Gordon T Long

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COMMENTARY for all articles by Gordon T Long

 

PRESERVE & PROTECT: The Jaws of Death

 

The United States is facing both a structural and demand problem - it is not the cyclical recessionary business cycle or the fallout of a credit supply crisis which the Washington spin would have you believe.

 

It is my opinion that the Washington political machine is being forced to take this position, because it simply does not know what to do about the real dilemma associated with the implications of the massive structural debt and deficits facing the US.  This is a politically dangerous predicament because the reality is we are on the cusp of an imminent and significant collapse in the standard of living for most Americans.

 

The politicos’ proven tool of stimulus spending, which has been the silver bullet solution for decades to everything that has even hinted of being a problem, is clearly no longer working. Monetary and Fiscal policy are presently no match for the collapse of the Shadow Banking System. A $2.1 Trillion YTD drop in Shadow Banking Liabilities has become an insurmountable problem for the Federal Reserve without a further and dramatic increase in Quantitative Easing. The fallout from this action will be an intractable problem which we will face for the next five to eight years, resulting in the “Jaws of Death” for the American public.  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:  WEEKEND 10-09-10

Last Update: 10/10/2010 11:33 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
                       
Greek civil servants paralyze government services Reuters X                  
Portugal Braces for Its First Joint General Strike in 22 Years Bloomberg                    
Real Estate Collapse Spells Havoc in Dubai NY TImes X                  
House prices record worst monthly fall ever Independ. X                  
The UK Now Officially Sees The US As A Banana Republic ZH X                  
Iceland Banks May Be Asked to Forgive $2 Billion After Protests Bloomberg X                  
Japan Says to Continue Forex Intervention if Necessary Reuters X                  
China Credit-Rating Upgrade Looms as a `Double-Edged Sword' Bloomberg X                  
USA                      
850,000 Or 530,000- What Is The Real Number Of Jobs Created In 2010 ZH X                  
Employers in U.S. Cut More Jobs Than Forecast in September Bloomberg X                  
U.S. Lost 95,000 Jobs in September WSJ X                  
Meanwhile, "Real Unemployment" Surged Massively In September BI X                  
Wholesale Inventories in U.S. Rose 0.8% in August Bloomberg X                  
Deficit near $1.3 trillion CNN X                  
While Europe Scrimps, European Union Spends NY Times   X                
Global Government Debt Levels on `Explosive Path,' S&P Says Bloomberg     X              
Corporate Debt Sales Fall for Third Week Despite Reynolds Issue Bloomberg     X              
The Search for Intelligent Yields Forsyth     X              
S&P Projects 60% Of All Countries Will Be Junk-Rated By 2060, Sees Increasing "Tests To Social Cohesion" ZH     X              
It's Now Obvious That The Crucial Economic Problem Is State Governments BI       X            
Meredith Whitney Warns Of Massive Pain Coming For The States, 80K Layoffs On Wall Street BI       X            
Building America's Next Bailout Weekly Standard                 X  
Janet Tavakoli On The "Biggest Fraud In The History Of Capital Markets" ZH                 X  
                       
ARTICLE SOURCE 11 12 13 14 15 16 17 18 19 20
                       
America's $4.6 trillion retirement hole CNN                    
A record 30% of unemployed people out of work at least a year USAT   X                
China Credit-Rating Upgrade Looms as a `Double-Edged Sword' Bloomberg             X      
Obama kills foreclosure bill as fury mounts Reuters                 X  
REMAINING                      
Soaring prices threaten new food crisis FT                   31
                       
                       
BP OIL                      
Doubts Emerge Over BP's Disaster Study WSJ                    
CENTRAL BANKING & MONETARY POLICY                      
Gross Says Employment Report a Signal For More Fed Easing Bloomberg                    
Fed's Next Meeting Will Be 'Tough Call': Bullard CNBC                    
As “QE2″ Looms, Is the Fed Focusing on the Wrong Things? Hutchison                    
Fed Needs to Pump Trillions More Into Economy: Analyst CNBC                    
'QE2': How to Invest in Manipulated Markets TheStreet                    
Ben Bernanke and his QE Street Band WSJ                    
Central bankers are huddling in search of a magic elixir to ward off deflation Pearlstein                    
Central bankers are huddling in search of a magic elixir to ward off deflation Omaha                    
Fisher Rebuts Calls for More Action WSJ                    
GENERAL INTEREST                      
Greenspan Says U.S. Creating `Scary' Deficit By Borrowing Bloomberg                    
`Black Swan' Author Says Investors Should Sue Nobel for Crisis Bloomberg                    
The end of economics Bedlam                    
Pictures of Deflation AEI                    
12 Ominous Signs For World Financial Markets Economic Collapse                    
FLASH CRASH                      
Refuting The SEC's Lies At The Core Of The "Flash Crash" Analysis ZH                    
MARKET WARNINGS                      
Equities Go Full Retard As Rates Run For Cover ZH                    
Is the Flattening Yield Curve Good For Stocks? Sonders                    
Trading slump seen hitting Morgan Stanley, Goldman AP                    
Retail investors are cashing out of stocks Business Standard                    

CURRENCY WARS

                     
Guest Post- Is A Currency War Coming ZH                    
BRICs Oppose U.S. on Currency Controls, Russia Says Bloomberg                    
Dollar Drops After Payrolls WSJ                    
Triple Crisis                      
Finance leaders seek currency peace                      
France seeks monetary overhaul Reuters                    
Currency wars prove decoupling is a myth MW                    
Will messy skirmishes in currency manipulation lead to all-out war? Independ.                    
China must fix the global currency crisis Soros                    
Feldstein Predicts Dollar to Weaken, Boosting Exports BL Video                    
Building America's Next Bailout Weekly Standard                    
MARKET & GOLD MANIPULATION                      
$6,000 Silver and ONE BANK  (Article Below - Sent by Reader - no link) Bix Weir                    
J.P Morgan: Gold to trade above $1,400/oz in 2011 MW                    
VIDEO TO WATCH                      
                       

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

RED ALERT

AMBER ALERT

ACTIVITY

MONITOR

Click to Enlarge





10-09-10

 

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

 

IRAN

ISREAL

KOREA

 

1- SOVEREIGN DEBT & CREDIT CRISIS

 

SOVEREIGNS

 

 

GREECE

Greek civil servants paralyze government services Reuters

 

PORTUGAL

Portugal Braces for Its First Joint General Strike in 22 Years BL

GERMANY

 

DUBAI

Real Estate Collapse Spells Havoc in Dubai NYT

 

UK

House prices record worst monthly fall ever Inde

The UK Now Officially Sees The US As A Banana Republic  ZH

 

ICELAND

Iceland Banks May Be Asked to Forgive $2 Billion After Protests BL

 

JAPAN

Japan Says to Continue Forex Intervention if Necessary Reuters

 

China Credit-Rating Upgrade Looms as a `Double-Edged Sword' BL

 

USA

 

 

850,000 Or 530,000- What Is The Real Number Of Jobs Created In 2010  ZH

 

 

Obama conveniently forgot to mention that the BLS just revised its trailing 12 month NFP number by 366 earlier today, taking a major Birth/Death biased haircut out of the propaganda numbers. Which is why when adding all YTD NFP numbers (excluding census), and excluding the now revised impact of the 366,000 on a monthly basis (30.5K from from the January-March numbers), one gets a number of 530K jobs, which is about 62% of the number boasted by Obama earlier.

Employers in U.S. Cut More Jobs Than Forecast in September  BL

 

The U.S. lost more jobs than forecast in September, reflecting a decline in government payrolls that shows the damage being done by rising fiscal deficits.

Employers cut staffing by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. The median estimate of economists surveyed by Bloomberg News called for a 5,000 drop. The unemployment rate unexpectedly held at 9.6 percent.

Private payrolls that exclude government agencies climbed 64,000, less than forecast, underscoring the concern expressed by some Federal Reserve policy makers that the rebound from the worst recession since the 1930s has been too slow and may require easier monetary policy. Economists surveyed by Bloomberg project unemployment will average at least 9 percent through 2011, which may restrain consumer spending, the biggest part of the economy.

The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 366,000 jobs in the 12 months ended March 2010. The data currently show a 1.7 million drop in employment during that time.

Longest Since 1948

The jobless rate has equaled or exceeded 9.5 percent for 14 consecutive months, surpassing the 13-month period from mid 1982 to mid 1983 as the longest span of elevated joblessness since monthly records began in 1948.

The decrease in overall payrolls reflected a 77,000 decline of temporary workers hired by the government to conduct the decennial population count and a 49,800 drop in teaching jobs at the local government level.

Manufacturing payrolls decreased by 6,000 after declining 28,000 a month earlier. Economists projected a 2,000 increase for September. Employment at service-providers decreased 73,000. Construction companies subtracted 21,000 workers and retailers hired 5,700 workers.

Average hourly earnings were little changed at $19.10, today’s report showed.

Government payrolls decreased by 159,000. State and local governments reduced employment by 83,000, while the federal government lost 76,000 jobs.

The average work week for all workers held at 34.2 hours.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 17.1 percent from 16.7 percent. The number of temporary workers increased to 16,900 after adding 17,700 in August. Payrolls at temporary-help agencies often slows as companies seeing a steady increase in demand take on permanent staff.

 

U.S. Lost 95,000 Jobs in September  WSJ

 

Meanwhile, "Real Unemployment" Surged Massively In September  BI

 

jobs data aficionados are frequently drawn to U-6, so-called "real unemployment" because that shows discouraged or marginally-attached workers.

And that number spiked from 16.7% to 17.1% in September, suggesting big problems underneath the hood.

Wholesale Inventories in U.S. Rose 0.8% in August BL

Deficit near $1.3 trillion CNN CBO File

 

2- EU BANKING CRISIS

   

While Europe Scrimps, European Union Spends NYT

 

3- BOND BUBBLE

 

Global Government Debt Levels on `Explosive Path,' S&P Says BL

 
“The erosion in sovereign ratings would start in 2015, when hypothetical ratings on a number of highly rated sovereigns come under pressure.”

 

Corporate Debt Sales Fall for Third Week Despite Reynolds Issue BL

 

The Search for Intelligent Yields Forsyth

 

S&P Projects 60% Of All Countries Will Be Junk-Rated By 2060, Sees Increasing "Tests To Social Cohesion"  ZH

 

 

4- STATE & LOCAL GOVERNMENT

 

It's Now Obvious That The Crucial Economic Problem Is State Governments  BI

 
This morning's jobs report was a bit of a split decision -- the private sector jobs number was somewhat decent, but government job cutting was aggressive. And only half the government cuts were census-related. The rest came from state governments, which are in dire straits. They don't have their own mini-Feds to keep them funding, and there hasn't been enough of a re-bubble in property to get taxes back to their old levels.

Meredith Whitney recently issued a huge report about how the states represent systemic risk, and she's absolutely right. They're emerging as the key economic problem.  The states will need bailouts, but the emerging political situation suggests that's going to be difficult

Meredith Whitney Warns Of Massive Pain Coming For The States, 80K Layoffs On Wall Street  BI

 

Meredith Whitney may not be ahead of the curve on this -- folks have been warning about this for awhile -- but it's significant that one of the most visible analysts on the street is warning about the economic health of the states and the systemic risk they pose to the economy. She predicts they'll need bailouts, but not sure they're really going to happen, given that it would require conservatives in states like Texas and Nebraska to vote for money to California and Michigan. Seems implausible.e

She's also warning of major risk to the banks after this quarter, as housing weakens again. She sees 80,000 in Wall Street layoffs.  Who does she like? Visa and Mastercard, she says, have been unfairly punished following financial regulations, and she predicts that their duopoly will survive.

 

 

 


5- CENTRAL & EASTERN EUROPE

 


6-BANKING CRISIS II



7- RISK REVERSAL

 

 

8- COMMERCIAL REAL ESTATE

 

 

9-RESIDENTIAL REAL ESTATE - PHASE II

 

Building America's Next Bailout Weekly Standard

 

Janet Tavakoli On The "Biggest Fraud In The History Of Capital Markets" ZH

 

When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one. Many investors now are waking up to the fact that they were defrauded. Even sophisticated investors. If you did your due diligence but material information was withheld, you can recover. It’ll be a case-by-by-case basis.

This can be done with a resolution trust corporation, the way we cleaned up the S&Ls. The system got back on its feet faster because we grappled with the problems. The shareholders would be wiped out and the debt holders would have to take a discount on their debt and they’d get a debt-for-equity swap. Instead we poured TARP money into a pit and meanwhile the banks are paying huge bonuses to some people who should be made accountable for fraud. The financial crisis was a product of our irrational reaction, which protected crony capitalism rather than capitalism. In capitalism, the shareholders who took the risk would be wiped out and the debt holders would take a discount but banking would go on.

 

 

10- EXPIRATION FINANCIAL CRISIS PROGRAM

 

 

11- PENSION & ENTITLEMENTS CRISIS


America's $4.6 trillion retirement hole CNN  EBRI

12- CHRONIC UNEMPLOYMENT


A record 30% of unemployed people out of work at least a year USAT

13- GOVERNMENT BACKSTOP INSURANCE

 

 

14- CORPORATE BANKRUPTCIES

 

 

17- CHINA BUBBLE


China Credit-Rating Upgrade Looms as a `Double-Edged Sword' BL

19- PUBLIC POLICY MISCUES

 

Obama kills foreclosure bill as fury mounts  Reuters

 

President Barack Obama killed proposed legislation on Thursday that struck at the heart of growing political rage over how banks have moved to evict struggling borrowers from their homes. The bill, which would have made it more difficult for homeowners to challenge foreclosures, came under the spotlight this week as the furor grew over disclosures that some of the biggest U.S. mortgage processors filed false affidavits in thousands of foreclosure cases.

Obama sent the bill back to the House of Representatives for further discussion on how it would affect the foreclosure crisis, one of the most visible signs of the deep economic problems gripping the country. The chorus of calls from political leaders for a suspension of foreclosures grew on Thursday, with Senate Majority Leader Harry Reid and Representative Ed Towns, the Democratic chairman of the House Committee on Oversight and Government Reform, adding their voices.

The bill, the Interstate Recognition of Notarizations Act, cruised through the Senate last week with no public debate and could have shielded bank and mortgage processors from liability for foreclosure documents that were prepared improperly.

"We believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized," the White House communications director, Dan Pfeiffer, said in a blog posting.  In a development first reported by Reuters, the bill would have required courts to accept all out-of-state notarizations, including those stamped en masse by computers in a practice that critics say has been improperly used to expedite foreclosure orders.

Senate Majority Leader Harry Reid, who is fighting a tough bid for reelection in Nevada, where foreclosure rates have been the highest in the nation, on Thursday called for the largest mortgage servicers to suspend foreclosures in Nevada.  And Towns, a New York Democrat, called for top mortgage lenders and banks to voluntarily halt all foreclosures in the country and asked New York Attorney General Andrew Cuomo to investigate allegations of fraud and other possible criminal activity.

"Losing a home can be one of the most traumatic experiences faced by an American family. Anyone forced to go through this process should be treated fairly. Sadly, it appears this may not have been the case for some borrowers," Towns said in a statement.

So far, Ally Financial Inc's GMAC Mortgage, JPMorgan Chase & Co and Bank of America have all announced that they are suspending some of their foreclosures to review whether they have been conducting them properly.  Wells Fargo has said that it is "confident" in its foreclosure paperwork, and Citigroup has also not announced plans to halt foreclosures despite increased pressure from state attorneys general and lawmakers in Washington.

Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year, according to real estate data company RealtyTrac Inc.

False notarizations figured in disclosures that GMAC, JPMorgan and other big mortgage processors filed false affidavits in thousands of cases, part of the wave of foreclosures that erupted in the wake of the financial and economic crisis.  The U.S. Justice Department said Wednesday it was probing reports the nation's top mortgage lenders improperly evicted struggling borrowers as growing numbers of lawmakers on both sides of the aisle demanded investigations.

But while many householders may cheer efforts to get tough with banks, some experts say any blanket halt to foreclosures could risk further hobbling the economy as banks wonder whether they will ever claw back losses and the housing market grapples with by a mounting inventory of homes still likely to face foreclosure in future.

Billionaire investor Wilbur Ross said on Thursday the foreclosure debacle could slow the lending process, seen as key to pumping life back into the U.S. economy.

"I think it's more of a clogging of the system and introducing another note of uncertainty," Ross said at a Reuters summit on restructuring in New York.

MYSTERIOUS BILL

Obama's decision not to sign the bill capped a week which saw the legislation, passed by the House in April, suddenly pushed through the Senate Judiciary Committee and approved by the full Senate on September 27, the day before the Senate recessed for the midterm election campaign.

Passage of the bill caught homeowners' advocates, including lawyers and some state officials, by surprise with some saying the timing seemed peculiar.

The bill had received almost no public attention but stirred controversy once the Senate's rapid passage of bill became public.

Congressional staffers said many lawmakers and White House officials initially didn't realize that the bill, which nominally deals only with notarizations, could have big impact on foreclosure cases.



 


OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE

 

19-US PUBLIC POLICY MISCUES

 

 

24-RETAIL SALES

 

 

26-GLOBAL OUTPUT GAP

 

 

31-FOOD PRICE PRESSURES

 

Soaring prices threaten new food crisis  FT

US forecasters slash grains production estimates

 

32-US STOCK MARKET VALUATIONS

 

 




BP - British Petroleum

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

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

 

 

 

Doubts Emerge Over BP's Disaster Study  WSJ

BP's lawyers helped prepare its internal investigation into its Gulf of Mexico drilling disaster, according to the report's lead author, raising questions about its independence.


   

CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES


Gross Says Employment Report a Signal For More Fed Easing BL

Fed's Next Meeting Will Be 'Tough Call': Bullard CNBC
“It would be a very reasonable decision to say 'hey maybe we should just push it [QE2] off a meeting or two and see how the data comes in”...

As “QE2″ Looms, Is the Fed Focusing on the Wrong Things? Hutchinson
Bernanke is looking forward to a point when the challenges facing today's economy mirror the problems of the Great Depression...

Fed Needs to Pump Trillions More Into Economy: Analyst CNBC
“To get someone who was part of the former economic council saying the Fed will need to step up big and do $6 trillion in (asset purchases), was a bit of a shock...”

'QE2': How to Invest in Manipulated Markets TheStreet

Ben Bernanke and his QE Street Band WSJ (Complete via Google jump)

Central bankers are huddling in search of a magic elixir to ward off deflation Pearlstein
Re-inflating financial bubbles isn't generally considered a worthy goal for monetary policy, but it speaks to the growing desperation of Fed policymakers...

Hoenig sticks to his dissent on Fed policy Omaha

Fisher Rebuts Calls for More Action  WSJ

 

 GENERAL INTEREST

 

 Greenspan Says U.S. Creating `Scary' Deficit By Borrowing  BL

 

Former Federal Reserve Chairman Alan Greenspan said the U.S. fiscal deficit is “scary” and the federal government needs to cut spending on entitlements.

“We’re involved in a dangerous game,” Greenspan said yesterday at a foreign-exchange conference in New York sponsored by Bloomberg LP, the parent of Bloomberg News. “We’re increasing the debt held by the public at a pace that is closing” the gap between our debt and “any measure of borrowing capacity,” Greenspan said. “That cushion is growing very narrow.”

U.S. companies may be holding back on investment because of the rising federal deficit, which causes uncertainty about future tax policies, Greenspan said in an opinion article for the Financial Times this week. Weak investment by businesses in capital equipment and fixed assets has helped to crimp the U.S. economic recovery, he said.

“You need” austerity, said Greenspan, a paid speaker at the event. “We’re going to have to start to cut” from government entitlement programs, he said, adding that reducing the budget is better than raising taxes in closing the U.S. budget deficit. Still, Greenspan reiterated that he supports allowing tax cuts enacted under President George W. Bush to lapse at the end of 2010.

The White House Office of Management and Budget in July projected the deficit for fiscal 2010, which ended Sept. 30, at $1.47 trillion and the gap for fiscal 2011 at $1.42 trillion. President Barack Obama formed a commission in February charged with presenting a plan by Dec. 1 on how to reduce deficits over the next decade. 

“It is crucially important that we put U.S. fiscal policy on a sustainable path,” Bernanke said in an Oct. 4 speech.  “The only real question” is whether adjustments to taxes and spending will come from a “careful and deliberative process” or from a “rapid and painful response to a looming or actual fiscal crisis,” Bernanke said in Providence, Rhode Island. U.S. lawmakers should consider adopting rules that limit federal spending or debt, he said.

Greenspan said that if the Fed decides to expand its balance sheet through purchases of bonds, a process known as quantitative easing, it may not be enough to get “money moving” and spur growth in the U.S. economy. Should the Fed increase “excess reserves and they just sit there on the asset side of commercial banks’ balance sheets not being relent, you’ve merely gone through an interesting bookkeeping exercise,” Greenspan said. “You’ve got to break that psychology that prevents that current trillion” in reserves from being relent, he said.

Record Low

Two-year Treasury yields fell to the lowest ever yesterday, setting or matching a record for a fifth consecutive day. Investors have stepped up bets that the Fed will resume buying bonds to keep borrowing costs low.

“It is very difficult to think through the scenario by which you induce” commercial banks to lend, Greenspan said. “If you don’t do this, quantitative easing can’t do anything to speak of.”

U.S. central bankers have kept their benchmark lending rate near zero for almost two years. In March, they finished $1.7 trillion in purchases of Treasuries, mortgage-backed securities and housing agency bonds.

A slowdown in growth in the middle two quarters of this year prompted the Federal Open Market Committee last month to warn that inflation rates were “somewhat below” its mandate to achieve stable prices and full employment.

New York Fed President William Dudley, who is also vice chairman of the FOMC, went further in an Oct. 1 speech when he called current levels of unemployment and inflation “unacceptable.” “Further action is likely to be warranted,” Dudley said.

 

`Black Swan' Author Says Investors Should Sue Nobel for Crisis BL

 

The end of economics Bedlam


Pictures of Deflation AEI (Whalen)

 

12 Ominous Signs For World Financial Markets Economic Collapse

 

FLASH CRASH - HFT - DARK POOLS

 

Refuting The SEC's Lies At The Core Of The "Flash Crash" Analysis  ZH

 
We now have prima facie evidence that the SEC is lying. We wonder: just how many pieces of silver did it cost the HFT lobby to bribe Schapiro and her Princeton physicist (what is it about this university and the caliber of "talent" it generates?) Gregg Berman to skew the data so much it is beyond laughable. In our ongoing expose of what really happened on May 6, Zero Hedge is happy to have collaborated with both W&R and Nanex to bring our readers the full truth behind the flash crash. Here it is...

 

MARKET WARNINGS

 

Equities Go Full Retard As Rates Run For Cover  ZH

 
To see the prevailing schizophrenia gripping the two different sets of mindsets in the market right now, look no further than than the surging divergence between equity vol and implied correlation (VIX, JCJ) and credit vol (via swaptions: USSV011). The chart below shows that even as equity traders are going full retard into QE2, rate guys are running for cover (guess what, the fact that going forward Americans will not pay mortgages again, likely for many months if not years, is not good news).



And an even more stunning demonstration of the full retardation of our once proud equity trader class, is the record surge in implied correlation between Jan 2011 and Jan 2012. Translation: the world is fine through the New Year, then it is all going to hell.

 

Is the Flattening Yield Curve Good For Stocks? Sonders

 

Trading slump seen hitting Morgan Stanley, Goldman AP

 

Retail investors are cashing out of stocks Business Standard

 

CURRENCY WARS

 

Guest Post- Is A Currency War Coming  ZH

 

BRICs Oppose U.S. on Currency Controls, Russia Says BL

 

Dollar Drops After Payrolls  WSJ

 

Dollar's Fall Roils World WSJ (Complete via Google) 

 

Triple Crisis

Finance leaders seek currency peace

 

France seeks monetary overhaul Reuters

 

Currency wars prove decoupling is a myth MW

 

Will messy skirmishes in currency manipulation lead to all-out war? Inde

 

China must fix the global currency crisis Soros (Complete via Google)

 

Feldstein Predicts Dollar to Weaken, Boosting Exports BL Video

 

Building America's Next Bailout Weekly Standard

 

MARKET & GOLD MANIPULATION

     

$6,000 Silver and ONE BANK  Bix Weir

 

 
The silver markets are rigged. Every day. Every trade. Every option. Every derivative. The silver markets have been rigged since the early 1970's when Alan Greenspan introduced computer market trading systems to the world beginning the long term commodity market rigging operation.   Since that time there has not been a day when the silver markets have been "freely traded". Nobody, and I mean NOBODY, knows the true "Fair Market Value" of silver! But like all price suppression schemes, the silver manipulation must come to an end and we are on the brink of that moment. The only remaining question should be "What is the true value of silver in terms of money?" First a little background to set the stage.

Computer Commodity Trading

Beginning in the early 1970's, computers were introduced to control the order flow in financial markets. Order processing was drastically changed with the New York Stock Exchange's "designated order turnaround" system (DOT, and later SuperDOT) which routed orders electronically to the proper trading post to be executed manually, and the "opening automated reporting system" (OARS) which aided the specialist in determining the market clearing opening price (SOR; Smart Order Routing).

Today we have algorithmic trading, auto trading, algo trading, black-box trading, robo trading…and the list goes on. Algorithmic Trading is widely used by pension funds, mutual funds, and other buy side institutional traders, to divide large trades into several smaller trades in order to manage market impact, and risk. Sell side traders, such as market makers and hedge funds, claim to provide "liquidity to the market", generating and executing orders automatically. In "high frequency trading" (HFT) computers make the decision to initiate orders based on information that is received electronically, before human traders are even aware of the information.

Over the years computers have played an increasingly important role in everything related to our "free and open market system" such that today's financial markets CANNOT function without computers. The Federal Reserve, US Treasury, Wall Street insiders and the Exchanges were all instrumental in the integration of computers but they also gained access to secret trading information before the order hit the open market. This information coupled with the fastest computers on earth made market manipulation easy. This power, the power to control markets, was too much for anyone to resist. Over time those who were given the official key to the back office operations have used and abused their position to its manipulative fullest. Although some of the time they used this power in an official capacity (for the good of the country), more often than not it was used in an unofficial capacity… for the good of themselves. Bernie Madoff, the ex-head of the NASAQ, was a great example of this public to private transition as his private trading firm was all computer algorithm based market rigging operations. There are many other ex-Exchange/Wall Street officers that went on to open computer trading operations. Many continue to thrive such as EWT, LLC which became a dominant trading/market making firm using "state-of-the-art technology and algorithmic models". EWT was founded by Vincent Viola (ex NYMEX Chairman) and David Salomon (reported to Robert Ruben at Goldman Sachs) and are also an "Authorized Participant" in the iShares Silver ETF (SLV). Are you beginning to see the problem? He who has the biggest, fastest and smartest computers (or programmers) can set the price and will ALWAYS WIN! No longer is there any kind of true supply/demand factors related to commodity exchanges or prices. Computer trading should be outlawed…the convenience and efficiency it provides does not offset the detrimental effects and potential for total and complete market manipulation.  

CFTC Created to Cover Up the Manipulation

When the computer rigging programs were implemented there needed to be some kind of cover to ensure secrecy and maintain a false confidence in free markets. In 1974 Congress passed the Commodity Futures Trading Commission Act that overhauled the Commodity Exchange Act and created the CFTC as an independent agency with powers greater than those of its predecessor agency, the Commodity Exchange Authority. From that moment the CFTC has been run by board appointees that showcased a revolving door of Wall Street insiders ensuring that the computer market rigging operations were not interfered with. The only notable exception is Brooksley Born who was fired by President Clinton when she found out the truth about our supposed "free markets" and tried to warn everyone. (see The Warning)

http://www.pbs.org/wgbh/pages/frontline/warning/view/

Listen to Brooksley Born explain the problems in her own words when she accepted her JFK Profiles in Courage Award in August 2009.

http://www.youtube.com/watch?v=0dVcic7czQ8&feature=channel

A while back I gave up my fight against the CFTC as I determined that they were NOT protecting the best interest of the investor but rather they were protecting the computer market rigging operations and the people involved.  Now that you have some background let's get back to $6,000 Silver! Historically, when any price rigging operation stops the violence of the ensuing price changes are determined by the length and scale of the manipulation as well as the underlying fundamentals of the item being rigged. Take for example the famous 1980's case of the Hunt brothers trying to corner the silver market. From early 1974 the Hunt brothers started accumulating silver which ultimately drove the price from $6/oz to $50/oz until January 21, 1980 when the CFTC finally pulled the plug on their operation. Within 2 months the price of silver plummeted from $50/oz to $10/oz and the silver price was back under control of the US Government and Banking Cabal. An excellent account of what transpired can be found here:

http://www.gold-eagle.com/editorials_04/laborde012704.html

This account shows what can happen to the price of a manipulated commodity when the price manipulation is ended. In the case of the Hunt Brothers the manipulation lasted 6 years and involved approximately 130M oz of physical silver and 90M oz of COMEX silver contracts. This was an attempt at a Long Silver price manipulation but it was going on while the Short Silver Official manipulation was going on trying to keep the price down. The only way the Hunt's accumulated so much silver without the price heading into the many thousands of dollars was the official computer price suppression operation. The manipulation was ended when the CFTC stopped all COMEX Silver purchases and allowed only silver liquidation sales instantly driving the price down. In 1980 the US Government held 3B oz of silver and in order to maintain the lower silver price levels they sold the entire stock of silver into the market over the next 25 years. That excess supply combined with other governments divesting their silver was enough to continue the price suppression scheme for almost 40 years. That supply is now gone.  

One Bank has the Hot Potato

So here we are 40 years after the official manipulation of silver began and the world is finally awakening to the situation. The CFTC, having investigated silver manipulation allegations twice previously, has had an open investigation into silver market manipulation for almost 2 years. They have even stated that the investigation was moved to the "Enforcement Division" within the CFTC which pretty much tells you what the conclusion of the investigation revealed. The FBI has separately stated that they are investigating JP Morgan for silver market manipulation. These two facts and the absolute SILENCE from JP Morgan are strong indicators that the long term manipulation of silver is about to end. Ted Butler of Butler Research has been exposing the official manipulation of Silver for the past 25 years. His research was instrumental in exposing the gold/silver leasing operations and the massive concentrated short positions in both gold and silver. On September 3, 2008 Butler published a report entitled Fact Versus Speculation where he showed how one bank, JP Morgan Chase, took over the Bear Stearns Silver COMEX Short position of 30,000 contracts or 150M oz.

http://www.investmentrarities.com/ted_butler_comentary09-02-08.shtml

Since this report was published JP Morgan has continued its silver market rigging antics in an effort to get out of this precarious short position. After Butler exposed JPM as the culprit there have been wild orchestrated swings in the price of silver as JPM attempts to cover their massive COMEX short position. The price of silver has risen from $13 to currently over $20 in this time frame and the size of the short position held by JP Morgan has gyrated wildly between 30k and 40k contracts as they desperately try to shake the longs to cover their shorts. But even with this rise in price the short position is STILL above 30k contracts according to the CFTC's latest Bank Participation Report.

http://www.cftc.gov/dea/bank/deaSep10f.htm

Add to this various silver market manipulation tools such as naked shorting silver ETF's, falsifying COMEX warehouse data, unallocated silver, leasing and swapping metal and you have a situation that dwarfs the Hunt brothers case. Of course, JP Morgan is no ordinary bank because they are also the LARGEST derivative holder in the WORLD at $75.3 TRILLION! Do remember Warren Buffett calling derivatives "Weapons of Mass Financial Destruction"? Well, JP Morgan holds the mother load when it comes to silver too with $8.4 BILLION of Silver derivative contracts!
 
(OCC Report table 9: Classified as "PREC METALS"… might be a little platinum but not much). This report was for the quarter ending June 2010 when the price of silver was $18.50. That translates into over 450 MILLION OUNCES of notional silver derivative contracts that remain open!

COME ON PEOPLE!  I'm starting to think my $6,000/oz silver call is too conservative!
 What's going to happen when JP Morgan's derivative monument comes crashing down…which it almost did in September 2008? So here's where I get to $6,000 per oz for silver.

1) I know silver has not been freely traded in 40 years so today's price if irrelevant. 2) I, like many, estimate there is only about 1B ounces in above ground physical silver for investment purposes.
3) I, like many, estimate there is only 5B ounces of above ground physical gold for investment purposes.
4) If the price of gold is not manipulated, like the banks claim, then the price of silver should be 5x the price of gold due to its supply/demand fundamentals.

CONCLUSION: The price of gold is around $1,300/oz so the true Fair Market Value of Silver should be over $6,000/oz in a FREE market!

It's simple, if you remove ONE BANK from the supply side of the equation the price of silver will SKYROCKET overnight.

ONE BANK controls the price of silver.

ONE BANK controls the fate of our monetary system.

ONE BANK is behind the curtain pulling the silver manipulation levers.

ONE BANK has control over a nation that was founded by "We the People".

ONE BANK MUST GO AWAY TO SAVE OUR LIBERTY!

May the Road you choose be the Right Road.

Bix Weir

 

J.P Morgan: Gold to trade above $1,400/oz in 2011  MW

 

AUDIO / VIDEO

 

 

QUOTE OF THE WEEK

 

“Within a single week 25 nations have deliberately slashed the values of their currencies.  Nothing quite comparable with this has ever happened before in the history of the world.”

Ben Davies, CEO of Hinde Capital


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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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ACCEPTING PRE-ORDERS

 

 

 




 

         

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

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

   

 

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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.

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.