Best of the Week
Most Popular
1.RED ALERT: Paris Terror Attacks - What to Expect Next - STRATFOR
2.Paris Terror Attacks, Death Pangs of a Dying Religion, and Impact on BrExit EU Referendum - Nadeem_Walayat
3.Paris Terror Attacks, Islamic State Attempting to Spark Civil War in France - Nadeem_Walayat
4.Three Shocking Charts That Prove Gold Price Rally Is Coming - Sean Brodrick
5.Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - Mike_Shedlock
6.Africa Population Explosion - Why Europe's Migrant Crisis is Going to Get A Lot Worse - Video - Nadeem_Walayat
7.Gold Mining Stocks May Be The Buy Of The Century - Jeff_Berwick
8.Grandmaster Putin Beats Uncle Sam at His Own Game - Mike_Whitney
9.BRICS? No, CRISIS - Raymond_Matison
10.UK Housing Market Affordability, House Prices Momentum and Trend Forecast - Nadeem_Walayat
Last 5 days
Investors Watch Out For The Auto Industry… - 24th Nov 15
BEA Revises 3rd Quarter 2015 US GDP Economic Growth Upward to 2.07% - 24th Nov 15
Stock Market Supports Are Being Broken - 24th Nov 15
Is Gold Price on the Verge of a Breakout? - 24th Nov 15
Fed’s Tarullo: U.S. Interest Rates Liftoff Should Wait for Signs of Inflation - 24th Nov 15
Silver Price, COT, US Dollar Updates and More - 24th Nov 15
UK Regional House Prices Analysis - Video - 23rd Nov 15
Crude Oil Swinging For The Fences - A 20 to 1 Option Play - 23rd Nov 15
US Dollar, CRB, Oil, Gas, Copper and Gold - The Chartology of Deflation - 23rd Nov 15
UK Regional House Prices, Cheapest and Most Expensive Property Markets - 23rd Nov 15
Stock Market Rally Losing Momentum? - 23rd Nov 15
Will Gold Price Drop Below $1000 Soon? - 23rd Nov 15
Gold and Silver Sector Big Green Light and Low Risk Entry Setup... - 23rd Nov 15
Limits to Economic Growth - Challenge and Choices - 22nd Nov 15
Long Dollar Trade and Current Copper Price Below Cost of Production - 22nd Nov 15
UK Housing Market House Prices Affordability Crisis - Video - 21st Nov 15
The Fed Has Set the Stage for a Stock Market Crash - 21st Nov 15
Stock Market Primary V Wave Continues - 21st Nov 15
Gold And Silver - Value Of Knowing The Trend - 21st Nov 15
UK Footsie Bulls Set To Foot The Bill - 21st Nov 15
UK Housing Market Affordability, House Prices Momentum and Trend Forecast - 21st Nov 15
GDX Gold Miners’ Strong Q3 Results - 20th Nov 15
End of Schengen, Stock Market’s Technical Strength Grows - 20th Nov 15
Justice for All and The Curious Case of Zambia - 20th Nov 15
Paris, Sharm el-Sheikh, and the Resurrection of Old Europe - 20th Nov 15
Silver Prices and The Management of Perception - 20th Nov 15
Stock Market Nifty-Fifty Becomes Fab-Five; Return of the 'Four Horseman' - 20th Nov 15
Waiting for Goldot Again - 20th Nov 15
Michael Curran Goes Down-Market Shopping for Gold Stock Winners - 20th Nov 15
Why Isn’t This Incredibly Bearish Bond Market Development Making the News? - 19th Nov 15
SPX Appears to have Stopped its Rally - 19th Nov 15
The Great Fall Of China Started At Least 4 Years Ago - 19th Nov 15
Using Elliott Waves: As Simple As A-B-C - 19th Nov 15
Has Deflation Been Ddefeated? - 19th Nov 15
Dow Jones Stock Market Index is Not Going to Crash - 19th Nov 15

Free Instant Analysis

Free Instant Technical Analysis

Market Oracle FREE Newsletter

Reasons to Get Excited About Japanese Stocks

Investor Mega Trend Nuggets

Stock-Markets / Financial Markets 2013 Jul 06, 2013 - 12:00 PM GMT

By: DeepCaster_LLC


“More than three quarters of Americans say they are living paycheck to paycheck, with barely enough to scrape by in an emergency. In a survey of 1,000 adults, fewer than one in four said they had enough money to cover expenses for six months. Half said they had less than a three month cushion, while a quarter said they had no savings at all.”, 7/2/2013

Successful Investors are typically those who keep in mind the Great Trends And Fundamental Realities when making their decisions. And these Trends are not usually those on which the MainStream Media, with its addiction to “reporting” Politically Correct GroupThink, focuses.

For example, it is widely reported that the citizens of Greece, Portugal, Italy, and Spain are in increasing economic difficulty. But it is not as widely reported (and when reported, not focused on) that a majority of Americans, for example, are increasingly living on the economic edge, and that therefore, one cannot expect that consumer spending (70% of U.S. Economy) will Buoy an Economic recovery.

But even though the Trends and Realities may be Negative (as is Americans’ impoverishment described above) they often provide investors with Opportunities for Profit and Wealth Protection.

And the other Key Trends and Realities on which we focus here are vastly underreported,  if reported on at all.

“The compounding debt is the monster that is easting the U.S. The only way out is to renege on the debt or try to pay it off with inflation or hyper-inflation. The bull market in bonds is over. From now on, we’ll be dealing with a bear market in bonds, at which time natural forces will drive bonds down, and as bonds fall, interest rates will rise.

“Since 1982, rising bond prices in the bond bull market and falling interest rates have buoyed stocks and encouraged Americans to borrow and leverage. Them days are now gone. Coming up is payback time. That’s the down-to-earth story. All else is daily news and noise and rumors and waiting.

“Medical and Social Security costs are due to soar as 10,000 people a day will turn 65 for the next 17 years.

“Interest rates will devour the U.S. By 2024 interest payments on the Federal debt will quadruple. Thus, even if the yearly deficit declines, the national debt will grow.”


Richard Russell,, 7/2/2013

We are not alone in reporting the ongoing Sovereign Debt Hyper-saturation and its consequences. But, unpleasant as it is, that Reality will be with most developed and key developing, Nations (e.g. China, India and many Eurozone nations) for years. It will therefore limit political and economic options and require hard choices for years to come.

But Debt Hypersaturation also carries a considerable threat for investors – Bail-ins – as Gene Frieda notes.

Eurozone banks' legacy debt problems must be cleaned up first—


“The newly agreed bank recovery and resolution directive swings Europe from one extreme - a system laden with implicit government guarantees that protected bank creditors from bearing losses - to the other.


“The regime creates a serious time inconsistency problem by requiring private bank creditors to cover any significant losses without first cleaning up legacy debt problems. Without comprehensive efforts to restructure corporate debt, clean up banks' balance sheets and fortify the European Stability Mechanism, bail-in will leave Europe much more prone to old-fashioned bank runs than in the past.


“In 2010-11, most of the periphery economies ran large current account deficits. When foreign funding for these deficits dried up, the periphery experienced a sharp rise in public and private borrowing costs that plunged their economies into deep recession and, in several cases, threatened default and exit from the euro area. Foreign ownership of public debt fell by a third in Italy and by half in Spain. Not only did the periphery experience a sudden stop in capital flows, but the stocks of past foreign investment began to unwind. The outright monetary transactions programme stopped the stock unwind, but did little to generate a return of foreign investment.


“The risks ahead are twofold. First, given the need to deleverage, periphery GDP growth will be weak and persistently vulnerable to shocks. But in the context of the new bail-in regime, a second, arguably more urgent risk has been introduced: that of a renewed unwind of past foreign investment, and indeed capital flight by domestic bank creditors intent on avoiding being bailed-in.


“Bail-in increases the loss that prospective creditors suffer in the event of a bank failure or resolution event. Against that backdrop, what should periphery bank creditors do in response to the threat of bail-in? Holders of senior unsecured debt should feel least secure, since they are now at the top of the pecking order. Given the persistence of high sovereign borrowing costs, this form of debt may well disappear in the riskier parts of the euro area. Uninsured depositors will move one step closer to being bailed in. (emphasis added)


“Secured lenders to banks will still lend against good assets, and the banks will in turn need to rely more on such funding. As the share of encumbered assets rises, unsecured creditors, including depositors, become ever more nervous. The bank is, after all, pledging its best assets to minimize its cost of funding.”

“Market Insight: Bail-in regime risks old-style bank runs”

Gene Frieda, global strategist for Moore Europe Capital Mgmt, 7/3/2013

Indeed, insured Depositors will likely be bailed-in (Have their deposits confiscated) as well as Ellen Brown points out.

“When Dutch Finance Minister Jeroen Dijsselbloem told reporters on March 13, 2013, that the Cyprus deposit confiscation scheme would be the template for future European bank bailouts, the statement caused so much furor that he had to retract it. But the ‘bail in’ of depositor funds is now being made official EU policy. On June 26, 2013, The New York Times reported that EU ministers have agreed on a plan that shifts the responsibility for bank losses from governments to bank investors, creditors and uninsured depositors.

“Insured deposits (those under €100,000, or about $130,000) will allegedly be ‘fully protected.’ But protected by whom? The national insurance funds designed to protect them are inadequate to cover another system-wide banking crisis, and the court of the European Free Trade Association ruled in the case of Iceland that the insurance funds were not intended to cover that sort of systemic collapse.

“Shifting the burden of a major bank collapse from the blameless taxpayer to the blameless depositor is another case of robbing Peter to pay Paul, while the real perpetrators carry on with their risky, speculative banking schemes.”


“Think Your Money is Safe in an Insured Bank Account? Think Again.”, Ellen Brown, via

And of central importance as well as the Debt Saturation and Systemically Risky Mega-Banking Crises are Bogus Official Statistics in the U.S., China, and elsewhere. Regarding the U.S. for example, Real Inflation is 8.99%, Real Unemployment 23%, and Real GDP a (Negative) -1.98% (see Shadowstats chart in Note 1 below).

And then there are the Slowdowns and Bubbles (which make the slowdowns more difficult to deal with). China, for example, claims GDP growth is 7.7%. But the hard numbers (e.g. Chinese electricity growth of 2.7%) indicate it is far lower than that.

And regarding bubbles, China has them in spades. Wang Shi, Chairman of the huge Chinese property developer China Vanke Co., when asked on 60 Minutes if there is a property bubble, said “Yes, of course. …if that bubble [bursts] – that's a disaster,” (3/3/13).

“Traders took solace in comments from Ling Tao, a deputy director of the Shanghai branch of the People's Bank of China, who attributed the recent spike in interbank lending rates to ‘seasonal factors’…


“Tao’s comments may signal the end of the recent scare but by no means indicate that China’s banking system is on the road to recovery, according to Jim Rickards, senior managing director at Tangent Capital and author of Currency Wars….

“‘It’s a giant Ponzi scheme,’ Rickards says of the wealth management products being marketed by Chinese trust companies. ‘There’s a lot to be concerned about.’

“In a nutshell, the ‘shadow’ banks borrow from China’s state-controlled banks, use the funds to finance construction projects and sell bonds tied to those projects with yields far above bank savings rates.

“‘The Ponzi scheme is going on with retail investors…they don’t want 1% or 2% in the bank or even less,’ Rickards explains. ‘The quasi banks come along and say ‘we’ll give you 6%-7%-8%.’ They take the money, invest in these assets that are completely non-productive [with] no way to be able to pay off the debt.’…

“In true Ponzi scheme fashion, the key here is that the shadow banks use the proceeds from the latest asset sale to pay off investors from prior ventures. “They never sell the assets,” Rickards says. ‘They sell [new] products and use that money to pay off the old guys.’

“China’s leadership is well aware of this problem, he adds, which explains why they’ve recently stood by as the spike in interbank lending rates caused a cash crunch and accompanying market freakout.

 “…’there’s no good outcome.’

“China’s ‘Giant Ponzi Scheme’ Won’t End Well: Jim Rickards”

The Daily Ticker,, 06/25/2013

And we have been calling attention for months to the all-time largest Bubble – the U.S. T-Bond Bubble, a Bubble which had already started to deflate, as rising rates which we forecast attest. But there is Good News on the Horizon – the Cartel’s (Note 2) thus far successful Precious Metals Price Suppression Attempts may be ending.

“The singular more important development in the gold market in my 53 years being involved in gold is the Russian cash bullion market now in the process of development. This is a new broad public means of gold price discovery that sits ready to replace the paper gold manipulative fraud market.

“Russia and China cannot be pleased by the Fed utilizing the Gold banks to move gold around so violently. Yes, they can buy cheap but so can you. Are you happy with the COMEX paper gold ability to manipulate price at will? You can buy gold cheap, but I hear precious few voices enthralled with the opportunity the COMEX knuckle draggers have offered us at $1187.

“With a cash exchange functioning in Russia, the bombastic paper offering of multi-year world production will get its hand called and head handed to the paper manipulators. On this exchange you deliver the real gold or get bought in real gold.

“I would love to have a membership on that exchange.

“After one more try in late 2014 the manipulators will be flattened by Russia’s ‘Free Gold’ friends.”

“The Russian Cash Bullion Market”

Jim Sinclar,, 6/30/2013

Indeed. Demand for Physical continues to Skyrocket with Chinese imports via Hong Kong up 68% in May, year on year. We and other Independent Analysts have been recommending (and still do) buying physical Gold and Silver to Profit and move assets outside of the Banking System. And regarding Deepcaster’s related recommendations for Purchasing Power and Wealth Protection, see Notes 3, 4 and 5 below.

Given Russia’s development of the Physical Gold Exchange and impending Hyperinflation, the question of timing becomes important. Consider John Williams very well-informed Analysis.

“U.S. Dollar Remains Proximal Hyperinflation Trigger.  The unfolding fiscal catastrophe, in combination with the Fed’s direct monetization of Treasury debt, eventually (more likely sooner rather than later) will savage the U.S. dollar’s exchange rate, boosting oil and gasoline prices, and boosting money supply growth and domestic U.S. inflation.  Relative market tranquility has given way to mounting instabilities, and severe market turmoil likely looms, despite the tactics of delay by the politicians and ongoing obfuscation by the Federal Reserve.

“This should become increasingly evident as the disgruntled global markets begin to move sustainably against the U.S. dollar.  As discussed earlier, a dollar-selling panic is likely this year—still of reasonably high risk in the next month or so—with its effects and aftershocks setting hyperinflation into action in 2014.  Gold remains the primary and long-range hedge against the upcoming debasement of the U.S. dollar, irrespective of any near-term price gyrations in the gold market.

“The rise in the price of gold in recent years was fundamental.  The intermittent panicked selling of gold has not been.  With the underlying fundamentals of ongoing dollar-debasement in place, the upside potential for gold, in dollar terms, is limited only by its inverse relationship to the purchasing power of the U.S. dollar (eventually headed effectively to zero).  Again, physical gold—held for the longer term—remains as a store of wealth, the primary hedge against the loss of U.S. dollar purchasing power.”

“Gold Price and Market Instabilities, No. 537”

John Williams,, 6/30/2013

Many of the foregoing Trends and Realities may seem Daunting and Depressing but, in fact, most are also Knowledge-Nuggets providing Opportunities for Profit and Wealth Protection.

Best regards,



Wealth Preservation         Wealth Enhancement

© 2013 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.


© 2005-2015 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History