Global Economic Analysis Summary June 2012 (Part 1)

June 28th, 2012

FAKE NEWS for the Zionist agenda

by Mike Stathis

For nearly three years we have been discussing important global macroeconomic trends in order to assess the progress and risks of what has been labeled a global economic “recovery.”

The illusion accounting for these improvements was created by a global release of trillions of dollars.

One of the most prominent characteristics of this “recovery” is that it has been lop-sided, with advanced nations showing very little progress on many fronts. While Australia and Canada have fared relatively well, the U.S., U.K., Japan and Europe have continued to stall, despite claims made by officials and the media that a recovery is in progress.

In contrast, emerging nations have performed particularly well. Asia and much of Latin America experienced a recession of short duration. Brazil spent the shortest time in the recession, followed by China and India.

In fact, the emerging world has been largely responsible for pulling up the advanced world from the depths of the financial apocalypse. The entire mechanism has been fueled by the flood of capital from the Federal Reserve.

During the events leading up to the global financial crisis of 2008, the entire global economy was severely impacted.

As spending froze up, imports came to a near stand-still by spring 2008, as the financial crisis began to spin out of control.

The first phase of money printing began in late-2008 during the global financial crisis. By early-2009, Washington approved an economic stimulus package of nearly $800 billion. Most other nations around the global followed with their own economic stimulus.

Within two years after trillions of dollars had been issued to bail out the global banking system, trade had exceeded pre-crisis levels in emerging Asia and Latin America. This was soon followed by several advanced economies.

Towards the end of 2009 we became more guarded with China and Brazil due to increasing risks. Since the 2009 multi-year lows in the U.S. stock market, we have continued to generally remain bullish because we have focused on earnings data. At the same time we have paid close attention to global economic risk.

By the first part of 2010, continued improvements in select economic data from around the globe offered sketchy evidence reinforcing the notion that the global recovery remained on course. Meanwhile, very high levels of unemployment continued to persist throughout the U.S. and most of Europe, with Germany as the notable exception.

Celebrating the superficial improvements to the economy, the establishment media continues to insist that President Obama “saved the U.S. from a Great Depression.”

Despite expenditures of several trillions of dollars devoted towards “avoidance” of a global depression, these efforts have largely failed. In the near future, the globe will feel the aftermath of the irresponsible and wasteful economic and monetary policies from the advanced world.

As we warned readers, rather than sufficient and selective deleveraging, the global bubble had reflated by early 2010.

Nonetheless, we continued to forecast higher moves for the U.S. stock market due to the continued string of impressive earnings growth while the perpetual doomers who have been preaching the same lines for years continue to keep their sheep followers out of the U.S. stock market; what a shame. Some of these clowns even advised their sheep to take a short position in the U.S. stock market using 200% leverage in late-2009. WOW.

Additionally, several rounds of quantitative easing have assisted the rise in the U.S. stock market all while swelling the balance sheet of the Federal Reserve. Other central banks have followed the lead of the Fed in swelling their balance sheets.

In 2011, uprisings in the Middle East followed by the catastrophe in Japan initiated a new cycle of global risk which we identified in numerous publications. A few months later, mounting problems with the European sovereign debt crisis led to a global sell-off in equities markets. Again, we warned about this correction in the stock market in advance.

As the European debt crisis has continued to worsen, for more than two years investors have piled into U.S. Treasury securities due to their safe haven status, causing yields to plummet.

This has not only increased investor appetite for dividend securities [1, 2, 3 and 4], but it has also emphasized the strength of dollar-denominated assets largely due to the dollar-oil link which we have highlighted beginning with our first discussion in America’s Financial Apocalypse.

As the snake oil salesmen, delusional gold bugs and others continue to lash out at the U.S. dollar and stock market, it should be clear by now that such individuals are lost in the dark.

They simply don’t understand the fine details of what is going on and how the game works. The U.S. stock market has largely decoupled from the U.S. economy. Someone needs to tell this to Schiff, Faber, Prechter, Dent, Weiss and the rest of the professional marketers who have been so wrong about so many things for so long.

In fact, Mr. Schiff keeps insisting that the U.S. dollar is riskier than the euro!

As a good salesman, Schiff knows that you must stick to your pitch regardless what happens because if you repeat something enough times, most people will believe it.

I would be extremely worried if I had any money at Europacific Capital.

Soon, Europacific Capital might need to change its name to Pacific Capital because the investment opportunities in Europe are far and few. This should seem obvious to anyone with a pulse.

Moreover, Asia continues to falter. And at some point we expect a large blow out in many Asian nations, many of which are likely to require external financial assistance. We discuss the details of this in our 300-page 2012 Global Economic Analysis report.

Finally, as we have been forecasting for more than a year, as the commodities bubble continues its correction, economic risks are mounting in Australia and Canada. Thus, it looks as if even the mere mention of the terms “Euro” and “Pacific” are becoming associated with the short side of the trade more and more every day.

Even as Europe continues to head for the sewer, marketers lacking much credibility among sophisticated investors have drawn upon their bias as gold dealers to insist that the dollar and U.S. economy are in worse shape than the euro and E.U. This is laughable at best and points to their confused state.

At worst, it points to the types ethical issues one often encounters from salesmen trying to pitch their own lines in order to make a sell. Some people would sell their soul to the devil for the right price.

As we have emphasized in many publications, the persistence of record-low interest rates seen in advanced nations has served to flood emerging and developing economies with excessive capital inflows. This has caused inflation in many of these nations, adding to property bubbles seen in China, Hong Kong, Australia and Canada.

Finally, in some cases the long duration of record-low interest rates has resulted in excessive currency appreciation in some nations.

This inflationary mechanism served as a catalyst for a while. By early 2011, excessive currency appreciation in Brazil had reached the point of diminishing returns making export trade less competitive. Meanwhile, Brazilian consumers had exhausted their capacity for domestic consumption. After reaching a bottom in unemployment, the jobless rate is now climbing in Brazil.

While leverage in the financial sector has decreased relative to historic levels, it is still quite high, especially within the European banking system. Moreover, total financial leverage has reached record levels in Finland, the U.S., Canada and Spain.

The impressive trend of robust earnings growth does not discount the fact that the vast majority of U.S. consumers have seen no improvements in their lives, whether we are talking about wage growth or the reduction of costs for basic necessities.

Since 2011, we have emphasized the fact that much of the economic progress achieved by emerging nations has been the direct result of the flood of capital from advanced-nation banks.

Excessively low interest rates in advanced nations have encouraged financial institutions to inject massive amounts of capital into emerging nations in the form of direct and indirect investments.

Notably, financial institutions have injected huge sums of money into Brazil in order to take advantage of the nation’s very high Selic rate. The huge appreciation seen in the real over the past two years has boosted returns further.

While Brazilian officials introduced numerous measures to curb the flood of foreign capital into the nation, they acted too slowly because they were eye-balling the continued economic progress as a result of these capital inflows.

Although interest rates have remained at record-lows for nearly four years in the U.S., banks have not provided ease of credit to consumers or small businesses. As a result, these dangerously low interest rates have not caused a commensurate amount of inflation in the U.S. because banks are not releasing much of this money into the retail marketplace.

Instead, banks have used this cash to buy Treasury securities and speculate in emerging and developing economies. Eventually some of this inflation will head back into the U.S.

We have also explained why U.S. banks refuse to lend to small businesses and consumers. Why take risks lending to businesses and consumers in a fragile economy when you can park funds in Brazilian banks and make loans to consumers and businesses in Brazil’s booming economy?

Despite the fact that U.S. taxpayers were forced to bail out the U.S. and E.U. banking systems, there have been no mandates from Washington for banks to lend to consumers and small businesses. That should tell you who runs the U.S.

When consumer and small businesses have been able to get loans, interest rates have been ridiculously high relative to all pertinent rates (discount rate, Fed Funds rate, etc.). This is criminal. Banks claim that interest rates to consumers and businesses have risen because their funding costs have risen. This is a complete lie.

Perhaps the biggest secret that virtually no one has discussed is the fact that the Federal Reserve has created the largest bailout for the banking system by keeping rates so low for so long. This is being done in order to help the banks restore their balance sheets.

As we have discussed in the past, these record-low low interest rates are causing pension deficits to widen. Thus, the U.S. banking system is essentially stealing money from pension beneficiaries in order to shore up their balance sheets. This is nothing short of fraud. Yet, it remains completely ignored by the media and their hand-picked “experts.”

Do you really think these people give a damn about you?

The fact is that anyone who is in the media as a regular guest has sold out to the forces that are against the people…the banks, government and corporate interests. This is specifically why they are in the media. And if you are Jewish, you will be placed at the top of the list as a way to enrich Jews through free promotion.

During the panic of 2011, global trade began to shut down. This was countered by a drop in interest rates by emerging nations. Although some relative improvements began to surface by early 2012, waning global trade and a collapse in new orders is becoming more concerning to investors.

Ever since the release of the global economic stimulus in 2009, economic risk has largely been ignored by investors until something emerges that reminds them of the dangers. For instance, after economic and financial risks in Europe begin to reemerge, investors became guarded.

In 2010, investors quickly traded optimism for fear and panic when the European debt crisis worsened. The same thing happened in 2011. Investors have acted as if these risks have subsided although there have been no fundamental improvements to the dire economic situation.

Regardless of their optimism, investors must remember that significant global economic risks will persist for many years. Thus, we must keep things in perspective at all times rather than following the knee-jerk response of the mass of investors. This will enable us to transform the panic expressed by investors into investment gains. It will also enable us to capture upside while minimizing downside due to our emphasis on risk management.

Irrespective of the various measures by Washington and the Federal Reserve; irrespective of the string of impressive earnings, the so-called “recovery” and surge in the U.S. stock market has been due to the smoke-and-mirrors trickery of debt spending. Much of the same can be said of the capital markets in the U.K. and other advanced nations. A good deal of economic growth in the emerging markets has even been due to the credit bubble created by the Fed.

The income and wealth inequalities seen in the U.S. during this depression have largely mirrored the credit boom of the 1990s and 2000s, whereby the highest income earners received the majority of the economic benefits.

The only thing we can be certain of is that the top 5% will always do much better than the rest of the population, even when their colleagues in the 0.01% have defrauded the nation using financial trickery and other schemes.

Still, not one of the head perpetrators responsible for this, the most severe and widespread pandemic of securities fraud in world history is in prison.

The reason for this is of course because the same people who have defrauded the globe are also in charge of policing the banks. In fact, the Jewish mafia runs everything in the U.S., Canada and Europe.

Watch the 15-min video that explains everything.

From an economic perspective, perhaps the most troubling trend seen throughout this historic period is the fact that corporate profits have risen, while wages and unemployment have stagnated.

Numerous U.S. corporations, many of them blue-chips continue to shed thousands of U.S. jobs; Dell, Cisco, Boston Scientific, Merck, IBM, Microsoft, Proctor Gamble and Hewlett-Packard. Meanwhile, these same firms are hiring overseas and spending tens of billions of dollars in both emerging and developing nations as they plan for the future.

This represents an effective transfer of living standards from the U.S. to emerging and developing economies. Yet, the bought-off media establishment refuses to discuss this “economic treason” committed by corporate America.

In the February 2012 issue of the Intelligent Investor, we discussed our view that the global economy was entering a new risk cycle…

“…over the past nine months we have emphasized our view that much more risk lay ahead relative to estimates given by Wall Street, the IMF and others.

We have also continued to remind readers that investor’s perception of risk is likely to bounce from region to region over the next few years, similar to the movement of a ball in a pinball machine. Moreover, the possibility of a cascading sequence of adverse economic events is possible at every target this ball strikes.

Just prior to the initial market selloff in 2011, we warned investors of a market correction in the May 2011 issue. We also provided warnings a couple of months earlier pointing to a weakening global economy in the second half of 2011. The peak risk during this cycle occurred in early October 2011.

Since then we have seen few absolute improvements. Rather, it has been an environment of relative improvement with the U.S. capital markets as the main benefactor. Meanwhile, the U.S. equities markets have benefited from both positive and negative developments in Europe.

Over the next several weeks we believe a new risk cycle will begin. Although it is impossible to determine the precise issues that will rise to the forefront, it should be obvious that many very difficult challenges remain in Europe.”

Within weeks after this announcement, the fear began to rise as more uncertainty from Greece and other European economies surfaced.

Notably, China’s manufacturing was still lingering while Europe began to enter a recession, just as we had warned in October 2011…

“… we are expecting a recession in the EU in 2012 (90% confidence), with Germany and France experiencing a less severe blow.”

In the August 2011 issue, shortly after the first-ever downgrade of U.S. sovereign debt, we stated that the downgrade was only justified if most other advanced nations had their debt downgraded to a larger extent.

“Investors should expect several more credit downgrades for sovereign debt in Italy, Spain, Greece and Portugal. We also expect France to be downgraded, as well a slew of European banks.”

Since then we have seen a slew of downgrades but we feel the rating agencies have acted too conservatively.

Once you realize that the vast majority of so-called “experts” in the media are the same group of people who run the banks, corporate America, the legal system, the ratings agencies, the IMF, all think tanks, etc., it’s all too obvious what’s going on. The question is what are we going to do about it.

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