some of the worst Investment Mistakes and Political Misjudgments occur as a result of the psychological impediment of “Denial.”
Denial is a natural human tendency - - it is often easier, temporarily, to deny unpleasant realities than to actually address and cope with them. But failing to address, acknowledge and cope with unpleasant realities more often than not has quite deleterious consequences.
This is especially true in the world of investing. As we describe below, key ominous financial and geopolitical developments over the past weeks are coming to a head. There is a high probability that these developments will serve as an occasion for, at the very least, greatly increased tension, and, at worst, for disaster.
We expect the resulting pressure from these developments (at the least) or events (at the worst) will serve as the apparent cause of Major Moves in the markets very soon – see Deepcaster’s Forecast in our September Letter posted at www.deepcaster.com.
Thus, recent ominous developments prompt Deepcaster to focus again on that key psychological impediment to profit and protection - Denial. That that fatal impediment broadly infects the mindsets of several entities in the Mainstream Media and certain investors around the world is evident in the persistent “happy talk” of the Mainstream Media about key issues confronting us all.
But the unvarnished truth is that today, in mid-summer 2008, if certain ongoing ominous developments come to fruition they will have profound and negative effects on citizens and citizen-investors of nations all around the world.
So we suggest “getting out ahead” of these issues and coping them in a way that is likely profitable and protective rather than being victims of them via “Denial.”
Deepcaster and, we expect, most Deepcaster readers, prefer having “courage for the truth” to “Denial.”
Assuming that, let us together consider how to profit and protect from the several such unpleasant realities and ongoing negative trends which many of us might prefer to deny, including:
1) Recent acts of the U.S. Congress, the private-for-profit U.S. Federal Reserve and U.S. Treasury which have caused the U.S. Taxpayer to now de facto be backstopping the over $5 trillion in questionable mortgage “assets” held by Fannie Mae and Freddie Mac.
Consider that already the portfolios of Fannie and Freddie are under great stress due to defaulted mortgages. But the ability of homeowners who are not now in default to continue to pay their mortgages will likely only decline over many months as the Hyperinflationary Recession continues to deepen. So what happens to the “assets” of Fannie and Freddie when many more of these mortgage assets go into default? Is there any doubt that the powers-that-be will look to the U.S. Taxpayers for a bailout?
But consider that in the last seven years Americans’ savings fell from 8% to a negative half a percent. There is simply no savings cushion to cushion the blow of the deepening recession. Moreover, Real Unemployment is near 14% and Real Consumer Price Inflation over 13% annualized according to the quite credible figures of shadowstats.com. Consider what will happen to the mortgage default rate and the U.S. Dollar when The Fed, in effect, prints another big chunk of paper to cover a portion of the $5 trillion of Fannie & Freddie liabilities.
2) One might also prefer to deny the results of an independent study by Chris Whalen from Institutional Risk Analytics. It has identified 8% of all 8,500 banks in the U.S. (or about 700 banks) as being troubled. Suppose even half of these 700 institutions fail. Of the roughly $6.84 trillion in bank deposits, $2.6 trillion of these deposits are uninsured! And there was only just over $274 billion of $6.84 trillion cash on hand in these banks, according to that report.
3) But the FDIC has only $53 billion to cover the $6.84 trillion of bank deposits. Once again, it is the hard-pressed (and disappearing) Middle Class American Taxpayers who have been and likely will be asked to “backstop” these deposits via the “full faith and credit of the U.S. government” (which means the American Taxpayer). And many of these taxpayers are the very homeowners who are in trouble already.
4) Another ominous reality, which profoundly affects major economies and most markets, is the reality of ongoing Market Intervention by a U.S. Fed-led Cartel* of Central Bankers. Indeed, when we examine the private-for-profit Fed’s actions and policies, we find it has been the catalyst or cause of several ongoing economic and financial crises - - crises which are worsening because the Fed is:
§ Expanding the money supply at a Hyperinflationary Rate, now about 16% per annum (M3), and coupling that with “easy credit,” and
§ Thus facilitating skyrocketing Real Consumer Price Inflation, now over 13% annually, and
§ Thus catalyzing record-high Real U.S. Unemployment, now nearly 14% annually (all according to the quite credible calculations of shadowstats.com).
The Systemic Manifestation of The Fed-Led Cartel’s Outrageously Bad Policies is the creation of the various Bubbles: the Credit Bubble, the Mortgage Market Bubble, the Darkly Liquid OTC Derivatives Bubble, are among the major ones. These are all in the process of Bursting, with quite deleterious consequences
Compounding the ongoing crises, the U.S. Fed-led Cartel* and cooperating Agents and Allies, have also been Intervening in all the Major Markets (e.g. artificially boosting equities and regularly suppressing the price of Gold and Silver) and/or manipulating the Statistics to suit their own purposes, as Deepcaster's July, 2008 Letter “Market Intervention, Data Manipulation Still Accelerating, Increasing Risks, The Cartel End Game,” available at www.deepcaster.com, demonstrates.
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*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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Of course, the Private, for-Profit “U.S.” Fed has continued to act with its usual Hubris. Indeed, on June 8,2008 a Fed Governor, Timothy Geithner, said banks and investment banks whose health is crucial to the global financial system should operate under a "unified regulatory framework", with The Fed playing a "central role" in that framework. James Politi and Gillian Tett, Financial Times, London, Sunday, June 8, 2008
It is hard to conceive of a statement that would reflect a more blatant grab for even more power for the private, for-profit Fed than this one. Fortunately, there are increasing numbers of countervailing forces arrayed against The Fed and its allies and factota.
In the United States, for example, a Fair Finance Activist recently filed a complaint questioning why The Fed conducted closed-door Rule-making with Private Entities in the massive $60 Trillion Credit Default Swaps Market. "The Fed thinks it can engage in rule-making in secret only with the industry,” said Matthew Lee Executive Director of the non-profit group Inner City Press/Community on the Move. He requested copies of all relevant communications. "Secrecy for NY Fed's Derivatives Bailout Scheme Challenged" (Joanne Morrison, Reuters, June 15, 2008).
In Europe too, many citizens are Chafing under the Bit of Central Bank control. Germans, for example, have begun to reject Euro Bank Notes with serial numbers reflecting that they have been printed in Italy, Spain, and Portugal. Some are demanding Euro Notes reflecting German provenance. Clearly, coupling this fact with the recent Irish rejection of EU hegemony, public support for the European Union and the Euro Currency is declining among the citizenry of the nations of Europe.
The conundrum is, of course, that while the fundamentals for the U.S. economy and the ongoing crises are worsening, the Fed-Led Cartel has massive derivatives positions that allow it to attempt to keep the Equities Markets pumped up and Gold and Silver taken down. Deepcaster Forecasts the outcome of this “battle” and makes Buy Recommendations in his September Letter (just posted at www.deepcaster.com).
5) Another Ominous Reality that many of us would rather deny is becoming increasingly threatening daily. Though the crises in Georgia and regarding Iran are major geopolitical crises, they also have profound and potentially catastrophic implications for economies and markets and investors around the world. Notwithstanding the recent ostensible cease-fire in Georgia, there are reports of a massive U.S. armada heading to the Persian Gulf.
Yet the comments we hear in the Mainstream Media in response to the distinct possibility of the U.S. attacking or blockading Iran, or intervening in Georgia, range from the unrealistic to the unrealistic. They range from “the Bush Administration wouldn’t be foolish enough to do this” or to the lethally unrealistic “it would be a cake walk.” Generally these latter are the same folks who said the Iraq War would be a “cakewalk.”
To those who say we wouldn’t do it, the U.S./NATO proxy, Georgia, contrary to Mainstream Media reports, actually initiated hostilities on Thursday, August 8th, by attacking South Ossetia for two days before Russia responded (J. Himmelreich, Spiegel International, August 11, 2008, Gwynne Dyer, straight.com and other sources). Indeed, media from all over the world have contradicted U.S. Mainstream Media reports that Russia initiated hostilities.
Of course the Mainstream Media is of little or no help in ascertaining the truth of the foregoing, as former Assistant Secretary of the Treasury in the Reagan Administration Dr. Paul Craig Roberts points out:
“And, today, August 9, 2008, as I write, it is the “liberal” Washington Post that has written an editorial urging the U.S. to go to war with Russia.
With its editorial, “Stopping Russia: the US and its allies must unite against Moscow’s war on Georgia,” the Washington Post has established a world record for the maximum number of lies in the minimum number of words.
Except for the Washington Post, the entire world knows that Georgia (the birthplace of Joseph Stalin, not Georgia, USA) initiated the aggression that killed Russian peacekeepers and hundreds of civilians in South Ossetia, peacekeepers who were there with the blessing of Georgia and International Agreements.
The true facts are available all over the world press. But the “liberal” Washington Post serves up the lies that Russia has attacked Georgia and conceivably plans to conquer all of Georgia. “This is a grave challenge to the United States and Europe,” thunders the Bush Regime’s mouthpiece, aka, “the liberal media.”
Thirsting for blood, the “liberal media” declares: “The United States and its NATO allies must together impose a price on Russia.”
Here we see the combination of idiocy and delusion in one sentence. The United States has proved that it is incapable of occupying Iraq, much less Afghanistan. Russia has a large trade surplus. America’s NATO allies are dependent on Russian natural gas. Yet the “liberal” Washington Post wants a bankrupt US and “its NATO allies” who are dependent on Russian energy “to impose a price on Russia” for defending its peacekeepers!
Seldom has the world seen such total insanity as the neoconservative Washington Post, a propaganda sheet as far from “liberal media” as it is possible to be” (see www.vdare.com’s Paul Craig Roberts’ archive for complete article).
Understandably, the Bush Administration and Israel, who have been arming the Georgians, have a strong interest in the Caspian oil and gas pipelines. They want the pipelines routed out through Turkey rather than hooking them up to Russian pipelines. The Turkish route would take them to the port of Ceyham and then to Israel’s oil terminal at Ashcalon and on to its Red Sea port of Eilat.
Considering what is at stake and the fact that Russia can not afford to retreat this close to its borders, it would not be surprising if the ceasefire fails. Moreover, Russia is certainly feeling quite encircled by NATO, including NATO’s plans to put a missile shield in Poland. It cannot be denied that the Georgian conflict has the potential to turn into a real regional, and possibly international, conflagration, threatening national security, and the markets, and the economy.
Consider the following from Ellen Hodgson Brown:
“I’m in show business, why come to me?”
“War is show business, that’s why we’re here.”
“Wag the Dog” (1997 film)
“Last week, Fannie Mae and Freddie Mac had just announced record losses, and so had most reporting corporations. Unemployment was mounting, the foreclosure crisis was deepening, state budgets were in shambles, and massive bailouts were everywhere. Investors had every reason to expect the dollar and the stock market to plummet, and gold and oil to shoot up. Strangely, the Dow Jones Industrial Average gained 300 points, the dollar strengthened, and gold and oil were crushed. What happened?…
It hardly took psychic powers to see that the Plunge Protection Team had come to the rescue…
Central Banks manipulate currencies in concert, by secret agreements directed from Europe. Gold is also manipulated, by massive selling of central bank reserves. Oil and any other game these Big Money Boys want to play can be manipulated as well. But markets can be manipulated by only so much and for only so long without fixing the underlying problem. There is more bad news coming down the pike, news of such magnitude that no amount of ordinary manipulation is liable to conceal it….
What to do? War and threats of war have been used historically to distract the population and deflect public scrutiny from economic calamity. AS the scheme was summed up in the trailer to the 1997 movie “Wag the Dog” – “there’s a crisis in the White House, and to save the election, they’d have to fake a war.”
Wag The Dog: How To Conceal Massive Economic Collapse,
Ellen Hodgson Brown, J.D., August 13, 2008
www.webofdebt.com/articles
6) In a related conflict with similar negative potential, House Congressional Resolution 362 authorizes the President to institute a de facto blockade on Iran. But blockades are considered an Act of War. A blockade of Iran would also be a de facto embargo on a major supplier of crude oil. The blockade proponents argue, “So what if the U.S. blockades Iran? Oil prices will rise for a while, the blockade will surely work, and besides they can’t do anything to stop us, ” proponents say. And, these proponents often go on to say, “If we do not do this Iran will eventually get nuclear weapons. Which is more dangerous?”
Others respond that it is not at all clear that Iran will even eventually get nuclear weapons, and that it has not attacked the U.S. and arguably poses no threat to the U.S. or NATO at this time. They go on to note that far more potent are other powers in the region, including Russia, Pakistan, Israel, India and China, all of which now have nuclear weapons, and yet none of these nations has yet used nuclear weapons because the nuclear terror has been prevented through negotiations.
But regardless of one’s position on the foregoing argument, there are further considerations.
Regarding non-nuclear “options,” consider the Israeli/Lebanese war of two summers ago. Israel, equipped with all the U.S. armor and latest technology, could not stop a rain of missiles coming down upon it, week after week.
Thus, lest “Denial” become an impediment again to acknowledging Realities, one must consider whether the military balance of power has apparently now changed in the Middle East, because:
a) It is likely that Iran has all the military power that Hezbollah had in Lebanon two summers ago, and more.
b) The Russian fleet and the “Sovrenny class” destroyers recently acquired from Russia by the Chinese now have the decisive military edge. That is because Russia, China and Iran have Russian made 3M-A2 Mosquit anti-ship Cruise Missiles (NATO designation SS-N 22 Sunburn). The Sunburn is a weapon for which the U.S. Navy has no defense. The Sunburn is much larger, faster, and has a greater range than the old Exocets which were determinative in the Falklands War.
c) In 2001, Iranian Defense Minister Shamkhani placed an order for an undisclosed number of Sunburns. The Sunburn can deliver a 200-kiloton nuclear payload, or a 750 lb. conventional warhead, with a range of 100 miles. Iran is thus likely far more formidable than Hezbollah.
For those who are still willing to suspend their disbelief, it does not take much imagination to consider what Sunburn missiles could do to a U.S. fleet involved in a blockade which the Iranians saw as a life and death threat to their country and which the Russians would also view as a considerable threat. Ships sunk in the Gulf of Hormuz would be more or less permanent impediments to oil shipments out of the Gulf.
Former Presidential Candidate and Representative Ron Paul has recently affirmed that an Iran Attack Plan has a “green light” and has said that if we do (attack) it is going to be a “disaster”. We reiterate, House Congressional Resolution 362 authorizes the President to institute a de facto blockade on Iran. But blockades are considered an Act of War. A blockade of Iran would also be a de facto embargo on a major supplier of crude oil.
Question: are those who advocate attacking Iran willing to risk an economic collapse and a possible Nuclear Holocaust which imposing a Blockade would create, merely in order to destroy some centrifuges? Consider also that the IAEA and the U.S. Intelligence Services Report have also said Iran is not now making nuclear weapons. Even if such a blockade did not go nuclear, could Iran tolerate a cutoff of its major income source (oil) and a major food source (imports)?
7) Also quite dangerous, because it leads to denial about Economic Realities, is the ongoing distortion of data by Official U.S. Government and Agency sources. Deepcaster has provided an overview of the ongoing distortions of all kinds of data in his July 2008 Letter entitled Market Intervention, Data Manipulation Still Accelerating - Increasing Risks, The Cartel “End Game,” and Latest Forecast for Gold, Silver, Equities, Crude, U.S. Dollar and Treasuries” available at www.deepcaster.com. The gist of the Real Data as of August, 2008 are:
Ř U.S. GDP is declining at a negative 2% annualized
Ř Unemployment is running at about 14% annualized
Ř M3 is increasing at about 16% annualized
And just today, August 14th, even the Official Numbers show that annual CPI rose to 5.6%.
In fact, the Real Numbers (as calculated by shadowstats.com) show that CPI is now increasing at 13.4% annually.
So, before acting or investing, it is important for citizens and investors to ask, regarding geopolitics and economic statistics, and the markets:
- What are the realities here?
- Does Mainstream Media News Distortion or News Manufacturing obscure our view of Geopolitical Realities?
- Is our view of Economic and Marketplace Realities obscured by Cartel Intervention and Data Manipulation?
- Where and how are The Cartel Intervenors intervening today?
- Is “Denial” a factor in interpreting the answers to any of the foregoing?
A clear-eyed view of Hard Realities is essential to Wise Judgments about Geopolitics, the Economy and the Markets, and to profitable and protective investing.
Deepcaster
August 15, 2008
-- Posted Friday, 15 August 2008 | Digg This Article | Source: GoldSeek.com
