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"Shadowstats Alternate Unemployment Measure rose to a series high 23.4% in June up from 23% in May, 2013." shadowstats.com, 7/5/2013 Three Key Economic/Resource Realities provide Opportunities (or Threats if unacknowledged) for Investors going forward. In fact, Real unemployment is increasing in the U.S.A., and has now risen to a record 23.4%! (Note 1) This is significant not only because of the devastating impact on the poor souls who cannot find work, (and reflects indeed the increasing impoverishment of the USA's middle class) but also because it means that the U.S. Consumer - 70% of the U.S. Economy - is not going to be able to generate or sustain an economic recovery. Shadowstats numbers also "Warn" that the U.S. is already Threshold Hyperinflationary with Real CPI at 9% (generated by ongoing Massive Central Banks' QE) and Real GDP a Negative -1.98%. See Shadowstats Chart (Note 1). These increasing CPI numbers signal an Opportunity for those who Invest with an eye to the coming Hyperinflation and a Threat to those who do not. See Notes 2, 3 and 4 below re Specific Recommendations. The Focus of another Opportunity/Threat is on the Prospects for Stability in the Mideast and its effect on Crude Oil supplies and Prices. We have earlier pointed out that even with the increased Oil Production resulting from fracking, total oil production now in the U.S.A. has now risen to only half of consumption, and (contrary to Mainstream Media generated Opinion) not likely ever to exceed 2/3 of consumption, absent a Depression. And other Major Developed and Developing Economies such as the Eurozone and China consume much more then they produce, and will likely do so for a long time to come. Therefore, the U.S. and Developed world will continue to rely on the Mideast for Crude for the foreseeable future. But consider the prospects for Mideast stability, and specifically the ability to safely ship Oil through Egypt's Suez Canal, in light of the following ".it's worth revisitingthe analysis Chris wrote 2 years ago. "While the power players are now different, the underlying factors persist. "Here are a few quite relevant statistics about Egypt The relentless math: Population 1960: 27.8 million
Population 2008: 81.7 million
Current population growth rate: 2% per annum (a 35-year doubling rate)
Population in 2046 after another doubling: 164 million Rainfall average over whole country: ~ 2 inches per year
Highest rainfall region: Alexandria, 7.9 inches per year
Arable land (almost entirely in the Nile Valley): 3%
Arable land per capita: 0.04 Ha (400 m2)
Arable land per capita in 2043: 0.02 Ha
Food imports: 40% of requirements
Grain imports: 60% of requirements Net oil exports: Began falling in 1997, went negative in 2007
Oil production peaked in 1996
Cost of oil rising steeply
Cost of oil and food tightly linked (since portable fuel, i.e., oil/gasoline is the primary energy source for food production -Ed.) "The future of Egypt will be shaped by these few biophysical facts -- a relentless form of math that is hardly unique to Egypt, by the way -- and it matters very little who is in power. "The interesting part is that these facts have been in plain view for decades, building into economic and social pressures that were suddenly unleashed in a wave of social and political unrest. How was it that such obvious things escaped notice for so long before they suddenly reared up into plain view? Instead of being a surprising exception to the rule, we should instead brace ourselves against the idea that this is just the way things tend to work. "Back to the main story. Without persistent (and rising) food imports, Egypt cannot feed itself. It has managed to cover up the shortfall by having enough oil to export, but, like every country, their oil reserves are finite and eventually they'll face a day of reckoning. "The oil situation in Egypt has only very recently become an enormous and unavoidable issue. "The re-emergence of political turmoil we're witnessing is quite predictable from the "relentless math" Chris laid out. Or perhaps more directly put:resources don't care about politics." (Emphasis added) "Revisiting Egypt's Warning," Adam Taggart, peakprosperity.com, 07/03/2013 The principles reflected in the foregoing facts (e.g., regarding population carrying capacity) about Egypt can be applied to every country. They reveal one (of several) demographic fallacy(ies). That is the Fallacy that Population Growth is always or usually Good for an Economy and the Citizens of that Nation. (See carryingcapacity.org for more on Population/Resource carrying capacity.) Egypt's population has been doubling every 35 years and it has a huge cohort of unemployed youth. Apart from the fact that such a huge Youth Cohort creates high Revolutionary Potential, (as we are now witnessing) there are other Negatives. Consider the high and rising Unemployment Rate (well in the double digits for Youth). But how is it possible for an economy to increase jobs if virtually all of its arable land is already under cultivation, it is a net food importer and a net energy importer. Providing the essentials --- food, potable water, and energy - are the necessary conditions for any other kind of sustainable economic health or development. No amount of Tech Prowess can significantly increase Food Production without a "reservoir" of arable land and potable water, or increase hydrocarbon reserves at all, if the hydrocarbons are not there. In short, in light of its resources base, Egypt has already overshot its Optimum Population Carrying Capacity. [Carrying capacity refers to the number of individuals who can be supported in a given area within natural resource limits, and without degrading the natural social, cultural and economic environment for present and future generations. The carrying capacity for any given area is not fixed. It can be altered somewhat by improved technology, but not to an unlimited degree. Mainly, it is changed for the worse by pressures which accompany a population increase. As the environment is degraded, carrying capacity actually shrinks, leaving the environment no longer able to support even the number of people who could formerly have lived in the area on a sustainable basis. No population can live beyond the environment's carrying capacity for very long.] Thus the consequences for Mideast stability and future Crude Oil Availability are not promising. But they do provide an Opportunity to profit from Crude Oil Price Rises. Ominously, other countries in the developing (and developed) world present similar problematic profiles (consider India and Bangladesh, for example). Such "Net Importer" low carrying capacity countries, when overpopulated, present a Real Drag on the economy. The Third Opportunity/Threat is provided by The Fed's apparently Intentional Policy of Creating Confusion. Will they taper or won't they, and if so, when? For example, the "News" dribbling out before the FOMC Minutes were recently released suggested they would begin Tapering this year, probably in September. But when Bernanke subsequently indicated that The Fed's QE would continue as long as necessary - and The Fed would adopt "a highly accommodative policy for the forseeable future" -- it had the effect of boosting Equities to all-time highs. The critical Fact is that these all-time highs are artificially created by Q.E. and not by fundamental Economic Strength. In fact, (as we have argued elsewhere) The Fed can not end QE (Witness what happened in the Markets when they just hinted they would) until "Forced" to do so because the consequent Hyperinflation has spun out of control and/or we have Serious Stagflation. Indeed QE to Infinity is with us until such occurs. Meanwhile, Investors can invest and profit and protect wealth from knowing that QE is not going away any time soon, and that it will inevitably create Hyperinflation, and by acting on that knowledge. Best regards, July 12, 2013 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 June 18, 2013
1.36% / 8.99%
U.S. Unemployment reported July 5, 2013
7.6% / 23.4%
U.S. GDP Annual Growth/Decline reported June 26, 2013
1.62% / -1.98%
U.S. M3 reported July 5, 2013 (Month of June, Y.O.Y.)
No Official Report / (e) 4.37% (i.e, total M3 Now at $15.189 Trillion!) Note 2:Since the May highs, Equities Markets exhibited a sideways chop with a downward bias, until just the past few days mini-Rally which has impelled Equities back near their 2013 highs. But within the next few weeks we can expect certain Key Sectors to begin Rallying hard and others to Fall dramatically. And you will note there is one Critical Sector which we expect to dramatically plunge. Note 3: Are two Key Sectors reversing powerfully? Or are we just witnessing Head Fakes, soon to be re-reversed powerfully? There is increasing evidence that the Reversal of one Key Sector is For Real and that this is the time to jump on board. The other appears to be a Head Fake. To consider the evidence, consider our Forecasts in our recent Alert "Key Sector Reversals?!!; QE Forecast Shocker; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Crude Oil, Equities, Gold & Silver," posted at deepcaster .com. And we just issued a Shocking Forecast for QE. Note 4: Near-Term (next few weeks) versus Mid-Term (next very few months) Forecasts are looking very Different for Key Sectors. And there is an Extraordinary Buy Opportunity in One Key Sector. DEEPCASTER LLC www.deepcaster.com DEEPCASTER FORTRESS ASSETS LETTERDEEPCASTER HIGH POTENTIAL SPECULATOR Wealth Preservation Wealth Enhancement
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