“A “strictly confidential” report on Greece’s
debt projections prepared for Eurozone finance ministers reveals
Athens’ rescue programme is way off track and
suggests the Greek government may need another bail-out ...
“The 10-page debt sustainability analysis, distributed to
Eurozone officials last week but obtained by the Financial Times on Monday
night, found that even under the most optimistic scenario, the austerity
measures being imposed on Athens risk a recession so deep that Greece will
not be able to climb out of the debt hold over the course of a new
three-year, €170billion bail-out.
“It warned that two of the new bail-out’s main prinicples might be self-defeating. Forcing austerity on
Greece could cause debt levels to rise by severely weakening the economy
while its €200billion debt restructuring could prevent Greece from ever
returning to the financial markets by scaring off future private
“’The Greek authorities may not be able to deliver
structural reforms and policy adjustments at the pace envisioned in the
Debt Nightmare Laid Bare, Peter Spiegel
A Macro-View of Likely Developments in
Coming Months and a consideration of constructive Investor Responses is
Essential to achieve Profit and Protection.
“Greece” is much bigger than
The Most Recent Greek Bail-out was
mainly a Bailout of Banks which had lent to Greece. (A 50%+ Haircut is easier to take than a 100% Haircut.)
And the fact that it is likely to Fail
(perhaps as early as March 2012) is important because:
1) The Credit
Markets would likely freeze up again (as in 2008) and
Major financial Institutions (and not just those in Europe) would be shown to
would raise the Question of which Sovereign Nations, and Banks, are likely to
default next (Portugal? Italy? Spain? France?...)
This would have seriously negative Effects on Many Markets.
4) The Eurozone
as we know it would be much more likely to break up.
(Nomura) explains how the Mega-Banks got us into this mess, explains certain
horrendous consequences, and provides the basis for knowing what we need to
do to profit and protect
“…Until, and unless, Germany signs up to full fiscal
union, a Eurozone breakup is likely. And depending on how long we can
continue to “kick the can” down the road in order to protect the
Eurozone banks, the Eurozone will be consigned to an extended period of weak
growth, which in turn means ever decreasing debt sustainability. Ultimately
this means that the end game will simply be more devastating for us all the
longer we are forced to wait….
staggered at how easily the concepts of Democracy and the Rule of Law –
two of the pillars of the modern world – have been brushed aside in the
interests of political expediency. This is not just a Eurozone phenomenon but of course the removal of
elected governments and the instalment of
“insider: technocrats who simply serve the interests of the elite has
become a specialization in Europe….The kind of totalitarianism being
pushed on us by our leaders will – if allowed to persist and fester
– end with consequences which are way beyond anything the printing
presses of our central banks could ever hope to contain. Communism failed
badly. Why then are we arguably trying to resurrect a version of it,
particularly in Europe? Are the banks so powerful that we are all beholden to
them and the biggest nonsense of all – that
defaults should never happen…?
“…Well, now, if you list to the latest from Bernanke and Draghi, it seems that the only solution they can offer up
is to yet again misprice the cost of capital, in the hope that yet again,
through increased leverage/debt, we are yet again “greedy” enough
to misallocate capital, which in turn will leard to
yet another round of asset bubbles. Such asset bubbles are meant to delude us
into believing that we are now “richer”. When – as they do by definition – these bubbles burst,
those who have been suckered in will realize that their “wealth”
is instead an illusion which in turn will be replaced by default risk.
“Secondly, I have clearly underestimated the
‘market’s’ willingness, nay desperation, to go along with
this ultimately ruinous policy path….
that we are in yet another liquidity fuelled rally courtesy of Bernanke and Draghi, then there are some key
things to remember. First, such rallies can last days, weeks, months…there are limits to what Bernanke
and Draghi can do, and once we hit those limits
these bubbles will burst, with increasingly greater consequences the longer
we are forced to wait….
when looking for where the bubbles may be, realize this: in this current
cycle, where central bank balance sheets are at the core, the bubble is
when this bubble bursts, I don’t think there is an easy way out. Who
will be the bail-out provider?...
have Monetary Anarchy running riot, where the elastic band between the
‘real’ economy and the current liquidity-fuelled markets is
stretched further and further beyond credulity, and where history tells us
that policymakers will happily stand by whilst bubbles are being pumped up,
and hope that they are onto their next job before it all comes tumbling down. It seems that the 07/08/09 part of this
crisis has resulted in zero lessons learned. In fact it is much worse than
that as we are instead being asked to double up on a strategy which I fear
will end in failure….
and Currency markets are now so rigged by policy makers that I have no
meaningful insights to offer, other than my bubble fears….
“Gold is a winner either way – remember, gold is a great
(monetary) inflation hedge, and in a deflationary credit collapse Gold works
as a store of value/wealth as it carries zero credit risk.”
Janujuah, Nomura International Strategist, 02/20/12
Indeed, we are, with the Vast Mega-Bank
ongoing Monetary and Credit Infusions into the Markets, being asked to
“double up on a strategy” which was a Failure before. Inter Alia,
it is a Failure because it increases already Dangerous levels of liquidity,
but does nothing (indeed, worsens) One Main Problem: Solvency.
The Housing Bubble was just the most
recent Asset Bubble to Burst, and it was generated by all-to-easy Credit, lax
standards, i.e., by Mispricing of Capital engineered/facilitated by the
private for-profit Fed and associated Mega-Banks.
It is thus essential to understand that all this “Stimulus” is not working because it
increases Liquidity but decreases Solvency. Consider
“Without any fanfare whatsoever from the White House, February
17 marks the three-year anniversary of the day President Obama signed the
much ballyhooed stimulus into law.
“At the time, Obama claimed that it would "create or
save" up to 3.5 million jobs, and that "a new wave of innovation,
activity and construction will be unleashed across America." The
stimulus, would, he promised "ignite spending by businesses and
consumers" and bring "real and lasting change for generations to
“So three years later, how do the stimulus results stack up?
Here's where various indicators stood in or around February 2009, and where
they stand today.
“Unemployment rate: The jobless rate is unchanged from February
2009 to January 2012, the latest month for which we have data. Both stood at
8.3%, according to the Bureau of Labor Statistics. Obama's economists had initially
predicted that with the stimulus, unemployment would stay below 8%.
“Number of long-term unemployed: The number of workers who have
been unable to find a job in 27 months or more has shot up 83%, with their
ranks now at 5.5 million.
“Civilian labor force: It has shrunk by 126,000. In past
recoveries, the labor force climbed an average of more than 3 million over
comparable time periods.
“Labor force participation: The share of adults in the labor
force — either looking or working — has dropped 3% — also
highly unusual in a recovery. … A lower participation rate makes the
unemployment rate look better.
“Household income: Median annual household income is about 7%
below where it was in February 2009, according to the Sentier
Research Household Income Index.
“National debt: Up $4.5 trillion, or 41%, according to the
Treasury Department's monthly reports. The latest Treasury figures put the
national debt at $15.4 trillion, larger than the entire U.S. economy.
“Deficits: The deficit for fiscal year 2009 totaled $1.4
trillion. The Obama administration's proposed deficit for 2012 is $1.3
trillion, which would mark the fourth year of deficits topping $1 trillion.
“Stimulus price tag: The original estimate for the cost of the
stimulus was $787 billion. Now the Congressional Budget Office says that,
when all is said and done, it will have cost $825 billion.
“Perhaps the best measure of the success or failure of the
stimulus, however, is the fact that President Obama in his latest budget plan
has called for still another round of stimulus spending, this time totaling
$350 billion over the next four years, for what is labeled ‘short-term
measures for jobs growth.’”
“Obama’s Stimulus: Nat’l Debt Up
41%, Incomes Down 7%”
INVESTOR'S BUSINESS DAILY Posted 02/17/2012 03:25 PM ET
It is clear that the kind of Stimulus we
have seen and are increasingly seeing from The U.S. Government, Fed and
Eurozone is not going to save the day. Indeed, continuing Similar Stimulus is
likely to worsen The Crash when it comes.
But there is an example of a Sovereign
Nation’s successful Recovery Story which provides further basis for
understanding how to Profit and Protect. Consider Iceland’s 110% plan
in which the banks agree to forgive debt exceeding 110% of Home Values.
“Icelanders who pelted parliament with rocks in 2009 demanding
their leaders and bankers answer for the country’s economic and
financial collapse are reaping the benefits of their anger.
“Since the end of 2008, the island’s banks have forgiven
loans equivalent to 13 percent of gross domestic product, easing the debt
burdens of more than a quarter of the population, according to a report
published this month by the Icelandic Financial Services Association….
“The island’s steps to resurrect itself
since 2008, when its banks defaulted on $85 billion, are proving effective.
Iceland’s economy will this year outgrow the euro area and the
developed world on average, the Organization for Economic Cooperation and
Development estimates. It costs about the same to insure against an Icelandic
default as it does to guard against a credit event in Belgium. Most polls now
show Icelanders don’t want to join the European Union…
“The island’s households were helped by an agreement
between the government and the banks,… to
forgive debt exceeding 110 percent of home values….
“’The lesson to be learned from Iceland’s crisis is
that if other countries think it’s necessary to write down debts, they
should look at how successful the 110 percent agreement was here,’ said
University of Iceland.
“Iceland’s approach to dealing with the meltdown has put
the needs of its population ahead of the markets at every turn….
“Iceland’s special prosecutor has said it may indict as
many as 90 people, while more than 200 including the former chief executives
at the three biggest banks, face criminal charges….
“’…The bottom line is that if households are
insolvent, then the banks just have to go along with it, (the 110% plan
– ED) regardless of the interests of the banks.’ –Lars
Christensen, Danske Bank, Copenhagen.”
“Icelandic Anger Brings Debt Forgiveness in Best Recovery
Story”, Omar R. Valdimarsson
Remarkably, Iceland’s Plan is
Working – Iceland’s economy this year will outgrow the Euro Area,
and indeed the World.
For Individuals and Entities alike Janujuah points to the
Wealth Protection Asset with Profit Potential regardless of whether we face
Hyperinflation (more likely) or Massive Deflation: Gold.
Thus we recommend buying Physical Gold
and Silver to be held in Personal (not Bank Vaults) Possession, and
quality Mining Shares with a Caveat.
The Caveat re Mining Shares is that they
are “Paper”/Digital Securities. Thus they are more susceptible to
Cartel (Note 1) Price Manipulation and as well their prices are also
influenced by Major Moves in the Equities Markets.
That Impending Great Crash of which Janujuah speaks will lead to numerous Counter Party
Failures. It is thus essential to be out of Assets with Great Counter-Party
Failure Risk prior to The Great Crash.
But Prior to that Crash, it is
reasonable to Incur Counter Party Risk, provided one plans to be
“out” in time (a challenging task!).
In making this Critical Timing
Determination one of Deepcaster’s Ongoing
Primary Goals is to help our readers make such Timing Judgments. Thus we
include Forecasts for most Major Sectors in each week’s letter or
Alert. Attention to The Interventionals facilitated
Deepcaster’s recommending five short positions
prior to the Fall, 2008 Market Crash all of which were subsequently
Input from Independent News Sources. Several Financial and other
Mainstream Media periodically Manufacture or Censor or Spin Real News. It is
especially important to know the Real Statistics and not rely on the Bogus
Official Ones. Real Inflation in the U.S. is 10.57% for example per
shadowstats.com (Note 2).
Given the aforementioned Real Inflation
Reality, it is essential that one Aim for Total Return (Gain plus Yield) in
excess of that (10.57% Real Inflation in the U.S., e.g.). Deepcaster
has designed its High Yield Portfolio with that Aim. Those selections had
Recent Yields of 18.5%, 8.6%, 10.6%, 26%, 6.7%, 8%, 10.6%, 10% and 15.6% when
added to the Deepcaster High Yield Portfolio.
Become familiar with the ongoing Cartel
‘End Game’ which we have described in several articles including
“Gold-Freedom versus The Cartel
‘End-Game’ & A Strategy for Surmounting It (09/23/10)”
and “Surmounting The Armageddon Scenario & Cartel ‘End
Game’(2/26/10)” in “Articles by Deepcaster”
Cache at deepcaster.com.
As well as
investing in Precious Metals, Invest in Tangible Assets in relatively
Inelastic Demand. We specifically, for example, have recommended Specific
Agricultural investments in recent Alerts.
seriously getting out of variable-rate debt and into fixed rate debt. At some
point interest rates will begin to skyrocket.
the Worst Case. Silver coins and Canned Food are useful Barter Items.
political arena favor National Self-Reliance and Fair International Trade,
not Regional or Global Governance. The Eurozone’s Nations’
Agonies (not over by any means) should be an object lesson about the Perils
of Relinquishing National Sovereignty, and Economic and Personal Liberties to
Regional or Global Entities of any kind in any Sector.
February 24, 2012
*Shadowstats.com calculates Key Statistics the way they were calculated in
the 1980s and 1990s before Official Data Manipulation began in earnest.
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:
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
is that this 42,000 gain is part of a seasonal pattern that fully reverses
itself each January…”
Payroll Seasonal-Adjustment Problem”
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
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
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
Fed doesn’t have a clue about markets or economics. They are dangerous
Printing money is not good for the world and will lead to more problems for
“What the Federal Reserve is doing now is ruining an entire class of
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,
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).
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.
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
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.