Gordon T Long

RESEARCH ANALYTICS for the GLOBAL MACRO

|   TIPPING POINTS   |  COMMENTARY  READER ROADMAP | SWAP SENTINEL   | 

 

BUY ANY BOOK

 

GET 2 MONTH SUBSCRIPTION TO

 

 MONTHLY MARKET COMMENTARY

 

PROMOTION  DETAILS

 

INVESTING ONLY

BOOKSTORE


Bookmark and Share 

LCM GROUPE

SITE ACCESS

ANALYTICAL SERVICES


Fibonacci - W.D. Gann

Elliott Wave - J. M. Hurst


Fibonacci series and spiral

Developers of Chaos Theory

& Mandelbrot Generator

Algorithms

 

APPLICATION FOCUS

 

 


 

READ ALL THE

"EXTEND & PRETEND SERIES"

 

 

Shifting Risk to the Innocent

 

Uncle Sam, You Sly Devil!

 

Is the US Facing a Cash Crunch?

 

Gaming the US Tax Payer

 

Manufacturing a Minsky Melt-Up

 

Hitting the Maturity Wall

 

An Accounting Driven Market Recovery

 


 

 

 

 A MUST READ FOR ANY UNDERSTANDING

of the current

GLOBAL MACRO ECONOMIC

ENVIRONMENT

 


 

READ ALL THE

"SULTANS OF SWAP"

 

ACT I

Sultans of Swap: Smoking Guns!

ACT II

Sultans of Swap: The Sting!

ACT III

Sultans of Swap: The Get Away!

 

 

ALSO

SULTANS OF SWAP: Explaining $605 Trillion in Derivatives!

 

SULTANS OF SWAP: Fearing the Gearing!

 

FOR UPCOMING SHOW TIMES SEE: COMMENTARY

 


 

 

 

 

FREE INTRODUCTORY

MAILING

 

Current Thesis Advisory

62 pages

 

EXTEND & PRETEND

 

Click page to view Index

 

Contact Us

 

Add Promo Code: "Introduction"

in the Subject Heading

 

 

The Latest Monthly

 

MONTHLY MARKET COMMENTARY

12 pages

 

Click page for Front Page

 

Contact Us

 

Add Promo Code: "MMU"

in the Subject Heading

 


FREE INTRODUCTORY

ACCESS

 

FACEBOOK

 

 

DAILY TIPPING POINT ARTICLE POSTS

 

SAMPLE PAGE

 

Click page to view Index

 

Contact Us

 

Add Promo Code: "Facebook"

in the Subject Heading

 

 


 

CUSTOMIZE YOUR RESEARCH EFFORTS

 

TIPPING POINT

TAG ENGINE

 

Click page to view Index

 

Free Access to Our Tag Engine for detailed research behind our Tipping Points.

 

OVER 1000 ARTICLES INDEXED

each with an

Executive Summary - Abstract

 

SAMPLE

Click page to view Index

 

Contact Us

 

Add Promo Code: "Tag Engine"

in the Subject Heading

 

  Bookmark and Share


 

 

 

 

 

 

 

                    LATEST PUBLICATIONS

RSS 

COMMENTARY for all articles by Gordon T Long

 

PRESERVE & PROTECT: Mapping the Tipping Points

The economic news has turned decidedly negative globally and a sense of ‘quiet before the storm’ permeates the financial headlines. Arcane subjects such as a Hindenburg Omen now make mainline news. The retail investor continues to flee the equity markets and in concert with the institutional players relentlessly pile into the perceived safety of yield instruments, though they are outrageously expensive by any proven measure. Like trying to buy a pump during a storm flood, people are apparently willing to pay any price.  As a sailor it feels like the ominous period where the crew is fastening down the hatches and preparing for the squall that is clearly on the horizon. Few crew mates are talking as everyone is checking preparations for any eventuality. Are you prepared?

 

What if this is not a squall but a tropical storm, or even a hurricane? Unlike sailors the financial markets do not have the forecasting technology to protect it from such a possibility. Good sailors before today’s technology advancements avoided this possibility through the use of almanacs, shrewd observation of the climate and common sense. It appears to this old salt that all three are missing in today’s financial community.

 

Looking through the misty haze though, I can see the following clearly looming on the horizon.

Since President Nixon took the US off the Gold standard in 1971 the increase in global fiat currency has been nothing short of breath taking. It has grown unchecked and inevitably became unhinged from world industrial production and the historical creators of real tangible wealth.  READ MORE

 

Do you believe trees grow to the sky?

Or, is it you believe you are smart enough to get out before this graph crashes?

   

 

INNOVATION: What Made America Great is now Killing Her!

What made America great was her unsurpassed ability to innovate.  Equally important was also her ability to rapidly adapt to the change that this innovation fostered. For decades the combination has been a self reinforcing growth dynamic with innovation offering a continuously improving standard of living and higher corporate productivity levels, which the US quickly embraced and adapted to.

 

This in turn financed further innovation. No country in the world could match the American culture that flourished on technology advancements in all areas of human endeavor. However, something serious and major has changed across America.  Daily, more and more are becoming acutely aware of this, but few grasp exactly what it is.  It is called Creative Destruction. 

 

It turns out that what made America great is now killing her!

 

Our political leaders are presently addressing what they perceive as an intractable cyclical recovery problem when in fact it is a structural problem that is secular in nature. Like generals fighting the last war with outdated perceptions, we face a new and daunting challenge. A challenge that needs to be addressed with the urgency and scope of a Marshall plan that saved Europe from the ravages of a different type of destruction. We need a modern US centric Marshall plan focused on growth, but orders of magnitude larger than the one in the 1940’s. A plan even more brash than Kennedy’s plan in the 60’s to put a man of the moon by the end of the decade. America needs to again think and act boldly. First however, we need to see the enemy. As the great philosopher Pogo said: “I saw the enemy and it was I”.

READ MORE

 


READER ROADMAP -  2010 TIPPING POINTS aid to positioning COMMENTARY

 

 

 

POSTS:  FRIDAY 08-27-10

Last Update: 08/28/2010 05:38 AM

SCHEDULE: 1st Pass: 5:30AM EST, 2nd Pass: 8:00 AM, 3rd Pass 10:30 -- Final Passs: 5:30 PM

ARTICLE SOURCE 1 2 3 4 5 6 7 8 9 10
                       
Forget Debt To GDP, It's Debt To Revenue That Matters--And The U.S. Is The Worst Business Insider X                  
Spain May Defer at Least EU200 Million of Tax Revenue  Bloomberg                   
Banks turn to Madrid bonds for collateral  FT                   
Balls to warn of economic ‘hurricane’  FT                   
The return of beggar-my-neighbour  FT                   
Japan Presses BOJ as Yen’s Climb Threatens Expansion  FT                   
Banks back switch to renminbi for trade  FT 
Minjie: Renminbi could assume the role of Asia's euro  FT                   
Renminbi goes global  FT                   
Long march to convertibility  FT                   
Ireland Set To Lose $30.5 Billion On Its Banking Sector Bailout Business Insider X                  
Albert Edwards: "We Are Returning To S&P of 450"  Zero Hedge                   
Second-Quarter GDP Growth Revised Downward WSJ X                  
Without Government Spending, GDP Growth Would Have Been Less Than Half Of What It Was Business Insider X                  
UK bank accounting rules 'fatally flawed', warns influential watchdog  Telegraph    X                
S&P Says US Should Act to Protect AAA-Rating: Report Reuters     X              
Despite Reform, Banks Have Room for Risky Deals NYT           X        
Fed in Emergency Bid to Put Bailout Ruling on Hold Reuters           X        
SEC vows more actions over crisis  FT                   
CMBS's trade above par MktWatch               X    
Landlords Cut Rents to Lure Commercial Tenants Reuters               X    
One in 10 Mortgage Holders Face Foreclosure AP                 X  
                       
ARTICLE SOURCE 11 12 13 14 15 16 17 18 19 20
                       
U.S. Jobless Claims Decline More Than Forecast Bloomberg   X                
Slower U.S. Capital Investment May Reach Job Market Bloomberg   X                
Lack of skilled workers threatens recovery- Manpower AP   X                
Strategic Migration - A Short-Term Solution to the Skilled Trades Shortage Manpower Inc   X                
Unemployment Data Masked A Huge Jump In Emergency Claims Business Insider   X                
Mr. Gross Goes to Washington Pimco     X              
                       
REMAINING                      
                       
                       
BP OIL                      
                       
GENERAL INTEREST                      
Hyperinflation, Part II: What It Will Look Like  Zero Hedge                     
The Great Deleveraging Lie  Burning Platform                     
Intel CEO: U.S. faces looming tech decline  CNet                     
FLASH CRASH                      
                       
MARKET WARNINGS
Albert Edwards: "We Are Returning To an S&P of 450" Zero Hedge                    
GOLD                      
Germans, And A Wave Of Swiss Bank Accounts, Are Piling Into Gold As If It's A New Crisis                      

Complete Legend to the Right, Top Items below.
Articles with highlights, graphics and any pertinent analysis found below.
(Note:  Latest re-rankings reflecting "Mapping the Tipping Points" will be reflected tomorrow)

 

1

         

1-SOVEREIGN DEBT

2-EU BANKING CRISIS
3-BOND BUBBLE

4-STATE & LOCAL GOVERNMENT

5-CENTRAL & EASTERN EUROPE
6-BANKING CRISIS II
7-RISK REVERSAL

8-COMMERCIAL REAL ESTATE

9-RESIDENTIAL REAL ESTATE - PHASE II
10-EXPIRATION FINANCIAL CRISIS PROGRAM
11-PENSION CRISIS

12-CHRONIC UNEMPLOYMENT

13-GOVERNMENT BACKSTOP INSUR.
14-CORPORATE BANKRUPTCY

TODAY'S TIPPING POINTS UPDATE

RED ALERT

AMBER ALERT

ACTIVITY

MONITOR

Click to Enlarge





08-27-10

 

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

 

 

IRAN

IRAN NUCLEAR THREAT

 

 

 

1- SOVEREIGN DEBT & CREDIT CRISIS

 

SOVEREIGNS

 

 

Forget Debt To GDP, It's Debt To Revenue That Matters--And The U.S. Is The Worst  Business Insider

 

 
Morgan Stanley have published a report titled "Ask Not Whether Governments Will Default, But How" (via Zero Hedge) and while it makes some interesting points about who is going to get hit when sovereigns begin to exact "Financial Oppression" on creditors what we're most interested in is the discussion of debt to GDP ratios.From Morgan Stanley's Arnaud Marès (emphasis ours):

Whatever the size of a government’s liabilities, what matters ultimately is how they compare to the resources available to service them. One benefit of sovereignty is that governments can unilaterally increase their income by raising taxes, but they will only ever be able to acquire in this way a fraction of GDP. Debt/GDP therefore provides a flattering image of government finances. A better approach is to scale debt against actual government revenues (see Exhibit 2). An even better approach would be to scale debt against the maximum level of revenues that governments can realistically obtain from using their tax-raising power to the full. This is, inter alia, a function of the people’s tolerance for taxation and government interference. Seen from this angle, the US federal debt no longer compares quite so favorably with that of European governments.

It is, in many ways, no different than looking at a company. Recall Q2 earnings. Investors were not that concerned about surging profits, made through companies cutting spending, but rather the decline in revenues.And while current bond yields or CDS pricing do not reflect that position in terms of U.S. sovereign debt, maybe there is an implied market assumption that the U.S. government could take in more revenue relative to its GDP, by either expanding revenues through economic growth or increasing taxes.And pushing this approach a bit further, even if the U.S. were to see a cut in government spending, increasing "profits" temporarily, would investors not be more concerned that revenues, via the taxes paid by those in government work evaporating, would decline?

 

SPAIN

Spain May Defer at Least EU200 Million of Tax Revenue BL

Banks turn to Madrid bonds for collateral  FT

Credit fears ease with backing from counterparties

 

GERMANY

 

FRANCE

 

UK

Balls to warn of economic ‘hurricane’  FT

Most dramatic warning yet by Labour politician

The return of beggar-my-neighbour  FT

 

IRELAND

Ireland Set To Lose $30.5 Billion On Its Banking Sector Bailout BI
Ireland's banking sector bailout is set to result in massive losses for the state and the NAMA fund it set up to buy bad bank debt, according to S&P. The Irish Independent reports that losses are expected to total €24 billion ($30.5 billion) over a 5-year period for the bailout fund. That would leave the country getting back €16 billion ($20.3 billion) or 10% of GDP.Ireland's governm
ent expects to get all of their investment back, eventually. And they've called S&P's recent attacks on Ireland, and the methodology behind them, flawed.  S&P cut the country's credit rating to AA earlier this week.

Some of the property loans Ireland's NAMA fund has invested in are starting to blow up.


JAPAN

Japan Presses BOJ as Yen’s Climb Threatens Expansion BL 
“They don’t really know what to do so they’re turning the heat up on the BOJ...” 
 

CHINA


 Banks back switch to renminbi for trade  FT
The phenomenon will accelerate Beijing’s drive to transform the renminbi into a global medium of exchange like the dollar and euro. Incentives offered to move from dollar and euro on China goods.
Minjie: Renminbi could assume the role of Asia's euro Asahi
Renminbi goes global  FT
Long march to convertibility  FT
Some believe that Beijing has started an experiment whose eventual aim is internationalisation of the renminbi...

 

USA

 

 

So far the equity market has shrugged off much of the weaker data that abounds, and has not joined the bond market in a perceptive move. The equity market will though crumble like the house of cards it is, when the nationwide manufacturing ISM slides below 50 into recession territory in coming months. Indeed the new orders data for August, already reported in regional ISM's suggests the equity market is going to get some sentiment crushing data in the very near term. But never mind the last standing optimist will tell us it is only a flesh wound!

 

 

GDP REVISION

The full announcement is here

 

Second-Quarter GDP Growth Revised Downward  WSJ

 

The U.S. economy grew more sluggish than initially estimated in the second quarter, and corporate profits nearly dried up, further evidence that the recovery is losing steam.Gross domestic product, the value of all goods and services produced, rose at an annualized seasonally adjusted rate of 1.6% from April to June, the Commerce Department said Friday.

In the government's first report of the economy's benchmark indicator a month ago, the growth rate was estimated to have slowed to 2.4% after a 3.7% expansion in the first quarter.Still, the revised estimate for the second quarter was above expectations for a 1.3% gain among economists polled by Dow Jones Newswires.

Friday's report also showed that companies barely managed to post profit gains, following several very profitable quarters. After-tax earnings edged up 0.1%, well off the previous quarter's gain of 11.4%. First-quarter profits were revised down from the initial estimate of a 12.1% increase.Year over year, profits remained 37.7% higher, with companies cutting costs by trimming payrolls.

 

Without Government Spending, GDP Growth Would Have Been Less Than Half Of What It Was Business Insider

 

The latest revision for U.S. Q2 GDP came in at 1.6%, which was higher than the 1.3% reading expected by consensus, but well below the 2.4% value previously reported by the government. Thing is, the latest GDP report shows just how dependent the U.S. economy was on government spending during the second quarter. Government spending contributed +0.86% to the 1.6% GDP growth value, which was one of the highest quarterly government contribution to GDP since at least 2007. The only quarters to beat it since the beginning fo 2007 were Q3 of 2008 and Q2 of 2009, at +1.04% and +1.24% respectively.  Sans the 0.86% government spending boost, U.S. GDP would have grown by just 0.74% during Q2 of this year. This is shown by the right-hand bar below.



Yes the economy is more complex than such straight subtractions, but while the exact GDP effect by government is debatable, what's clear is that Q2 relied heavily upon government spending. This sheds light on the challenge for U.S. Q3 GDP, as government spending support is expected to wane going forward.

 

 

 

2- EU BANKING CRISIS

   

UK bank accounting rules 'fatally flawed', warns influential watchdog Telegraph

 

3- BOND BUBBLE

 

S&P Says US Should Act to Protect AAA-Rating: Report  Reuters via CNBC

 
UNITED STATES: The United States government needs to take steps to preserve its top AAA-rating, a Standard & Poor's Ratings (S&P) official told Dow Jones newswire in an interview published on Thursday. The measures taken in response to recommendations President Barack Obama's commission on fiscal responsibility would be crucial in the view S&P takes on the U.S. credit rating, he said. "It is very important for the credit standing of the United States that the Congress considers very carefully what the fiscal commission proposes," John Chambers, chairman of S&P's sovereign rating committee, was quoted as saying. "It is very important for Congress to take the required steps."

S&P maintains the United States' top AAA rating with a stable outlook, meaning there is not a significant chance of a change in the near future. However, it has repeatedly warned about the gigantic deficit and the debt burden in the world's biggest economy, calling it a challenge for the government. David Beers, S&P's global head of sovereign ratings said in a July report the U.S. does not have unlimited fiscal flexibility and the best-case scenario for the U.S. would be for its debt-GDP ratio to peak at around 80 percent, although there was a chance it could exceed 100 percent. "So we don't think these political decisions on tackling the public finances can be put off forever," Beers said in the report.

IRELAND: Chambers also disagreed with Ireland's criticism of its downgrade in the Dow Jones interview. Chambers said S&P does not consider the bad loans the government's asset management agency is buying from banks as liquid assets in the near term, but added further rating action was unlikely in the near term. On Tuesday, S&P cut Ireland's long-term rating by one notch to 'AA-', the fourth highest investment grade, and assigned the country a negative outlook saying the cost to the government of supporting the financial sector had increased significantly.That drew criticism from the National Treasury Management Agency which said it disagreed with S&P's view that Ireland faced substantially higher costs to bail out its ailing banking sector. "In terms of the specific analysis by S&P, this is largely predicated upon an extreme estimate of bank recapitalization costs of up to 50 billion euros," the NTMA said. "We believe this approach is flawed."

 

Albert Edwards: "We Are Returning To 450 On The S&P" ZH

 

4- STATE & LOCAL GOVERNMENT

 


5- CENTRAL & EASTERN EUROPE

 


6-BANKING CRISIS II

 

Despite Reform, Banks Have Room for Risky Deals NYT
“You can use client activity as a cover for basically anything you are doing,” said Janet Tavakoli, who runs her own structured finance consulting firm. “It’s very problematic that losses like this are showing up. It’s a prime example of what the financial reform bill doesn’t address.”

Fed in Emergency Bid to Put Bailout Ruling on Hold  Reuters via CNBC

SEC vows more actions over crisis  FT
US regulator targets banks and insurers

 

7- RISK REVERSAL

 

 

8- COMMERCIAL REAL ESTATE

 

Commercial mortgage-backed securities trade above par MW
An index of CMBS compiled by Bank of America Merrill Lynch has returned 14.8% this year, including 5% gains in the last month.

 

Landlords Cut Rents to Lure Commercial Tenants Reuters via CNBC
U.S. commercial property landlords cut rent and offered concessions to lure tenants as vacancies remained high, the National Association of Realtors reported in a quarterly property survey released Thursday. An index measuring conditions in the commercial real estate sector rose 2.8 percentage points to 41.0 in the second quarter, well below a level of 100 that represents a balanced marketplace. The last time the commercial market was in equilibrium was in the third quarter of 2007. Although the index remains weak, this marked the third consecutive quarterly improvement.

"Vacancy rates are beginning to level off in some sectors, but rent discounts and moderate levels of landlord concessions are widespread," Lawrence Yun, the NAR's chief economist, said in a statement.

With vacancies still elevated, commercial real estate development remains "stagnant" in all regions, the NAR said. The weak commercial real estate market has been a significant drag on economic growth in the past two years, subtracting from gross domestic product in seven of the past eight quarters. The NAR said it expected the office vacancy rate to increase to 17.0 percent in the second quarter of 2011 from 16.7 percent in the latest period. Apartment rental buildings, which have been one of the few bright spots in the hard-hit commercial real estate sector, will likely see another decline in the vacancy rate to 5.6 percent next year from 6.0 percent in the most recent quarter.

 

 

9-RESIDENTIAL REAL ESTATE - PHASE II

 

One in 10 Mortgage Holders Face Foreclosure AP via CNBC

1) One in 10 American households with a mortgage was at risk of foreclosure this summer. 
2)
About 9.9 percent of homeowners had missed at least one mortgage payment as of June 30, Mortgage Bankers Association said Thursday. That number, which is adjusted for seasonal factors, was down slightly from a record-high of more than 10 percent as of April 30. In a worrisome sign, the number of homeowners starting to have problems with their mortgages rose after trending downward last year. The number of homes in the foreclosure process fell slightly, the first drop in four years.
3)
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.
4)
The number of Americans missing payments and falling into foreclosure has followed the upward trend in unemployment, which has been near double digits all year and has shown no sign of dropping soon.
5)
There was some modestly encouraging news. The percentage of mortgage borrowers receiving foreclosure notices fell slightly to 4.57 percent in the April-to-June quarter. That's down from 4.63 percent in the January-to-March period and the first drop in four years.
6)
And the percentage of loans receiving their first notice of foreclosure also dipped. That fell to 1.1 percent in the second quarter from 1.2 percent in the first quarter.

Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market. Government efforts haven't made much of a difference.

7) Nearly half of the 1.3 million homeowners who have enrolled in the Obama administration's main mortgage-relief program have been cut loose through July, the Treasury Department said last week. The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments.
8)
Roughly 32 percent of those who started the program have received permanent loan modifications and are making their payments on time.

 

 

10- EXPIRATION FINANCIAL CRISIS PROGRAM

 

 

11- PENSION & ENTITLEMENTS CRISIS



12- CHRONIC UNEMPLOYMENT


U.S. Jobless Claims Decline More Than Forecast BL
The average number of claims over the past month climbed to the highest level since November. Jobless claims dropped by 31,000, the first decline in a month, to 473,000 in the week ended Aug. 21. The number of people receiving unemployment insurance decreased, while those getting extended benefits climbed.
  1. o The four-week moving average of claims increased to 486,750 from 483,500 the prior week.
  2. o The number of people continuing to collect unemployment benefits dropped by 62,000 to 4.46 million in the week ended Aug. 14, from 4.52 million the prior week.
  3. o The continuing claims figure does not include those receiving extended benefits under federal programs. The number of Americans who’ve used up traditional benefits and are now collecting emergency and extended payments rose by about 302,000 to 5.84 million in the week ended Aug. 7.
  4. o 4.46M + 5.84M = 10.3M receiving unemployment benefits
  5. o 26 Year high

Slower U.S. Capital Investment May Reach Job Market BL

A slowdown in U.S. business investment may soon hit the job market, further hindering a recovery in the world’s largest economy. Capital spending, one of the few bright spots in the recovery, declined in July, according to Commerce Department figures released yesterday in Washington. Sales of new homes fell to the lowest level since data began in 1963, another report from the same agency showed, indicating a lack of jobs is crippling housing. Employers are reluctant to take on more staff until they see more evidence of durable growth


Lack of skilled workers threatens recovery- Manpower  AP

Workers with specialized skills like electricians, carpenters and welders are in critically short supply in many large economies, a shortfall that marks another obstacle to the global economic recovery, a research paper by Manpower Inc  concludes.  "It becomes a real choke-point in future economic growth," Manpower Chief Executive Jeff Joerres said. "We believe strongly this is really an issue in the labor market."  The global staffing and employment services company says employers, governments and trade groups need to collaborate on strategic migration policies that can alleviate such worker shortages. Skilled work is usually specific to a given location: the work cannot move, so the workers have to.

The shortage of skilled workers is the No. 1 or No. 2 hiring challenge in six of the 10 biggest economies

Manpower found in a recent survey of 35,000 employers. Skilled trades were the top area of shortage in 10 of 17 European countries, according to the survey.

ATTITUDES MUST CHANGE

While the short-term way to address to shortages is to embrace migration, the long-term solution is to change attitudes toward skilled trades, Manpower argues.  Since the 1970s, parents have been told that a university degree -- and the entry it affords into the so-called knowledge economy -- was the only track to a financially secure profession. But all of the skilled trades offer a career path with an almost assured income, Joerres said, and make it possible to open one's own business.  In the United States, recession and persistent high unemployment may lead parents and young people entering the workforce to reconsider their options.

WELDERS NEEDED

The skilled trades category also includes jobs like bricklayers, cabinet makers, plumbers and butchers, jobs that typically require a specialist's certification.  Older, experienced workers are retiring and their younger replacements often do not have the right training because their schools are out of touch with modern business needs. Also contributing to the shortage is social stigma attached to such work, Manpower argues in its paper published on Wednesday.

A poll of 15-year-olds by the Organization for Economic Cooperation and Development found only one in 10 American teenagers see themselves in a blue-collar job at age 30. The proportion was even lower in Japan.

Education could address that stigma. Students should be reminded that blue-collar work can be lucrative: skilled plumbers can make upwards of $75,000 a year, Manpower argues.

Overall, Manpower's fifth annual talent shortage survey found 31 percent of employers worldwide are having difficulty filling positions due to the lack of suitable workers available in their markets, up one percentage point over last year.

AN EMOTIVE ISSUE

Although the proportion of employers seeing shortages is still below pre-recession levels, shortages in some countries are more critical than the global average. Majorities of those surveyed in Poland, Singapore, Argentina and Brazil reported shortages. In Japan, 76 percent had trouble finding the right workers, the highest reading among the 36 countries and territories.  Examples of successful, targeted migration include an Ohio shipbuilder that brought in experienced workers from Mexico and Croatia, and a French metal-parts maker that hired Manpower to find welders in Poland.  Obstacles to such migration include differing standards for certification in skilled trades, as well as political barriers to immigration, which remains an "emotive" subject in many countries, Manpower's CEO said. Japanese employers, for example, have difficulty attracting skilled workers.  Sweden, on the other hand, is innovative and aggressive about strategic migration, for example by removing obstacles to workers being recertified in their specialty, Joerres said.


Strategic Migration - A Short-Term Solution to the Skilled Trades Shortage  Manpower Inc

Worker Shortages

Unemployment Data Masked A Huge Jump In Emergency Claims  BI
The latest report described a 200,000 jump in people seeking emergency unemployment extensions (Emergency Unemployment Compensation, EUC*), for the week ending August 7th, which is the latest data. As shown by a chart from Waverly Advisors below, emergency unemployment claims have shot up markedly as percentage of the workforce.

Waverly Advisors:

The number of claimants under all emergency extensions for the week ending August 7th expanded by 200k to 4.9 million. In context, the total receiving benefit extensions is now back over 3% of the civilian work force and at the highest level since April.

*Emergency Unemployment Compensation is provided as a temporary Federal extension for the unemployed who have already used up their regular state benefits.


Emergency Unemployment Claims

13- GOVERNMENT BACKSTOP INSURANCE

 

Mr. Gross Goes to Washington Gross
I proposed a solution that recognized the necessity, not the desirability, of using government involvement, which would take the form of rolling FNMA, FHLMC, and other housing agencies into one giant agency – call it GNMA or the Government National Mortgage Association for lack of a more perfect acronym – and guaranteeing a majority of existing and future originations. Taxpayers would be protected through tight regulation, adequate down payments, and an insurance fund bolstered by a 50–75 basis point fee attached to each and every mortgage.
  • o Americans now know that housing prices don’t always go up, and that they can in fact go down by 30%–50% in a few short years.
  • o Having grown accustomed to a housing market aided and abetted by Uncle Sam, the habit cannot be broken by going cold turkey into the camp of private lending.
  • o Private mortgage lenders will demand extraordinary down payments, impeccable credit histories and significantly higher yields than what markets grew used to over the past several decades.

 

 

14- CORPORATE BANKRUPTCIES

 



 


OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE

 

24-RETAIL SALES

 

 

31-FOOD PRICE PRESSURES

 




BP - British Petroleum

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

------------

 






 

GENERAL INTEREST

 

Hyperinflation, Part II: What It Will Look Like  ZH

The Great Deleveraging Lie  Burning Platform

Total credit market debt peaked at $52.9 trillion in the 1st quarter of 2009. It is currently at $52.1 trillion. The GREAT DE-LEVERAGING of the United States has chopped our total debt by 1.5%.

During the Great Depression of the 1930′s Total Credit Market Debt as a % of GDP peaked at 260% of GDP. As of today, it stands at 360% of GDP. The Federal Government is adding $4 billion per day to the National Debt. GDP is stagnant and will likely not grow for the next year. The storyline about corporate America being flush with cash is another lie. Corporations have ADDED $482 billion of debt since 2007. Corporate America has the largest amount of debt on their books in history at $7.2 trillion.

Now we get to the Big Lie about frugal consumers paying off debts, cutting up those credit cards, and eating Raman noodles 5 nights per week. Household and non-profit debt, which includes mortgages, credit card debt, auto loans, home equity loans, and student loans peaked at $13.8 trillion in 2008. After two years of supposed deleveraging, frugality and mass austerity, the balance is $13.5 trillion. Consumers have buckled down and have paid off 2.2% of their debts, it seems. Not exactly going cold turkey, but it is a start.

But wait. Consumer debt outstanding is $300 billion lower. If you hadn’t noticed, the banks in the United States have been taking a few losses on their loans over the last couple years. A simple search of the Federal Reserve website reveals that banks have charged off 5.66% of all their loans in the last two years. The charge off rate in the 2nd quarter of 2010 was 6.66%. To verify for yourself go to the Federal Reserve website:

http://www.federalreserve.gov/releases/chargeoff/chgallsa.htm

So, let’s get down to the nitty gritty. If consumer debt was $13.8 trillion at the end of 2008 and the banks have since written off 5.66% of that debt, total write-offs were $800 billion. If total consumer debt now sits at $13.5 trillion, then consumers have actually taken on $500 billion of additional debt since the end of 2008. The consumer hasn’t cut back at all. They are still spending and borrowing. It is beyond my comprehension that no one on CNBC or in the other mainstream media can do simple math to figure out that the deleveraging story is just a Big Lie.

The truth is that the debt has simply been shifted from criminal Wall Street Banks to the American taxpayer. These consumer debts were created in a private transaction between individuals and these banks. When the loans went bad, the consumer should have lost their home, car, etc., and their credit rating should have been ruined, keeping them out of the credit market for a number of years. If the banks that made these bad loans made too many, they should have failed and had their assets liquidated in bankruptcy. Instead, the Federal Government has inserted the American taxpayer into the equation by using our tax dollars to prop up insolvent Wall Street banks and allowing screw-ups who took on too much debt to live in houses for over two years without making a mortgage payment.

Intel CEO: U.S. faces looming tech decline  CNet
Intel Chief Executive Officer Paul Otellini offered a depressing set of observations about the economy and the Obama administration Monday evening, coupled with a dark commentary on the future of the technology industry if nothing changes.

Otellini's remarks during dinner at the Technology Policy Institute's Aspen Forum here amounted to a warning to the administration officials and assorted Capitol Hill aides in the audience: unless government policies are altered, he predicted, "the next big thing will not be invented here. Jobs will not be created here."  The U.S. legal environment has become so hostile to business, Otellini said, that there is likely to be "an inevitable erosion and shift of wealth, much like we're seeing today in Europe--this is the bitter truth." Not long ago, Otellini said, "our research centers were without peer. No country was more attractive for start-up capital...We seemed a generation ahead of the rest of the world in information technology. That simply is no longer the case."  

FLASH CRASH - HFT - DARK POOLS

 

 

MARKET WARNINGS

Albert Edwards: "We Are Returning To 450 On The S&P" ZH

 
"Equity investors are in for a rude shock. The global economy is sliding back into recession and they are still not even aware that these events will trigger another leg down in valuations, the third major bear market since the equity valuation bubble burst."

 

US-Europe Market Projections

 

 

GOLD MANIPULATION

Germans, And A Wave Of Swiss Bank Accounts, Are Piling Into Gold As If It's A New Crisis  Business Insider

 
As the Eurozone crisis made headlines, European retail demand for gold surged in the second quarter. While this was to be expected, given the concerns which emerged in regards to the value of the euro and a European financial crisis, the scale of the buying is a bit shocking, not to mention the concentrated buying from Germany and its German-speaking neighbors:

World Gold Council:

Net retail investment growth in Europe was again concentrated in the German- speaking countries (Germany, Switzerland and Austria). Germany (+59% YoY) and the US (+32% YoY) both recorded gains in excess of the 23% global total, while Switzerland posted a solid +19% gain over Q2 2009. In France, purchases of bars and coins just outweighed profit-taking, with net investment demand scraping in at 0.4 tonnes, which was marginally below the 0.6 tonnes from Q2 2009.

The table below shows just how shaken Germany and co were by the situation. Investors from Switzerland and Germany bought more gold than they ever have since the 2008 financial crisis. It's clear Eurozone fears are extremely elevated:

 

European Gold Sales

 

VIDEO TO WATCH

 

 

QUOTE OF THE WEEK

 

To paraphrase Oscar Wilde

Investors know the price of everything but the value of nothing.


BUY ANY BOOK

 

GET 2 MONTH SUBSCRIPTION TO

 

 MONTHLY MARKET COMMENTARY

BOOKSTORE

PROMOTION  DETAILS

 

 

Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.ont>

 

© Copyright 2010 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.

 

         

TODAY'S NEWS

FRIDAY

08-27-10

AUGUST
S M T W T F S
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30 31        

ARCHIVAL


TIPPING POINTS

1-SOVEREIGN DEBT & CREDIT CRISIS

2-EU BANKING CRISIS
3-BOND BUBBLE

4-STATE & LOCAL GOVERNMENT

5-CENTRAL & EASTERN EUROPE
6-BANKING CRISIS II
7-RISK REVERSAL

8-COMMERCIAL REAL ESTATE

9-RESIDENTIAL REAL ESTATE - PHASE II
10-EXPIRATION FINANCIAL CRISIS PROGRAM
11-PENSION CRISIS

12-CHRONIC UNEMPLOYMENT

13-GOVERNMENT BACKSTOP INSUR.
14-CORPORATE BANKRUPTCY
 

15-CREDIT CONTRACTION II

16-US FISCAL IMBALANCES
17-CHINA BUBBLE
18-INTEREST PAYMENTS
19-US PUBLIC POLICY MISCUES
20-JAPAN DEBT DEFLATION SPIRAL
21-US RESERVE CURRENCY.
22-SHRINKING REVENUE GROWTH RATE
23-FINANCE & INSURANCE WRITE-DOWNS
24-RETAIL SALES
25-US DOLLAR WEAKNESS
26-GLOBAL OUTPUT GAP
27-CONFIDENCE - SOCIAL UNREST
28-ENTITLEMENT CRISIS
29-IRAN NUCLEAR THREAT
30-OIL PRICE PRESSURES
31-FOOD PRICE PRESSURES
32-US STOCK MARKET VALUATIONS
33-PANDEMIC
34-S$ RESERVE CURRENCY
35-TERRORIST EVENT
36-NATURAL DISASTER

 

READING THE RIGHT BOOKS?

 

NO TIME?

 

WE HAVE IT ANALYZED & INCLUDED IN OUR LATEST RESEARCH PAPERS!

 

ACCEPTING PRE-ORDERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Book Review- Five Thumbs Up for Steve Greenhut's Plunder!  Mish

 

 

   

 

Fair Use Notice

Fair Use Notice

This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

 

If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.   

 

 

l Fractal Research l Secrets of the Pyramids l Φ Research l Platonic Solids l 6T Development Site

 

E-Mail


 
Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, we recommend that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, we encourage you confirm the facts on your own before making important investment commitments.

Copyright and Disclaimer

© Copyright 2010, Gordon T Long. The information herein was obtained from sources which the Gordon T Long. believes reliable, but we do not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that the Gordon T Long. or its principals may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Gordon T Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from us.