“The three-month euribor/OIS spread,
the fear gauge of credit markets, reached the highest level in two years
today, jumping 7 basis points to 40 in wild trading.
"Europe's money markets are undoubtedly starting to
freeze up," said Marc Ostwald from Monument Securites.
"It's not as dramatic as pre-Lehman but it is alarming
and shows the pervasive degree of fear in the markets. People are again
refusing to lend except on a secured basis."
The credit stress was triggered by fresh mayhem in the
southern European bond markets and ominously in parts of the eurozone's soft core as well, including Belgium. Spanish
yields pushed further into the danger zone to 6.42pc. Italian debt reached a
post-EMU high of 6.22pc before falling back slightly on reports of Chinese
"We have a revolt taking place by foreign investors in
these bond markets," said Hans Redeker,
currency chief at Morgan Stanley. "There have been hardly any purchases
for several months. We are seeing net disinvestment because people fear that
these countries lack the potential to grow their way out of the problem, and
risk falling into a Fisherite debt trap."”
“Europe's money markets freeze as crisis escalates in
Italy and Spain”
Ambrose Evans-Pritchard, telegraph.co.uk, 7/4/11
Much of the Investment World is finally
beginning to realize that a number of worsening International Economic and
Financial Problems will not be solved by increasing “borrowed
liquidity” (via, e.g. QE 1, 2, 3…?) or Fiat Money Injections,
because the aforementioned problems are structural Problems for which
reliance on “Earned Liquidity” and, ultimately, bullion-backed
currencies are necessary but not sufficient conditions for solving.
For example, increasing liquidity by
piling debt upon more (often unpayable) debt, only worsens the problem, as the Eurozone members
are already discovering, and the USA is beginning to discern.
Indeed, one could argue that the Sovereign
Debt Bubble is the largest Bubble in History.
These are not observations original with
us. Eminent European Banker and Austrian School Economist Dr. Kurt Richebacher R.I.P. years ago warned us of the dangers of
relying on Excessive “Borrowed Liquidity” (thus on leverage)
rather than on “Earned Liquidity”.
An Economic Structure built on Excessive
“Borrowed Liquidity”/Leverage is doomed to fail. And what is a
Fractional Reserve Banking System, if not one founded on creating excessive
Because many Nations have reached or are
about to reach “Debt Saturation”, Structural Changes (resulting
probably in some Debt Repudiation, with the PIIGS eventually pursing the
Icelandic Solution, and more Fiat Currency Purchasing Power Destruction) are
being forced upon us.
In sum, thanks in part to certain
Mega-Bankers Reckless Greed, the Old Economic and Financial Order is engaged
in dancing its Last Tango, to speak metaphorically, and the August 4 Equities
Market Sell-Off is merely a harbinger of Troubles to come and of emerging New
But these prospective Structural Changes
Provide Great Profit Opportunities as well as Substantial Traps for the
Here, we summarize several actual and
Prospective Structural Changes and Key Consequent Opportunities and Traps for
your consideration. Fuller analysis is offered in our recent Articles
available at www.deepcaster.com.
Andy Hoffman, Managing Director at San
Diego Torrey Hills Capital, effectively emphasizes the importance of certain
New Realities in spite of (or perhaps because of) his Hyperbole.
“So here we are, at the very end of a decade-long journey
through hell, which was destined to end more horribly than it began.
It all started in 2000, when the “Age of Stolen
Prosperity”(thanks Jim Willie) under Clinton,
Greenspan, and Robert Rubin’s “Strong Dollar Policy” (i.e.
surreptitiously selling the Fort Knox gold) ended with the commencement of
the Tech Wreck.
It gained steam in 2001 following 9/11, when the
combination of an economic downturn, Bush’s “War on
Terror”, an acceleration of the American jobs exodus to China, and
continued financial deregulation sowed the seeds of the maniacal surge in
money printing and debt issuance that has brought us to the abyss we stand at
And it all ends here in 2011, as a perfect storm of
negative events converge to engender global hyperinflation…
Because the U.S. government has run out of moves, and thus
the GAME IS OVER!
There is NOTHING left to prop up the economy (in reality or
fiction), as debt saturation has now set in (the economy now CONTRACTS
when debt expands).
There is NOTHING left to “kick the can down the
road”, as all means (reduced interest rates, deficit spending, currency/stock/bond/gold
manipulation, falsifying economic statistics) have been exhausted…
Either the U.S. government raises the debt limit,
essentially admitting overt QE3 and certain near-term hyperinflation, or
fails to do so, inviting immediate default, exploding interest rates, and an
immediate global economic collapse that would dwarf the combined strength of
the 1930s depression and the 2008-09 meltdown, replete with massive bank
liquidations, a collapsing dollar, hyperinflation, and violent social unrest.”
“RANTING ANDY: CHECKMATE, i.e. ‘MANIPULATION
Andy Hoffman, lemetropolecafe.com, 7/27/11
Hoffman is right about “Debt Saturation”
as Developments in the Eurozone and U.S. are demonstrating.
As well, increasing the debt limit (as in
the U.S.) and piling more Debt upon unpayable
Debt (as in the U.S. and Eurozone) is a de facto QE 3 and has Already put us
on the Hyperinflation Threshold if one considers the Real Numbers (e.g. U.S.
CPI is already at 11.3% per Shadowstats.com).
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 July 15, 2011
% (annualized June, 2011 Rate)
U.S. Unemployment reported August 5, 2011
U.S. GDP Annual Growth/Decline reported August 1, 2011
U.S. M3 reported July 16, 2011 (Month of June, Y.O.Y.)
No Official Report 2.29%
Since failing to provide more Liquidity
would likely result in global collapse, and since that is unacceptable to the
Powers That Be, liquidity will be provided, far in excess of that justified
by (de facto nonexistent) GDP growth. Therefore Hyper-Price Inflation is
bound to visit us sooner rather than later.
Trap: Failing to prepare for Hyperinflation, or more precisely, for
Trap: Consider carefully whether to hold currency in bank deposits –
in Europe Investors are already fleeing certain banks.
Opportunity: Purchase inflation Resistant Assets with Profit Potential mainly
found in the three Sectors (which Deepcaster has
Trap: Given the USA and Eurozone Officials Unwillingness to address and
solve the Real Problems, the U.S. Dollar and Euro/Eurozone are in increasing
“I know it’s early on a Monday morning, but I had to give
my take on the “deal” announced last night…
I predicted in my July 28th RANT… “come Sunday night, a triumphant,
“bipartisan agreement” to “temporarily” raise the
debt limit by roughly $1 trillion, to $15.3 trillion, with essentially ZERO
spending cuts or tax increases to back it up – in essence, the worst
possible scenario for the dollar and the U.S.’s credibility.”
Unfortunately, what we got was even WORSE, by several
magnitudes!... and far worse for my already maxxed
out forecast of imminent hyperinflation… the debt ceiling will
essentially be raised by $2.1-$2.4 trillion, to roughly $16.4-$16.7 trillion
from $14.3 trillion currently, or just enough to get through the 2012
elections if you believe the fatally flawed, insanely optimistic math of the
government (4.8% GDP growth, LOL!). Most of the supposed “dollar for
dollar” spending cuts… haven’t even been CONSIDERED
yet… In other words, it is very likely that the national debt will be
in the $16.5 trillion region before even a dollar of spending is CUT!!!! Not
to mention, we already have a $2+ trillion/year annual budget deficit…
Of course, gold and silver were attacked immediately
including, if you can believe this one, another SILVER MARGIN INCREASE LAST
NIGHT (http://silvergoldsilver.blogspot.com/2011/07/here-we-go-again-ib-raised-silver.html)... PAPER derivatives were used to enable the media
to spin the recent rises in Precious Metal as due solely to DEFAULT fears,
when in actuality they have been rising, as always, due to ongoing INFLATION
“RANTING ANDY SPECIAL: WAY TO GO CONGRESS,
YOU"VE JUST GUARANTEED HYPERINFLATION!”
Andy Hoffman, lemetropolecafe.com, 8/1/11
And it is correct to Identify the Monetary Metals
Gold, especially, and Silver as Hedges against Inflation and thus
Profitable Investments (both having Beaten the performance of the S&P by
several hundred percent in the last decade).
But it is also essential to point out
that Gold and Silver are subject to ongoing Price Suppression Attacks by what
we have for years long identified as The Fed-led Cartel* of key Central
Bankers and their Allies and Factota.
*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, 2009, Special Alert containing a summary overview of Intervention
entitled “Forecasts and December, 2009 Special Alert: Profiting From
The Cartel’s Dark Interventions - III” and Deepcaster’s
July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S.
Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts
Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com.
Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including
testimony before the CFTC, 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.”
Attention to The Interventionals facilitated Deepcaster’s recommending five short positions
prior to the Fall, 2008 Market Crash all of which were subsequently
Trap: Failing to Acknowledge that The Cartel is still Potent (though less
than it used to be) as demonstrated by their Takedown of Precious Metal
Prices in Early May, 2011 and again just yesterday (Thursday, August 4).
Opportunity: Buy these Precious Monetary Metals near the bottoms of the Dips.
Trap: Thinking the Fiat Currency System, as Presently Constituted, will Survive
Trap: Thinking that Wealth can be safely preserved in Key Fiat-Currency
denominated Assets. The U.S. Dollar has lost over one-third of its Purchasing
Power vis a vis other
Fiat Currencies in the last decade, and lost much more vis
a vis Gold and Silver.
Opportunity: Increasingly in the next few years, currency values will be in large
part a function of their links, or lack thereof, to Gold and Silver, i.e.
Real Money, and to other Commodities in relatively Inelastic Demand, such as
Of course, Purchasing Power Parity or
lack thereof, and Comparative Interest Rates will continue to play a large
Part in Currency Values, as well.
Opportunity: As the early May and early August, 2011 Takedowns of Precious Metal
prices have shown, considering the Interventionals,
as well as Fundamentals and Technicals can help one
know when to “Buy near the Bottom of the Dips” thus enhancing
Opportunity: The Environment for Equities-in-General will only continue to
deteriorate. Therefore potentially profitable properly timed hedging
with Short or leveraged Short Exchange Traded Funds is advisable.
Finally, we need to avoid the Wealth
Confiscating Trap of the Fed-led Cartel’s End Game (see Deepcaster’s Articles - “Saving Investments,
Sovereignty, & Freedom from The Cartel ‘End-Game’
(1/13/11)” and “Gold-Freedom versus The Cartel
‘End-Game’ & A Strategy for Surmounting It (09/23/10)”
in the ‘Articles by Deepcaster’ Cache
at www.deepcaster.com). Congressman Dennis Kucinich has one plan which could
allow us to avoid the End Game Trap.
“Dennis Kucinich says Congress must direct the
Treasury Department to issue US Notes (like Abe Lincoln's Greenbacks, but
which would also be issued in electronic deposit form) to pay off the
National debt. He says the US must also gradually increase the reserve ratio
that private banks are required to maintain from 10% to 100%, thereby
gradually ending banksters
ability to create money out of thin air and then loan this funny money out at
In this bill, HR 6550 IH, Kucinich proposes a means by
which we can:
· create a full employment economy;
· provide for public investment in capital
· provide for a reduction in the cost of public
· retire public debt;
· stabilize the Social Security retirement system;
· restore the authority of Congress to create and
regulate money, modernize and provide stability for the monetary system of
the United States, retire public debt, and achieve the goals just listed
Step 1: Direct the Treasury Department to issue U.S. Notes
(like Lincoln's Greenbacks, but which can also be in electronic deposit
format) to pay off the National debt.
Step 2: Gradually increase the reserve ratio that private
banks are required to maintain -- from 10% to 100%, thereby ending their
ability to create money out of thin air when they loan it out at interest.
These two relatively simple steps, which Congress has the
power to enact, would extinguish the national debt, without inflation or
deflation, and would end the unjust and parasitic practice of private banks
creating interest-generating money every time they make a loan through
fractional reserve banking.
Paying off the national debt would wipe out our $400+
billion annual interest payments and thereby balance the budget. This would
in turn stabilize the economy and end the boom-bust economic cycles caused by
fractional reserve banking and the systematic exploitation of our money
supply by banksters.”
“The Kucinich Plan for National Economic Reform and
Richard Clark, opednews.com, 7/25/11
There is nothing particularly radical about the
Kucinich Plan. After all, President John F. Kennedy ordered the U.S. Treasury
to issue U.S. Notes a few months before he was killed.
New Structural Realities require New
Strategies for Wealth Protection and Enhancement as well as Systemic
Stability. These Strategies can succeed if one recognizes the Opportunities
and avoid the Traps.
Recognizing that the Current Structure is
dancing its Last Tango is the first step toward these Recognitions.
Note 1: One Way of Beating Impending Hyperinflation (already Real U.S. CPI is
11.13% per Shadowstats.com) is to invest in a Portfolio whose aim is to beat
Inflation via Total Return (Gain plus Yield).
All of the High Yield Stocks, recommended
by Deepcaster but two are above our Buy Prices and
they keep generating remarkable yields. To consider our High-Yield Stocks
Portfolio with Recent Yields of 18.5%, 10.6%, 26%, 6.7%,
8%, and 15.6% when added to the portfolio; go to www.deepcaster.com and click
on ‘High Yield Portfolio’.
***Note 2: Deepcaster
addresses the questions of Profit and Protection in light of Fiat Currency
Purchasing Power Destruction in his recent article – “Essentials
for Wealth Acquisition Acceleration” and provides Guidelines.
Using such Guidelines allowed Deepcaster to make buy and sell recommendations resulting
in remarkable profits recently if acquired and liquidated when we
38% Profit on Silver on July 18, 2011 after just 201
days (i.e. about 68% annualized!)
150% Profit on Gold Stock Calls on July
13, 2011 after just 56 days (i.e. about 975% annualized!)
40% Profit on leveraged Short Treasuries
ETF Puts on April 15, 2011 after just 3 days (i.e. about 4800% annualized!)
30% Profit on Silver on April 6, 2011
after just 98 days (i.e. about 111% annualized!)
To read our recent article --
“Essentials for Wealth Acquisition Acceleration”, go to
www.deepcaster.com and click on the ‘Articles by Deepcaster’
Past Profitable Performance is no
assurance of future Profitable Performance.
Preservation - Wealth Enhancement
and Geopolitical Intelligence