-- Posted Friday, 17 February 2012 | | Disqus
“Financial currency inflated hell by global debt monetization is the condition from which there is no escape, except through burning down the old system and making a new one. This is the dead end sign at the end of the road for can kicking. It is the condition of financial perdition. It is not something coming in a distant future. It is here and now, clear and present, if you have the eyes to see.
“The means to this end is the combination of sick sovereign debt, risk insurance issued against the default of debt without sufficient liquid capital to do so, and the fact that those entities who issued this insurance are themselves and in truth illiquid under strain thanks to the capitulation of FASB on true market value of their legacy and other assets. This is the construction of the house of financial cards that will not survive intact during the period of 2012 to 2015. This is what gold at $1700 is indicating to those unfortunate enough to understand the practical workings of a system whose life force has been stolen to a degree that can only be deemed epic….
“Only a resurgence of business based on solid foundations of equity and not debt can do the final clean up and provide a door to a better future.
“No politician anywhere can do the necessary without causing the explosion of the results being heard almost as a new big bang. We are going to inflate this debt away or those in power will be swept away by the violence inherent in the suffering citizen….”
Jim Sinclair, “The Lonely Road We Take Together”, 02/13/2012
Under “Operation Twist” The Fed bought 64% of all U.S. Treasury Securities with maturities of 8 to 10 years, and 91%! of those maturing in 20 to 30 years. All with hundreds of billions of Fiat Money created for “free” out of thin air (no wonder wheat prices were up 12% and corn up 10% at one point in January!). The Bond Vigilantes have been nearly neutered by The Fed, temporarily.
And: The Fed made $1 Trillion in de facto loans to the ECB and tacitly admitted QE3 is on the way (of course, it is already here).
Moodys warns it may downgrade credit ratings of 17 international and 114 European Banks. But European Banks have borrowed $3.2 Trillion and want $1 Trillion more. And via the LTRO the Eurozone has injected hundreds of billions of Euros more into the Financial System and will add a second Tranche (likely $800 billion) at the end of Feb, 2012 with more likely to come. Q.E. to infinity it is called, and will surely result in a Very Bad End.
Clearly the Mega-Banker-Political Cartel has chosen to Cram the system with Money and Credit to keep the Banks, especially, and Key Market Sectors, secondarily, afloat (and to avoid for a few months, the Market Crash which would otherwise surely have occurred) until after…
…French elections this Spring
…German elections this Spring
…U.S. elections this Fall
Indeed U.S. Elections are 9 months from now, in November, 2012.
And that “Cramming” is THE KEY to the next 9 months’ Market Performance.
And that Cramming is disguised by Bogus Official Statistics
Once again, January Retail Sales Gain Was Not Statistically Meaningful and Likely Was All from Rising Prices. As has been the case in eight of the last nine months, the monthly change in January 2012 retail sales was not statistically meaningful, and it likely was flat-to-minus, adjusted for official CPI inflation, as had been the case in four of the last seven months. The evidence here continues to be for a bottom-bouncing economy….
Where the purported month-to-month January retail sales gain was 0.4%, seasonally adjusted, it was a contraction of 21.4% not seasonally adjusted….
Under such circumstances, where the markets effectively are flying blind as to actual economic activity, consideration of broad underlying fundamentals is essential. Consumer income and credit remain structurally impaired and continue to signal economic deterioration, not recovery, with the broad economy remaining in serious trouble….
John Williams, Retail Sales, shadowstats.com, 02/15/2012
See Note 1 below re shadowstats.com
Of course all this Cramming will be (and already is) increasingly hyperinflationary.
And that disguised Hyperinflation (already at 10.57% in the U.S., e.g.) provides Magnificent Opportunities for Profit and Protection – See Notes 2 and 3 below.
Recent Downgrading (and ultimate defaults) of Spain, Italy and Portugal and Watchlisting of France and U.K. were earlier forecast by us and other honest analysts. But The Key Takeaway is the ongoing and Prospective Hyperinflation-inducing Response of the Mega-Bank-Political Cartel, and the resulting Prospects for these nations and Greece.
Although the Greek Austerity package passed, “the Market” rightly questions the ability of the Greeks to implement the package. Understandably since Greek Manufacturing is down 15.5% in December, Industrial Production is down 11.3% in December, and Unemployment is at 20.9%. So the Euro bounced up a little bit after the package passed but not enough to move the U.S.$ much lower than 79ish basis USDX.
Though the Eurozone expects another LTRO injection (likely $800 billion) at the end of February the smart money knows this will only create another temporary Sugar (Liquidity) High. But the basic unsolved problem in the Eurozone, and the U.S.! is Solvency not liquidity. Eurozone Crises merely deflect from the larger U.S. Solvency Crisis.
Indeed, China is not exempt. In China, Credit Outstanding is 200% of GDP and they just approved rolling $1.7 Trillion in loans to local governments, a de facto default.
For the long run, few Structural Problems have been “solved.”
In sum, over the mid and long term that Euro strength (and probably the Euro itself at least in its current form) is unsustainable for the whole host of reasons including not only the ultimate de facto default of Greece, Portugal, and Ireland, but also probably eventually default of Italy and Spain, and perhaps even France and the U.K.
Thus the Q.E. to Infinity.
With all the juicing and goosing The Fed and ECB has provided the Markets, and promised to continue, the Equities Rally could last fitfully for a while.
But such a Rally goosed by Excess money and credit provided by The Fed and Eurozone, will only exacerbate The Great Equities Crash when it surely arrives. Deepcaster has forecast the approximate timing of that Crash. And the Developing multi-year Jaws of Death Technical Pattern emphasizes this Prospect.
Meanwhile, Food and Energy Costs will likely soar more, further financially disabling consumers, which are 70% of the U.S. Economy and a similar % of other Major Economies.
In this connection, the Crude Oil Price is the most difficult of all Major Commodity Prices for The Cartel to Manipulate but it can be manipulated but only over the short-term. Over time, Supply and Demand determine Price because Crude is a necessity and it gets used up.
Important to Note: The Crude Oil Price at over $100 bbl is sending us a message: Commodity Price Inflation, and, indeed, overall Inflation is increasing regardless of what the (Bogus) Official Numbers Say. Therefore, Deepcaster recommends Opportunities for Profit and Protection available in Key Market Sectors in its recent Letters and Alerts.
This fact of continuing high (and increasing) energy and food prices underscores the Extraordinary Reckless Policy Error (or intent) of both The Fed and ECB which create too much money and credit (in their attempt to save their owners, The Mega-Bankers), and the Obama Administration which continues to Increase the U.S. National Debt to over $15 Trillion (from $10 Trillion when they were elected) plus downstream unfunded liabilities of over $100 Trillion for Social Security, Medicare, etc…
All this will of course, generate Hyperstagflation down the road for which we will all pay (and are already paying) a very high price in Destroyed Savings and Wealth in General.
Best regards,
Deepcaster,
February 15, 2012
Note 1: *Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported January 19, 2012
2.96% / 10.57% (annualized December, 2011 Rate)
U.S. Unemployment reported February 3, 2012
8.3% / 22.5%
U.S. GDP Annual Growth/Decline reported January 27, 2012
1.56% / -2.70%
U.S. M3 reported February 13, 2012 (Month of December, Y.O.Y.)
No Official Report / 3.87%
And Official Source Disinformation continues, consider Shadowstats comments on the January 6, 2012 release of U.S. Employment data:
“The reported seasonally-adjusted 200,000 jobs surge in December 2011 payrolls included a false, seasonally-adjusted gain of roughly 42,000 in the “Couriers and Messengers” category. That gain was an artifact of the seasonal-adjustment process and will remove itself in the January 2012 numbers.
“The problem is that this 42,000 gain is part of a seasonal pattern that fully reverses itself each January…”
“December Payroll Seasonal-Adjustment Problem”
www.shadowstats.com, John Williams, 1/6/12
Note 2: Deepcaster addresses the questions of Profit and Protection in light of Fiat Currency Purchasing Power Destruction and provides Guidelines in his article – “Essentials for Wealth Acquisition Acceleration” found in ‘Articles by Deepcaster’ Cache.
Using such Guidelines facilitated Deepcaster’s making buy and sell recommendations resulting in remarkable profits recently if acquired and liquidated when we recommended, approximately*:
45% Profit on Platinum ETF on February 8, 2012 after just 42 days (i.e., about 390% annualized!)
40% Profit on March 2012 $55 Dollar GDX Calls on January 27, 2012 after just 23 days (i.e., about 635% annualized!)
34% Profit on Gold Royalty Streaming Company on December 5, 2011 after just 166 days (i.e., about 74% annualized!)
42% Profit on Volatility Index Futures ETN on October 3, 2011 after just 292 days (i.e. about 52% annualized!)
36% Profit on Double Short Euro ETF on September 7, 2011 after just 43 days (i.e. about 300% annualized!)
35% Profit on Double Long Gold ETN on August 23, 2011 after just 41 days (i.e. about 280% annualized!)
26% Profit on Double Long Gold ETN on August 17, 2011 after just 35 days (i.e. about 260% annualized!)
25% Profit on Gold Stock on August 8, 2011 after just 201 days (i.e. about 45% annualized!)
150% Profit on Gold Stock Calls on July 13, 2011 after just 56 days (i.e. about 975% annualized!)
*Past Profitable Performance is no assurance of future Profitable Performance.
Note3: “A Great Opportunity and A Dangerous Trap; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar, U.S. T-Notes, T- Bonds, & Interest Rates” – February Letter
“The Fed doesn’t have a clue about markets or economics. They are dangerous people.
Printing money is not good for the world and will lead to more problems for the world….
“What the Federal Reserve is doing now is ruining an entire class of investors.”
Jim Rogers, Bloomberg Interview, 6/29/11
We are not so Negative about the Near-Term Prospects for Nominal Asset Price Growth in Certain Sectors as we were six months or a year ago.
That is mainly because the E.U., Mega-Banks, and the Fed, have already de facto launched a Massive Quantitative Easing 3, with more likely to come.
This QE will serve as a Major Force impelling (but not necessarily successfully) Nominal Asset Prices UP in certain Sectors, for example, for Equities.
But before one becomes too enthusiastic about the Prospects one should consider the implications of our Forecast for Nominal Assets Prices Strength in certain Sectors.
The practice of issuing Bogus (U.S. and other Key official) Inflation figures obscures the Fact that Monetary Inflation (generated mainly by reckless Q.E.) is very rapidly depreciating the purchasing Power of most Fiat Currencies – by about 11% per year in the U.S. e.g. (per shadowstats.com).
Our High Yield Portfolio is aimed at achieving Total Return in excess of Real Inflation. Stocks in that Portfolio with Recent Yields of 18.5%, 8.6%, 10.6%, 26%, 6.7%, 8%, 10.6%, 10% and 15.6% when they were added to the Portfolio.
Also important to note is that, while massive Q.E. is a Major Inflationary Force tending to pump up Prices in certain sectors, there are Powerful Deflationary forces operating as well – the depreciating Housing Markets in the U.S. and China come to mind. Real Estate in some areas in China is down over 25%, but Food prices are up 9% year over year.
The key to identifying The Great Opportunities (and Great Potential Losses) is knowing which Sectors will likely have Inflating Asset Prices and which will have Deflating ones.
Investors failing to Evaluate Inflation/Deflation Prospects on a Sector by Sector Basis will have missed Great Opportunities and fallen into a Dangerous Trap.
Deepcaster’s Letter --“A Great Opportunity and A Dangerous Trap; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar, U.S. T-Notes, T- Bonds, & Interest Rates; February Letter” -- posted in the ‘Latest Letter & Archives’ Cache at www.deepcaster.com, identifies which Sectors will likely be helped (albeit temporarily) by this Massive QE3 and which will likely be hurt, and provides Forecasts for all. And in his March Letter, “The Pause Before The Great Bull; 3 Buy Recos! Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, March Letter”, Deepcaster makes 3 Buy Recommendations designed for Protection and Profit.
-- Posted Friday, 17 February 2012 | Digg This Article
| Source: GoldSeek.com
