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“…the
Federal Reserve established and refined a program that permitted banks to
pledge virtually any security as collateral…a guaranteed way for
taxpayer capital to evaporate in the context of a disintegrating financial
system, all with the purpose of bailing out Wall Street's major institutions…
…We
uncovered numerous bankrupt companies' equities that were being pledged as
collateral for what ultimately was taxpayer exposure. To our surprise, this
discovery is not an exception, and in fact in the days immediately preceding
the collapse of Bear Stearns…
…Beginning
in March 2009, the Fed was now running the capital markets directly, by
pushing prices of "riskless" assets ever higher through its $1.7
trillion Quantitative Easing program, thereby making it all too
clear…that moral hazard was once again tolerated and encouraged…
Furthermore,
by being a self-professed "lender of last resort" as well,
providing a perpetual backstop for an indirect way to bid up equities at a 50
bps funding cost, the Federal Reserve has now managed to singlehandedly
take over the entire capital market…
…On
September 14th, 2008 the gloves came off, when the Fed, stated in a press
release no less, that it would provide virtually free taxpayer capital to
banks so that they could go to the market and purchase equities!
…Yet
in the meantime, Primary Dealers and banks should take full advantage of the
Fed's market manipulating generosity courtesy of such middle-class devaluing
constructs as Quantitative Easing…
…As
long as commercial banks and dealers are allowed to commingle their balance
sheets, and as long as firms like Goldman which have yet to open even one
deposit branch exist and have a riskless balance sheet courtesy of the
American taxpayer, nothing will ever change…And the administration's
response to date has been to make the firms at the top, even more
systematically critical…
The
CPDF provides a glimpse into the Fed's, up to now speculative, and hereby
confirmed, willingness to (in)directly manipulate equity markets via its
Primary Dealer network…”
An
Overview of the Fed's Intervention in Equity Markets Via the Primary Dealer
Credit Facility
Tyler
Durden, Zerohedge.com, 10/25/09
But
notwithstanding all the foregoing, as well as the fact that the private
for-profit Fed’s excessively loose monetary and credit policies are the
Primary Cause of the recent Financial crises, Congress is headed toward
giving the Fed even more Power!
“The
latest financial-regulation legislation moving through Congress would give
the Fed new oversight powers, including the authority to force large firms
to shrink if their size threatens the broader economy.
The
draft bill, released this week by House Financial Services Committee Chairman
Barney Frank (D., Mass.) gives the central bank more direct authority than
outlined in a proposal earlier this year.” (emphasis added)
Congress
Weighs Scope of Fed's Authority
Sudeep
Reddy, The Wall Street Journal, 10/28/09
Perhaps nothing
threatens potentially Profitable Investment and Trading Strategies more than
the Myths upon which they may be founded.
Deepcaster critically
examines certain of these currently widely accepted Fairy Tales and suggests
ways of surmounting, and profiting from, those which pose such a threat.
Fairy Tale #1:
The Equities, Precious Metals and other Markets trade freely, and are not
manipulated by a Fed-led Cartel.
The
aforementioned excerpts from Tyler Durden’s excellent article are yet
another substantial addition to the veritable Mountain of Evidence that the
Major Markets are manipulated by a Cartel* of key Central Bankers and Favored
Financial Institutions led by the private for-profit Federal Reserve.
*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, 2008 Letter
containing a summary overview of Intervention entitled “A Strategy
for Profiting from the Cartel’s Dark Interventions & Evolving
Techniques” and Deepcaster’s July, 2009 Letter entitled
"A Strategy For Profiting From The Cartel’s Dark Interventions
& Evolving Techniques - II" in the “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.”
Indeed, the
evidence for pervasive overt and covert Intervention is now so
overwhelming, thanks to GATA and increasing numbers of other, that we merely
refer readers who may have doubts to the articles referenced above.
Indeed, but for
Cartel Intervention, the sustained Equities rally since March 9, 2009 would
never have occurred.
Fairy Tale #2:
The U.S.
Housing Industry is in a Recovery Mode
Dream on.
The Average New
Home has been on the Market for over a year.
At current rates
of home sales it will take over two years just to absorb the vacancies. Six
percent of all homes built this decade are Vacant.
And the U.S.
faces a substantial increase in Alt-A and Option ARM interest Rate Resets in
2010, and even more in 2011.
Indeed the dollar
value of loans resetting in 2011 will nearly equal that of the Peak 2007-2008
period when subprime defaults brought down the mortgage Market. [All the
foregoing data courtesy of a T2 Partners Special Report.]
Fairy Tale #3:
The Economy is Recovering; there are “Green Shoots”
70% of U.S. GDP
is the U.S. Consumer/Taxpayer (and, often, Mortgage Holder). This huge Sector
is certainly no better off, and is arguably worse off, than before the 2008
Crises. U.S.
household liabilities as a percent of disposable income have inched down from
a peak of 138% in mid-decade to 129% now. No significant change there.
[Indeed, the
Primary Beneficiaries of the Bailouts and Stimuli are the “too-big-to-fail”
Financial Institutions, NOT the U.S. Consumer/Taxpayer.]
But the consumer
credit to fund these Household liabilities is contracting.
Overall, consumer
credit is declining at a 5% rate, while revolving credit (credit cards) is
declining by 7.8% annually.
And in an ominous
omen for the job market and for the economy at large, commercial and
industrial loans are off 12%. Economic growth (from whence come earnings to
justify increased equities prices) is declining.
Fairy Tale #4:
The economy is structurally sound – we just have to get through this
rough spot.
Au contraire, the
U.S.
and International economies have increasingly been built, in recent years, on
borrowing, and not on savings and investment -- the traditional
and healthy source of economic growth.
The primary
Culprit effecting this Unhealthy Structural Transformation is the
private for-profit U.S. Federal Reserve and its allies – other Key
Central Banks and Favored Financial institution. That is The Cartel* referred
to above.
The more
borrowing which is undertaken by government and consumers, the more money The
Cartel makes and the more power they accrue. Add their profits from lending
to their Profits from Market Intervention ($13.4 Trillion in the last
six months of 2008, when Investors were losing Trillions in the Equities
Markets -- see “Opportunities & Threats in Derivatives
Shocker” (05/29/2009) and “Surmounting the Cartels' 'End Game'
Juggernaut” (09/25/2009) in the ‘Articles by Deepcaster’
cache at www.deepcaster.com) and The Cartel* is a Real Juggernaut.
But borrowing
from The Cartel and their allied Favored Financial Institutions carries the
obligation to repay principal and interest. Thus, The Cartel must
continually create more Fiat Money to pay the interest. But more Fiat Money
Creation erodes the Purchasing Power of the World’s Reserve Currency,
the U.S. Dollar, thus imposing a Stealth Tax on U.S. Dollar Holders. (See
“Opportunities to Escape Paper ‘Wealth’ ” 11/07/2008
in the ‘Articles by Deepcaster’ cache at www.deepcaster.com)
Thus genuinely
profitable U.S. dollar denominated investments must profit sufficiently to
beat U.S. Dollar depreciation.
This
Fed-implemented Ponzi-Monetary/Credit Creation Scheme is truly fundamentally
unsustainable in the Long Run. Unfortunately, “The Long Run” is
nearly over.
Fairy Tale #5:
Official Figures provide a Realistic View of Economic and Financial Realities.
Official Numbers vs. Real
Numbers
Annual Consumer
Price Inflation reported October 15, 2009
-1.3% 6.1%
(annualized October Rate)
U.S. Unemployment
reported October 2, 2009
9.8% 21.4%
U.S.
GDP Annual Growth/Decline reported October 29, 2009
-2.33% -5.71%
Fortunately John
Williams’ of Shadowstats.com calculates Key Statistics the Traditional
Way they were calculated before serious Political
gimmicking began in the 1980’s and 1990’s.
In light of the
foregoing Myths, we offer Antidotes designed for Protection and Profit in the
form of Guidelines.
Our regular
readers may notice that certain of the following Guidelines have been
published before. We trust that those readers will understand that we receive
requests to republish these Guidelines, when we fail to do so.
In any event, we
believe that it is important to carefully consider these Guidelines, and
especially #7, because legislation now pending in Congress (e.g. Rep. Ron
Paul’s ‘Audit the Fed and Abolish the Fed’ bills and Rep.
Barney Frank’s countervailing “More Power to The Fed” Bill)
will be important determinants of whether citizen/investors around the world
will be, to use Ellen Brown’s words, “subservient to a global
empire of Central Bankers”.
Guidelines for
Identifying Opportunities for Profit and Protection
1. 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.
Educate yourself about the realities of the
marketplace using Alternative Data Sources such as Deepcaster, Gold
Anti-Trust Committee (www.gata.org), and shadowstats.com. Gathering and
staying attuned to authentic information regarding the marketplace can save
one much financial grief as well as positioning one for profit.
2.
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.
As well, such investors may not have thought
systematically about how one copes with and profits from such Intervention
and Data Manipulation.
Consider one example of Cartel Intervention: the
Traditional and Legitimate Safe Haven from inflation, deflation, and risk, is
Gold. Yet, Gold has, during the recent periods of extreme financial
market turmoil, been taken down in price from its highs of over
$1000/oz down to around the mid-$700 level (e.g. in 2008) when it should have
skyrocketed.
In early March, 2008 Gold was over $1000/oz. when the
Bear Stearns Crisis revealed the fragility of the Financial System.
Gold should surely have skyrocketed then. Instead, it was brutally
taken down. Were its price not manipulated, Deepcaster’s view is
that its price would be over $3,000.00 per ounce today.
As indicated above Deepcaster and others, including
the Gold AntiTrust Action Committee, have offered considerable evidence that
the Cartel* of Central Bankers and Favored Financial Institutions are the
culprits behind these dramatic and devastating Takedowns. See
Deepcaster’s Alert of 12/25/07 “A Strategy for Profiting from
Cartel Intervention in Gold, Silver, Crude Oil and Other Tangible Assets
Markets” in the Alerts Cache at www.deepcaster.com.
But there is a Profitable Refuge from Market
Intervention and Data Manipulation. That Profitable Refuge lies in the
Strategy described in the aforementioned Alert, key components of which we
outline here:
3.
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!
4.
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 nature and timing of 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.
5.
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”.
The
Blossoming of the 200% and 300% (and other) leveraged ‘short’ and
‘long’ ETF’s described above provide a superb opportunity
to go short and long with ease, but not, as we explain in recent articles,
without risk.
6.
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.
For example, a Major Motivation of the U.S. Federal
Reserve and other key Central Banks is the protection and enhancement of the
legitimacy of their Treasury Securities and Fiat Currencies as Measures and
Stores of Value. Therefore, one can understand that one of their Major Goals
will be to attempt de-legitimize Gold, Silver and the Strategic Commodities,
including especially Crude Oil, as Stores and Measures of Value. With this in
mind, the repeated takedowns of Gold and Silver prices and, since July, 2008,
of Crude Oil prices, become understandable. Moreover, such an insight applied
daily to the market can result in a tremendous edge in understanding market
performance, present and future.
Moreover, regarding the assets at The Cartel’s
disposal, if one tracks the Repurchase Agreement and TSLF Pools regularly, as
Deepcaster does, and is aware of the other Interventional tools that The
Cartel has at its disposal, then one gains a considerable edge.
7.
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:
a)
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
250 co-sponsors) and S604 in the Senate; and The 'Abolish The Fed' Bill is
H.R. 2755. www.carryingcapacity.org is a
nonprofit organization which actively supports these bills.
b)
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.
c)
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 The Cartel is sacrificing the U.S. Dollar
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.
Conclusion:
If this aforementioned strategy is
employed effectively, it can result both in wealth protection, and in
considerable profit along the way.
Additional
insights and details regarding Deepcaster’s Strategy for investing in
Gold and Silver are laid out in Deepcaster’s article “Defeating
the Cartel...With Profit” (03/28/2008 (part 1) and 06/19/2009 (part 2))
in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
Deepcaster’s latest Forecasts for price moves in the Precious Metals,
Equities, Crude Oil and other Markets can be found in his latest Alert posted
in the ‘Alerts Cache’ at www.deepcaster.com.
Protection and
profit require Proactivity and attention to the Interventionals, Fundamentals
and Technicals, not “Buy and Hold.” We reiterate, “Buying
and Holding” for the long term rarely succeeds anymore as current
market conditions attest.
Indeed, the Key
Point of the foregoing 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.
Thus, 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.
We conclude with John Williams’ and
Stewart Thomson’s observations which are excellent Antidotes to the
Fairy Tales circulating about these days.
“The
general outlook for the U.S. economy continues to be for severe contraction,
with the worst still ahead.”
Shadowstats.com,
10/29/09
“All
hail the regulators. They've done it again. The banksters are masters at directing
the public's anger at a red herring, while they operate a vastly larger
robbery elsewhere. An example is bank manager salaries. The public is focused
on those salaries, not on the trillions of dollars that have simply
disappeared after being handed to the banksters, printed money now, to be
paid in real money by your great grandchildren over the next 100 years.
Should any taxpayer refuse to pay his share to the banksters, it's "hi
ho hi ho off to the clink you go."
The
bankster puppets, the CFTC, decided that ETF funds held "too much
power" in the energy markets. So they are imposing "position
limits." while the Chinese communist govt buys up every commodity it can
touch without limit. US oil and gas funds, and the small investors invested
in them, have been stopped from their evil mission to hold substantial
amounts of oil and gas. I have to wonder how long it is before GOLD ETFs
suffer the same fate.”
Gold
Neckline Play. Easy on The Trampoline
Stewart
Thomson, Graceland Updates, October 27, 2009
Best Regards,
Deepcaster
LLC
Deepcaster.com
All the other articles by
Deepcaster
Wealth
Preservation - Wealth Enhancement
Financial
and Geopolitical Intelligence
Gravitas,
Pietas, Virtus
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