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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
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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
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READER ROADMAP
- 2010 TIPPING POINTS aid to
positioning COMMENTARY
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POSTS: WEDNESDAY 10-13-10
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Last Update:
10/14/2010 05:09 AM
SCHEDULE: 1st Pass: 5:30AM EST, 2nd Pass: 8:00 AM, 3rd Pass 10:30
AM. Last Pass 5:30 PM
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

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10-13-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
IRAN
ISREAL
KOREA
1-
SOVEREIGN DEBT & CREDIT CRISIS |
GREECE
Greek bonds put on star turn in eurozone
FT
Confidence grows that Athens can spur economy
Greece's Borrowing Costs Fall
WSJ
Greece's deficit-reduction efforts are bearing some
fruit in the debt markets, where the nation sold a batch
of short-term bills at a yield lower than a previous,
similar auction. |
SPAIN
GERMANY
FRANCE
French Unions Threaten Open-Ended Strikes Over Pensions
BL
Sarkozy stands firm as pension protests escalate
Inde
UK
IRELAND
JAPAN
Bank of Japan May Buy More Assets
WSJ
Japan's Central Bank Threatens To Buy Up Even More Stocks,
Bonds, And Real Estate BI
Japan's central bank made the incredible announcement
last week that it would buy stocks, bonds, and real estate
in a bid to devalue the yen.
They've already set up a $61.1 billion fund targeting
bonds, exchange-traded funds (ETFs), and real estate
investment trusts (REITs) and it's a bid to fight
deflation by blatantly inflating all kinds of asset
prices.
As Joe Weisenthal has pointed out, this is part of
Japan's new 'rabid
dog' monetary policy -- They want speculators to be
absolutely terrified by the unpredictable nature of the
central bank. It could suddenly intervene in currency
markets, suddenly start buying Nikkei ETFs, or just throw
free money at banks and order them to lend. They're
craaazy, so beware if you're long the yen.
Yet even Japan's wild actions to discredit its own
currency hasn't stopped the yen from appreciating further.
It's now below 82 per U.S. dollar and near year-to-date
lows.
Maybe that's why Bank of Japan governor Masaaki
Shirakawa has today 'hinted' that the central bank could
expand its $61.1 billion inflate-the-market-at-all costs
buying program even further.
"If judged necessary in the future, steering monetary
policy by making further use of the fund is one of the
likely policy options," he said at a parliamentary
committee meeting reports the
Wall Street Journal.
Translation -- We can and will trash our currency to
the best of our ability. Anything for the exporters.
|
|
time (et) |
report |
period |
Actual |
Consensus forecast |
previous |
Wednesday, Oct. 13 |
8:30 am |
Import price
index |
Sept. |
|
N/A |
0.6% |
2 pm |
Federal budget |
Sept. |
|
N/A |
-$45 bln |
|
Faber- I'm Ultra-Bearish On Everything, And We're At A Turning Point Where
It's Time To Dump Bonds BI
Inflation-linked bonds show more concerns than Fed
MW
4- STATE
& LOCAL GOVERNMENT |
California to Sell 24
Government Buildings for $2.3 Billion CNBC
The state announced Monday it is selling 24 government office
buildings — including the Ronald Reagan State Building in Los
Angeles and the San Francisco Civic Center — to a group of private
investors for $2.3 billion.
The Associated Press reported earlier this year that
the deal would end up costing the state $5.2 billion in rent over 20 years,
perhaps saddling taxpayers with costs beyond whatever the state would net from
the sale. a study by
Beacon Economics
reached a similar conclusion by looking at a
30-year period. |
US cities face big public pension deficits FT
Four Governors on How to Cut Spending
WSJ
After years of cost increases that exceeded population growth
and inflation, the budgets of many American states plunged into
crisis during the economic downturn. We asked Ed Rendell, Arnold
Schwarzenegger, Deval Patrick and Bob McDonnell to tell us how
they are coping and how they plan to save money in the future |
5-
CENTRAL & EASTERN EUROPE |
Expect Bank Earnings to Be Lower This Quarter: Bove
CNBC
8-
COMMERCIAL REAL ESTATE |
9-RESIDENTIAL REAL ESTATE - PHASE II |
Home Prices Are Love Affair Heading for Rocks
Lynn
The foreclosure freeze freakout MW
10- EXPIRATION FINANCIAL CRISIS PROGRAM
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11- PENSION & ENTITLEMENTS CRISIS
|
Debt - US Cities Face
Half a Trillion Dollars of Public Pension Deficits
CNBC
Big US cities could be squeezed by unfunded public
pensions as they and counties face a $574 billion funding gap, a study to be
released on Tuesday shows. The gap at the municipal level would be in addition to
$3,000 billion in unfunded liabilities already estimated for state-run pensions,
according to research from the Kellogg School of Management at Northwestern
University and the University of Rochester. |
Senior citizens brace for Social Security freeze
Reuters
Peak Oil Experts Fear Big New U.S. Job Losses, Economic Downturn
HP
Jobless America threatens to bring us all down with it
Warner
Fifteen months since recession’s official end, economy short 11.5
million jobs EPI0
13- GOVERNMENT BACKSTOP INSURANCE |
FDIC Floats Rules on Closing Firms WSJ
Federal regulators proposed a rule that would require
creditors of large financial firms to suffer losses in the event
of a firm's collapse. |
14- CORPORATE BANKRUPTCIES |
China Banks
Hit Again with Required Reserve Ratio Hike Reuters
China Needs to Move Slowly on Yuan Revaluation Pettis
China to Add Emerging-Market Currencies to Reserves BL
$2.5 Trillion in Reseves? BL
China says yuan reform doesn't mean appreciation Reuters
Once a Winner, China Sees Globalization’s Downside - Part I YALE
If another 20 to 30 million units under construction are
added, China’s excess capacity could house the entire US
population! |
"Transforming China's Economic Development Model" Econbrowser
19- PUBLIC POLICY MISCUES |
The President's Nun: Obamacare Scranton Scandal Explodes American
Spectator
Hospitals, said this doctor -- frequently run a debt.
"What's different? Why now?" he said in terms of the rationale for
selling the Mercy hospitals. The reason is exactly as CEO Cook
originally said it was. ObamaCare cuts in Medicare reimbursement
have changed the rules so drastically for hospitals
"you [Mercy Health Partners] are in an untenable situation," said
this physician. Most hospitals have accumulating debt because of
capital investments, says the doctor. But they can't deal with
that debt if in fact their ability to earn money is cut off or
drastically reduced over time.
Alarmingly, the doctor, with a lifetime of practice in
hand, says that "hospitals close in clusters where there is
decreased income in terms of relatively low Medicare
reimbursement…because they are the most vulnerable."
He adds that what is happening in Scranton,
Nanticoke, and Tunkhannock with the Mercy hospitals "is just the
beginning. It will happen everywhere because reimbursements will
be reduced" under ObamaCare. Particularly, he adds, in areas where
you have a high elderly population.
If the doctor is right, and he is not alone in saying
this, the proposed sale of the three Mercy hospitals becomes a
harbinger of what will happen nationally as a result of ObamaCare
slowly tightening its government tentacles over the private health
care system. Which means the sale of the three Mercy hospitals has
added Scranton to what the Wall Street Journal has
already called ObamaCare's "trail of destruction."
|
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
19-US PUBLIC POLICY MISCUES
24-RETAIL SALES
26-GLOBAL OUTPUT GAP
31-FOOD PRICE PRESSURES
Worrying Over China and Food Sorkin
Meat Market Corn Crunch Means Costliest Beef in Quarter Century BL
32-US STOCK
MARKET VALUATIONS
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES
------------
Bernanke's History Lesson- Japan WSJ
Criticisms Ben Bernanke made of Japan's central bank a
decade ago—saying it was too timid in stimulating Japan's
economy to prevent deflation—give hints of what the Fed's
next steps might be. |
Fed Moves Viewed as Targeting the Dollar WSJ
Fed Officials Were Prepared to Ease `Before Long,' Minutes Say
BL
Minutes Federal Reserve
Fed tilts to more monetary easing FT Minutes show
likelihood of QE2 in November
More Fed easing likely won't help economy: Hoenig Reuters
Speech Federal Reserve
“There simply is no strong evidence the additional
liquidity would be particularly effective in spurring new
investment, accelerating consumption, or cushioning or
accelerating the deleveraging that is hopefully winding
down.” |
Fed's Yellen acknowledges risks to ultra-low rates AP
Speech
Federal Reserve
Experts warn that further easing could sink recovery Fund
Strategy
Deutsche on the liquidity trap – and the last hurrah FTA
The Fed's QE2 — Speeding Our Demise Decline of the Empire
"Ben Bernanke can not repeal the law of gravity no
matter how hard he tries. Any boost he did achieve in
house and stock prices would be temporary, as it was the
last time around. Equities would once again revert (fall)
to their natural price levels, and the latest deception ( stimulus)
would be played out without turning the economy around.
And if Americans did spend more money for a while based on
their new-found wealth, they would once again find
themselves holding the debt bag after that phony wealth
disappeared." |

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GENERAL INTEREST
America's Faltering Empire Decline of the Empire
If we assume that Empires rise & fall, and history tells us they always do, the
question becomes where do we stand? Again, it is crystal clear that our
power is waning, to wit—
-
- The
Imperial Capital (aka. Washington, D.C) is now mostly
out of touch with the citizenry, and thus no longer serves
their interests.
-
- Corruption is rife in the Capital,
with corporate special interests, especially in Finance,
dominating any actions taken there. This makes a mockery of
our so-called "Democracy."
-
- The things that made us great are
falling apart. For example, our Middle Class is disappearing
at an alarming rate. Wealth & income disparity in the United
States is greater than at any time since the late 1920s before
the 1929 crash and the subsequent Great Depression. These
developments are related to the outsourcing of our
manufacturing base, which began in earnest in the early 1990s
during the Age of Globalization.
-
- The United States is effectively
broke, or soon will be. The private sector no longer
functions. Our failed domestic sectors are bankrupting us (e.g.
Banking or Housing—see Citigroup, or Fannie & Freddie). The
public sector grows overly large. We can no longer afford our
Imperial Adventures, and must borrow money from rising powers
like China to carry them out (e.g. Iraq,
Afghanistan).
-
- The United States is heavily
dependent on resources (chiefly oil) that it does not produce
domestically. Thus America must defend far-flung supply chains
to secure these resources, but its ability to do so, or coerce
others to sell us what we need, becomes weaker & weaker over
time.
-
- Corruption itself, aside from plain
vanilla bribery, is a symptom of a lack of Vitality and a
tendency toward Paralysis & Complexity which always arises
when an Empire goes downhill. It happened in Britain, it
happened in Rome, and it is happening here. I have written
that our get up and go has got up and went. In other
words, we are stuck on The Wheel of Suffering.
By my reckoning, the Empire's Decline began in the early 1980s. I date it then
because a wide array of disturbing economic data points to that period. For
example, it is no accident that the so-called "credit bubble" got started during
that time, and later grew to disastrous proportions during the Lost Decade
2000-2009.Increasingly, people did not earn a living wage and spend their money based on
savings & income. They spent money they didn't have because of easy credit.
They speculated in stocks & houses, among other things. As Bill Bonner once
pointed out, Easy Credit Is Stimulus. You can see why I find it a
complete joke that we must now stimulate an economy that has been
over-stimulated for nearly 30 years. |
This is a "run" on the system. The final run Real Reform
Forget about piddly runs on national banks. If the info my
colleague has been tracking for many years is correct, a mega run
on the entire economic system appears to be set in place and on
its way. Here are the indicators:
- The price of agricultural, industrial commodities, stocks
and bonds are surging simultaneously
- People in the know are beginning to get rid of money
- And acquiring tangible stuff with that money (commodities,
land, businesses, gold)
Money is now less appealing than tangible wealth. They no longer
want to save in money, financial capital. They want to save in
tangible assets, real capital, wealth. The stuff now in greater
demand than money. That is the real indicator.
This is an
extremely disturbing development. |
Third world America Macleans
U.K. Warns of Cyber Attack Risk WSJ
The head of Britain's communications intelligence agency said
it may need to receive feeds of information from private companies
in key economic sectors in order to protect the U.K. economy from
the threat from cyber attacks. |
FLASH CRASH - HFT - DARK POOLS
Lazy Portfolio winners and Flash Crash Zen Farrell
MARKET WARNINGS
Options Show No Black Swan in Emerging Markets as Stocks Surge BL
Risk to the Downside Grows Kass
Shrugging Off Bad News Saut
CURRENCY WARS
What Is Rally In Gold Telling Us? Wells Fargo
Currency tensions to continue China Daily
China paper warns currency war could fuel bubbles Hindustan Times
Fed’s Bizarre Tactics Target Weaker Dollar Merk
Former Fed Member Tells Obama To Pull A "Gordon Brown" And Sell All Of
America's Gold ZH
Currencies and bonds fire quant funds to big rallies FT
Q3 EARNINGS
Posco Cuts Profit Forecast After Costs Erode Earnings BL
Shares of Korea-based Posco -- the world's third largest
steelmaker -- and a major proxy for global demand, has come out
with disappointing earnings and a mediocre outlook, sending its
shares down over 2% in Korean trading. What's going on? It
looks like a classic case of mediocre demand and high underlying
costs, as iron ore prices continue to surge.
|
Intel Sees Strong Corporate Demand WSJ
MARKET &
GOLD MANIPULATION
AUDIO / VIDEO
QUOTE OF THE WEEK
"The global financial system continues to be unsound in
the same way that a Ponzi scheme is unsound: there are not
enough cash flows to ultimately service the face value of all
the existing obligations over time. A Ponzi scheme may very
well be liquid, as long as few people ask for their money back
at any given time. But solvency is a different matter -
relating to the ability of the assets to satisfy the
liabilities."
John Hussman
No Margin
of Safety, No Room for Error
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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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