Financial Sector Regulations Fleeting Opportunities
Politics / Market Regulation Mar 25, 2010 - 07:16 PM GMTBy: DeepCaster_LLC
“The Senate Banking Committee has approved Democratic legislation overhauling Wall Street Regulations on a party-line vote. The bill now goes to the Senate, where its prospects remain in doubt…
The committee vote Monday was 13-10…
The surprise development did nothing to mend the partisan fissures over the legislation and adds even more uncertainty to Congress’ ability to pass a sweeping rewrite of financial regulations this year…” “Democrats push Wall Street bill to full Senate” Washington (AP), 3/22/10
“On Monday the Senate Banking Committee passed the "Restoring American Financial Stability Act of 2010" on a 13-10, party-line vote. The legislation, drafted by committee chairman Chris Dodd, gives the Federal Reserve power to regulate any large company in America. When considered alongside similar legislation that passed the House of Representatives in December, at least part of the intent of the bills' sponsors becomes clear. The current proposals for "financial" reform are stalking horses allowing government intervention into virtually every facet of the U.S. economy. [Emphasis added.]
…The Senate bill is even more explicit in giving the Fed power to regulate commercial, non-financial services companies.
Under both bills a company that is deemed to be "financial" can be made subject to special examination and scrutiny by the systemic risk regulator. Whether or not a company is financial comes down to whether the company is engaged in "financial activities"…
…non-banks become subject to Federal Reserve regulation for the first time…
The list of companies that might find themselves subject to new Federal Reserve regulation is as deep as the U.S. economy itself…
Senator Dodd's systemic risk proposal would authorize the Federal Reserve to have an unprecedented role in regulating the U.S. economy. This proposition deserves more scrutiny and debate than it has thus far received.
Mr. Zerzan was Deputy Assistant Secretary and Acting Assistant Secretary of the United States Treasury in the Administration of President George W. Bush.”
“The Dodd bill would regulate and tax plenty of non-banks.” Gregory Zerzan, The Wall Street Journal, 3/23/10
“With the passage of the legislation allowing the federal government to take control of the medical care system of the United States, a major turning point has been reached in the dismantling of the values and institutions of America…
Even the massive transfer of crucial decisions from millions of doctors and patients to Washington bureaucrats and advisory panels-- as momentous as that is-- does not measure the full impact…
With politicians now having not only access to our most confidential records, and having the power of granting or withholding medical care needed to sustain ourselves or our loved ones, how many people will be bold enough to criticize our public servants, who will in fact have become our public masters?...
Despite whatever "firewalls" or "lockboxes" there may be to shield our medical records from prying political eyes, nothing is as inevitable as leaks in Washington. Does anyone still remember the hundreds of confidential FBI files that were "accidentally" delivered to the White House during Bill Clinton's administration?...
The corrupt manner in which this massive legislation was rammed through Congress…has provided a roadmap for pushing through more such sweeping legislation in utter defiance of what the public wants…
…a road map for how other "historic" changes can be imposed by Obama, Pelosi and Reid…
What will it matter if Obama's current approval rating is below 50 percent among the current voting public, if he can ram through new legislation to create millions of new voters by granting citizenship to illegal immigrants? That can be enough to make him a two-term President, who can appoint enough Supreme Court justices to rubber-stamp further extensions of his power…
The last opportunity that current American citizens may have to determine who will control Congress may well be the election in November of this year…the 2010 election may be the last chance to halt the dismantling of America. It can be the point of no return.”
“A Point of No Return?” Thomas Sowell, Investors Business Daily, 3/23/10
The Prospect that we may not get any Genuine Financial Regulatory Reform from this session of Congress, AND that the private for-profit Fed will acquire even more power, creates both potential Crises and Opportunities.
Here we focus on one Private Profit Opportunity and one Public Policy Opportunity.
Consider that none of the Key Structural problems which led to the Fall, 2008 Market Crash has been solved, and most not even addressed.
Consider also that the ostensible Recovery of the Past Year is mainly the result of Stimulus actions by Major Governments around the World – mainly Printing More Money and/or borrowing to create the Economic and Markets “Sugar Highs” we see today.
But Sugar Highs do not last. Especially this one, which has been considerably boosted by shifting private (mainly Mega-Financial Institutions) Debt into the Public Sphere.
That is to say the losses of Mega-Institutions have been socialized by shifting them to U.S. and other taxpayers around the world.
But the Profits of these Institutions remain privatized. The $12.9 Billion (per the N.Y. Times) of taxpayers’ money which Goldman Sachs received via the AIG Bailout is a case in point, and was in addition to the TARP funds which Goldman received (and subsequently repaid).
And the $1.7 Trillion of Toxic Instruments bought by the Fed mainly from Mega-financial institutions is another case in Point.
One need only look at the Eurozone to see that the push to commonize debts onto the taxpaying Public, while privatizing profits, continues.
If the foregoing Bailouts and Stimuli achieved fundamental improvements in economies around the world, perhaps they could be justified. But none of the Fundamental Problems has been solved. Massive Mortgage rate resets loom in 2010, 2011, and 2012, for example.
And the U.S. now has $108 Trillion! in downstream unfunded liabilities for Social Security, Medicare and Medicaid. And the U.S. Federal Debt will approach $20 Trillion by 2020.
Massive Unemployment (Real U.S. Unemployment is over 20% per Shadowstats.com) looks to persist for many months, and probably for a few years. And with Consumer Spending a huge chunk of GDP for Major Nations, this does not bode well for Corporate Earnings in the mid-and long term. Thus the Markets should be looking lower over the mid and long term.
Yet recently Bulls have been buying Equities with earnings yields of a mere 4% and a price/earnings ratio of just over 22.
Not a logical policy given the Fundamentals, or Technicals, for that Matter.
But the Prospective Crises provide a considerable Mid-Term Profit Opportunity, and mainly on the short side in the Equities Markets.
Fortunately, the advent in recent years of short and leveraged short Funds provides an opportunity to “go short” in Equities and other Sectors while reducing the risk of capital loss due to time and risk premium erosion. See Deepcaster’s 2010 Letters and Alerts available at www.deepcaster.com for specific recommendations.
But before actually “going short” it is important to consider certain Essential Caveats. (Note that we merely summarize the Caveats below, while providing supporting documentation in our referenced Articles.)
- Make decisions based on Real Data, such as that provided by shadowstats.com, gata.org and deepcaster.com, not on bogus Official Statistics. See Deepcaster's articles: "Opportunities to Profitably Escape Paper "Wealth" in 2010" (3/12/10) and “Surmounting Deception, Distortion & Intervention” (7/17/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. FYI, the latest key statistics from Shadowstats.com are:
Official Numbers vs. Real Numbers
Annual Consumer Price Inflation reported March 18, 2010
2.14% 9.39% (annualized March Rate)U.S. Unemployment reported March 5, 2010
9.7% 21.6%U.S. GDP Annual Growth/Decline reported February 26, 2010
0.15% -4.62% - Take Account of overt and covert Cartel* Interventions; that is take account of The Interventionals as well as the Fundamentals and Technicals. *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, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" 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 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 liquidated profitably. See Deepcaster's articles: “Profit & Protection from Cartel Intervention” (12/25/2009) and “Gain from the Cartel Game Plan” (9/04/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com. IMPORTANT NOTE: As indicated in the referenced Articles, much of the post-March 9, 2009 Equities Rally has been Cartel-generated.
- Invest in Gold and Silver (and key Strategic Commodities), BUT, according to a Strategy designed to minimize the Effects of Cartel Price Suppressions of Gold and Silver (and key Equities Sectors and Commodities), and, indeed, to Profit. Deepcaster has designed such a Strategy described in the following articles: “Get Physical! For Protection and Profit” (10/09/2009 ), “Defeating the Cartel... With Profit, Part 2” (6/19/2009), and “Defeating the Cartel... With Profit, Part 1” (3/28/2008) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
- Implement an Investment and Personal Protection Strategy designed to cope with, surmount, and profit from The Cartel’s ‘End Game’. See Deepcaster's articles: “Surmounting The Armageddon Scenario & Cartel ‘End Game’” (2/26/2010), “Crunch Time for the Cartel“ (11/25/2009), “Surmounting the Cartels' 'End Game' Juggernaut“ (9/25/2009), and “Coping with Power Moves in the Cartel's 'End Game'” (4/24/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
- Implement a Strategy Designed to Profitably Escape Paper ‘Wealth’. Deepcaster’s Strategy is described in “Opportunities to Profitably Escape Paper "Wealth" in 2010” (3/12/2010) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
- Become involved in Political action designed to blunt the Cartel’s Superpower-Threat. See Deepcaster's articles: “Surmounting Cartel Advantages” (5/08/2009) and “Coping with the Superpower-Cartel Threat!” (1/30/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
- Become involved in Political Action to Audit the Fed and stop the Amnesty of 25 to 30 million Aliens now illegally in the U.S. A. When this Amnesty was proposed in 2007, Robert Rector of the Heritage Foundation calculated it would cost $100 billion annually. The cost now would be higher due to increased Alien population growth and entitlements in the new Health Care Bill. Carrying Capacity Network (www.carryingcapacity.org) is a nonprofit organization which actively supports Auditing the Fed and opposes the Illegal Alien Amnesty.
- Develop an Investment and Trading Strategy designed to address all of the above. See Deepcaster's articles: “Avoiding Wealth Confiscation... With Profit!” (2/05/2010), “Profiting in "the whipsaw year" 2010” (1/08/2010), “Middle Class Outrage, Solutions, & The Markets” (12/11/2009), and “Protect and Profit Before the Coming Storm” (11/13/2009) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.
In sum, 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.
Best Regards,
By DEEPCASTER LLC
www.deepcaster.com
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Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.
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