Investor Profit Lessons from The Ongoing Europe, USA Debt Crises
Stock-Markets / Financial Markets 2010 Dec 04, 2010 - 03:20 AM GMTBy: DeepCaster_LLC
“The money struggle is the struggle against totalitarianism”
“It may be a bit hypocritical for an American to wonder why Europeans are giving up their democracy, their countries, their money, and their very lives to an unelected, overweening, bank-controlled bureaucracy. After all, that already has happened in the United States. But at least there are powerful stirrings against the new European totalitarianism, perhaps best articulated today by Nigel Farage, a member of the European Parliament from southeast England and leader of the United Kingdom Independence Party.
Two supremely eloquent interviews Farage gave this week could use the widest audience, as he makes plain that the money issue is what it always has been, a core question of democracy. One interview is 23 minutes long with Eric King of King World News here:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/12/1_MEP_Nigel_Farage.html
Or try this abbreviated link: http://bit.ly/hdywOd”
“Nigel Farage: The money struggle is the struggle against totalitarianism”
Chris Powell, Gata.org, 12/1/10
“Today's POMO has closed, with Brian Sack monetizing $6.8 billion of bond. This is a 3.5x Submitted to Accepted ratio as PDs realize various blogs are on their POMO funding needs and thus moderate their Submission amount. Yet what is simply surreal is that the second most monetized bond was PJ3, due 11/30/2015 [1]. This is the same issue that was just auctioned off by the Treasury last week! There is no longer even a pretense of avoiding direct monetization. It is time for Bernanke to go out and just buy bonds at auction. A one week turnaround is nothing less than criminal fraud which if anything is unnecessary and pads the PDs pockets. The result was so stunning it was not even included in last week's frontrunning guide [2]as nobody had a clue that the Fed could be so brazen in its flaunting of direct monetization. For just holding the bond a whopping 168 hours, PDs made a few million dollars. This is criminal. But who cares. Eric Holder has still to prove that he is anything besides an organ donor.” (Ed. Note – PD=Primary Dealer) (Ed Note #2 – Which of these Primary Dealers are also Shareholders of the private for-profit Fed?)
“6.8 Billion POMO Closes: Brian Sack Monetizes $1.1 Billion Of Bonds Issued Last Week”
Tyler Durden, zerohedge.com, 11/30/10
“Stripped to its essentials, the E85 billion package imposed on Ireland by the Eurogroup and the European Central Bank is a bailout for improvident British, German, Dutch, and Belgian bankers and creditors.
The Irish taxpayers carry the full burden, and deplete what remains of their reserve pension fund to cover a quarter of the cost.
This arrangement…was announced in Brussels before the elected Taoiseach of Ireland had been able to tell his own people what their fate would be.
The Taoiseach said afterwards that Brussels had squelched any idea of haircuts for senior bondholders…
It is harder to justify why the Irish should pay the entire price for upholding the European banking system, and why they should accept ruinous terms.
I might add that if it is really true that a haircut on the senior debt of Anglo Irish, et al., would bring down the entire financial edifice of Europe, then how did any of these European banks pass their stress tests this summer, and how did the EU authorities ever let the matter reach this point? Brussels cannot have it both ways…
Patrick Honohan… wrote the definitive paper on the causes of this disaster from his perch at Trinity College Dublin in early 2009. Entitled "What Went Wrong In Ireland?," it recounts how the genuine tiger economy lost its way after the launch of the euro, and because of the euro.
"Real interest rates from 1998 to 2007 averaged -1 percent [compared with plus 7 percent in the early 1990s]," he wrote.
A (positive) interest shock of this magnitude in a vibrant, fast-growing economy was bound to stoke a massive credit and property bubble…
Given this, why should the Irish people accept the current terms?
… Should the Dail vote against the austerity budget on December 7, Pearl Harbour Day? And should the next government… tell the EU to go to hell, do an Iceland, wash its hands of the banks, and carry out a unilateral default on senior debt by refusing to extend the guarantee?
The risks are huge, but then the provocations are also huge… Did the EU not disregard the Irish "no" to Lisbon, just as it disregarded the first Irish "no" to Nice? Did it not trample all over Irish democracy?”
“Ambrose Evans-Pritchard: Ireland's debt servitude”
Ambrose Evans-Pritchard, The Telegraph, London, 11/30/10
Essential to Profit-Making as we move into 2011 is taking account of key Mega-Bankers’ and Globalist (as opposed to Internationalist) Politicians’ Guiding Slogans?
“Extend and Pretend”
“Kick the Can Down the Road”
“Spin and Deceive”
“Lure and Entrap”
In spite of their Public Pronouncements, these are still the Operative Maxims of these Key Mega-Bankers and Globalist (as opposed to Internationalist) Politicians.
Recall, for example, how earlier this year the Greek Debt problem (de facto a Solvency problem) was supposedly fixed. Well it had to be re-fixed recently.
And now Ireland, whose leaders claimed it didn’t need a Bailout, but then had to have one. And Portugal Soon and Spain…and…?!
The Essential Point is that piling More Debt on Top of Debt is Not a Solution, but rather exacerbates the Problem (and continues to enrich the Mega-Banks)…when we face it again just a little farther down the Road.
Nonetheless, this observation provides Great Profit Opportunities. For example:
Just under two months ago, the Euro strengthened to nearly U.S. $1.40. But such strength was utterly unjustified because the earlier Greek Bailout had not fixed the Greek debt problem; nor has the recent Irish Bailout fixed the Irish Debt problem; nor, we suspect, will the impending Portugal and Spain Bailouts fix their Solvency problems either.
We reiterate, piling on more Debt to “Solve” the problem of Too Much Debt is no Solution. The Markets eventually “recognize” this, notwithstanding Interventions.
Therefore, just under two months ago, reflecting on these Non-Solutions and Euro Technicals, caused us to conclude that the Euro was unjustifiably strong at U.S. $1.40ish. Thus, we recommended that DHPS Speculators buy Calls on a leveraged short Euro ETF. Sure enough, since then the Euro has sunk and earlier this week, we recommended taking about a 90% profit in just 56 days or about 585% annualized, for those who bought when we recommended it.
The Key Profit-Lesson is that it is essential to get past the Spin, Deception, Delusions and Lies and to ascertain the Underlying Reality, upon which sound Investment or Trading Decisions can then be made.
Another Profit-Lesson from the Ongoing Crises is that Key Official Statistics are Bogus; thus relying on them can lead to catastrophic Investment and Trading errors.
This Wednesday, December 1 Equities Rally is a case in point. It was fueled in part on the most dodgy interpretation of questionably optimistic Economic Data.
But the Dow soared over 250 Points, doubtless with Aid of some Fed POMOS.
Let’s consider at the Real Numbers; which will allow us to estimate where we think the Dow and S&P will be in a year.
Shadowstats.com calculates key statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest.
Consider the following Bogus Official versus Real Numbers
Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)
Annual U.S. Consumer Price Inflation reported November 17, 2010
1.17% 8.51% (annualized October, 2010 Rate)
U.S. Unemployment reported November 5, 2010
9.6% 22.5%
U.S. GDP Annual Growth/Decline reported November 23, 2010
3.24% -1.44%
U.S. M3 reported November 16, 2010 (Month of October, Y.O.Y.)
No Official Report - 3.29%
Look at the GDP and Unemployment Numbers – there is No Real Recovery. But there is already, serious Consumer Price Inflation, doubtless in part propelled by ongoing Q.E. (Money Printing).
Another Profit-Lesson is that while The Cartel still has considerable clout to Manipulate all Markets, (cf. the Tyler Durden excerpt above) it does not have the Clout it used to have to Suppress the Gold and Silver Prices. See Deepcaster’s Article “GOLD: Opportunities + Threats = Opportunities” (6/11/10) regarding why The Cartel has lost Clout to suppress the Precious Metals, in the ‘Articles by Deepcaster’ Cache at www.deepcaster.com.
Thus given The Cartel’s recently diminished Clout, these Precious Metals have in 2010 repeatedly bounced back higher after one or two day Cartel Takedowns.
*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 Deepcaster’s website. 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 Deepcaster’s website 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.
And perhaps the most significant Profit-Lesson of all is that, since the Key Sovereign Nations’ (i.e. U.S. and U.K., and not just the PIIGS) Economic Problems are Mainly Solvency Problems, not Liquidity Problems as The Fed and other Central Banks would have us believe, they can not be solved with more Debt, Bailouts or Q.E. (Money Printing). Thus, more Q.E. will only worsen these countries Economic conditions going forward. We and others have considerable evidence that the Cartel has planned these developments including the Fall, 2008 Market Crash as a part of its ‘End Game’ to increase its Power and Wealth. (See “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.)
The Key Takeaway from these Observations is that, short of War, the Greatest Risk for Sovereign Nations, and many States, Municipalition and, indeed, businesses, is Default Risk. The likely “Solution” is Currency Devaluation and/or Actual Default.
Thus, all investments and Trades should be made with an eye to the Default Risk of, not just the Principals, but of Counterparties as well.
There comes a point where Extending and Pretending, so the Can of Economic Worms can be Kicked Down the Road, and the public can continue to be Lured and Entrapped by Spin and Deception, will No longer Work.
That Time is Default Time with consequent Social Chaos.
At that time One had best have plenty of Gold and Silver, and other Means to Sustain and Protect Oneself.
And, yes, the Money Struggle is the Struggle against Totalitarianism.
Best Regards,
By DEEPCASTER LLC
www.deepcaster.com
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