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NOVEMBER ISSUE - 61 PAGES

Integrating Macro Research

& Technical Analytics

Gordon T Long

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READ ALL THE

"EXTEND & PRETEND" SERIES

 

 

Stage I Comes to an End!

 

A Matter of National Security

 

A Guide to the Road Ahead

 

Confirming the Flash Crash Omen

 

Its either RICO Act or Control Fraud

 

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

FOR UPCOMING SHOW TIMES SEE: COMMENTARY READER 


 

 

 


 

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!

 

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

 

SULTANS OF SWAP: Gold Swaps Signal the Roadmap Ahead

 

FOR UPCOMING SHOW TIMES SEE: COMMENTARY READER

 


 

 

 

 

READ ALL THE

"EURO EXPERIMENT" SERIES

 

 

 

EURO EXPERIMENT: German Steel or Schmucks?!

 

 

 

FOR UPCOMING SHOW TIMES SEE: COMMENTARY READER

 

 

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Current Thesis Advisory

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Published November 2009

 

EXTEND & PRETEND

 

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READ ALL THE

"INNOVATION" SERIES

 

Innovate or Die

 

INNOVATION: America has a Structural Problem!

 

INNOVATION: What Made America Great is now Killing Her!

 

America - Innovate or Die!

 

FOR UPCOMING SHOW TIMES SEE: COMMENTARY READER

 


 

 

 

READ ALL THE

"PRESERVE & PROTECT" SERIES

 

 

 

 

FOR UPCOMING SHOW TIMES SEE: COMMENTARY READER

 

 

 

 

 

 

 

 

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COMMENTARY for all articles by Gordon T Long

 

CURRENCY WARS: Debase, Default, Deny!

 

In September 2008 the US came to a fork in the road. The Public Policy decision to not seize the banks, to not place them in bankruptcy court with the government acting as the Debtor-in-Possession (DIP), to not split them up by selling off the assets to successful and solvent entities, set the world on the path to global currency wars.

 

By lowering interest rates and effectively guaranteeing a weak dollar, the US ignited an almost riskless global US$ Carry Trade and triggered an uncontrolled Currency War with the mercantilist, export driven Asian economies. We are now debasing the US dollar with reckless spending and money printing with the policies of Quantitative Easing (QE) I and the expectations of QE II. Both are nothing more than effectively defaulting on our obligations to sound money policy and a “strong US$”. Meanwhile with a straight face we deny that this is our intention.  

 

Though prior to the 2008 financial crisis our largest banks had become casino like speculators with public money lacking in fiduciary responsibility, our elected officials bailed them out. Our leadership placed America and the world unknowingly (knowingly?) on a preordained destructive path because it was politically expedient and the easiest way out of a difficult predicament. By kicking the can down the road our political leadership, like the banks, avoided their fiduciary responsibility. Similar to a parent wanting to be liked and a friend to their children they avoided the difficult discipline that is required at certain critical moments in life. The discipline to make America swallow a needed pill. The discipline to ask Americans to accept a period of intense adjustment. A period that by now would be starting to show signs of success versus the abyss we now find ourselves staring into.  A future that is now massively worse and with potentially fatal pain still to come. READ MORE

   

 

CURRENCY WARS: Misguided Economic Policy

 

The critical issues in America stem from minimally a blatantly ineffective public policy, but overridingly a failed and destructive Economic Policy. These policy errors are directly responsible for the opening salvos of the Currency War clouds now looming overhead.

 

Don’t be fooled for a minute. The issue of Yuan devaluation is a political distraction from the real issue – a failure of US policy leadership. In my opinion the US Fiscal and Monetary policies are misguided. They are wrong! I wrote a 66 page thesis paper entitled “Extend & Pretend” in the fall of 2009 detailing why the proposed Keynesian policy direction was flawed and why it would fail. I additionally authored a full series of articles from January through August in a broadly published series entitled “Extend & Pretend” detailing the predicted failures as they unfolded. Don’t let anyone tell you that what has happened was not fully predictable!

 

Now after the charade of Extend & Pretend has run out of momentum and more money printing is again required through Quantitative Easing (we predicted QE II was inevitable in March), the responsible US politicos have cleverly ignited the markets with QE II money printing euphoria in the run-up to the mid-term elections. Craftily they are taking political camouflage behind an “undervalued Yuan” as the culprit for US problems. Remember, patriotism is the last bastion of scoundres  READ MORE


READER ROADMAP -  2010 TIPPING POINTS aid to positioning COMMENTARY

 

 

 

POSTS:  MONDAY 11-08-10

Last Update: 11/09/2010 05:24 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
                       
Peripheral nerves: Portugal still under siege by bond markets FT X                  
Germany Criticizes Fed Move WSJ X                  
USA                      
                       
Treasury Yields Tumble to Records on Fed's Plan to Purchase $600 Billion Bloomberg     X              
                       
BANK OF AMERICA - The Case for Fraud             X        
William K. Black: Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership Huffington Post           X        
William K. Black: Foreclose on the Foreclosure Fraudsters, Part 2: Spurious Arguments Against Holding the Fraudsters Accountable Huffington Post           X        
William K. Black: Let's Set the Record Straight on Bank of America: Open the Books! Huffington Post           X        
William K. Black: Let's Set the Record Straight on Bank of America, Part 2: Eliminating Foreclosure Fraud Huffington Post           X        
Bank of America Edges Closer to Tipping Point Bloomberg           X        
Bank Of America- We Face Repurchase Lawsuits On $375 Billion Worth Of Mortgage Securities BI           X        
                       
ARTICLE SOURCE 11 12 13 14 15 16 17 18 19 20
                       
A look at US employment – and how’s that recovery doing? Fabius Maximus   X                
Lapse of U.S. Unemployment Benefits May Cool Spending Bloomberg   X                
Employment Numbers Lacy Hunt   X                
Lapse of U.S. Unemployment Benefits May Cool Spending Bloomberg   X                
Fannie Mae asks for $2.5 billion in new US aid AP     X              
Banks set for small company failures FT       X            
China '10 industrial output to rise 13.5%: Minister ET             X      
                       
Exporting Our Way to Stability Obama                 X  
                       
The Real Reason For Obama's Trip To India- The Sixth Biggest Arms Deal In U.S. History BI                 X  
Obama’s quest for an Indian pay-off FT                 X  
US companies welcome power shift FT                 X  
Battles Loom Over Taxes, Spending WSJ                 X  
REMAINING                      
National Inflation Association - Food Price Projections NIA                   31
A loaf of wheat bread may soon cost $23 due to skyrocketing food price inflation Natural News                   31
                       
                       
CENTRAL BANKING & MONETARY POLICY                      
QE2 Noland                    
Thoughts on Liquidity Traps Mauldin                    
To Hell Through QE Xie                    
Fed Chief Defends Action in Face of Criticism NYT                    
“We’re not in the business of trying to create inflation” Bernanke                    
Bernanke's latest folly will cost us MSH (Fleck)                    
Bernanke’s grasp of economics weak, says Rogers Econiomic Times                    
Bernanke Invokes Friedman's Inflation-Fighting Legacy... Bloomberg                    
Fed has starring role in 'Return to Jekyll Island' Washington Post                    
                       
GENERAL INTEREST                      
The "Real" Mega-Bears dshort                    
He Saw Trouble Coming. Now He Sees It Going Morgenson                    
Reviving '70s stagflation Washington Times                    
Oil price forecast to hit $100 a barrel in 2011 Telegraph                    
MARKET WARNINGS                      
Mid-Term-Election Rallies Zeal                    
Kyle Bass remains apocalyptic, likes Switzerland Absolute Return                    
                       

G20 MEETING

                     
Global anger mounts at 'clueless' Fed actions Reuters                    
The Fed's magic money machine annoys the world Leonard                    
Geithner: U.S. Won't Use Dollar to Gain Competitive Advantage Bloomberg                    
China gets major stake in IMF in vote overhaul Reuters                    
China rejects trade surplus proposals China Daily                    
Zoellick seeks gold standard debate FT                    
The G20 must look beyond Bretton Woods Zoellick                    
As Economy Shifts, Companies Retool WSJ                    
Germany Criticizes Fed Move WSJ                    
                       

CURRENCY WARS

                     
Stop Blaming The Chinese, America Gothamist                    
Is the Fed Really to Blame for Emerging Market Headaches? Scotia                    
Currencies: Seven Charts You Should See Money & Markets                    
US stimulus 2-edged sword for Korea Korea Times                    
                       
Q3 EARNINGS                      
                       
MARKET & GOLD MANIPULATION                      
Gold's next hurdle is 1980's peak 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





11-08-10

 

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

 

 

IRAN

 

ISREAL

 

KOREA

 

1- SOVEREIGN DEBT & CREDIT CRISIS

 

SOVEREIGNS

 

 

GREECE

 

PORTUBAL

Peripheral nerves: Portugal still under siege by bond markets FT

 

GERMANY

Germany Criticizes Fed Move  WSJ

 

German officials, concerned that Washington could be pushing the global economy into a downward spiral, have launched an unusually open critique of U.S. economic policy and vowed to make their frustration known at this week's Group of 20 summit.

 

"Germany's exporting success is based on the increased competitiveness of our companies, not on some sort of currency sleight-of-hand. The American growth model, by comparison, is stuck in a deep crisis. The USA lived off credit for too long, inflated its financial sector massively and neglected its industrial base. There are many reasons for America's problems"

German Finance Minister Wolfgang Schäuble

 

"I doubted the U.S. would live up to a commitment world leaders made this summer at a G-20 summit in Toronto to halve government deficits by 2013."

 

FRANCE

 

UK

 

IRELAND


JAPAN

 

 

USA

 

 

 

 

 

 

2- EU BANKING CRISIS

   

 

3- BOND BUBBLE

 

Treasury Yields Tumble to Records on Fed's Plan to Purchase $600 Billion BL


4- STATE & LOCAL GOVERNMENT

 


5- CENTRAL & EASTERN EUROPE

 


6-BANKING CRISIS II



BANK OF AMERICA - The Case for Fraud

William K. Black: Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership  HP (10-22-10)

William K. Black: Foreclose on the Foreclosure Fraudsters, Part 2: Spurious Arguments Against Holding the Fraudsters Accountable HP (10-24-10)

William K. Black: Let's Set the Record Straight on Bank of America: Open the Books!  HP (11-04-10)

William K. Black: Let's Set the Record Straight on Bank of America, Part 2: Eliminating Foreclosure Fraud  HP (11-05-10)


Bank of America Edges Closer to Tipping Point  Bloomberg

 

Judging by its shrinking stock price, though, investors are acting as if Bank of America is near a tipping point. Its market capitalization stands at $115.6 billion, or 54 percent of book value. That’s the second-lowest price-to-book ratio among the 24 companies in the KBW Bank Index, and well below the 76 percent ratio the company was at in October 2008 when it landed its first round of TARP dough. Put another way, the market is saying there’s a $96.8 billion hole in Bank of America’s balance sheet.

 

The problem for anyone trying to analyze Bank of America’s $2.3 trillion balance sheet is that it’s largely impenetrable. Some portions, though, are so delusional that they invite laughter. Consider, for instance, the way the company continues to account for its acquisition of Countrywide Financial, the disastrous subprime lender at the center of the housing bust, which it bought for $4.2 billion in July 2008.

Goodwill Purchase

 

Here’s how Bank of America allocated the purchase price for that deal. First, it determined that the fair value of the liabilities at Countrywide exceeded the mortgage lender’s assets by $200 million. Then it recorded $4.4 billion of goodwill, a ledger entry representing the difference between Countrywide’s net asset value and the purchase price.

 

That’s right. Countrywide’s goodwill supposedly was worth more than Countrywide itself. In other words, Bank of America paid $4.2 billion for the company, even though it thought the value there was less than zero.

 

Since completing that acquisition, Bank of America has dropped the Countrywide brand. The company’s home-loan division has reported $13.5 billion of pretax losses. Yet Bank of America still hasn’t written off any of its Countrywide goodwill.

 

Dubrowski, the company spokesman, declined to comment when I asked him why not. In its latest quarterly report with the SEC, Bank of America said it had determined the asset wasn’t impaired. It might as well be telling the public not to believe any of the numbers on its financial statements.


Bank Of America- We Face Repurchase Lawsuits On $375 Billion Worth Of Mortgage Securities  BI

From Bank of America's just-released 10-Q (via Keith McCullough), here's what the company says about repurchase lawsuits:

 

The Corporation and affiliates, legacy Countrywide entities and affiliates, and legacy Merrill Lynch entities and affiliates have been named as defendants in a number of cases relating to various roles they played in MBS offerings. These cases are generally purported class action suits or actions by individual purchasers of securities. Although the allegations vary by lawsuit, these cases generally allege that the offering documents for more than $375 billion of securities issued by hundreds of securitization trusts contained material misrepresentations and omissions, including statements regarding the underwriting standards pursuant to which the underlying mortgage loans were issued, the ratings given to the tranches by rating agencies, and the appraisal standards that were used in violation of Section 11 and 12 of the Securities Act of 1933 and/or state securities laws. The cases generally allege unspecified compensatory damages and in some instances, seek rescission. The Corporation has previously disclosed some of these matters under other headings, in its 2009 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010 and June 30, 2010, including Countrywide Mortgage-Backed Securities Litigation; IndyMac Litigation; Merrill Lynch Subprime-related Matters; and Federal Home Loan Bank of Seattle Litigation.


This is also an interesting chart, showing repurchase requests from the GSEs by vintage:

 

 

FYI, here's Bank of America's comment on one of the lawsuits.

110410_DI RITA_Court Ruling (Maine State)_FINAL


7- RISK REVERSAL

 

 

8- COMMERCIAL REAL ESTATE

 

 

9-RESIDENTIAL REAL ESTATE - PHASE II

 

 

10- EXPIRATION FINANCIAL CRISIS PROGRAM

 

 

11- PENSION & ENTITLEMENTS CRISIS



12- CHRONIC UNEMPLOYMENT





A look at US employment – and how’s that recovery doing? Fabius Maximus

(1)  The Recovery!

Wall Street and the media obsess over the tiny changes in the monthly employment reports.  These surveys are not that accurate, and changes of a few thousand mean nothing among 300 million Americans.  Instead we should watch the levels and trends.  What improvement in jobs has this recovery brought us since it started in June 2009?  Here are the results for the past 12 months (October 2009 – October 2010, seasonally adjusted, in thousands):

  • Civilian non-institutional population 16 or older:  +0.8%
  • Employed:     +0.0007%
  • Unemployed:  down 4.9%  (mostly though people dropping out of the labor force)
  • Not in the labor force (neither working nor looking):  +2.3%

As your teachers said, always check our conclusions with different methods.  First, look at the Social Security employment taxes in September:  down 2.8% year-over-year.  This is a reliable measure of American wage income.  Payments by social security rose 3.0%, so its cash flow dropped from -4.4 billion to -7.5 billion.  Cash flow was +7.2 billion in September 2006; this deterioration is a growing and serious drag on the Federal government’s finances.

Second, look at new claims for unemployment:  stable since late December 2009 at roughly 463 thousand/week.  That’s job losses at an annual rate of 24 million per year.  Only about 80% of workers are covered by UI (no independent contractors and self-employed), and the unemployment rate is higher for uncovered workers.  So the job loss rate is probably running at about 30 million/year.  This shows considerable stress on the US economy — and on US households.  Most of the newly unemployed find a job, but often with some combination of lower wages, less benefits, and fewer hours.

Do we have a recovery?  Not in jobs.  Not in wages.  A wide range of economic data suggests that the recovery stalled in May and June 2010.

(3)  The Current Numbers:  October 2010

Some aspects of employment are leading indicators, some are lagging indicators.  Broadly speaking, employment is one of the major metric’s of the nation’s health, both economic and social.

These are the numbers from the Census’ Household Population survey (tables A and A-1) for October, released 5 November 2010.  IMO the household survey gives a more reliable real-time picture than the establishment survey (CES).  After the benchmark revisions, 18-plus months later, the CES provides the definitive historical record.  Unfortunately, the initial results bear only a slight resemblence to the final results.  They’re largely modeled from a few early responders.  And the early responses do not include small businesses, the center of the current downturn. 

Here’s the story for October.  All rounded to the nearest million.

  • 239 million – the civilian non-institutional population, adults 16+ years old (17 million are 16-19 years old).
  • 154 million of these are in the labor force (6 million are ages 16-19). 
  • 139 million have jobs (4 million are ages 16-19)
  • 27 million of those jobs are part-time jobs; 9 million of those with part-time jobs would prefer full-time jobs.
  • 15 million of the labor force are unemployed:  1 million  quit, 9 million were fired, 5 million entered or re-entered the labor force (2 million are ages 16-19).
  • 1 million have become discouraged and stopped looking.

The Census provides six measures of unemployment, depending on definitions of the labor force and unemployed.  The four most widely used (U-3 to U-6) range from 9.6% to 17.0% (table A-15).  All have been stable since June.  None of these measures are more “right” than the others.  None are easily comparable to those of the great depression (the government began measuring unemployment in the 1940′s; earlier numbers are rough estimates).

The median duration of unemployment is 21 weeks; the mean is 34 weeks (table A-12).  The mean is large due to the six million workers who have been unemployed for 27 weeks or more.  The level of long-term unemployment during this downturn is a post Depression high .

Much has been made of the declining ratio of workers to population.  For example, the fraction of men over 16 who have jobs is a post-Depression low.  Get used to it.  This ratio can only fall further as the boomers age.

Other posts about employment

  1. America passes a milestone!, 20 January 2010 — More jobs in government than manufacturing
  2. Yes, it is a “mancession”, with men losing more jobs than women. Just like all recessions., 5 October 2009
  3. Update on the “mancession”, 2 December 2009
  4. A look at the engines of American job creation, 12 January 2010
  5. An ominous trend: number of Americans working for the government vs. those making things, 5 March 2010 — Update to the Oct 2009 post.
  6. The coming big increase in structural unemployment, 7 August 2010
  7. The coming Robotic Nation, 28 August 2010
  8. The coming of the robots, reshaping our society in ways difficult to foresee, 22 September 2010
  9. Economists grapple with the first stage of the robot revolution, 23 September 2010

Lapse of U.S. Unemployment Benefits May Cool Spending BL

Employment Numbers  Dr. Lacy Hunt


The October employment situation was dramatically weaker than the headline 151k increase in the payroll employment measure. The broader household employment fell 330k. The only reason that the unemployment rate held steady is that 254k dropped out of the labor force. The civilian labor force participation rate fell to a new low of 64.5%, indicating that people do not believe that jobs are available, but this serves to hold the unemployment rate down. In addition, the employment-to-population ratio fell to 58.3%, the lowest level in nearly 30 years.

 

While not actually knowing what happened to the net job change in the non-surveyed small business sector, the Labor Department assumed that 61k jobs were created in that sector. This assumption is not supported by such important private surveys as those from the National Federation of Independent Business or by ADP. Just a month ago the Labor Department had to revise downward the job totals due to a serious overcount of their statistical artifact known as the Birth/Death Model.

 

The most distressing aspect of this report is that the US economy lost another 124K full-time jobs, thus bringing the five-month loss to 1.1 million in this most critical of all employment categories. In an even more significant sign, the level of full-time employment in October was at the same level that was reached originally in December 1999, almost 11 years ago (see attached chart). An economy cannot generate income growth by continuing to substitute part-time work for full-time employment. This loss of full-time jobs goes a long way to explain why real personal income less transfer payments has been unchanged since May.

 

The weakness in real income is probably lost in an environment in which the Fed is touting the gain in stock prices and consumer wealth resulting from the latest quantitative easing (QE), but QE has unintended negative consequences for real household income. Due to higher prices of energy and food commodities, QE may result in less funds for discretionary spending for consumers whose incomes are stagnant. Also, with five-year yields falling below 1%, rates on CDs and other types of short-term bank deposits will decline, also cutting into household income. At the end of the day these effects will be more powerful than any stock-price boost in consumer spending, which, as always, will be very small and slow to materialize.

To have a broad-based recovery, the manufacturing sector must participate. Contrary to the ISM survey, manufacturing jobs fell 7k, the third consecutive drop, resulting in a net loss over the past three months of 35k.

 

In summary, the latest economic developments indicate a slight worsening of underlying fundamental conditions.


Lapse of U.S. Unemployment Benefits May Cool Spending BL


13- GOVERNMENT BACKSTOP INSURANCE

 

Fannie Mae asks for $2.5 billion in new US aid AP


14- CORPORATE BANKRUPTCIES

 

Banks set for small company failures  FT

 

17- CHINA BUBBLE


China '10 industrial output to rise 13.5%: Minister ET

19- PUBLIC POLICY MISCUES

 

Exporting Our Way to Stability

 

President Barack Obama

 

New York Times Op-Ed


AS the United States recovers from this recession, the biggest mistake we could make would be to rebuild our economy on the same pile of debt or the paper profits of financial speculation. We need to rebuild on a new, stronger foundation for economic growth. And part of that foundation involves doing what Americans have always done best: discovering, creating and building products that are sold all over the world.

 

We want to be known not just for what we consume, but for what we produce. And the more we export abroad, the more jobs we create in America. In fact, every $1 billion we export supports more than 5,000 jobs at home.

 

"It is for this reason that I set a goal of doubling America’s exports in the next five years."


State Visit India
State Visit Indonesia
State Visit South Korea
   
G20 Summit Seoul South Korea
   
State Visit Japan
   
Asia-Pacific Economic Conference Japan
   

         

Last year, the nations of the G-20 worked together to halt the spread of the worst economic crisis since the 1930s. This year, our top priority is achieving strong, sustainable and balanced growth. This will require cooperation and responsibility from all nations — those with emerging economies and those with advanced economies; those running a deficit and those running a surplus.



The Real Reason For Obama's Trip To India- The Sixth Biggest Arms Deal In U.S. History  BI

 
President Obama is traveling to India this weekend to make a $5 billion sale for 10 of Boeing's C-17 cargo planes. If India signs the contract, this would be the sixth biggest arms deal in U.S. history.

This and the pending $60 billion deal with Saudi Arabia will certainly help to jump-start the economy, as they have for the past fifty years.

 

Obama’s quest for an Indian pay-off  FT

 

US companies welcome power shift  FT

 Obama to hit reset button with business

 

Battles Loom Over Taxes, Spending  WSJ

Newly empowered Republicans pushed to extend Bush-era tax levels for as long as possible and pledged significant cuts in spending Sunday, as President Barack Obama sought to maintain his footing in an escalating budget battle.



 


OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE

 

24-RETAIL SALES

 

 

26-GLOBAL OUTPUT GAP

 

 

31-FOOD PRICE PRESSURES

 

National Inflation Association - Food Price Projections  NIA

NIA's special U.S. food price projection report is now available to download for free by clicking here.


A loaf of wheat bread may soon cost $23 due to skyrocketing food price inflation Natural News


Within a decade, a loaf of wheat bread may cost $23 in a grocery store in the United States, and a 32-oz package of sugar might run $62. A 64-oz container of Minute Maid Orange Juice, meanwhile, could set you back $45.71. This is all according to a new report released Friday by the National Inflation Association which warns consumers about the coming wave of food price inflation that's about to strike the western world.

Authored by Gerard Adams this report makes the connection between the Fed's runaway money creation policy ("quantitative easing") and food price inflation. (http://inflation.us/foodpriceprojec...)

"For every economic problem the U.S. government tries to solve, it always creates two or three much larger catastrophes in the process," said Adams. "Just like we predicted this past December, the U.S. dollar index bounced in early 2010 and has been in free-fall ever since. Bernanke's QE2 will likely accelerate this free-fall into a complete U.S. dollar rout."

 

 

32-US STOCK MARKET VALUATIONS

 

 




BP - British Petroleum

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

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CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES

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QE2 Noland

Thoughts on Liquidity Traps Mauldin

To Hell Through QE Xie

Fed Chief Defends Action in Face of Criticism NYT
“We are aware the dollar plays a special role in the global economy”

“We’re not in the business of trying to create inflation” Bernanake

Bernanke's latest folly will cost us MSN (Fleck)

Bernanke’s grasp of economics weak, says Rogers Economic Times

Bernanke Invokes Friedman's Inflation-Fighting Legacy... BL

Fed has starring role in 'Return to Jekyll Island' WP

 

 GENERAL INTEREST

The "Real" Mega-Bears  dshort

 

It's time again for the weekend update of our "Real" Mega-Bears, an inflation-adjusted overlay of three secular bear markets. It aligns the current S&P 500 from the top of the Tech Bubble in March 2000, the Dow in of 1929, and the Nikkei 225 from its 1989 bubble high.

This chart is consistent with my preference for real (inflation-adjusted) analysis of long-term market behavior. The nominal all-time high in the index occurred in October 2007, but when we adjust for inflation, the "real" all-time high for the S&P 500 occurred in March 2000.

 

Here is a nominal version to help clarify the impact of inflation and deflation, which varied significantly across these three markets.

 

 

Note: These charts are not intended as a forecast but rather as a way to study the today's market in relation to historic market cycles.

 

He Saw Trouble Coming. Now He Sees It Going Morgenson

 

 Reviving '70s stagflation WT

 

Oil price forecast to hit $100 a barrel in 2011 Telegraph

FLASH CRASH - HFT - DARK POOLS

 

 

MARKET WARNINGS

Mid-Term-Election Rallies ZEAL

 

Kyle Bass remains apocalyptic, likes Switzerland  Absolute Return

In a keynote address at the AR Symposium in New York, hedge funder Kyle Bass reiterated some of his big themes regarding the global economy.

  • Japan is doomed, thanks to its excessive debt. (Any day now his yen-denominated mortgage will become uber cheap!)
  • Greek has no chance.
  • Ireland has no chance.
  • The US is in a situation like the PIIGS and Japan, but not really as bad.
  • And "all roads lead to gold."

So who does he like?

The Swiss

Among his dire predictions, Bass had some rare optimistic words about Switzerland. “When you think about Switzerland you have to extricate Credit Suisse and UBS because they became multiples of GDP … when you look at the rest of the banking system they don’t have banks go down,” said Bass. “Do you know why? Because the officers and directors of the bank become personally liable for the assets of the bank. So the give-a-shit factor is pretty high.”He added, “The Swiss banking system, in my opinion, is very robust, very solid. They make good loans.”

He also had praise for the country’s central banker, Philipp Hildebrand, president of the Swiss National Bank. “Hildebrand is the best central banker of any in the world,” he said. “He gets it.” Bass said once Switzerland deals with Credit Suisse and UBS, the country will be in good shape. “Once they fix those two, the rest of their system is OK.”

G20 MEETING

Global anger mounts at 'clueless' Fed actions Reuters

 

The Fed's magic money machine annoys the world Leonard

 

Geithner: U.S. Won't Use Dollar to Gain Competitive Advantage BL
“I’m happy to reaffirm again that a strong dollar’s in our interest as a country”

 

China gets major stake in IMF in vote overhaul Reuters

 

China rejects trade surplus proposals China Daily

 

Zoellick seeks gold standard debate  FT

World Bank chief airs disquiet with system

 

The G20 must look beyond Bretton Woods  Zoellick

As Economy Shifts, Companies Retool  WSJ

G20 RE-BALANCING - The  Reality:

 

- Each percentage-point reduction in the annual savings rate in Germany and China—two countries with particularly big surpluses that have pledged to boost spending—would increase consumer spending by a total of just $42 billion.

- Each percentage-point increase in the U.S. household savings rate reduces spending by $100 billion, estimates McKinsey Global Institute.

- U.S. consumers now save 6% of their after-tax income, compared to just 1% in 2005.

- Chinese households save more than 25% of their disposable income.

- Chinese who earn more than $100,000 are four times more likely than Americans with the same income to buy luxury cars, according to Bernstein Research.

- Consumer spending makes up just 40% of China's gross domestic product, compared to 70% in the U.S. and 56% in Germany.

 

 

 

"I don't think the U.S. savings rate is sustainable at a level of 6% or 7%. Once Americans feel confident again, they'll spend. It's how Americans are coined."

Mr. Eichiner CFO, BMW .

 

Germany Criticizes Fed Move WSJ

 

German officials, concerned that Washington could be pushing the global economy into a downward spiral, have launched an unusually open critique of U.S. economic policy and vowed to make their frustration known at this week's Group of 20 summit.

 

CURRENCY WARS

Stop Blaming The Chinese, America   Gothamist

“If you look at the U.S., you look at who we’re electing to Congress, to the Senate—they can’t read. I’ll bet you a bunch of these people don’t have passports. We’re about to start a trade war with China if we’re not careful here, only because nobody knows where China is. Nobody knows what China is."

“I think in America, we’ve got to stop blaming the Chinese and blaming everybody else and take a look at ourselves...There’s a country on the other side of the world that is taking their taxpayers’ dollars, and trying to sell subsidized things so we can buy them cheaper, and have better products, and we’re going to criticize that?"

 

Michael Bloomberg, Mayor of New York City

C40 conference in Hong Kong

 

Is the Fed Really to Blame for Emerging Market Headaches? Scotia

 

Currencies: Seven Charts You Should See Money and Markets

 


With the Fed’s QE2 policy officially on the table, the emerging market and Asian countries that have been waging a fight to keep their currencies from a runaway surge have already stepped up with more currency market intervention and talks of capital controls.

And they are doing so because the dollar is weakening. But more importantly they’re reacting because the Chinese yuan is getting weaker relative to their currencies in the process — a competitive disadvantage for their export trade.

The key take-away: A grossly weaker dollar is not an economically or politically acceptable proposition for the world. And trouble for the world economy represents trouble for the U.S. economy.

So, despite all of the bold projections of a continued rout in the dollar, these seven charts suggest the exact opposite outcome could be around the corner.

 

US stimulus 2-edged sword for Korea Korea Times

 

Q3 EARNINGS

MARKET & GOLD MANIPULATION

Gold's next hurdle is 1980's peak MW

 

AUDIO / VIDEO

 

 

QUOTE OF THE WEEK

"It could unfold very, very quickly. Because deflation is a swing of poverty feedback, it can take awhile to build up. If you try to explain to people what's coming, because it doesn't happen instantly, they tend to go back to sleep. The thing they need to understand, however, is that when it does hit a tipping point, a kind of critical mass, then it can unfold exceptionally quickly. Then it's very much like having the rug pulled out from under your feet. So I tell people all the time, prepare now because it's better to be two years too early than five minutes too late. You can't play with this sort of thing. In September, 2008, we came within a few hours of the banking system seizing up, and that could easily happen again. People wouldn't get a lot of notice. For anyone who's not in the meeting room-it will be too late by the time they find out. My worry is that if there are an enormous number of people who just had the rug pulled out from under their feet, they're going to run around like headless chickens, and the human over-reaction to events will be really responsible for a large percentage of the impact. “

Automatic Earth

 


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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.