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 MONTHLY MARKET COMMENTARY

 

NOVEMBER ISSUE - 40 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

62 pages

 

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

 

 

 

 

 

 

 

 

POSTS:  WEDNESDAY 11-17-10

Last Update: 11/18/2010 04:42 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
                       
Euro Dominos Will Fall Until Currency Is Split Lynn X                  
Austrian Finance Minister: Bailout to Greece not certain AP X                  
Anger at Germany boils over FT X                  
Sarkozy Under Pressure as France Feels Irish Heat Bloomberg X                  
£7bn cheque that is set to give Osborne nightmares Prosser X                  
Bank shares hold up as market bets on bailout Irish Independent X                  
Irish woes should speed Europe’s default plan Roubini X                  
Ireland told: Take EU bailout or trigger crisis Gaurdian X                  
Irish 'contagion' hits Portugal Pritchard X                  
Euro zone seeks way out of Irish debt crisis Reuters X                  
Debt crisis team heads for Dublin FT X                  
                       
USA                      
U.S. Consumer Prices Rose 0.2% in October; Core Rate Unchanged Bloomberg X                  
U.S. Home Starts Drop More Than Forecast on Multifamily Slump Bloomberg X                  
Net foreign buying of U.S. assets down nearly 40% in September vs. August US Treasury X                  
                       
Shadow banks face regulators’ scrutiny FT   X                
Debt: There is No Jubilee Hinde Capital     X              
The global debt clock Economist     X              
Inflation, low rates don’t go together Kellner     X              
Bond Market Defies Fed WSJ     X              
No Inflation? CNBC     X              
Roubini: 'Inflation Is Not a Problem' CNBC     X              
U.S. Rating Not Under Pressure This Year or Next, Moody's Says Bloomberg     X              
New Yield Forecast: Yields have bottomed out Danske     X              
California kicks off $14 billion debt sale CNN       X            
California Will Default On its Debt Whalin       X            
Positions in global over-the-counter (OTC) derivatives markets at end-June 2010 BIS           X        
Commercial Real Estate (CRE): The Slow-Mo Cliff-Dive Gathers Speed Smith               X    
A hearing on foreclosures, and an industry at stake NY Times                 X  
S&P predicts more home price declines through 2011 Housing Wire                 X  
                       
ARTICLE SOURCE 11 12 13 14 15 16 17 18 19 20
                       
Hosting the Dalai Lama can be bad for your export health Asia Sentinel             X      
How to chart course out of Sino-US storm FT (Wolf)             X      
Deficit Panel Ignores $153 Trillion Hole Kotlikoff                 X  
GAO: Unchecked Debt Could Prove ‘Disruptive and Destabilizing’ WSJ                 X  
                       
REMAINING                      
Wholesale vegetable prices surge - Govt to introduce food price rules China Daily                   31
                       
CENTRAL BANKING & MONETARY POLICY                      
Taleb Says Fed Doesn't Understand Risks of Quantitative Easing You Tube                    
If You're Looking For Inflation, Here's Where To Find It Chart of the Day                    
Bond Market Defies Fed WSJ                    
I Am Shocked, Shocked that the QE2 is Akin to Printing Money... Kasriel                    
Yellen Defends WSJ                    
Dudley: “This exit could be years away” Huffington Post                    
GENERAL INTEREST                      
Another Government Cover Up - Will it ever End? Brig Gen. Cash                    
The Age of Deleveraging Mauldin                    
MARKET WARNINGS                      
                       

CURRENCY WARS

                     
Fed Easing Not Aimed at Weakening Dollar: Dudley Reuters                    
FX Forecast Update: PIIGS unlikely to reverse the dollar downtrend PIIG (presentation) Danske                    
FDI grows faster in October amid hot money concern Shanghai Daily                    
China said to impose new measures to curb price increases Shanghai Daily                    
SKorean central bank raises rate to 2.5 percent AP                    
China eyes price controls to fight inflation FT                    
                       
Q3 EARNINGS                      
If You Read Wal-Mart's Earnings, You Know The Real Reason The Market Is Tanking BI                    
MARKET & GOLD MANIPULATION                      
                       
VIDEO TO WATCH                      
                       
                       

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

 

 

 

                    LATEST RESEARCH PUBLICATIONS

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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


  BRIEFS  

Obama's 'Hail Mary' Export Strategy
   
     

 READER ROADMAP -  2010 TIPPING POINTS aid to positioning COMMENTARY

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





11-17-10

 

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

 

 

IRAN

 

ISREAL

 

KOREA

 

1- SOVEREIGN DEBT & CREDIT CRISIS

 

SOVEREIGNS

 

 

Euro Dominos Will Fall Until Currency Is Split Lynn

 

GREECE

Austrian Finance Minister: Bailout to Greece not certain  AP

 

VIENNA—Austria is balking at paying its share of Greece's financial bailout.

 

Finance Minister Josef Proell says that the December tranche of Austria's contribution -- 190 million euros ($258 million)-- will only be paid out if Greece can show that it has raised the amount of money it pledged to take in through taxes.

 

Proell told reporters Tuesday that at this stage that target does not appear to have been met. The Austria Press Agency quoted him as saying that he would "comment critically" on this issue at the upcoming EU finance ministers' meeting in Brussels.

 

If Austria balks, and other countries follow suit, the Greek bailout package could unravel.

 

Athens is receiving euro110 billion ($150 billion) in rescue loans from the International Monetary Fund and other eurozone countries.

 

GERMANY

Anger at Germany boils over  FT

Merkel accused of putting eurozone leaders in untenable positions

 

WHY? German Chancellor wants:

 

1- An formal Sovereign Insolvency Mechanism

2- Bondholders and Private Investors / Speculators to take 'haircuts'

3- Well managed, richer countries to not bare the burden of the poorly managed countries.

 

Frankly it is anger about not getting a free lunch!!

 

The drive by Angela Merkel, the German chancellor, to rewrite the European Union’s treaties to set up a new bail-out system for future Greek-like collapses – and her insistence that private investors bear more of the cost of such rescues – was quietly resented when she bulldozed it through last month’s summit of EU leaders.

 

German officials insist their campaign to get private bondholders to shoulder more bail-out costs is not just about domestic considerations. The government is more concerned that the current system – which condemns well-managed states to bailing out badly-managed ones – is unsustainable.

 

Merkel is resolute the eurozone must agree a “crisis resolution mechanism” that would allow governments with big debt burdens to ask creditors to reschedule or forgive debts

 

FRANCE

Sarkozy Under Pressure as France Feels Irish Heat BL

 

UK

£7bn cheque that is set to give Osborne nightmares Prosser

 

IRELAND

The fear is that Irish politicians are assuming the ECB will continue indefinitely to provide unlimited liquidity to banks. Currently, Ireland accounts for a quarter of the liquidity the ECB is pumping into the eurozone financial system. But conditions elsewhere in the eurozone are strengthening the case for the ECB to unwind its exceptional liquidity support.

 
IRISH PLAYERS

Brian Lenihan Ireland’s finance minister. The man in charge of Ireland’s economic policy has appeared most resistant to a bail-out. He has framed any deal as part of a wider EU move to shore up the euro. As he told Irish radio on Sunday: “We have not, contrary to much speculation, applied to join any facility or avail of any facility. But of course we’re an inter-dependent part of the eurozone and we’re in constant liaison with the central bank and the Commission.”

 

Brian Cowen Ireland’s prime minister. In recent weeks, Mr Cowen has denied that his country is in the market for a “bail-out”. “The use of pejorative terms, precisely because they are ill-defined and mean different things to different people, are adding to the confusion,” he said, as the crisis developed. But speaking before yesterday’s meeting of eurozone financial ministers in Brussels, Mr Cowen also admitted that Ireland was “engaged with our counterparts in discussing with them how best we can underpin banking and financial stability”.

 

Patrick Honohan Irish central bank governor. Mr Honohan seemed to allude to the likely shape a bail-out might take in a speech last week. He told the International Financial Services Summit in Dublin: “Presumably overcapitalising the banks would also help build confidence, but this is not something which the state can lightly be asked to do given the pressures on its finances.”

 

Bank shares hold up as market bets on bailout Irish Independent

Irish woes should speed Europe’s default plan Roubini (Complete via Google jump)

Ireland told: Take EU bailout or trigger crisis Guardian

Dublin warned it has 24 hours to make decision as EU emergency talks loom amid fears Irish banks' contagion may spread to other eurozone countries

Irish 'contagion' hits Portugal Pritchard

“The creditors say please take the money, and the debtor says 'we don't want it'. It's very odd”

Euro zone seeks way out of Irish debt crisis Reuters

Debt crisis team heads for Dublin  FT

UK Treasury considers billions in loans to Ireland

 

USA

 

time (et) report period Actual Consensus
forecast
previous

Wednesday, Nov. 17

8:30 am Consumer price index Oct. 0.2% 0.3% 0.1%
8:30 am Core CPI Oct. 0.0% 0.1% 0.0%
8:30 am Housing starts Oct. 519,000 588,000 610,000


U.S. Consumer Prices Rose 0.2% in October; Core Rate Unchanged BL BLS

U.S. Home Starts Drop More Than Forecast on Multifamily Slump BL

Net foreign buying of U.S. assets down nearly 40% in September vs. August
Treasury

 

2- EU BANKING CRISIS

   

Shadow banks face regulators’ scrutiny  FT

Lord Turner points to fundamental failure of old approach

 

3- BOND BUBBLE

 

Debt: There is No Jubilee Hinde Capital
The World has too much debt

 

The global debt clock Economist


Inflation, low rates don’t go together Kellner

 

Bond Market Defies Fed WSJ 

 

No Inflation? CNBC

The trend is a potential problem for the economy and the Fed.

 

Roubini: 'Inflation Is Not a Problem' CNBC

 

U.S. Rating Not Under Pressure This Year or Next, Moody's Says BL

“Certainly over time...the debt trajectory such as it’s laid out in official projections at this time, could put pressure on the Aaa rating eventually”

 

New Yield Forecast: Yields have bottomed out Danske

 

4- STATE & LOCAL GOVERNMENT

 

California kicks off $14 billion debt sale CNN

 

California Will Default On its Debt  Whalen

 

5- CENTRAL & EASTERN EUROPE

 


6-BANKING CRISIS II


Positions in global over-the-counter (OTC) derivatives markets at end-June 2010 BIS
In the first half of 2010, growth in amounts outstanding was subdued or negative in all risk categories. Positions of all types of OTC derivatives fell by 4% to $583 trillion...

Today the BIS releases the latest statistics on positions in the global over-the-counter (OTC) derivatives market. These comprise the results of the second part of the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity as well as the regular semiannual OTC derivatives statistics.

  • Positions in the OTC derivatives market went up in the three years since the last Triennial survey (+15%, or 5% annualized) to $583 trillion, but at a slower pace than during the previous period from 2004 to 2007 (+ 131%, or 32% per year). Data from the semiannual survey shows that the modest overall increase is the result of a surge in positions until June 2008, followed by a decline in the wake of the financial crisis. Growth in gross market values, which provide a measure of the counterparty risk of these positions at prevailing market prices, increased far more than notional amounts outstanding, going up by 122% to $25 trillion at the end of June 2010 . This compares to a growth of 74% during the previous (2004-07) reporting period.
  • The modest overall growth in notional amounts outstanding hides significant variations across risk categories. The highest growth was recorded in the interest rate segment of the OTC derivatives (25%), bringing the share of this risk category in the market total to 82%. Positions in foreign exchange derivatives went up by 9%. By contrast, amounts outstanding of the other OTC segments declined substantially, ranging from 30% and 40% (equity and credit) to 60% (commodity contracts). Sharp movements in asset prices, related to a reassessment of risks during the financial crisis, drove up gross market values of foreign exchange (100%), credit (88%) and interest rate derivatives (175%). Gross market values of equity and commodity contracts declined.
  • Data from the semiannual survey shows that, in the first half of 2010, growth in amounts outstanding was subdued or negative in all risk categories. Positions of all types of OTC derivatives fell by 4% to $583 trillion, following the 2% increase in the second half of 2009. The decline occurred against the backdrop of deteriorating market sentiment related to the European sovereign debt crisis. However, much of the contraction reflected a valuation effect due to the depreciation of European currencies against the US dollar, the currency in which the data are reported. In contrast to the decline in the positions, gross market values for existing OTC contracts rose by 15% to $25 trillion at end-June on the back of sharp asset price movements. Gross credit exposures, after netting agreements, which had dropped slightly in the half-year up to end-2009 (-6%) increased by 2% to $3.6 trillion.
  • Notional amounts outstanding of credit default swaps (CDS) declined for the fifth consecutive semiannual period, largely due to terminations of existing contracts. Gross market values for single-name contracts dropped by 16%, while those for multi-name contracts rose by 10%. The latest semiannual survey introduces additional information on the importance of central counterparties (CCPs) in the CDS market. At end-June 2010, about 11% of CDS positions were vis-à-vis a CCP 1 . The CDS counterparty breakdown for contracts with other financial institutions has also been expanded. In particular, special purpose vehicles (SPVs) and hedge funds are singled out for the first time. CDS contracts with hedge funds and SPVs account for about 5% and 4% respectively of total notional amounts outstanding with other financial institutions.

 

A detailed analysis of elements of the 2010 Triennial Survey and of the end June 2010 semiannual OTC derivatives statistics will be made available in the forthcoming December BIS Quarterly Review. In particular, the publication will include special features on structural changes in the CDS market, on derivatives in the emerging economies, on the drivers of growth in FX markets, and a user's guide to the Triennial survey.


7- RISK REVERSAL

 

 

8- COMMERCIAL REAL ESTATE

 

Commercial Real Estate (CRE): The Slow-Mo Cliff-Dive Gathers Speed Smith

 

CAUSE Federal Reserve Policy = > Credit Bubble

  • 1- Low Interest Rate Policy
  • 2- Extended Period of Time
    3- High Leverage allowed
    4- Plentiful Liquidity maintained
    5-Increased Risk Appetite unchecked
  • 6- Unchecked growth in FIRE economy versus Productive economy

 

RESULT: "Malinvestment"

  • 1- Lending standards went out the window ($5T HELOCS, SubPrime, OptionArms etc.)
  • 2- Banks loaned too much,
  • 3- Buyers paid too much,
  • 4- Lousy deals were avidly securitized,
  • 5- Cash flow projections entered Fantasyland and
  • 6- Unhealthy speculation fed widespread fraud.

 

SITUATIONAL ANALYSIS: Massive Re-Structuring Needed but not Happening

  • 1- $1.7T refinancing need in 2011
  • 2- Asset prices down 40% from 2006 peaks
  • 3- Leveraged cost basis of $800K/resort hotel room
  • 4- $500/Sq Ft Class A Office Space

 

PROBLEM:

  • 1- No foreseeable foundation for future growth (end of viruous cycle growth).
  • 2- Retrenching Consumer (Frugality = Reduced Consumer Credit)
  •       - A) No $5T HELOC ATM
  •       - B) $11T wealth reduction
  •       - C) 10% Unemployment
  •       - D) Salary Compression and Benefits removal
  •       - E) Cost of Education, Taxes and Inflation impact 
  •       - F) Baby Boomer Retirement Demographic - $60M with no retirement   
  •              security 
  • 3- Declining Rates due to Increasing Overhead on a highly leverage balance sheet
  • 4- Death of 5 Year Lease and "Pop-Up' Model
  • 5- Internet Impact on "Work at Home"
  • 6- Continued Global Wage Arbitrage
  • 7- Corporate Cost Cuts on slowing growth rates

 

9-RESIDENTIAL REAL ESTATE - PHASE II

 

A hearing on foreclosures, and an industry at stake NYT

 

S&P predicts more home price declines through 2011 Housing Wire

 

10- EXPIRATION FINANCIAL CRISIS PROGRAM

 

 

11- PENSION & ENTITLEMENTS CRISIS



12- CHRONIC UNEMPLOYMENT



13- GOVERNMENT BACKSTOP INSURANCE

 

 

14- CORPORATE BANKRUPTCIES

 

 

17- CHINA BUBBLE


Hosting the Dalai Lama can be bad for your export health Asia Sentinel
As China's economic clout has grown, it has become increasingly assertive in using trade systematically as an ideological weapon...

How to chart course out of Sino-US storm  FT Martin Wolf

19- PUBLIC POLICY MISCUES

 

Deficit Panel Ignores $153 Trillion Hole Kotlikoff

 

GAO: Unchecked Debt Could Prove ‘Disruptive and Destabilizing’ WSJ

 


 


OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE

 

24-RETAIL SALES

 

26-GLOBAL OUTPUT GAP

 

31-FOOD PRICE PRESSURES

 

Wholesale vegetable prices surge - Govt to introduce food price rules China Daily

 

32-US STOCK MARKET VALUATIONS

 




BP - British Petroleum

SULTANS OF SWAP: BP Potentially More Devastating then Lehman!

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

 






   

CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES

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

 


Taleb Says Fed Doesn't Understand Risks of Quantitative Easing You Tube




If You're Looking For Inflation, Here's Where To Find It Chart of the Day

Right now, Federal Reserve Chairman Ben Bernanke is trying to stimulate inflation in the U.S. economy through purchasing assets the Fed's money. Some people like it, and some people don't.

 

Bernanke, through reducing the returns on treasuries in the U.S., is forcing investors to move out on the risk curve and into emerging markets. And that if flooding countries like China, India, and Brazil with cash.

 

The cash is creating inflation in those economies. China may soon tighten. India already has. And Brazil has turned to capital controls to protect itself.

So whatever you think of Bernanke he's succeeding, just not where he might have hoped.




Bond Market Defies Fed  WSJ



I Am Shocked, Shocked that the QE2 is Akin to Printing Money... Kasriel

Yellen Defends  WSJ

Dudley: “This exit could be years away” via HP

 

GENERAL INTEREST
Attached is a short article voicing my concern for what appears to be yet another cover-up and shading of the truth by the current administration.  Please pass it on or print/post it as you see fit.
 
Jim Cash
B/G, USAF, Ret.

ANOTHER GOVERNMENT COVER-UP!!!  WILL IT EVER END???

 

Sliding silently under the mud, muck and fog of national politics, is a current event that makes Bill Clinton's excursion into the world of elderly sex look tame in comparison.  This time the nation's national security is truly threatened in my opinion, and it involves not only a weak President with limited problem-solving ability, but leadership at the highest levels in the Pentagon as well.  The American people would do well to demand a full investigation by an unbiased group, and let the chips fall where they may.  I am referring to the "missile shot" taken of California coast recently, and the lame response by NORAD, the Pentagon and the White House itself.

 

First, in hope of adding some creditability to my assessment of what really happened just off the coast of Los Angeles let me convey a bit of my background which can be checked easily by going to Google and typing in my name.   An Air Force biography will appear.

 

During the late eighties I was assigned to NORAD, as a Command Director initially and later as the assistant Director of Operations for NORAD.  The NORAD operation was located inside the Cheyenne Mountain complex just outside Colorado Springs , Colorado .  Twenty four hours a day a team of approximately 150 highly trained individuals, lead by a Brigadier General, monitored one of the most sophticated computer systems in the world.  This system was fed data from many different sensors that were able to detect missile shots from any point on the globe.  All this data was taken into consideration when making the "assessment" as whether or not North America and/or Canada were threatened by such a launch.  If the launch was assessed as a true threat, the President was contacted immediately by NORAD through a military individual always close to the President who carried what we called, "the football", a black brief case with release codes for our nuclear forces.   I know the system well, as for near three years I led one of those teams.

 

In addition, for over 25 years, I flew US Air Force fighters to include the F-106, F-4, F-15, F-16, and commanded an F-15 Squadron and an F-16 Wing.  The sole purpose of the F-106 assignment was to maintain an ability to become airborne in minutes to intercept inbound bombers posing a threat to the US mainland.  Untold hours were spent studying and being tested on visually identifying an air-to-air threat to include its type and threat potential.  I understand the difference in an aircraft contrail and a missile launch contrail.

 

In my opinion there is absolutely no doubt that what was captured on video off the coast of California was a missile launch, was clearly observed by NORAD, assessed by a four-star General in minutes, and passed to the President immediately.  That is the way the system works, and heads fall if there is a failure.  This is one of the most important tenets of National Defense and its sole purpose of protecting the American people.  Even the smallest failure in this system gets intense scrutiny at the highest level.

 

Now, the question that still must be answered is why NORAD's muted response was simply that North America was not threatened, and later our government approved the lame excuse that the picture recorded was simply an aircraft leaving a contrail.  This decision was made far above the four-star level, and because the system in place demands it, was made by the President himself.

 

There are many possible answers to the question why.  Normally, when a situation of this nature occurs the decision makers in Washington feel it would create panic among the mere mortals who go to work every day.  To avoid shocking the population the truth is shaded, or sometimes just kept quite in hope it will just go away.  I would say to our government officials who disregard the intelligence of the American people, be careful.  The people are awakening, and their trust in our government is fading.  This level of decision making will hasten that process.

 

In my opinion we must question the timing of this shot across our bow.  The President was abroad being diplomatic, which means trying to placate China which is becoming overly concerned with our handling a totally out of control deficient in spending.  They do not want our debt to them be paid in cheapened US dollars, and it appears that our current plan is to do just that.  China is devoting a major portion of their GDP to defense spending, and what better time to show the US that they can slip a missile equipped submarine through the South Pacific undetected right up to one of our largest cities, than right now.  And, the Chinese have the guts to do it.

 

Important in my opinion is that once again the leader of this nation chose to disguise the truth and keep the American people in the dark on an issue that constitutes a major threat to the entire population of the United States of America.  This is no longer a threat to only our military thousands of miles from the homeland.  This is a show of force sending a signal that downtown USA is now capably of being hit by an undetected submarine and at any time.  It may very well be the beginning of the real power struggle between the United States and China . If so, I predict the next phase will be China 's demand for the US to cease support of Taiwan , and so it goes. 

 

President Obama is getting in over his head once again on this one.  Hiding the severity of issues we face with China to include this possible signal of strength is a terrible mistake.  It is happening at a time that our Secretary of Defense, under the guidance of the President, is literally gutting our military forces.  We have seen it already when the F-22 buy was cut from over 600 aircraft to 187, and research and development for follow on systems severely reduced.  This is but one of hundreds of examples of military reductions.  I fear that this could be another reason for this cover-up.  If the American people fully realized the severity of the threat they might demand restoring our military to face the growing threat from China and Russia , as opposed to the massive domestic spending that we have witnessed over the past two years.

 

So, where does this leave us?  Again, the people must decide and place pressure on the government to insure that our National Security remains intact.  Military strength prevents war.  Military weakness invites not only war, but also a lack of deterrence for intervention and bullying on many fronts.

 

If there was ever a time for the people to look closely at the national leadership and demand honesty and integrity, it is now.  This is not a Democrat or Republican issue.  At issue is electing those who have the ability to make proper decisions for our country, and will do so with no regard to their own personal gain.  It is time to elect a President and a Congress who will put country above self, and defend this great nation against all enemies, foreign or domestic, and above all be honest with the people who honored them with election to high office.

 

Jim Cash

Brig. Gen., USAF, Ret.

 

The Age of Deleveraging Mauldin

 

FLASH CRASH - HFT - DARK POOLS

 

MARKET WARNINGS

 

CURRENCY WARS

Fed Easing Not Aimed at Weakening Dollar: Dudley Reuters

 

FX Forecast Update: PIIGS unlikely to reverse the dollar downtrend PIIG (presentation) Danske

 

FDI grows faster in October amid hot money concern Shanghai Daily

 

China said to impose new measures to curb price increases Shnaghai Daily

 

SKorean central bank raises rate to 2.5 percent AP

 

China eyes price controls to fight inflation  FT

 

Q3 EARNINGS

If You Read Wal-Mart's Earnings, You Know The Real Reason The Market Is Tanking  BI

 
This morning Wal-Mart reported earnings, and they were fine, but it was all Asia growth. The US is glum still. If Asia slows, US stocks hit the wall.

 

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Volcker

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Volcker


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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.