“A continuation of bailouts in Europe could ultimately spark another world war, says international investor Jim Rogers….
“‘Add debt, the situation gets worse, and eventually it just collapses. Then everybody is looking for scapegoats. Politicians blame foreigners, and we’re in World War II or World War whatever.’
“The Rogers solution: ‘Let the people who have failed, go bankrupt,’ he says. ‘The banks and bondholders would lose money, but then you start over.’
“That’s classic capitalism, Rogers says. ‘Bailing out zombie companies and banks has never worked. Look at Japan.’
“But free markets alone can’t solve the problem, Rogers says. Governments must help choose the winners and losers – and quickly.
“‘If you wait two years from now, five years from now, when no government has any credibility and nobody will give you any more money, then it's finished. You better get yourself a rifle and head to Asia.’…
“Rogers isn't alone in predicting such a dire scenario.
“Bailouts and loose monetary policy won't create lasting economic improvements but will push up inflation rates that will send the economy tanking and wealthy investors seeing half of their investments wiped out, says Marc Faber, publisher of the Gloom, Boom and Doom report….
“The government, however, won't be able to prop up the economy forever, and all that borrowing will come due. When that support fades, the economy and markets will retreat and retreat hard, creating massive losses for investors, especially when inflation rates rise due to the sheer volumes of liquidity in the system.
“‘I think somewhere down the line we will have a massive wealth destruction. That usually happens either through very high inflation or through social unrest or through war or credit-market collapse,’ Faber recently told CNBC.” (emphasis added)
“Jim Rogers: European Bailouts May Lead to Another World War”
Dan Weil, moneynews.com, 6/22/12
Rogers’ statement – “Bailouts May Lead to Another World War” – sounds extreme but, given the facts it is not, really – repeated Bailouts may result in war. Nor are Rogers’, Marc Faber’s and Deepcaster’s views that QE et al. is driving us toward much Higher Inflation.
The indisputable fact is that Piling Debt (in order to continue bailing out the Mega-Banks) upon already unpayable Debt, is Unsustainable.
But one can Garner the Golden ‘Nuggets’ of Information and, indeed, Profit Opportunities, if one correctly forecasts the consequences of certain ongoing Trends.
Consider, for example,
Rogers’ conclusion about the result of continuing this “Bailout” Course of Action, is likely correct: “eventually it just collapses.” And his proposed Solution “let the people who have failed go bankrupt” is also reasonable. Indeed, it is a variant of the successful (Iceland is thriving again) Icelandic Solution: Debt Repudiation, i.e., force the Mega-banks to accept Defaults.
These “Bankruptcies” (defaults) would rid the system of debt which cannot be paid under any reasonably likely Economic Scenario. Significantly, Deepcaster, Jim Rogers, and Marc Faber all agree on one increasingly threatening consequence fo Bailouts to Infinity: “Bailouts and loose monetary policy won’t create lasting Economic Improvements but will push up Inflation Rates.
Indeed they have already! The Central Banks grossly excessive Monetary Inflation has pushed up Food and Energy prices around the World. And the recent blip down in Crude Prices will not last, we forecast. N.B. Food Commodity Prices are Rising Again, (Corn has a $6 handle, Wheat a $7 handle, and Soybeans a $14 handle AGAIN! and the elevated Order of Magnitude of these Essential Food Prices is not mainly weather related) notwithstanding other recent Commodities Price Takedowns.
This reveals a ‘Golden Nugget’ Opportunity – essential Food Producers are likely to be Inflation-Resistant and Profitable regardless of Economic Conditions.
The Real Numbers, (as opposed to Bogus Official Statistics) show Inflation in the U.S., for example, is already Threshold Hyperinflationary, at 9.3% annualized per shadowstats.com (Note 1).
Important to Note also are certain other Mortally Negative Consequences of this policy of Excess Money Printing and Credit Provision. Perhaps the most Negative is that Debt Saturation, or more correctly, Debt Hypersaturation which places an Intolerable burden on Economies. It creates Economic Stagnation. So the result is impending Hyperstagflation – Stagnant Economic Growth and Hyperinflation. This is why Deepcaster’s High Yield Portfolio is aimed at achieving Returns in excess of Real Inflation (Note 2).
The consequence of Economic Stagnation and Inflation for the Markets was accurately expressed recently by Richard Russell.
“I’m fairly convinced that this is a legitimate primary bear market. And it will end the way all major bear markets end -- with good stocks being tossed into the market for whatever price they may bring. The good stocks will be sold last, because there will, at least, be a market for them. They will sell below known value. If I had to guess, I’d say the Dow will sell below 10 times earnings, and the dividend yield will be above 6%.
“This bear market will be different in at least one respect. Before it’s over, all paper or fiat central bank-created ‘money’ will be suspect.”
Richard Russell’s Dow Theory Letters, ww1.dowtheoryletters.com, 6/18/12
And, By the Way, the Fact that Corporate Earnings have been (and probably will continue to be, when the July reports come in) “strong” (albeit not as strong as in earlier quarters) does not serve as a sufficient durable support for the Equities Markets. Net Corporate Assets/and Earnings are Orders of Magnitude Smaller than the Multi-Trillion Dollar Order of Magnitude of Sovereign and other Unpayable Debt.
Durable support for the Equities Markets would require lower unemployment levels, inter alia.
The fact that the Markets are Trading on Headlines, (for example, recently they have been trading on Expectations of a Euro Decision or non-Decision) demonstrates that Fundamentals are very weak for the Equities Markets in general. Therefore, a ‘Golden Nugget’ Opportunity is on the short side of Equities if one’s timing is right. However, we have Good News for Gold (and Silver) Partisans.
After last week’s Cartel-facilitated (See Note 3) Massive Gold Price Takedown, the Good News is that Big Buyers flooded back into the Market Monday this week, taking Gold back up some $20 from the $1560s to the $1580s. Subsequent Takedowns wiped out these gains. But such action is Noise. The Essential Golden Nugget Opportunity results from the fact that Gold and Silver have been bouncing back almost immediately after Takedowns! Big Buyers are buying on dips. This was not typically true after Cartel-generated Price Takedowns several years ago.
In other words, even though last week’s Takedown generated a short-term sell signal, long term, Gold (and Silver) is still very much in a Bull Trend. And Gold’s recent Weakness is due in part to a weak Indian Rupee which has recently lost some 30% of its purchasing power vis-ŕ-vis the $US, but this weakness likely will not continue. The Equities Markets Negatives do adversely affect the prospects, short-term, for the Mining shares however, because they tend to follow the broader Equities Markets. Longer term they are Golden too.
Distinguishing underlying Golden Nuggets of Accurate Information from Markets Chaos and Noise facilitates obtaining ‘Golden Nuggets’ of Profit.
June 28, 2012
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 14, 2012
1.70% / 9.30%
U.S. Unemployment reported June 1, 2012
8.2% / 22.7%
U.S. GDP Annual Growth/Decline reported June 28, 2012
1.99% / -2.17%
U.S. M3 reported June 18, 2012 (Month of May, Y.O.Y.)
No Official Report / 2.52%
Note 2: There are Magnificent Opportunities in the Ongoing Crises of Debt Saturation, Rising Unemployment, negative Real GDP growth, over 9.0% 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 (9.3% 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’.
Deepcaster’s High Potential Speculator Portfolio has provided the following profits in recent months:
56% Profit on Premium Gold Miner on June 1, 2012 after just 2 days (i.e., about 10,100% annualized!)
87% Total Return on Agricultural Blue Chip on April 23, 2012 after just 208 days (i.e., about 152% profit annualized on the remaining half of the original position)
57% Profit on Agricultural Blue Chip on February 24, 2012 after just 149 days (i.e., about 140% annualized!)
Note 3: 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.