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Catching a Falling Financial Knife

What The MainStream Media is Hiding from Investors

Stock-Markets / Financial Markets 2012 Aug 18, 2012 - 10:46 AM GMT

By: DeepCaster_LLC

Stock-Markets

Best Financial Markets Analysis Article“…Greg Page, chief executive of global grains trading giant Cargill Inc, joined a chorus of critics of biofuels by urging the U.S. government to temporarily curb its quotas to produce corn-based ethanol fuel.

 

“Page said on CNBC that the U.S. biofuel mandate ‘needs to be addressed’ through existing policy tools. Otherwise, the spike in U.S. corn and soybean prices to record highs will ‘ration’ demand in ways that will hurt food production too much.

 

“‘If all that is only on livestock or food consumers, it really makes the burden disproportionate. What we see are 3 or 4 percent declines in supply lead to 40 to 50 percent increases in prices, and I think the mandates are what drives that,’ he said.


“In 2011, almost 40 percent of the giant U.S. corn crop went into making ethanol, and the United States still exported more than half of all corn shipments worldwide….

 

“On Monday, U.S. livestock groups appealed to the Environmental Protection Agency (EPA) to curb or suspend the mandate, warning against the ruinous impact of soaring feed costs. Corn and soybean meal make up basic animal feedstuffs….”

 

“Drought deepens worries about food supplies, prices” ,

Bob Burgdorfer, reutersreprints.com , 8/1/2012

Consider the Grain Giant Cargill’s CEO’s extraordinary statement recently that the U.S. Government Mandate that Corn be used to make Ethanol for fuel, could lead to a 40% to 50% rise in food prices!

Though the story was reported in the MainStream Media (MSM) it has not been followed up on, yet should have been because a potential 40% to 50% rise in food prices is highly significant. Typical. Much of the news important to investors is de-emphasized, spun into inaccuracy, or blacked out entirely by the MSM.

So we summarize here a few items crucially important to Investors (and Citizens-in-general) that the MSM obviously does not want us to see (otherwise they would report on them), or, if reported at all, does not want us to focus on. Consider the following de-emphasized, spun, or blacked-out facts:

  • Regarding Ethanol, when all energy inputs to its production are considered, it actually takes more Energy to produce than one gets out of it when it is burned up as fuel. (See studies of Prof. David Pimentel, et al, Cornell University). In fact, Ethanol is an Energy Waster and Food Consumer.
  • Those who make the (Keynesian-based) Claim that facilitating the increase in Debt (whether via Q.E., L.T.R.O. Operations or otherwise) boosts the economy, should read the excellent studies by noted Economists Reinhart, Reinhart and Rogoff, which have not been widely reported by a MSM complicitous with Wall Street in encouraging more QE.

They examined 26 advanced economies (over the period from 1800) with Public Debt levels above 90% of GDP. (The U.S.A. is nearly 100%, Japan’s over 200% and certain Eurozone countries over 100%).

They found these hyperindebted (i.e., those with 100%-plus Debt to GDP ratios) Economies had 1.2% lower GDP growth rates than they did during low debt periods.

So much for the Argument that “Stimulus” (whether via QE or otherwise) increases economic growth, and health. Indeed, such stimulus hurts Savers and Investors alike by depreciating the Purchasing Power of their Fiat Currencies. The MSM should focus on the fact that adding more Debt to already-unpayable Debt is quite injurious to Economic Health.

  • Corporate Earnings for Q2, 2012 in the aggregate, reflected a drop year over year for the first time since 2009. The Economy is not recovering, as the MSM would have us believe.
  • The United Kingdom and six Eurozone countries are already in recession.
  • China’s slowdown is much more severe than their officially massaged numbers indicate.
  • If one looks at the Real Numbers, the U.S. has never exited from Recession.

Consider Housing, Jobs, Unemployment Rates, Inflation and Real GDP per Shadowstats.com, which calculates the numbers as they were calculated in the 1980s before Data Politicization began in earnest.

“July reporting for the major, government-compiled economic series has been mixed versus market expectations, but the general outlook remains for renewed downturn continuing to evolve, out of the protracted period of stagnation in the post-economic-collapse environment…. Reversing the general patterns of May and June reporting, payroll employment, retail sales and the trade deficit were better than expected against consensus expectations, production was about as expected, while unemployment and housing starts were worse than consensus.  Still, as discussed in each related Commentary, none of those reported monthly changes were meaningful, in the context of prior-period revisions and/or serious seasonal-adjustment problems….

 

“Accordingly, real-world U.S. economic activity has not recovered since the collapse, and no near-term economic recovery appears to be in the offing….

 

“I view the (GDP) series as the most worthless of official government reports, in terms of providing a meaningful indication of actual business activity.  One almost has to be in a real-world depression these days in order to see a downside blip in the reporting.  While there are a number of issues with the largely theoretical structure of the GDP, the most egregious problem is the use of too-low inflation in deflating the series.  Such overstates inflation-adjusted GDP growth and has created the illusion of an economic recovery, a full recovery that curiously has not been seen in any other major economic series….

 

“…The pattern of ongoing stagnation in housing construction activity continued in July 2012, with a statistically-insignificant 1.1% headline monthly decline in starts….For the last 44 months, the pattern of housing starts generally has remained one of stagnation at an historically low-level plateau of activity,…

 

“The long-term fiscal solvency issues of the United States—where GAAP-based accounting shows annual deficits running in the $5 trillion range—are not being addressed, and the politicians currently running the government lack the political will to address those issues.  That circumstance initially suggested a hyperinflation crisis by the end of this decade, but federal government and Federal Reserve actions—in response to the systemic-solvency crisis of 2008—accelerated the process, indicating a hyperinflation problem by no later than the end of 2014.  The continuing economic downturn is intensifying the fiscal- and systemic-solvency problems, and public awareness of this should grow rapidly in the months ahead….

 

“…A dollar-selling crisis, however, could begin at any time, triggered by any number of economic, sovereign-solvency or political issues.”

 

July Housing Starts, Economic Review, John Williams,

Shadowstats.com, 08/16/2012

So much for claims of an Economic Recovery widely publicized (i.e. strongly promoted) by the MSM.

--Just consider the Chart comparing Shadowstats Real Numbers with the Bogus Official Ones.

*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 August 15, 2012
1.41%     /     9.02%

U.S. Unemployment reported August 3, 2012
8.3%     /     22.9%

U.S. GDP Annual Growth/Decline reported July 27, 2012
2.21%        /     -2.15%

U.S. M3 reported  August 4, 2012 (Month of July, Y.O.Y.)
No Official Report     /     2.86% e

Note that Real U.S. GDP “Growth” is a Negative Number!

--Regarding Real Inflation, the U.S.A. (and likely other Major Nations, if Accurate Data were available) is already at the Hyperinflationary Threshold of 9%.

Intuitively we all know this because we all see this inflation in Food, Energy and other Prices. (And N.B., recall that Food Price Inflation started well before the USA’s Summer Drought. It was the spark which set off the “Arab Spring.”)

Thus it is essential for Investors to Understand that if they want Genuine Gain, their Total Return (Gain plus Yield) must exceed Real Inflation (which is why Deepcaster’s High Yield Portfolio is aimed at doing just that – see Note 1 below)

But there is a Way Forward to Economic Recovery which now apparently even the IMF is (albeit with the Predictably Qualified MSM Spin) endorsing on which the MSM has continued to impose a blackout, while instead offering a “Spun Version”. This “Spun Version” – The Icelandic Solution (for full discussion see recent Deepcaster Articles in ‘Articles by Deepcaster’ at www.deepcaster.com). Consider one most interesting perspective on “The Icelandic Solution”:

For approximately three years; our governments, the banking cabal, and the Corporate Media have assured us that they knew the appropriate approach for fixing the economies that they had previously crippled with their own mismanagement. We were told that the key was to stomp on the Little People with “austerity” in order to continue making full interest payments to the Bond Parasites – at any/all costs.

 

Following three years of this continuous, uninterrupted failure; Greece has already defaulted on 75% of its debts, and its economy is totally destroyed. The UK, Spain, and Italy are all plummeting downward in suicide-spirals, where the more austerity these sadistic governments inflict upon their own people the worse their debt/deficit problems get. Ireland and Portugal are nearly in the same position.

 

Now in what may be the greatest economic “mea culpa” in history, we have the media admitting that this government/banking/propaganda-machine Troika has been wrong all along. They have been forced to acknowledge that Iceland’s approach to economic triage was the correct approach right from the beginning.

 

What was Iceland’s approach? To do the exact opposite of everything the bankers running our own economies told us to do. The bankers (naturally) told us that we needed to bail-out the …Big Banks – at taxpayer expense…

 

The bankers told us … the Bond Parasites (should get) paid at 100 cents on the dollar. Iceland told the Bond Parasites they would get what was left over…

 

The bankers told us that our governments “could no longer afford” the same education, health-care and pension systems which our parents had taken for granted. Iceland told the bankers that what the country “could no longer afford” was to continue to be blood-sucked…

 

In typical fashion, the moment that the Corporate Media is forced to admit that it has been serially misinforming us for the past several years; the Revisionists are immediately deployed to rewrite history:

 

…the island’s approach to its rescue led to a “surprisingly” strong recovery, the International Monetary Fund’s mission chief to the country said….

 

As I detailed in a four-part series one year ago, the campaign of “economic rape” perpetrated against the governments of Europe over the past 2 ½ years (in particular) has been expressly designed to take away “the Iceland option” for Europe’s other governments.

 

One of the reasons for Iceland being able to escape the choke-hold of the Western banking cabal is that it’s economy (and its people) still retained enough residual prosperity to tough it out…

 

Instead of the Truth: that from Day 1 Iceland’s approach was the only possible strategy which could have succeeded, while our own governments chose a strategy intended to fail; we get the Big Lie (i.e. Ed.). Our Traitor Governments were acting honestly and honorably; and Iceland’s success and our failure was yet another “surprise which no one could have predicted.”

 

We saw precisely the same Revisionism following the Crash of ’08 itself, where the mainstream media trotted out all their expert-shills to tell us they had been “surprised” by this economic event; while those within the precious metals sector had been predicting precisely such a cataclysm, in ever more-assertive terms, for several years….

 

“Iceland Was Right, We Were Wrong: The IMF”

Jeff Nielson, www.lemetropolecafe.com, 08/16/2012

 

And, speaking of Precious Metals, perhaps the Biggest MSM News Blackout of all is the ongoing (for years) suppression of Precious Metals prices by the private for-profit Fed as the leader of an International Banking Cartel. (See Note 2.)

Finally, regarding the MSM claims that TARP would (and has) benefit(ed) the American Economy and the Taxpayers who funded it, consider the following recent USA Today finding:

“Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay paises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.

 

“The amount of loans outstanding to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009, at banks that participated in TARP compared with a 6.2% drop at banks that didn’t.”

 

USA Today, 07/22/2012

The foregoing fact is not widely reported either. Since the recent announcement that no criminal charges will be brought in the Goldman Sachs matter or the MF Global matter was greeted by no perceptible outrage that was reported by the MSM, one wonders how much heat the Big MSM will keep focused on the LIBOR rigging scandal. The LIBOR rate affects the cost of Trillions of Dollars of Credit around the World, and so should be kept in intense focus by the MSM.

Unfortunately, anticipated that the LIBOR rigging will be yet another example of News Spinning and Suppression by the MSM, which along with the Precious Metals Price Suppression (Note 2 below) and others, will eventually be blacklisted from news reports. Thus it is all the more important for Investors to track the “Interventionals” and Independent Information sources, as Deepcaster does.

Do we see “All the News that’s Fit to Print”? Not really.

Best regards,

www.deepcaster.com
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© 2012 Copyright DeepCaster LLC - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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Catching a Falling Financial Knife