“Yes, you.
And Trichet,
and the rest of the Central Bank fools.
But especially
you, Bernanke.
There's dumb
and then there's really dumb. Let's take a short walk back down history
lane.
You were sure
there was no housing bubble.
Then you were
sure it wouldn't pop.
Then you were
sure when the subprime problem hit, that it wouldn't cause a recession.
Then you were
sure you had it under control with Bear Stearns' hedge funds.
Then you were
sure you had it under control with Bear Stearns itself.
Then you were
sure it was under control with Lehman, even though you had to know
Citibank and others were refusing their collateral in the repo market.
You were sure
QE would support higher bond prices - and lower yields. The exact
opposite thing happened.
You were sure
QE2 would suppress long end yields. The exact opposite thing happened.
Oh yeah, you
made excuses both times, but in fact you publicly said that in both
cases the exact opposite thing would happen that did.
Now let's look
at what happened just today.
Oil went up
almost $7 today for the WTI contract. For each dollar that crude oil
rises, we transfer roughly $95 billion (estimates vary from $90-100) outside
of the United States.
That's a direct
hit to GDP.
In ONE
DAY the entire impact of your so-called "QE2" was ERASED.
(As an aside,
yes, I can do the math on the direct import numbers; the argument here is on
the total economic impact, which is as noted above. Estimates there
vary somewhat, but they're centered around $90-100 billion/year/dollar
increase.)
Your entire
gambit and what you sold to Congress and President Obama was that you could
"restart" credit expansion with your policies. Implicit in
your policy was a need to do so, because without it you cannot
succeed. The World Economic Forum at Davos released a paper saying that
we needed, collectively, to add one hundred trillion dollars of new debt
to the system to support the paltry growth numbers you and your economists
are putting up. Worse, the CBO stuck up numbers in the TBAC report that
show another doubling of Federal Debt in the next nine years and a
rough quadrupling of debt service costs to $800 billion, implying a paltry
3% blended rate.
We had the
collapse starting in 2007 because people couldn't afford the debt they
already had and yet your entire scheme, to succeed, requires doubling
all systemic debt AGAIN.
So how are you
going to do it Ben?
Who's going to
take on that debt, and how are they going to service it?
You know damn
well it can't work, and won't. You also know damn well you've goaded
and prodded the Federal Government into taking on $4.5 trillion in
debt we cannot afford, or nearly 30% of GDP.
How are you
going to take that back off Bernanke? You keep being asked this, but
all you say is that you're confident "you have the tools."
Uh huh.
You don't have
jack and you know damn well you can't pull your pump-job back one iota
without laying bare on the table the fact that the Federal Government is
supporting 12% of GDP with borrowed money. If it disappears we
have an instant Depression worse than the 1930s.
The bad news is
that if you keep this crap up it will disappear by force of the
market, there's not a damn thing you can do to prevent it, and that
day is rapidly approaching.
EVERY
prediction you've made about the economy over the last five years has been
wrong.
All of them.
The market is
rising only because you're "promising" infinite leverage.
But infinite
leverage means certain financial ruin if you're wrong about external
forces. And the economy is not a closed system under your control.
You cannot control other nations, you cannot control commodity speculators
and you cannot control other central banks and politicians. You think
you can force China off their peg, but they can suppress riots longer than
we can. You think you can keep printing but now Egypt has gone
down, Libya is collapsing and if Saudi Arabia folds you're instantly ****ED
and so are the rest of us…
Congratulations
Ben Bernnake. Your place in history is secure, and I'm sure Beelzebub
thanks you daily for your cooperation.”
“Bernanke,
You Stupid B******”
Karl Denninger,
market-ticker.org, 2/21/11
“Hey, how
'bout that Ben Bernanke... He's a freedom fighter! Look what he's done to
North Africa!
Seems like
every time we pick up the paper another dictator is toppling over. Where does
it lead, we wonder?...
Which leads us
to ask: what's up?
The answer
comes from our old friend, Jim Davidson. He pins the revolutions on Ben
Bernanke. Behind the popular discontent is neither the desire for liberty nor
the appeal of elections. It's food. And behind soaring food prices is Ben
Bernanke.
The Arab world
is a model Malthusian disaster, says Davidson. Populations have ballooned.
Food production has not. Which makes Arab countries the biggest importers of
cereals in the world. And when the price of food goes up, the masses rise up
too.
From Jim's
latest newsletter, Strategic Investment:
Food prices hit
an all-time high in January. According to the UN's Food and Agricultural
Organization (FAO) "the FAO Food Price Index (FFPI) rose for the seventh
consecutive month, averaging 231 points in January 2011, up 3.4 percent from
December 2010 and the highest in both real and nominal terms" since
records began. Note that prices have now exceeded the previously record
levels of 2008 that sparked food riots in more than 30 countries…
Well, how do
you like that, Dear Reader? All those billions of dollars spent propping up
dictators – $70 billion was the cost of supporting Hosni Mubarak in
Egypt alone – and then the Fed comes along and knocks them down.
The Fed lowers
the cost of money so speculators can borrow below the rate of inflation. And
then it prints up trillions more – just to top up the worlds' money
supply.
Is it any
wonder food prices rise?
While Mr.
Bernanke modestly declines the credit for de-stabilizing much of the world,
close analysis confirms that he played an informing role. His QE2 program of
counterfeiting trillions out of thin air has helped ignite a raging bull
market in raw materials with food and commodities – up 28% in the past
six months. The fact that the US dollar has heretofore been the world's
reserve currency means that almost all commodity prices are denominated in
dollars. As a matter of simple math, when the dollar goes down, the prices of
commodities tend to go up.
Today, Libya.
Tomorrow...Yemen? Or Saudi Arabia.”
“The Role
of US Debt in the Current Revolution, Cereal Wars...and Zombie Wars...”
Bill Bonner,
The Daily Reckoning, 2/23/11
For several Months Now, we have thought the Markets,
and especially the Equities Markets, were not pricing in Sufficient Risk.
This coming March, Equities Markets would have had a
two year Bull run but for this week’s Fall.
But there are Important Reasons Equities, and other,
Markets have not been pricing in sufficient risk. And knowing why certain
markets have not, until this month, been pricing in sufficient risk, is the
essential first step to gaining from Chaos Investing. Among the Reasons are, first and
foremost,
- The private for-profit
Fed’s virtually daily POMO pumping to keep Equities Markets
artificially elevated (see Graham Summers (seekingalpha.com), author of
the September 28, 2010 piece - “The Only Reason Stocks Rallied
this Month”) and
- The Fed-led Cartel’s*
ceaseless Campaign to suppress the Prices of the Monetary Metals, Gold
and Silver, (an effort which has been less successful in recent months
due in part to revelations that certain Major Gold and Silver
Repositories likely do not have all the Physical Gold and Silver they
say they do, resulting in Increased demand by Investors for Delivery and
Personal Possession of Physical Metals – a wise move).
*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.
But Gold and Silver for years have suffered from Cartel* Price
Suppression Attacks, though they have become less vulnerable to these
attacks in recent months. See Deepcaster’s Article
“Opportunities to Profitably Escape Paper “Wealth”
into 2011 (10/07/10)” in the ‘Articles by Deepcaster’
Cache at www.deepcaster.com for details.
Had there not been ongoing Price Capping, Gold and Silver would have
served as an even greater “Miner’s Canary” than they
already have – signaling ongoing Economic and Financial Crises,
including dramatically increasing inflation, unreported by the Main
Stream Media (see below).
- The Compulsion of the Main
Stream Financial Media to Censor or Minimize Market-Negative News and to
promote or Emphasize, or perhaps occasionally to even Manufacture,
Market-Bullish News.
But one characteristic of the three aforementioned
Forces which result in the manipulation of Free Markets for a time is
that they typically do not control Ultimate Market Outcomes. They just
delay them, and usually worsen them.
Thus, what they do do is create Market Bubbles, or
Market Distortions which, when they Pop or Unwind, typically cause a greater
Reaction than they would otherwise, i.e. without the Market Interference
Detailed above.
An important example is the Fed-facilitated period
(approximately 2000-2008) of excessively low interest rates and high monetary
creation which led to the housing bubble which burst in 2007-2008.
There is a Strategy for addressing the Challenges
presented by Market Risk and the three counter-Free-Markets Forces identified
above, a Strategy which can provide both Wealth Protection and Profits.
First, it involves considering both Bullish and
Bearish Market Realities.
Among the Bearish are:
·
USA and Key Eurozone Nations’ Debts are already unpayable without
Devaluation
·
Key Emerging and Frontier Markets are closely linked to the USA and Eurozone,
so that all would plunge together in a Crash
·
Increasing U.S. and Eurozone Money Printing (Q.E. 3, 4, 5…?) and
Bailouts debases those currencies Purchasing Power, thus confiscating the
Wealth of Investors, Savers, and Retirees, as well as increasing Food and
Other prices worldwide, as well as Risking Hyperinflation not too far down
the road and is very conducive to the Creation of Asset Bubbles. These
Bubbles eventually will Pop with Severe Consequences.
·
Worsening Unemployment Situation in the U.S. and other Major Nations
virtually ensures More Fed and other Mega Bank Q.E (i.e. Money Printing).
·
The Crude Oil Price Crisis is real and will persist for a while. Not just
Saudi Arabic is at risk of Chaos, but also Algeria!
Among the
Bullish are:
- Risk Assets in General, as
reflected in the recent 22-months-long Equities Rally, recently soared
to Record Highs
- In the Bond Market, the 10
Yr. Yield recently Rocketing to over 3.5%, ostensibly reflecting a
Strengthening Economy
- Key Forces have driven many
Commodities Prices Higher, bullish for producers, but not consumers
- Cartel* Markets Manipulation,
though not as Potent as in past years, can still serve to boost Key
Markets, temporarily
- Corporate Earnings have,
generally, been recovering
So which Scenario will prevail? They both will, for
a short while longer.
How is this possible?
The Resolution to this Seeming Inconsistency and one
Key to Gaining from Chaos depends on Timing and Watchfulness and Sector
Selection. Consider the following Guidelines and Indicators to help
determine when and where to be Long and when and where to be Short in 2011.
Equities, for example, are perhaps just coming to
the end of a 22-months-long Bull Market. But Given the aforementioned
Negatives, it is highly unlikely that this Bull will survive throughout 2011.
Thus, Deepcaster monitors a number of Indicators which will signal it is time
to take profits from the Long side (of e.g. Equities) and jump onto the Short
Side e.g. via Short ETFs, such as those we have already recommended. The
farther we go into 2011, the more likely an Equities Markets Crash becomes,
indeed one may have begun just this week.
Among the Many Fundamentals and Indicators we watch
are U.S. Dollar levels and U.S. Long Bond Rates, Treasury International
Currency Reports, POMO and TOMO Injections, Euro-PIIGS Status, Fundamentals,
Technicals, and Interventionals, Geopolitics, and, especially, Real CPI and
GDP Numbers, as opposed to the Bogus Official Ones.
Specifically, 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 February 17, 2011
1.63%
9.07% (annualized January, 2011 Rate)
U.S. Unemployment reported
February 4, 2011
9.0%
22.2%
U.S. GDP Annual Growth/Decline
reported January 28, 2011
2.79%
- 2.21%
U.S. M3 reported February 12, 2011 (Month
of January, Y.O.Y.)
No Official Report
- 2.21%
Also crucial to Monitor are Gold and Silver Prices,
not merely as Indicators of Fiat Currencies Purchasing Power Deterioration
(though they are important for that), but also of Cartel*
Interventions and Interventional Capacity.
In the Medium and Long Run, we see the
aforementioned Equities Bearish Factors overwhelming the Bullish Ones, which
will have Severe Negative Consequences for Equities-in-General and for
certain Commodities which are in Elastic Demand.
Given this negative Scenario Safe Havens with Great
Profit Potential are Gold, Silver (with Caveats) and Agricultural Commodities
in relatively inelastic demand (such as Wheat and Foodstuff in
general).
Medium and Long term, we are very Bullish on Gold
and Silver. Short-term they are under intense Cartel Attack, but have been
moving higher nonetheless.
But, Financial and Economic Conditions are such that
we do not recommend shorting Gold and Silver, even in advance of a
likely Cartel* Takedown attempt.
Deepcaster recommended response to Cartel Market
Manipulation (i.e. in the Precious Metals Market) is fivefold:
- Buying on Dips, coupled with
a Willingness to Tolerate Great Price Volatility
- The Core Holdings of
Ones’ Precious Metals Position are best held in one particular
form (see our Precious Metal Recommendations) of the Physical Metals, in
Personal Possession
- that Well Managed reasonably
priced Miners be bought on Dips, and, if one is a Trader, a portion sold
near interim highs
- that a portion of Ones
Holdings be in a Dividend Paying Precious Metals Fund such as one which
we have Recommended, and
- Regarding Silver, since it is
also an Industrial Metal, it is especially vulnerable to Slowdown in
Economic Activity and (for the Shares) Takedowns in the Equities Markets.
In sum, we expect another Markets Crisis will launch
in 2011 (and may well already have just this week) and Gold and Silver are
the place to be.
Gold and Silver are the single most important Means
to Profit and Protect regardless of Economic, Financial, or other Market
Conditions.
Consider, finally, that, given the aforementioned
Negatives, a Crisis is likely “baked into the cake.” The
Fed’s (and Eurozone Bankers) Price boosting via Q.E. can not go on
forever, and, in any event Q.E. worsens the Inevitable Crash because it
serves only to pile more Debt upon already Unpayable Debt.
The Bond Markets have already been Signaling that
Q.E. will result in increasing Inflation and Interest Rates which will
Seriously Injure the Equities Markets, and Burst Equities and other Key Asset
Bubbles.
These Asset Bubbles are not just limited to the
Eurozone PIIGS though e.g. Greece (with a E$1.2 Trillion Debt) is likely
eventually to Default, which coupled with other Sovereign Defaults will
create an Existential Crises for the Eurozone Financial System and Political
Union, and thus another Systemic Crisis for all Major Economies and Markets.
This Crisis is being Exacerbated by The Libyan Chaos
and the possibility of it spreading to Mega-Oil-Producer Saudi Arabia, Algeria
and Iran.
Finally, those who believe The Ongoing Ostensible
Recovery is Sustainable, should Consider the following Debt to GDP Chart from
the Bank for International Settlements, The Central Bankers Bank.
Global Debt (Fiat Currency Purchasing Power
Degradation) Risk
Table
1.1
|
|
Government Debt
|
Fiscal Balance
|
|
As
a Percentage of GDP
|
|
2007
|
2010
|
2011
|
2007
|
2010
|
2011
|
Austria
|
62
|
74
|
77
|
-0.5
|
-4.7
|
-4.6
|
France
|
70
|
94
|
99
|
-2.7
|
-7.8
|
-6.9
|
Germany
|
65
|
81
|
84
|
0.2
|
-5.4
|
-4.5
|
Greece
|
104
|
129
|
139
|
-5.4
|
-8.1
|
-7.1
|
Ireland
|
28
|
83
|
92
|
0.1
|
-11.7
|
-10.8
|
Italy
|
112
|
132
|
135
|
-1.5
|
-5.2
|
-5.0
|
Japan
|
167
|
199
|
205
|
-2.4
|
-7.6
|
-8.3
|
Netherlands
|
52
|
75
|
79
|
0.2
|
-6.4
|
-5.4
|
Portugal
|
71
|
95
|
99
|
-2.7
|
-7.4
|
-5.6
|
Spain
|
42
|
73
|
78
|
1.9
|
-9.4
|
-7
|
United
Kingdom
|
47
|
82
|
91
|
-2.7
|
-11.5
|
-10.3
|
United States
|
62
|
90
|
95
|
-2.8
|
-10.7
|
-8.9
|
Source: Bank for International Settlements
|
Conclusion: Most Major Fiat Currencies are not
reliable Stores of Wealth.
Thus Gold and Silver and businesses involved in Food
Production (e.g. Deepcaster recommended three undervalued ones in the
last month) should be the most significant Long Positions for Profit and
Protection in 2011.
And Short ETF’s in particularly Vulnerable
Sectors should serve as both Hedge and Potential Profit Centers.
Best regards,
Deepcaster
LLC
Wealth
Preservation - Wealth Enhancement
Financial
and Geopolitical Intelligence
Gravitas,
Pietas, Virtus
|