Gordon T Long

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INNOVATION: America has a Structural Problem

gave President Barrack Obama six months to roll-out his doomed Keynesian policies, twelve months to discover they were flawed and eighteen months to realize that the solution to America’s problems must lie within a different economic framework. I had hoped by the end of twenty-four months to see new policies closer to an Austrian economic philosophy emerge. I was wrong.

 

Though, even the Wall Street Journal recently featured an article on the re-emergence of the Austrian School of Economic philosophy, it would appear that President Obama’s administration still neither gets it, nor I am afraid ever will.

Key defections by his leading economic advisors, talk of the need for QE II and a Stimulus II, and a political collapse in public confidence suggests a growing awareness that Keynesian policies are not working, as many predicted they wouldn’t. Obama's exciting rhetoric of Hope and Change has left myself and the majority of recent polled Americans disillusioned and disappointed. What I see the administration failing to grasp is twofold:

 

I-America has a Structural problem, not a cyclical business cycle problem. Though the cyclical business cycle was greatly worsened by the financial crisis, I would argue that the structural problem facing the US is actually a contributor to what caused the financial crisis.

 

II- America has a Credit demand problem, not a Credit supply problem. It isn’t that the banks won’t lend, but rather that few can any longer afford or qualify (on any reasonably and historically sound basis) to borrow. READ MORE

   

 

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


READER ROADMAP -  2010 TIPPING POINTS aid to positioning COMMENTARY

 

 

 

POSTS:  WEDNESDAY 09-15-10

Last Update: 09/15/2010 04:56 AM

SCHEDULE: 1st Pass: 5:30AM EST, 2nd Pass: 8:00 AM, 3rd Pass 10:30 AM. Last Pass 5:30 PM

ARTICLE SOURCE 1 2 3 4 5 6 7 8 9 10
                       
Iran’s Global Ambitions - Part I Yale Global                    
                       
Greek PM Inadvertently Explains The Real Reason His Country Is Bankrupt BI X                  
Britain Without the Banks Bear's Liar X                  
The Canadian family: Deep in debt, net worth slipping G&M X                  
Japan intervenes to weaken yen FT X                  
Inventories in U.S. Rise at Fastest Pace in Two Years Bloomberg X                  
Retail Sales in U.S. Increase for a Second Month Bloomberg X                  
It’s double trouble to discount a double-dip recession Rosenberg     X              
Head Of NJ Teachers' Union Makes $550,000 A Year--2X As Much As The Governor And 10X The Average American BI       X            
Swaps rules leave insurers in limbo FT           X        
BASEL III                      
IMF head says Basel falls short on bank supervision Reuters           X        
Report Examines Private-Sector Lending in Housing Boom WSJ                 X  
                       
ARTICLE SOURCE 11 12 13 14 15 16 17 18 19 20
                       
Obstacle to Deficit Cutting- Entitlements WSJ X
IMF fears 'social explosion' from world jobs crisis Prichard   X                
Three signs it's truly a jobless recovery Fortune   x                
The 11th Reason Equities Are Dead- We Don't Need A Stock Market Anymore BI       X            
CHART OF THE DAY- China's #1 Problem Is Its Looming Labor Shortage BI             X      
Beware starting trade war, China economist tells U.S. Reuters             X      
'Goldman Conspiracy' helps China beat U.S. Farell             X      
Research - The outlook for US government debt Danske                 X  
Federal Government Budget - Update Northern T                 X  
Changing Perceptions on Economics and Politics NYT                    
US risks superpower status over deficit, Paulson warns Telegraph                 X  
                       
                       
BP OIL                      
BP cited for safety lapses in North Sea FT                    
CENTRAL BANKING & MONETARY POLICY                      
Bernanke Loses Control Over The Fed, As Internal Divide Now On Full Display For The Public BI                    
GENERAL INTEREST                      
John Williams Sees The Onset Of Hyperinflation In As Little As 6 To 9 Months As Fed "Tap Dances On A Land Mine" ZH                    
The Era of Expert Failure CATO                    
The decade after the fall: Diminished expectations, double dips, and external shocks VOX                    
FLASH CRASH                      
                       
MARKET WARNINGS                      
Investors: Don't Trust Wall Street, Don't Trust Regulators CNBC                    
David Rosenberg Is Embarrassed By What Passes For Research These Days BI                    
MARKET & GOLD MANIPULATION                      
                       
VIDEO TO WATCH                      
Llink to Pento post-mortem on King World News King World                    
                       

Complete Legend to the Right, Top Items below.
Articles with highlights, graphics and any pertinent analysis found below.

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

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AMBER ALERT

ACTIVITY

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09-15-10

 

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

 

IRAN

 

Iran’s Global Ambitions - Part I YALE Global

1- SOVEREIGN DEBT & CREDIT CRISIS

 

SOVEREIGNS

 

 

GREECE

Greek PM Inadvertently Explains The Real Reason His Country Is Bankrupt  BI

 

Here's what George Papandreou says:

Papandreou added that his administration had great hopes for its crackdown on tax evasion, even though it has fallen short of its target in revenue collection so far. “If Greece stamps out tax evasion, it will not need any new loans and will emerge much more quickly from the current crisis,” he said. So the tax crackdown is falling short, and yet that's what the whole reforms hinge on. Cracking down on this stuff requires major cultural, institutional changes that can't happen in the next few months. Restructuring is coming.

Don't miss: 10 devastating facts about the Greek pension system >

 

UK

Britain Without the Banks Bear’s Lair

 

CANADA

The Canadian family: Deep in debt, net worth slipping G&M


JAPAN

Japan intervenes to weaken yen FT

 

 

USA

 

 

Inventories in U.S. Rise at Fastest Pace in Two Years BL Census


Retail Sales in U.S. Increase for a Second Month BL

 

 

2- EU BANKING CRISIS

   

 

3- BOND BUBBLE

 

It’s double trouble to discount a double-dip recession Rosenberg

 
Recent gains in bond yields and stock prices are creating a false sense of security

 

 

 

4- STATE & LOCAL GOVERNMENT

 

Head Of NJ Teachers' Union Makes $550,000 A Year--2X As Much As The Governor And 10X The Average American  BI

 

5- CENTRAL & EASTERN EUROPE

 


6-BANKING CRISIS II

 

Swaps rules leave insurers in limbo  FT

 

BASEL III

 

IMF head says Basel falls short on bank supervision Reuters

 

 

7- RISK REVERSAL

 

 

8- COMMERCIAL REAL ESTATE

 

 

9-RESIDENTIAL REAL ESTATE - PHASE II

 

Report Examines Private-Sector Lending in Housing Boom WSJ (via Google jump)  FHFA

 

While around 30% of all private-label loans have been 90-days delinquent at some time, that rate falls to 10% for all loans backed by Fannie and Freddie.

 

10- EXPIRATION FINANCIAL CRISIS PROGRAM

 

 

11- PENSION & ENTITLEMENTS CRISIS


Obstacle to Deficit Cutting- Entitlements  WSJ
Efforts to tame the U.S. deficit could soon confront a daunting reality: Nearly half of all Americans live in a household in which someone receives benefits, more than at any time in history.









12- CHRONIC UNEMPLOYMENT


IMF fears 'social explosion' from world jobs crisis Pritchard  IMF

Three signs it's truly a jobless recovery Fortune

13- GOVERNMENT BACKSTOP INSURANCE

 

 

14- CORPORATE BANKRUPTCIES

 

The 11th Reason Equities Are Dead- We Don't Need A Stock Market Anymore  BI

 

Yesterday it was reported that Microsoft would take on debt and buy back shares. HP has announced the same thing, and today Cisco says that its taking on debt to pay a dividend (which is similar).

The fact is that if you're a big blue chip, it behooves you to take on as much debt as you can -- super-cheap capital at these rates -- and buy up all your equity, which is expensive capital.And if a company won't do it itself, no doubt there are some PE shops looking at making the same calculus (although a PE shop isn't likely to be able to get capital quite as cheaply as a company can itself).

But bottom line, with rates this low, there's just not much reason to finance via equity. It's all about debt.

Now see the first 10 reasons equities are really dead this time >

 

17- CHINA BUBBLE


CHART OF THE DAY- China's #1 Problem Is Its Looming Labor Shortage  BI
When most people think of China, they think of its growth and massive population over 1 billion. What they don't think of is that that population may have peaked, and that could have a huge impact on the country's workforce. Dylan Grice pointed out in a piece from last year for Societe Generale that the Chinese workforce is about to do the same thing Japan's did: shrink. This reduction will be a result of the country's one-child policy, which is now coming home to roost. This shrinkage could cripple economic growth and be a one of the triggers for a Japan style bubble burst and lost decade in China. From Dylan Grice of Societe Generale:



Beware starting trade war, China economist tells U.S. Reuters

'Goldman Conspiracy' helps China beat U.S. Farrell
China: $123 trillion economy by 2040, three times bigger than America

It's crucial to see why China is so successful, so prosperous while Americans are trapped in a paranoid self-destructive culture, why we're blinded, virtually incapable of thinking outside a box that's projecting years of high unemployment ... as our suicidal war economy continues eating up roughly 50% of our tax dollars ... as our ideological battles dig us deeper into debt ... as our press keeps distracting us, focusing narrowly on self-serving warmongering wingnuts ... as the actions of partisan leaders irresponsibly and unconsciously aid and abet China's grand strategy to replace America as the world's economic superpower ... and as the Goldman Conspiracy sabotages us from within.

19- PUBLIC POLICY MISCUES

Research - The outlook for US government debt Danske


Federal Government Budget - Update NTrust

 
Changing Perceptions on Economics and Politics NYT (Norris)


US risks superpower status over deficit, Paulson warns Telegraph

 


 


OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE

 

19-US PUBLIC POLICY MISCUES

 

 

24-RETAIL SALES

 

 

26-GLOBAL OUTPUT GAP

 

 

31-FOOD PRICE PRESSURES

 

 

32-US STOCK MARKET VALUATIONS

 




BP - British Petroleum

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

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

 


BP cited for safety lapses in North Sea  FT



   

CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES

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

 

Bernanke Loses Control Over The Fed, As Internal Divide Now On Full Display For The Public  BI

The FOMC is meeting next week, and the huge question is whether the Fed will stand pat or start nibbling at more Treasuries. Today's dollar drubbing may have been the result of increased expectations that indeed some form of QEII (quantitative easing, round 2) will in fact begin next week.So what will happen? Nobody has any idea if the latest report from WSJ's John Hilsenrath is right.Some on the Fed are ready to take more action. Others want to see more evidence of worsening. Others don't think action could possibly do any good. When you combine the existing internal divisions with the unclear data -- the economy seems to be in a soft patch, and yet some of the recent data has been decent -- it makes it even harder to figure out what's going on. But what we do know is that the Bernanke has lost any ability to convey a united Fed that will clearly stand athwart deflation, and it's hard to see that being good for the market.

 

 GENERAL INTEREST

 

John Williams Sees The Onset Of Hyperinflation In As Little As 6 To 9 Months As Fed "Tap Dances On A Land Mine"  ZH  Source: Shadow Stats

 
John Williams, arguably one of the best trackers of real, unmanipulated government data via his Shadow Stats blog, has just released a note to clients in which he warns that hyperinflation may hit as soon as 6 to 9 months from today.


1- Official actions, however, in combination with global perceptions of limited U.S. fiscal flexibility, likely will trigger massive flight from the U.S. dollar and force the Federal Reserve into heavy monetization of otherwise unwanted U.S. Treasury debt.  When that land mine explodes — probably within the next six-to-nine months, the onset of a U.S. hyperinflation will be in place, with severe economic, social and political consequences that will follow.  The Hyperinflation Special Report is referenced for broad background.  The general outlook is not changed.

2- U.S. Economy.  Already the longest and deepest economic contraction of the post-World War II era, the current downturn in the U.S. economy is re-intensifying, with no near-term stability or recovery on the forecast horizon.  After an initial plunge, broad-based business activity bottom-bounced at a low-level plateau for more than year.  Shy of short-lived bumps in activity from stimulus measures, there has been no recovery.  Reflecting an intense real (inflation-adjusted) annual contraction in broad systemic liquidity (SGS-Ongoing M3 estimate), the economy has started to contract anew.  In the popular media, where the hype of a recovery-at-hand readily was accepted, the renewed downturn already is being called a "double-dip," but underlying reality is that of an extremely protracted, deep and ongoing contraction.  If there is a double-dip, it is in the combination of the two major economic downturns of the last decade (see graphs).
 
Structural problems tied to lack of real consumer income growth — and worsened now by a credit-intensified contraction in consumer liquidity — pushed the economy into recession by early 2007, almost a year before the officially-clocked onset of December 2007.  Such helped to trigger the credit collapse, which exacerbated the unfolding downtown and threatened systemic collapse.  Despite extraordinary efforts to prevent a failure of the banking system, the structural consumer liquidity issues have not been addressed.  Until they are, sustainable growth in U.S. business activity will be lacking.
 
The current contraction likely will meet my definition of depression (a greater than 10% real decline in peak-to-trough activity).  In response to a likely hyperinflation, the current circumstance would evolve into a great depression (a greater than 25% real decline in peak-to-trough activity).  Ongoing contractions in the world’s largest economy have sharply negative implications for global economic growth, but the hyperinflation risk for the United States likely will not spread to the more-stable major U.S. trading partners.
 
3- U.S. Inflation.  Risk remains exceptionally high in the next six-to-nine months for a combination of massive U.S. dollar selling and heavy Federal Reserve monetization of Treasury debt to boost inflation, and to open the early stages of a U.S. hyperinflation.  As discussed in the Hyperinflation Special Report, runaway inflation is a virtual certainty by mid-decade.
 
Defining inflation (deflation) in terms of annual change in the prices of consumer goods and services, consumer prices currently are about as contained as they have been since before the financial crises began to break in 2007, even as measured by the SGS-Alternate CPI measures.  Tied to wild swings in oil and related gasoline prices, the CPI began to pick-up sharply in 2008, as oil prices soared, but prices then retreated to a period of short-lived official deflation in 2009, as oil prices collapsed.  The current "contained" circumstance will not last, and the problem ahead very likely is not going to be deflation, partially because the Fed has indicated that it will act to prevent deflation, and it has the ability to do so.
 
First, though, again, as point of clarification, I define inflation in terms of changes in consumer prices, not in terms limited purely to changes in money supply growth (annual broad nominal growth is negative), nor in terms of asset inflation or deflation (a stock market crash does not necessarily lead to contracting consumer prices).

A sharp annual contraction in money supply, as seen at present in annual M3 (the SGS-Ongoing M3 estimate) legitimately can and has raised fears of deflation.  Federal Reserve Chairman Bernanke has noted (see his 2002 comments in the Hyperinflation Special Report) and effectively confirmed in his recent Jackson Hole, Wyoming speech that a central bank in conjunction with its central government always can debase its currency (create inflation) in order to prevent deflation.
 
A central bank indeed can do that, if it so desires.  The quantitative easing undertaken by Japan never was designed to debase the yen.  Similarly, Mr. Bernanke’s quasi-effort at dollar debasement in the trillion-dollar-plus expansion of excess bank reserves was aimed specifically at banking system stability, not at creating inflation, per se.  The deflation fight, though, is at hand and will be discussed further in the Systemic Stability section.
 
Current projections on the federal budget deficit, U.S. Treasury funding needs, banking industry solvency stress tests, etc. all have been predicated on some form of economic recovery.  There is and will be no recovery for the foreseeable future; and the negative implications of that for U.S. funding needs and for systemic stability should act as eventual triggers for massive dumping of the U.S. dollar.  Those circumstances also should lead to funding difficulties for the U.S. Treasury, putting the Federal Reserve in the position as lender of last resort to the Treasury.  Such lending would be direct monetization of U.S. Treasury debt, which would feed directly into the money supply.
 
Actions already taken by the Fed and the U.S. Government in the ongoing crises have pushed major U.S. lenders to the brink of abandoning the U.S. dollar as the world’s reserve currency, and to the brink of dumping dollar-denominated assets.  Keep in mind that a weak U.S. dollar can be extremely inflationary, particularly when dollar-denominated oil prices rise in response to such weakness, as has been seen in the last several years.
 
4- Systemic Stability.  Threatened with systemic collapse at the time of the 1987 stock crash, then-Federal Reserve Chairman Alan Greenspan began serious efforts to forestall an eventual day-of-reckoning for the economy and financial system, through encouraging massive debt expansion, with leverage built upon leverage.  As the economy faltered in early 2007, the system began to fall apart.  The financial system did face collapse, and the Fed and the U.S. government did all in their powers — spent whatever money they thought they had to — to prevent it.  A systemic collapse would have represented a complete functional failure of the U.S. government and the Federal Reserve.  Such had to be, and still has to be, avoided at all costs, as far as the government and Fed are concerned.  The big problem is there are no viable solutions.
 
The federal government effectively is bankrupt, unable to meet its long-range obligations or even to cover physically its annual shortfall in operations (see the Hyperinflation Special Report).  Accordingly, the efforts at fiscal stimulus rapidly are approaching their practical limits, the point at which the U.S. Treasury will have difficulty raising needed funds.  There are three options open to the government for meeting its impossible fiscal needs: balancing its books, reneging on its obligations or printing the money it cannot possibly raise through taxation. 
 
The option for balancing the books would mean the U.S. government reversing its ever-evolving social-system policies of the last 75-plus years, abandoning the concept of federal government social programs supporting the income, retirement and health needs of the broad public.  The economy cannot expand enough, taxes cannot be raised enough and other expenses cannot be cut enough otherwise to balance the books.
 
Specifically needed are slashing of the Social Security, Medicare and Medicaid programs, as well as the nascent fiscal shortfalls already building up as a result of the healthcare system control recently seized by the federal government.  Such change is an extremely unlikely political possibility in the current system and circumstance, which leaves open the general options of government default on its obligations or government printing of money to meet its obligations.  The latter option is the usual and likely one to be taken.
 
With no easy or politically-practical solutions, the available options all are bad; the choices being made and likely to continue being made are aimed at delaying systemic turmoil as long as possible.  Ironically, it likely will be the efforts at saving the system that push the system into its ultimate day-of-reckoning in a hyperinflationary great depression.  The general background material provided in the Hyperinflation Special Report again is referenced here, as I do not want to get overly repetitive with key points of the broad picture.
 
Consider, though that the "quantitative easing" entered into by the Fed had minimal impact on the money supply, as it involved mostly the purchase of mortgage-backed securities, with the created excess bank reserves being deposited with Fed, earning interest.  As result, bank lending into the normal flow of commerce has been in contraction, and the broad money supply has followed.  Now the Fed is considering the possibility of inducing banks to lend, by cutting the interest rate it pays on reserve balances.
 
The Fed’s primary function — as a private corporation owned by commercial banks — is to protect the banking system.  Supporting economic growth and containing inflation are secondary concerns, but the renewed economic threat now also can shatter the fragile appearance of banking-system stability.  Indeed, the banking system is far from stable, which is one reason lending is down.
 
Separately, a number of states will need financial bailouts, insolvent pension funds will seek government backing, the unemployed will be looking for greater support, etc., and all these pressures will be on top of a renewed decline in federal tax revenues.   The most likely course of action here remains ongoing efforts to spend or create whatever money is needed to keep the system from collapsing.  Where the options are for devil’s choices, the one that buys the most time and is least politically painful usually is the one chosen.
 
Greenspan abandoned the U.S. dollar for a while following the 1987 stock crash.  The dollar and foreign investment likely will become secondary concerns for political Washington against a U.S. populace looking to kick out the political miscreants — both sides of the aisle — who have lead the U.S. system into this crisis over decades.  The ultimate cost in domestic inflation will be horrendous.

What does this mean for US financial markets? (take a wild guess)

In these circumstances, the financial markets likely will be highly unstable and volatile.  Looking at the longer term, strategies aimed at preserving wealth and assets continue to make sense.  For those who have their assets denominated in U.S. dollars, physical gold and silver remain primary hedges, as do stronger currencies such as the Canadian and Australian dollars and the Swiss franc.  Holding assets outside the U.S. also may have some benefits.

 

The Era of Expert Failure CATO

 

The decade after the fall: Diminished expectations, double dips, and external shocks VOX

FLASH CRASH - HFT - DARK POOLS

 

MARKET WARNINGS

 

Investors: Don't Trust Wall Street, Don't Trust Regulators CNBC

David Rosenberg Is Embarrassed By What Passes For Research These Days  BI

 

MARKET & GOLD MANIPULATION

 

 

AUDIO / VIDEO

 

Llink to Pento post-mortem on King World News

 

Zero Hedge Commentary on CNBC Interview: For some, this week's incident on CNBC where Michael Pento was kicked off CNBC for daring to question the basic assumption that his host Erin Burnett presented as fact, was perplexing (to others, who are well aware of the modus operandi of the TV station is, not so much). In a follow up interview that was uninterrupted by commercial breaks and octoboxes, with King World News, Michael Pento gives a post-mortem of just what transpired: "I looked at it 4 times and I don't when I went off the rails, I thought it was a bit unwarranted. All I was doing was being very passionate about an issue I feel very strongly about." The core of the disagreement of course, is the underlying assumption which CNBC takes as gospel, which is that no matter what, interest rates will not, are not allowed to rise (which together with a failed treasury auction, will be the key indicators of the "beginning of the end"). And Pento is completely right to question this as the underlying "factual basis" of any rhetorical question: "We as Americans have no right to believe that interest rates on the 10 year, which are far below their historic 49 year average, 7.31%, are now on 2.7%, so the onus is not on me that interest rates will rise. The onus is on other people to convince me and the investing public that the US bond market will always be in a perpetual bubble that will never burst. And if you look at the data, it shows that this can not be a sustainable situation." Pento then goes on to highlight all the facts that certainly make his case, but that ultimately all collapse into one thing: that the Fed will be able to continue to control, and frankly, manipulate the rate market for perpetuity. This is a flawed assumption and sooner or later Ben Bernanke will lose control as with every system which is in disequilibrium, the snapback to a sustainable balance will occur, and the longer it is kept away from its natural state, the more violent the snapback will be.

One point that Pento discusses that bears further attention, is his argument that governmental investment in the economy should decline and the private sector should be encouraged to pick up the slack. Of course, with the Balance of Payments equation which is now on the forefront of public attention, this means that unless the Current Account goes positive, the private sector is unlikely to be able to pick up the slack from a collapse in endless governmental stimulus (and thus constant debt creation). Which goes to the crux of the Keynesian-Austrian debate. Many would say here that instead of having funded the government apparatus, which as even Mort Zuckerman points out is beyond unwieldy and has grown excessively, the government should have instead have focused on making the US competitive from an international trade standpoint, a topic even Warren Buffett lamented in his non-corrupt days, when he was actually a voice of reason, and not just unbridled, government captured greed. Alas, that would mean a total break from the current Chinese trade surplus hegemony and realigning the US economy in a way that would result in a dramatic shock to millions of people who realize they are simply uncompetitive in the global picture (and thus redundant in the job market) but which would serve as another much needed reset to get America off on a way to long-lost prosperity with an attempt to reincarnate the American manufacturing sector while gradually phasing out the service sector (and especially its "financial innovation" component) . Yet as Gorgon T. Long also pointed out a few days ago, America is now dead set on repeating the destructive Keynesian mistakes of the past, and will continue to fund a broken model until one day, as Michael Pento all too correctly points out, it all snaps, and the "shocking" death of Keynesianism, as described a month ago by Eric Sprott, catches all so many completely unaware.

Of course to explain all this to Erin Burnett, who still believes that the government has done a great job with the "fastest" recovery in the past 20 years, which would be correct if one could eliminate those little pesky things known as "facts", is beyond folly. All those who are invited to CNBC, and dare to explain the truth: you have been warned.

 

 

QUOTE OF THE WEEK

 

“The great enemy of the truth,” John F. Kennedy declared in a 1962 commencement address at Yale University, “is very often not the lie – deliberate, contrived and dishonest – but the myth – persistent, persuasive and unrealistic.”


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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.

 

         

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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.

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© 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.