“…The banking system remains severely stressed, with some form of new easing—a QE-3—likely just a matter of time, and likely sooner rather than later. All Fed actions since the crisis of 2007 and panic of 2008 have been aimed at saving the banking system—not the economy—where the survival and health of banking system is the Fed’s primary function.
“In the current political environment, however, the Fed likely would run into heavy public opposition to an ongoing effort to bailout the banking system. …Any new form of easing will be justified under the cover of an effort to boost economic activity.
“The April payroll-survey employment gain of 115,000 was below already-weak consensus expectations, for a second month, while the household survey showed an outright monthly employment contraction for the second month. None of the month-to-month changes were statistically significant, as usual, but year-to-year change in nonfarm payrolls has begun to slow markedly.”
“Household-Survey Employment Fell as Payroll Growth Faltered”
John Williams, shadowstats.com, 5/4/12
Major Challenges confront investors in the 2nd half 2012. So it is essential to describe the Key Forces which will influence the 2nd half, as the Markets Takedowns earlier this week show.
Indeed, The Precious Metals and Tangible Assets Price Takedowns of Recent Days reflects The Cartel’s (See Note 1) increasingly desperate Attacks on pro-Precious Metals and Tangible Asset Sentiment and thus on Prices. Considering “why” indicates how to profit from the Opportunities arising from the Takedowns.
First we know that in the two of the three largest economies in the World, the Eurozone and the U.S., unemployment is high and rising, with youth unemployment near 50% in Key Countries of the Eurozone. Citizen dissatisfaction has been reflected in the recent French and Greek Elections and their Aftermath, and will intensify.
Moreover, Official Employment and other figures in Key Countries are Bogus.
“Let’s cover the April Jobs and Unemployment report issued by the Department of Labor’s Bureau of Labor Statistics. They reported that the Unemployment rate as of April 30th was 8.1 percent, which of course is nonsense. It fails to include 7.9 million people looking for full time work, but involuntarily settling for part-time work. Of course part-time work is a double whammy, low wages and no benefits. It also fails to include 2.4 million folks who want to work, looked for work in the past 12 months, but not the past 30 days. It also fails to include immigrants who are looking for work, but are here, living in this country, marrying, having children. If we add all this together, we are talking a real unemployment rate of around 20 percent. Then we need to consider quality paying jobs, which are not in this number. Full time employed folks at minimum wage, a wage insufficient to support a family. The entirety of this situation is dismal.
“Now, to the interesting number. The BLS reported with a straight face that the economy created 115,000 new jobs in April. This number deeply disappointed markets. It is a number that failed to cover the breakeven figure of 150,000 needed to simply cover legal population growth, let alone eat into the ranks of the unemployed.
“But wait, the 115,000 is vastly overstated. It was really a lie. The CES Birth Death adjustment in April was a whopper of a lie, 206,000. In other words, the BLS fudged the non-farm payroll actual counted number by 206,000, made it seem better by 206,000 than it really was. It means the economy actually lost 91,000 net jobs in April.”
Robert McHugh, “McHugh’s Market Forecasting & Trading Report,” 5/4/12
Indeed, in the U.S., Real Unemployment is 22.3%. Moreover, Real U.S. GDP is a Negative 2.17% and Real Inflation 10.28% (see paragraph re shadowstats below). Moreover, it is no wonder that economies are not recovering and that unemployment is increasing because, as shadowstats points out, the Bailouts and QE were, and are, all about sustaining a Profitable Banking System for its owners (including the owners of the Private For-Profit Fed) at the expense of taxpayers, as we describe in our Article, “Gain From Gargantua” from 3/2/12 in the ‘Articles by Deepcaster Cache’ at deepcaster.com.
Another Key Reality going forward is that all the Bailouts and Q.E. (i.e. Money Printing) is coming at a Great Cost. This vast and increasing Monetary Inflation is already transforming itself into Price Inflation. We emphasize that in the U.S., the numbers are already threshold Hyperinflationary with Real Inflation at 10.28%.
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 April 13, 2012
2.65% / 10.28%
U.S. Unemployment reported May 4, 2012
8.2% / 22.3%
U.S. GDP Annual Growth/Decline reported April 27, 2012
1.62% / -2.17%
U.S. M3 reported May 7, 2012 (Month of March, Y.O.Y.)
No Official Report / 3.02% (e)
Failing to take the impending Hyperinflation into account can be lethally destructive to wealth.
And the Third increasingly troublesome Reality going forward is that of Debt Saturation, not just of certain companies and citizens, but of Sovereign Nations, because several Key Sovereign Nations Debts can never be repaid.
As a result, Social Chaos is increasing and Extreme measures are being considered. Spain’s 10yr Note Yields are at 6%ish again; its Banks/Economy will “need” over $1Trillion. That is, it is too Big to Bail.
Some Nations may resort to an “Icelandic approach” of Debt Repudiation. For example, Great Britain may resort to an approach similar to Iceland’s, a decision which would have profound effects on the Capital Markets.
“Britain could be just eight months away from cancelling billions of pounds of public debt that it acquired with made-up money, Financial Mail has learnt.
“The first £8billion of gilts – Government bonds – bought under the Bank of England’s quantitative easing scheme will be due for repayment from the start of next year.
That means the Treasury will give the Bank £8billion to redeem gilts that the Bank bought with cash that it conjured out of thin air.
“The Bank, a nationalised industry whose shares are owned by the Treasury, could then return the £8billion to George Osborne and his colleagues, who will in effect have spent £8billion of free money.”
Dan Atkinson, “Treasury could make £8bn of public debt ‘disappear’ if it cancels bonds bought by Bank of England,” 5/5/12 Financial Mail
Indeed, as one Commentator on Dan Atkinson’s report notes, such an “Icelandic” Debt Repudiation course of Action could go a long way toward Alleviating both Great Britain’s and the USA’s Debt Crises.
“The private, for-profit Federal Reserve cabal borrowed its funny-money concept from the Rothschild-controlled Bank of England. The idea is that these central banks conjure up money from thin air [a book-keeping entry], then lend [by buying government bonds] the newly-created money and collect interest on that funny-money. Tax-payers are, of course, the ones paying the interest.
“Calling the interest "dividends", Dan Atkinson reports that British taxpayers have already paid the Bank of England 12 billion Pounds on debt/money created since the start of the Quantitative Easing program.
“Governments would go a long way toward becoming solvent by repudiating all the funny-money debts created by central bank book-keeping entry. At least in the United States, the Constitution gives the Congress and Executive full power to issue the nation's money. No bank intermediary, such as the Federal Reserve, is needed to lend money.”
Such a Debt Repudiation is not unprecedented in the U.S. President John F. Kennedy embarked on a similar course when he ordered the U.S. Treasury to issue U.S. Notes which were competitive with the Federal Reserve Notes/Debt issued by the private for-profit Fed. After President Kennedy was assassinated a few months later, the U.S. Notes disappeared from circulation.
Given all the foregoing, it is understandable that The Cartel will go to great lengths (as in this week’s Precious Metals Takedown) to destroy pro-Precious Metals and pro-Tangibles Sentiment.
To consider how all the foregoing is likely to play out see our Forecasts as well as the 3 Takedown Antidotes we suggest, in our June Letter, “3 Takedown Antidotes with Great Profit Potential; 2nd Half 2012 Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates” in Deepcaster’s ‘Letter Archives’ at deepcaster.com. One Takedown Antidote is referred to in Note 2 below.
Fourth, virtually all important Markets and not just the Precious Metals Market are victims of Cartel (See Note 1) Fed/Government Manipulation.
The Markets Manipulation has become so blatant and pervasive that even Establishment Notable Jim Grant (Grant’s Interest Rate Observer) was recently moved to describe the extent of the Manipulation.
“…The world in which we invest is a world of immense wall to wall manipulations by our friends in Washington. And people get off on Goldman Sachs because it has done this and this, it is pulling wires...The Federal Reserve is the giant squid of squids, it is the vampire squid of vampire squids."
“They - the vampire squids - have manipulated virtually every single price and valuation in the capital markets. People ought to recognize when they invest that one of the unspoken risks is the risk that this hall of mirrors, this Barnum and Bailey world that the Fed has created for us is going to vanish one day because they will not be able to hold it any more... It's not as if there is nothing to do in investing, but one must always keep in mind that the valuations that we see, that the prices that we watch flicker across the tape are prices that are fundamentally manipulated by these well-intended, dangerous people in Washington called the Federal Reserve".”
“The Federal Reserve Is The Vampire Squid Of Vampire Squids"
Jim Grant, 5/3/12, via Bloomberg
And the Financial System Mismanagement is not limited to The U.S. Fed.
Marc Faber aptly characterized the Eurozone’s Financial Managers
“The bureaucrats in Brussels are completely useless Functionaries…who seek only to keep their power.”
Marc Faber, Bloomberg Interview, 05/10/2012
In sum, successful Investors in the second half, 2012, will need to consider the four aforementioned Realities in order to make accurate Forecasts and thus Identify Profitable Opportunities.
May 10, 2012
Note 1: 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 liquidated profitably.
Note 2: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, negative Real GDP growth, more than 10% Real U.S. Inflation (per Shadowstats.com) and prospective Sovereign and other Defaults.
One Sector full of Opportunities is the High-Yield Sector. Deepcaster’s High yield Portfolio is aimed at generating Total Return (Gain + Yield) well in excess of Real Consumer Price Inflation (10.28% per year in the U.S. per Shadowstats.com).
To consider our High-Yield Stocks Portfolio with Recent Yields of 18.5%, 8.6%, 10.6%, 26%, 6.7%, 8%, 10.6%, 14.9%, 10% and 15.6% when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio’.