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EXTEND & PRETEND
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Complete Legend to the Right, Top Items below.
Articles with
highlights, graphics and any pertinent analysis found below.
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COMMENTARY for all articles by
Gordon T Long
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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 |
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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
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READER ROADMAP
- 2010 TIPPING POINTS aid to
positioning COMMENTARY
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1
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1-SOVEREIGN DEBT |
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2-EU BANKING CRISIS |
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3-BOND BUBBLE |
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4-STATE &
LOCAL GOVERNMENT |
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5-CENTRAL & EASTERN EUROPE |
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6-BANKING CRISIS II |
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7-RISK REVERSAL |
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8-COMMERCIAL REAL ESTATE |
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9-RESIDENTIAL REAL ESTATE -
PHASE II |
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10-EXPIRATION FINANCIAL
CRISIS PROGRAM |
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11-PENSION CRISIS |
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12-CHRONIC
UNEMPLOYMENT |
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13-GOVERNMENT BACKSTOP
INSUR. |
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14-CORPORATE
BANKRUPTCY |
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TODAY'S TIPPING POINTS UPDATE |
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RED ALERT |
AMBER ALERT |
ACTIVITY |
MONITOR |
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Click to Enlarge
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11-10-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
IRAN
ISREAL
KOREA
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1-
SOVEREIGN DEBT & CREDIT CRISIS |
More bond buying please Mr Trichet FT
Alphaville
| Tuesday’s market action suggests the
market is trying to test the ECB’s resolve |
Sweden Debt Market Tensions Show ECB What Exit Brings
BL
| “The implications for Europe could be severe if the ECB
doesn’t handle things delicately” |
HSBC and StanChart call for Basel III rewrite
FT
Foreign investors shun risky eurozone bonds
FT
Concerns grow over health of peripheral economies
Doubts grow over ‘peripheral’ eurozone nations
FT
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4- STATE
& LOCAL GOVERNMENT |
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5-
CENTRAL & EASTERN EUROPE |
Goldman, Natixis Fight Over Swaps Deal Goes to Trial in London
BL
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8-
COMMERCIAL REAL ESTATE |
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9-RESIDENTIAL REAL ESTATE - PHASE II |
Some judges chastise banks over foreclosure paperwork
WP
Rethinking Homeownership Reason
J.P. Morgan Faces Suits Alleging Foreclosure Fraud
WSJ
Mortgage Lenders Set Back in Courts WSJ
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The push by mortgage companies to accelerate the snarled
foreclosure process is running into resistance from judges who are
cracking down on sloppy paperwork.
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10- EXPIRATION FINANCIAL CRISIS PROGRAM
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11- PENSION & ENTITLEMENTS CRISIS
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1.2 million people want a job but aren't looking
USAT
A heartening jobs report last week masked an ominous
statistic: Discouraged workers hit a record 1.2 million.Discouraged workers are those who want a job but aren't counted in the labor
force because they've stopped looking for work.
The portion of over-55 workers in the labor force has risen the past decade from
about 32% to 40%. Sara Rix, an AARP policy adviser, partly credits older
workers' shrinking 401(k) accounts and higher health care costs.Yet that labor participation rate has held steady or edged down slightly in the
recession as many older Americans, like their younger counterparts, grew
discouraged and stopped looking for jobs. Workers 55 and older totaled 335,000,
or 27.5%, of all discouraged workers in October, the single-largest demographic
group. |
Basically, The "Good" Jobs Report Was A Flat-Out Lie
Gluskin Sheff
Employment Rate
58.3% Fell from 58.1%
Participation Rate
64.5% Fell from 64.7%
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It is astounding how market commentators leap
on every piece of economic data; they merely look at the headline,
and then make a judgment on whether it is weak or strong. The U.S.
payroll report that came out last Friday was spurious, at best.
Yes, yes, the +151,000 headline was nice and well above
expectations, but it was also highly concentrated in just a few
service sector industries, led by waste management. For an economy
gone to waste, maybe that’s totally apropos.
But let’s get real here. The raw data showed
that 919,000 payrolls were somehow created in October, which
therefore would have made this the second strongest October in the
last 11 years — in October 2009, the tally in the raw nonfarm
payroll data was 646,000 even though the economy then was
accelerating at a 5% annual rate. That 919,000 not seasonally
adjusted surge in October far surpassed what we saw at the peak of
the cycle in 2007 (740,000 jobs) as well as the boom periods of
2006 (698,000) and 2005 (727,000). The data bear no resemblance to
the reality of an economy barely growing at all in real per capita
terms.
For a bond or a
stock trader, it all comes down to the headline nonfarm payroll
number. For a labour market analyst, what is important is the
information that comes from many parts of the Household survey.
Who in their right mind could ever refer to the jobs report — it
is an entire report, by the way — being strong when the
employment-to-population ratio (the “employment rate”) dipped
two-tenths of a percentage point to 58.3% in October. The labour
force plunged 254k and the participation rate fell from 64.7% in
September to 64.5% — the lowest level since November 1984! How is
that bullish? If not for the slide in the labour force last month,
the unemployment rate would have gone back up to 10%
The level of unemployment rose 76k in October
and is up now in two of the past three months. They may take issue
with Mr. Market’s and Mr. Media’s response to the headline payroll
figure. The Household survey, when put on the comparable footing
to the payroll report (the “population and payroll concept
adjusted” series), showed a 505k slide in employment last month,
the steepest decline of the year. That was certainly no +151k. Not
only that, but the Household survey found that 124,000 full-time
jobs were lost in October, making it a five-month streak during
which 1.1 million of these positions vanished, only replaced
in part by 690k part-time workers.
To be sure, the payroll survey flagged upward
revisions, an uptick in the workweek and a rebound in work-based
pay. But the Household survey is consistent with an economy still
mired in deep malaise if not contraction. So which survey is
correct? Hard to say. Historically, only 5% of the time do the
Household survey and Payroll survey diverge in any given month to
this extent, and usually it is the former that has the story
right. Time will tell.
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13- GOVERNMENT BACKSTOP INSURANCE |
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14- CORPORATE BANKRUPTCIES |
Banks and property firms drop amid tightening concern Shanghai Daily
Xie: “The property market has reached its peak” Caixin
Immelt- China Eases Concerns About Policy WSJ
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GE's chief executive said he remained concerned about a Chinese
industrial policy that has been widely criticized by foreign
businesses as discriminatory, even as he pledged new GE investment
there.
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19- PUBLIC POLICY MISCUES |
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
24-RETAIL SALES
26-GLOBAL OUTPUT GAP
31-FOOD PRICE PRESSURES
Food price fears as US warns on crop yields FT
Global Grain Reserves Diminish, U.S. Stockpiles in Worse Shape Holly
Deyo
| Domestically the price of meat, milk, sugar and eggs is
already taking a huge upward jump. If the root cause were a single
issue, it might be absorbable or at least less damaging. However,
multiple factors are hiking food prices and they are only expected
to climb. |
Food Sellers Grit Teeth, Raise Prices Holly Deyo
32-US STOCK
MARKET VALUATIONS
GENERAL INTEREST
FLASH CRASH - HFT - DARK POOLS
High-Frequency Traders Lobby, Donate to Head Off U.S. Rules BL
The Flash Crash, in Miniature
NYT
MARKET WARNINGS
Stocks pull back on China tightening concerns FT
G20 MEETING
Unbalanced worldG20 agreement will be elusive FT
G-20 Unity Born in Crisis Fractures as Leaders Pursue Own Ends
BL
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President Barack Obama finds himself on the defensive before a
summit of world leaders tomorrow as Asian and European
counterparts disparage U.S. economic policies they say weaken the
dollar and stoke hot-money flows.
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A Better G-20 Agenda WSJ Op-Ed
Zoellick urges G20 to heed gold price FT
World Bank chief says world heading towards new monetary system
Japan
Downplays Prospect of G20 Current Account Deal Reuters
New Report
Blasts ETFs for ‘Systemic’ Risk CNBC
A Lack of Transparency in S.E.C. Disclosure Rule Sorkin
G20 and beyond Bretton Woods II FT
G20 draws up two-tier bank plan FT
Global and national regulators to split focus
Beijing can afford to stand firm FT
Leading squabblers FT CURRENCY WARS
China to Tighten Control on Inflows of Overseas Funds BL
China forex regulator seeks to curb 'hot money' AFP
World Bank Says Asia May Need Capital Controls to Curb Bubbles BL
East Asian Exchange Rates and China’s Trade Surplus EB
Japan Reenters the Foreign Exchange Market FRBSL
Q3 EARNINGS
ING Says Third-Quarter Net Falls on U.S. Insurance Writedown BL
MARKET &
GOLD MANIPULATION
Silver Overbought BeSpoke
Gold surges above $1,400 on Zoellick calls FT
Zoellick’s call on gold standard dismissed FT
Zoellick seeks gold standard debate FT
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. “
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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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TODAY'S NEWS
WEDNESDAY
11-10-10
NOVEMBER
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ARCHIVAL |
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TIPPING POINTS |
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1-SOVEREIGN DEBT &
CREDIT CRISIS |
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2-EU BANKING CRISIS |
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3-BOND BUBBLE |
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4-STATE & LOCAL
GOVERNMENT |
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5-CENTRAL & EASTERN EUROPE |
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6-BANKING CRISIS II |
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7-RISK REVERSAL |
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8-COMMERCIAL REAL ESTATE |
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9-RESIDENTIAL REAL ESTATE -
PHASE II |
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10-EXPIRATION FINANCIAL
CRISIS PROGRAM |
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11-PENSION CRISIS |
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12-CHRONIC
UNEMPLOYMENT |
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13-GOVERNMENT BACKSTOP
INSUR. |
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14-CORPORATE
BANKRUPTCY |
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15-CREDIT CONTRACTION II |
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16-US FISCAL IMBALANCES |
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17-CHINA BUBBLE |
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18-INTEREST PAYMENTS |
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19-US PUBLIC POLICY MISCUES |
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20-JAPAN DEBT DEFLATION SPIRAL |
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21-US RESERVE CURRENCY. |
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22-SHRINKING REVENUE GROWTH RATE |
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23-FINANCE & INSURANCE WRITE-DOWNS |
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24-RETAIL SALES |
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25-US DOLLAR WEAKNESS |
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26-GLOBAL OUTPUT GAP |
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27-CONFIDENCE - SOCIAL UNREST |
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28-ENTITLEMENT CRISIS |
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29-IRAN NUCLEAR THREAT |
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30-OIL PRICE PRESSURES |
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31-FOOD PRICE PRESSURES |
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32-US STOCK MARKET VALUATIONS |
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33-PANDEMIC |
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34-S$ RESERVE CURRENCY |
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35-TERRORIST EVENT |
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36-NATURAL DISASTER |
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