Deepcaster: Financial Crisis PHASE 2 MACROEVENTS SIGNAL PHASE 3 IMPENDING

Image: Jonny O'Callaghan
Image: Jonny O’Callaghan

Submitted by Deepcaster:

Everybody talks about what they are not going to do, which is exactly what they are going to do.  –Jim Oberweis, Oberweis Investment Management, 02/12/13

Yes, indeed, Mr. Oberweis. The Major Powers have begun a Competitive Currency Devaluation “War” = Phase 2 of the Ongoing Financial Crisis. But this War has only just begun. This is why the G-20’s “DRAFT” Pledge, while it may be agreed to, will never be implemented.
When, not if, this War starts to Rage out of control in the next few months, that will mark the beginning of Phase 3, which is inexorably approaching.  Investors and Traders alike must be prepared for Phase III.

And those Investors and Traders who have prepared for Phase 3 can get rich, while those who are unprepared will be devastated.

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G-20 Pledge to Refrain from Competitive Devaluation – DRAFT”

Bloomberg, 2/14/2013

 

Everybody talks about what they are not going to do, which is exactly what they are going to do.

Jim Oberweis, Oberweis Investment Management, 02/12/13

 

Yes, indeed, Mr. Oberweis. The Major Powers have begun a Competitive Currency Devaluation “War” = Phase 2 of the Ongoing Financial Crisis. But this War has only just begun. This is why the G-20’s “DRAFT” Pledge, while it may be agreed to, will never be implemented.

 

When, not if, this War starts to Rage out of control in the next few months, that will mark the beginning of Phase 3, which is inexorably approaching.

 

And Investors and Traders alike must be prepared for Phase III.

 

And those Investors and Traders who have prepared for Phase 3 can get rich, while those who are unprepared will be devastated.

 

Phase I, now in the process of ending has been marked by Sovereign Debt Hypersaturation among nearly all the World’s Major Fiat Currency Powers.

 

Not just the PIIGS Nations, but also France, the U.K., Japan and the U.S.A. have Debts which can never be repaid given any sustainable rate of Economic Growth and Taxation System. (Even China has a Debt Saturation Problem, though they have more resources than most to cope with it.)

 

So their Central Banks (and, consequently, others) have begun a Race to Devalue their Currencies (Phase 2) vis á vis each other.

 

But as those nations with overvalued currencies experience the pain from, e.g., diminished Exports; they are impelled to devalue even faster than their fellow G-20 Members. And thus the Currency Devaluation War is intensifying and spreading far and wide – Venezuela recently joined the “Devaluation Club.”

 

Thus we have the intensifying “War”, which is really a Race to Major Fiat Currency Purchasing Power Degradation, that is, to Price Inflation, then; when the Currency Devaluation War spins out of control, Hyperinflation (e.g., the U.S. is already Threshold Hyperinflationary with CPI at 9.4%, (per shadowstats.com).

 

Thus The Race to Phase 3, Hyperinflation, has begun.

 

In this Process, it is critically important not to be misled or deceived by Participant Governments, Central Banks and other Mega Banks’ False or Misleading Claims.

 

Savvy and Experienced Jim Sinclair provides an excellent summary of what can not happen going forward, despite the aforementioned Big Boys Claims to the Contrary.

 

We add an explicit Rationale for Sinclair’s Claims just in case one is needed.

 

 

“There is no way that any entity, be it private, public or both, is going to manipulate away the debt situation faced today.”

 

Jim Sinclair, MineSet, 2/11/2013

 

 

 

True. Thus the only way Central Banks believe they “Cope” with the Debt Hypersaturation situation is for Central Banks to Devalue the Currencies in which the Debt is Denominated. This is The Road to Price Hyperinflation. Of course, there are other ways to cope, including partial Debt Repudiation, but The Central Bankers are not keen on facilitating their Banker Client/Owners taking a loss.

 

“There is no way that the US is going to become a net exporter of energy in amounts that could even slow down this rate of growth in the debt.” IBID

 

 

True. Indeed, it is unlikely the U.S. will ever become a net exporter of Hydrocarbon Based Energy in any event. The Reserves made available via Fracking have higher Depletion Rates and lower Recovery and net Energy Production Rates than Prior “Easier” Sources.

 

“There is no way this flat line recovery is going to turn into a boom in business.” IBID

 

 

There is no Flat line Recovery as shadowstats.com demonstrates. Indeed, the USA has never come out of recession. The U.S. recession continues and its Negative GDP continues to contract (See Note 1).

 

“There is no way that the unemployment figures are going to have a sustained improvement short of all the unemployed giving up hope and shifting to the underemployed list.” IBID

 

 

This is True in Spades, especially in the U.S., given that it may be about to embark on a Massive and Foolish Importation of Jobseekers via Immigration “reform” when it already has 25 Million Unemployed including tens of thousands of unemployed graduates in Science, Technology, Engineering and Mathematics. See www.carryingcapacity.org.

 

“There is no way that you can set such records in increased liquidity and not have explosion inflation regardless of business activity.” IBID

 

 

Very True. And the U.S. is already Threshold Hyperinflationary. (See Note 1.)

 

“There is no way that the Fed can liquidate its holdings of treasuries in an orderly manner without collapsing the Treasury market.” IBID

 

 

True. And the U.S. Treasury Market is going to eventually collapse anyway because the Purchasing Power of the currency in which it is denominated, the $US, is being rapidly degraded thanks to The Fed.

 

“There is no way the Fed can liquidate any toxic paper it took on from banks internationally in the crisis of 2008.”

 

True, because, inter alia, the Mark to Market Value would be dramatically less than the Mark to Myth at which it is currently valued.

 

“There is no way the Fed can step away from QE which would mean higher interest rates without collapsing the flat line so called economic recovery.” IBID

 

 

True, for all the aforementioned reasons, The Fed and other Central Banks will likely keep Printing until we reach Phase 3, Hyperinflation. And shadowstats.com substantiates a quite similar position.

 

Opening Comments and Executive Summary.  Today’s (February 13th) release of January 2013 retail sales activity showed ongoing stagnation in consumer spending, with both the January 2013 monthly gain of 0.13%, and the nearly-unrevised 0.50% monthly gain in December 2012 statistically insignificant.  

Contrary to the President’s contention last night that the rubble of the crisis had been cleared away, the economic and systemic-solvency crises remain in place.  Particularly relevant to today’s reporting, consumer income and credit conditions continue in shambles, with problems so severe as to prevent an economic recovery. 

“Retail Sales Continued to Stagnant, Reflecting Intensifying Structural Liquidity Issues for the Consumer,” John Williams, shadowstats.com, 02/13/2013

 

The “Solution” for Investors and Traders for Profit and Protection going Forward is to Position Oneself in Inflation Resistant Assets including especially Gold, Silver (yes, Silver) and Agriculture. Regarding Specific Recommendation for Profit and Protection, see Notes, 2, 3, 4 and 5 below.

 

And Note Especially the comment by Marcus Grubb of The World Gold Council, “Central Banks are now buying more gold than ETF investors which is a very startling result.” Yes, Mr. Grubb, about 450 tons per year. If Central Banks were confident that their Fiat Currencies were such a great Store of Value, why would they be buying Gold?!

 

Best regards,

 

Deepcaster

February 15, 2013

 

Note 1: Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s before Official Data Manipulation began in earnest. Consider

 

Bogus Official Numbers vs. Real Numbers (per Shadowstats.com)

 

Annual U.S. Consumer Price Inflation reported January 16, 2013

1.74%              /           9.36%

 

U.S. Unemployment reported January 4, 2013

7.8%                /           23.0%

 

U.S. GDP Annual Growth/Decline reported January 30, 2013

1.54%              /           -2.20% (i.e., a Negative 2.20%)

 

U.S. M3 reported January 24, 2013 (Month of December, Y.O.Y.)

No Official Report       /           4.38%

 

Note 2: The Equities Market has been Rallying up since Mid-November, as we earlier forecast, with only a few down days at end-December over Fiscal Cliff concerns.

 

Now we have surmounted the Psychological 14,000 Marker on the Dow, and despite the little pullback this week, the all-time 14,129 High appears dead ahead.

 

So what is the likely Upside High and when, will it likely occur? And what then?

 

We evaluate the Competing forces which will determine this Top, and Forecast that Top and the Time it is likely to hit it, and make Forecasts for other Major Sectors in our latest Alert, “Rally Targets; Buy Reco; Forecasts: U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold, Silver, Equities, & Crude Oil” just posted in ‘Alerts Cache’ at www.deepcaster.com.

 

As well, we make a Buy Recommendation aimed at Profiting from the Intensifying Flood of Liquidity from The Fed, BOJ, ECB, and other Central Banks.

 

And we warn of two increasingly likely Major Sell-Offs in two Key Sectors likely coming Very Soon.

 

Note 3: Last month, we issued a “Take 83% Profit” notice on a stock we recommended just 111 days before in a “Fortress” Asset Sector.

 

Just two days after that we made another Buy Recommendation in that same Sector – a Sector whose Superb Profit Potential will remain Relatively Undiminished by Economic Conditions, whatever they may be.

 

And we expect to make several more Recommendations in that Fortress Asset Sector in the Next Few Months.

 

The Economic Forces which were temporarily displaced by the Fiscal Cliff Fight are coming to the Fore again. And those Forces telegraph the next likely Market Moves, which we Forecast in last week’s Alert.

 

To see our Fortress Asset Sector Buy Recommendation and our Forecasts for U.S. Dollar/Euro, & U.S. T-Notes, T- Bonds, & Interest Rates, Gold, Silver, Equities, & Crude Oil, go to deepcaster.com and click on ‘Alerts Cache.’

 

Note 4: The Market Price of virtually any Asset is arguably always primarily a result of Competing Forces.

 

But 2013 is unique in that there are especially Strong Forces impelling many markets up. And there are especially Strong Forces impelling markets Down, Catastrophically Down. Regarding Forecasting Force Predominance in 2013, forecasting Timing is critical.

 

So we evaluate the prospective results of this “competition” and forecast Timing accordingly in our February Letter entitled “2013 Profit Primer; Buy Reco; Forecasts: Equities, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates, Gold, Silver, & Crude Oil” recently posted at deepcaster.com in ‘Latest Letter and Archives.’

 

And we offer a Buy Recommendation aimed at a Substantial Profit in just the next two months in our February Letter.

 

Note 5: 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 (9.41% per year in the U.S. per Shadowstats.com).

 

To consider our High-Yield Stocks Portfolio recommendations with Recent Yields of 10.6%, 18.5%, 26%, 15.6%, 8%, 6.7%, 8.6%, 10%, 14.9%, 8.8%, 10.4%, 15.4%, and 10.7% when added to the portfolio; go to www.deepcaster.com and click on ‘High Yield Portfolio.’

 

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