14/3/10

GREECE, US@FED, GS & OTHER POSSIBLE FUTURE STORIES

Federal Reserve Chairman Ben S. Bernanke testifies before the Senate Banking Committee about the U.S. economy, central bank monetary policy and the Fed's review of the derivatives arrangements of Goldman Sachs Group Inc. and other companies with Greece. Bernanke, speaking in Washington on the second day of his semi-annual address to Congress, repeated his statement that the economy is in a "nascent" recovery that still requires low interest rates to encourage demand by consumers and businesses once federal stimulus expires. (This includes the prepared statement and part 1 of the question-and-answer portion of the hearing. Source: Bloomberg)

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Is the Federal Reserve going to perform a Greece bailout? Have they done the same with foreign nations in the past? As to Greece, it remains to be seen, despite what Ben Bernanke testimony indicates. The writing may already be on the wall. Here’s the exchange between Ben Bernanke and Ron Paul (at 4.50-5.00 Bernanke turns around to his aides, he seems uninformed....):


Surmounting The Armageddon Scenario & Cartel ‘End Game’
full article here


Jim Kouri, Law Enforcement Examiner, Examiner.com

... and “Goldman Sachs Group Inc. managed $15 billion of bond sales for Greece after arranging a currency swap that allowed the government to hide the extent of its deficit.

No mention was made of the swap in sales documents for the securities in at least six of the 10 sales the bank arranged for Greece since the transaction, according to a review of the prospectuses by Bloomberg…”

“Goldman Sachs, Greece Didn’t Disclose Swap Contract”

Elisa Martinuzzi, bloomberg.com, 2/17/10

“Many of the banks that helped Greece create derivatives that concealed its borrowing are betting on default, hoping to make additional profit from the nation's financial troubles… Banks' and hedge funds' purchases of credit default swaps on Greek bonds are driving up the cost of borrowing that Greece needs to roll over its maturing debt…”

“Report: Banks that hid Greece's debt aim to profit from default”

The New York Times, 02/24/10

“America's Founding Fathers were afraid of any concentration of power in the republic. They were particularly afraid that banking interests could hijack our fledgling democracy.

And yet today, 234 years later, our Founding Fathers' worst fears have come true. Wall Street's stranglehold on the economy threatens our very prosperity, and the future of a truly democratic republic…”

“Wall Street’s Stranglehold on the Economy Is Choking Americans”

Shah Gilani, Money Morning, 1/26/10

“What does not kill me, makes me stronger.”

F.W. Nietzsche


The inexorable Momentum of Destructive Megatrends is impelling us toward an Economic and Markets Armageddon, about which we and a few other notable commentators have been writing for some time. The Denouement will not be at all pretty or short-lived.

Thus with the foregoing as Context we sketch an all-too-likely, in our view, Scenario of Coming Events and Consequences, and lay out key Guidelines for coping and profiting.

Many of the themes about which we have previously written are now coming to a head, as the foregoing indicates. Thus we reiterate and weave them together in the following Scenario and recapitulate Guidelines for Profit and Protection.

Scenario


Athens, Greece, Cradle of Western Civilization, awakens on an early Spring Morning in 2010 and is forced to acknowledge that no effective Bailout is coming.

Greece can thus no longer pay interest on its Megaloans, nor can it obtain new loans.

Greece defaults on its Sovereign Debt.

The Unions call a National Strike. Greece, the country, is in chaos, and is de facto expelled from the EU.

If Greece’s relatively small GDP were the only issue, the Sovereign Debt Default would not matter much (from an economic perspective) to the EU, or the world, except that it foreshadows more Sovereign Debt defaults by Italy (worse off than Greece), and, Spain, Portugal, and, finally France and perhaps even some or all “Major Nations” on the von Greyerz list of the de facto bankrupt, above.


Greece is thus a Catalyst. (Other Nations’ Sovereign Debt Defaults could serve equally well.)


Subsequently a Tidal Wave of Sovereign Default Ripple Effects Cascades around the world, affecting most those economies and markets which most allowed themselves to be ensnared by the Lethal Cocktail of Globalism (as opposed to Internationalism) and “Free Trade” (as opposed to Fair Trade). The least self-reliant are shown to be the most vulnerable.


Again, late in 2010, Mega-Financial Institutions which are holders of the increasingly Toxic Sovereign Debt clamor for more bailouts.


But Stark Reality raises the question “Bailouts by whom, with what, and how?”


Consequently Credit Markets freeze, again, by the end of 2010.


The FDIC, which already had a $20.9 billion deficit as of February 23, 2010 is unable to prevent hundreds more U.S. small and medium size banks from failing.


Central Banks respond by printing even more Fiat Currency while simultaneously increasing demands for One Global Currency, de facto, a Major step toward World Government of, by, and for The International Banker Cartel.*


Simultaneously, the Fed-led Cartel* of Central Bankers allies, and Agents direct the full force of their Market Intervention and Manipulation Regime developed over decades toward their ‘End Game’ goals. See “Surmounting The Cartel’s ‘End Game’ Juggernaut” (9/25/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com for more details.


*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, 2009 Letter entitled "A Strategy For Profiting From The Cartel’s Dark Interventions & Evolving Techniques - II" 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 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.



Massive Fiat Currency printing impels Hyperinflation to rear its ugly head in earnest. The Weimar Scenario Unfolds in countries around the World and reveals that long-suppressed-truths are coming home to roost. The Hyperinflationary Depression, long hidden by bogus official statistics (see below), is revealed to the world.


Truths and Consequences


Among the long suppressed truths that increasingly force themselves upon general public awareness as 2010 proceeds is the fact that major Official Statistics have been bogus for several years.


Indeed, the entire Official Statistics Production Machinery has been revealed as generating bogus numbers as demonstrated by Shadowstats.com.


Consider the following Real Numbers from Shadowstats.com which calculates the Real Numbers for the U.S.A. the way they were calculated in the 1980’s and 1990’s before Official Data Manipulation began in earnest.


Official Numbers vs. Real Numbers


Annual Consumer Price Inflation reported February 19, 2010

2.63% VS 9.76% (annualized February Rate)


U.S. Unemployment reported February 5, 2010

9.7% VS 21.2%


U.S. GDP Annual Growth/Decline reported January 29, 2010

0.10% VS -4.62%


And consider that the U.S. Dollar has lost one third of its purchasing power in the last 8 years, thanks primarily to the deleterious policies of the private for-profit Federal Reserve.


And consider also that the Financial Accounting Standards Board’s decision to allow financial institutions to value their portfolios according to a “Mark to Model” standard (i.e. falsely) rather than “Mark to Market” allows a Great Deception as to the True Value of those portfolios. Were portfolios required to be Marked to Market, a number of financial institutions would be shown to be bankrupt.


Considered together, the foregoing numbers (and those below) reveal a Stealthy Transfer of Wealth and Power from Citizens around the world to The Cartel. Long-time Citizens in the U.S. (and elsewhere) know this, at least intuitively – Two wage-earners are required today to support a family at the same standard of living in the U.S. as one wage-earner could sustain in 1972.


As Richard Russell, Dean of the Newsletter writers, points out, the creation of ever-increasing debt and interest payments is unsustainable. Thus there will inevitably be a Day of Reckoning, a Day which is fast approaching.

Given the impending Disaster it is not surprising that The Cartel has an “End Game” to absolve themselves of responsibility and to allow others to “take the hit”.

In order to stave off the Day of Reckoning (which, we reiterate, is coming mainly as a consequence of The Fed’s decade-long dramatic monetary inflation and “easy credit” policies), and to implement its own ‘End Game’, the Fed-led Cartel* of Key Central Bankers and Favored Financial Institutions has created, and for the past several years has operated, an extraordinary “financial regime” built on dramatically, increasing trillions of dollars (nearly $600 trillion according to the Central Bankers Bank (BIS) report as of December, 2008 - - see www.bis.org (path: statistics>derivatives>Table 19 and ff.) of Dark OTC Derivatives available for the manipulation of major markets ranging from Precious Metals to Crude Oil and Energy, to Equities and Strategic Commodities (see Deepcaster’s July, 2008 Letter at www.deepcaster.com).

The Magnitude of the Wealth Transfer this Regime has facilitated is staggering. For example, BIS Table 19 reveals that in the six months from June, 2008 to December, 2008 when investors were losing Trillions in the Market Crash, the Mega-Financial Institutions gained some $11.9 Trillion.

To be sure The Cartel’s massive and increasing use of derivatives to intervene (Overtly and Covertly via Primary Dealers) in a wide variety of markets (and especially to suppress the prices of Gold and Silver) is fraught with danger (e.g. through actual and prospective counterparty -and sovereign nation- failure as we are now seeing, as well as prospective Systemic Failure). Deepcaster, Warren Buffett and Jim Sinclair have pointed out the dangers of OTC derivatives. Indeed, Buffett calls them “toxic” … ”weapons of financial destruction” and Sinclair has aptly described the financial system as “sitting on a… trembling mountain of derivatives … think Weimar Republic.” Unfortunately, Deepcaster, Jim Sinclair, and Warren Buffett are correct.

Indeed, the evidence provides increasing details about the Cartel’s nefarious “End Game” plan, key aspects of which we describe below.

Consider the following observation by Harry Schultz:

“…what is the reason for this “seemingly random monetary mess that multiplies its momentum every day? The answer, in one word, control. The elite/insiders already have control of the financial system, but they wanted more, much more…and it was not random, it was planned.” (emphasis added)

“How will all the above manifest itself in your life? The answer: “All you own will shrink...your income, assets, net worth, will shrink year after year in real terms inflation adjusted and possibly also nominally.”

Harry Schultz, Eminence Grise of the Newsletter writing Fraternity sees the Threat to Profits and Wealth posed by the Fed-led Cartel* quite clearly.

The Cartel* ‘End Game’, as Deepcaster has named it, apparently involves Stealthily transferring ever more Wealth and Power to The Cartel at the expense of Investors/Citizens around the world. (See elsewhere in this Letter, and “Coping with the Superpower Cartel Threat” (1/30/09) in the ‘Articles by Deepcaster’ cache at www.deepcaster.com.)

Of course, The Fed-led Cartel’s increasing Power and Profits have been threatened by Rep Ron Paul’s ‘Audit the Fed’ Bill (H.R. 1207) which fortunately has garnered two thirds Majority of the U.S. House of Representatives as co-sponsors and over half of the Senate on a companion Bill. Unfortunately, it has been dramatically watered down in Congress this session.

Even so, the private for-profit Fed has predictably responded to the Audit Threat with a not-so-veiled counter-Threat delivered via Chairman Bernanke’s Testimony to Congress last year.

“Federal Reserve chairman Ben Bernanke unleashed an alarming veiled threat of financial terrorism when he was questioned by Rep. Duncan on Thursday about his response to the fact that a majority of Congress (is) co-sponsoring Ron Pauls H.R. 1207 bill to audit the Federal Reserve.

Bernanke clearly regarded the bills intent as hostile to the institution he represents:

“My concern about the legislation is that if the GAO is auditing not only the operational aspects of the programs and the details of the programs but making judgments about our policy decisions (it) would effectively be a takeover of policy by the Congress and a repudiation of the Federal Reserve (which) would be highly destructive to the stability of the financial system, the Dollar and our national economic situation.”

The brunt of Bernankes statement is as crystal clear as a threat from a common street thug -- back off from the Fed, or the economy gets it.

The chairman clearly implies that any attempt to restore monetary powers constitutionally granted to the Congress would be seen as a takeover and that the defensive and repudiated Fed would respond destructively.

Of course Congress’ constitutional power over money is enumerated in Article I, Section 8 of the U.S. Constitution:

‘The Congress shall have power To coin money, regulate the value thereof, and of foreign coin, and fix the standard of weights and measures;’ “

“Bernanke Threatens Economic Collapse If Fed Audited”
Aaron Dykes, Infowars, Friday, June 26, 2009

Deepcaster has described in detail key aspects of The Cartel’s apparent ‘End Game’ in its June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations “ and its August 13, 2006 Alert “Massive Financial-Geopolitical Scheme Not Reported by Big Media” posted in the “Archives” at www.deepcaster.com. Fortunately, a Bill was introduced in the last session U.S. Congress (H.Con.Res.40), which opposes this nefarious scheme.


Prologue to The Strategy designed for Profit and Protection

Key aspects of the ‘End Game’ plan that have been implemented through various departments of the U.S. government agencies and NGOs.

We repeat a critical fact: Masking the True State of the Economy and Financial Markets, is a central aspect of The Cartel Regime – Data Manipulation (coupled with Markets Manipulation).

Consider certain Real Numbers from Shadowstats.com which we mentioned above.

And consider the FASB’s decision to allow “Mark to Model” valuations.

We emphasize, Real U.S. GDP “growth” is a negative number -- about a negative 4.6%, according to shadowstats.com, as opposed to Official Figures showing just a positive 0.1%.

That the U.S. economy (about 25% of the international economy) is headed in the direction of Serious Stagflation (a Kondratieff Winter) is pretty clear from the very credible shadowstats.com statistics cited above. Predictions of Recovery any time soon are a combination of Media Hype and Fed “Communications policy”.

In sum since, the U.S. Dollar’s purchasing power has declined over 30% in the past 8 years, it appears that The Cartel expects (and likely are even pushing) the U.S. Dollar to go into further and further decline, over the medium term, and to continue their other policies, until there is a “No-Salvation, No-Return Systemic Crisis.”

It would appear that The Cartel-charted-course toward a Stagflationary Recession/Depression, and thus toward the further implementation of their “End Game,” is on course. For more details on the ‘End Game’ see the articles referred to above....


N.B. : A possible (past) future scenario:
Great Depression in Central Europe
...The Great Depression severely affected central Europe. The unemployment rate in Germany, Austria and Poland rose to 20% while output fell by 40%. By November 1932 every European country had increased tariffs or introduced import quotas.
Under the Dawes Plan the German economy boomed in the 1920s, paying reparations and increasing domestic production. Germany's economy retracted in 1929 when Congress discontinued the Dawes Plan loans. This was not just a problem for Germany. Europe received almost $8 billion USD in American credit between 1924 and 1930 in addition to other war time loans.
Germany's Weimar Republic was hit hard by the depression as American loans to help rebuild the German economy now stopped. Unemployment soared, especially in larger cities. Adolf Hitler's Nazi Party came to power in Germany in January 1933. Repayment of the war reparations due by Germany were suspended in 1932 following the Lausanne Conference of 1932. By that time Germany had repaid 1/8th of the reparations.
Falling prices and demand induced by the crisis created an additional problem in the central European banking system, where the financial system had particularly close relationships with business. In 1931 the Creditanstalt bank in Vienna collapsed, causing a financial panic across Europe...
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...It goes far to prove the revolutionary axiom that if you wish to destroy a nation you must corrupt its currency. Thus must sound money be the first bastion of a society's defence...IT is a phenomenon of any national group that, almost however much it is riven with dissent, an external threat will unite it...Inflation is like a drug in more ways than one.'It is fatal in the end, but it gets its votaries over many difficult moments...The workers responded in the only way they could, demanding not only higher wages but daily payment so that their income would keep its spending power long enough to get rid of it. The demands were enforced with repeated strikes, disorders and demonstrations in all parts of the country. The possibility of civil war was openly discussed in the press, and frenziedly denied by the government. A thousand arrests were made after riots...The same pattern was to continue through August, when armed strikers were to kill police at Wilhelmsburg and throw them into the water at Hamburg...The dreary foreign outlook together with the destruction of the currency and the resulting chaos in the whole economic structure have produced the result that the population are beginning to lose confidence in the State and in themselves....reconstruction was compared to the experiment made by the gipsy to teach his horse to do without food. When he got it down to a straw a day, the horse died. ' απο When Money Dies: The Nightmare of the Weimar Collapse





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