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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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11-18-10
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
IRAN
ISREAL
KOREA
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1-
SOVEREIGN DEBT & CREDIT CRISIS |
|
| time (et) |
report |
period |
Actual |
Consensus
forecast |
previous |
| Thursday, Nov. 18 |
| 8:30 am |
Jobless claims |
11/13 |
439,000 |
445,000 |
437,000 |
| 10 am |
Leading indicators |
Oct. |
|
0.6% |
0.3% |
| 10 am |
Philly Fed |
Nov. |
|
5.0 |
1.0 |
Jobless Claims in U.S. Increase Less Than Forecast
BL
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BOB RUBIN: "US In Terribly Dangerous Territory," Bond Market May
Be Headed For "Implosion" BI
| Warning of the
risk of an "implosion" in the bond market, former Treasury
Secretary Robert Rubin says the soaring federal budget deficit and
the Fed's quantitative easing are putting the U.S. in "terribly
dangerous territory."
Speaking at an
event at The Pierre Hotel in New York City honoring Sen. Kent
Conrad (D-N.D.), Rubin joined the growing number of current and
former officials (foreign and domestic) to criticize QE2. The
Fed's plan to buy $600 billion of Treasuries "has a lot of risk,"
he said, calling the international reaction "horrendous."
Rubin, who issued a similar warning about the
bond market at The FT's "Future of Finance" conference in October,
said Congress' vote on raising the deficit ceiling next spring
could be the "trigger" for a rout in the Treasury market.
Several Republican and Tea Party candidates vowed to not increase
the government's debt ceiling unless Democrats agree to sharp cuts
in spending that may not be politically tenable.
A Congressional standoff on the debt ceiling
could spook international investors, Rubin said, alluding to a
market event similar to the Dow's 778-point plunge on Sept. 29,
2008, when the House initially voted no on TARP.
While most pundits worry about the potential
for China to dump its Treasury holdings, the former non-executive
chairman of
Citigroup said a financial version of the Cold War concept of
Mutual Assured Destruction will likely prevent them from doing so.
But he is worried about selling by the government's of
Singapore, Hong Kong and Malaysia. "They could say ‘the
Chinese are stuck but we're not,'" Rubin predicts.
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Bond Vigilantes Ride Again Forsyth
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4- STATE
& LOCAL GOVERNMENT |
Cities Face a Deepening Fiscal Crisis Real
Clear
Crisis looming in US municipal debt market (Whitney)
FT Video
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5-
CENTRAL & EASTERN EUROPE |
Fed to Require Capital Plan From Banks
WSJ
The Federal Reserve will require all 19 banks that underwent
stress tests during the height of the financial crisis to undergo
another review of their capital base and their ability to absorb
potential losses.
The Federal Reserve will require all 19
banks that underwent stress tests during the height of the
financial crisis to undergo another review of their capital base
and their ability to absorb potential losses.
The Fed, in
guidance issued on Wednesday, said the 19 banks must submit
capital plans by early next year showing their ability to
withstand losses under a set of conditions to be determined by the
central bank, including "adverse" economic conditions. |
FDIC Conducting 50 Criminal Investigations Into Failed Banks
HP
The Real Cause Of Europe's Sovereign Debt Crisis: Mamma's Boys
BI
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8-
COMMERCIAL REAL ESTATE |
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9-RESIDENTIAL REAL ESTATE - PHASE II |
Mortgage Applications in U.S. Post Biggest Drop of 2010
BL
Courts Helping Banks Screw Over Homeowners
Taibbi
The Appraisal Racket Slate
| Why the housing bubble's burst failed to align the
home-appraisal business with reality. |
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10- EXPIRATION FINANCIAL CRISIS PROGRAM
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11- PENSION & ENTITLEMENTS CRISIS
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13- GOVERNMENT BACKSTOP INSURANCE |
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14- CORPORATE BANKRUPTCIES |
Economic power shifting from U.S. to China, Soros says G&M
Time to face up to China Morici
China introduces food subsidies BBC
China Said to Seek Foreign Buyers for Guangzhou Bank BL
China's October electricity consumption up 8.5% Xinhua
For Chinese Scientists, a Glut of Work Back Home WSJ
For China's Toymakers, an Unwanted Gift BL
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19- PUBLIC POLICY MISCUES |
Unemployment insurance sent $319 billion to the jobless CNN
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Unemployed Americans have collected $319 billion in jobless
benefits over the past three years due to the federal government's
unprecedented response to the Great Recession, according to a
CNNMoney analysis of federal records.
The cost of such benefits will be central to the heated debate
in Congress in coming weeks over whether to extend this safety net
for the fifth time this year. Lawmakers must act by Nov. 30 or two
million people will start losing extended benefits next month.
The federal government has already footed $109 billion
of the bill.
The jobless now receive an unparalleled level of support while
they look for new positions. Benefits last up to 99 weeks, far
surpassing the previous record, which totaled 65 weeks during the
recession of the mid-1970s.
Some 8.5 million people are collecting unemployment insurance,
including 4.8 million receiving federal benefits.
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U.S. Deficit Plan Misses the One Big Gap
Lowenstein
One Way to Trim Deficit: Cultivate Growth
Leonhardt
Budget Puzzle: You Fix the Budget NYT
The Politics of Debt: Part 2 ATimes
Pay up, or wiggle out
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
24-RETAIL SALES
26-GLOBAL OUTPUT GAP
31-FOOD PRICE PRESSURES
Like Hell There's No Inflation BI
"Everything Looks Fine to ME!"
32-US STOCK
MARKET VALUATIONS
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CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES
------------
Bernanke in Big Trouble, Global Investors Prepare to Dump
Trillions of Dollars North
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THE SPOTLIGHT IS ON BERNANKE
The general public knew nothing of the FED as recently
as the summer of 2008. There was no Tea Party movement.
Ron Paul went public with his campaign's criticisms as the
recession was getting worse. He raised so much money that
he got the attention of the Establishment. He was cogent
in the debates. This is why Fox News finally banned him
from the debates. The mainstream Media had not dared to do
that until Fox did its deed. But by then, it was way too
late.
Then came the crisis of September and October. That
proved Paul correct. He had warned of this, and it hit in
full view of the voters. It cost John McCain the
Presidency.
The fall-out has been almost entirely negative for the
FED. Academia is still behind the FED, but academia has
been exposed as utterly incompetent. None of its Keynesian
policies has worked. The voters know this. The
unemployment statistics remain stuck well above 9%.
Bernanke is now a target. He can shrug off criticism
from the Right, but if his policies are not followed by
reduced unemployment, more exports, a reduction in the
balance of payments deficit, economic growth, and a
reduced Federal deficit, the popular media will start
calling for more radical measures. He is not a radical
man. He is a mild-mannered professor who had not been in
the spotlight before 2008. Now he can't get out of the
spotlight. He can run, but he can't hide.
He has no aura of invulnerability. Volcker had this.
Greenspan had this. No one remembers Miller, whose term
lasted only 18 months. How many reporters remember Burns?
Hardly any. So, from the point of view of today's media,
Bernanke is weak. Now he is getting hammered by events.
The President went to the two Asian economic summits in
the way that a desperate man goes to Las Vegas with a
small stake in the hope of winning big and covering his
debts back home. He came up short. He crapped out. Yet he
was acting as the agent of Bernanke. He went into the
lion's den in the week that Bernanke had announced his new
policy of buying T-bonds, a move so obviously aimed at
weakening the dollar that the Asians rebuffed Obama as if
he were the President of a banana republic. All he could
do after striking out was to brag about some non-existent
singles. There were no singles.
The world's central bankers used to hold Greenspan and
Volcker in reverence. Bernanke commands nothing like this
degree of respect. The world's central bankers are waiting
for him to make mistakes. They give no sign of
encouragement. They did not praise his November 3
announcement. They remained mute. The German finance
minister said Bernanke is clueless. No major international
financial decision-maker came to his defense.
CONCLUSION
Bernanke is going to come under fire from all sides:
domestic, international, political, financial. Everyone
wants the FED to remain the rock of Gibraltar, because the
world is holding trillions of dollars' worth of Treasury
debt. If the dollar falls, those who hold T-bills and
T-bond will be exposed as suckers – lapdogs of the Federal
Reserve. No one wants to be seen as anyone's lapdog,
especially when he really is. Everyone is ready to run to
the lifeboats if the Good Ship Bernanke is perceived as
going to Davy Jones' locker.
The only question is this: Which lifeboats will float,
if any?
|
The most foolish economic policy move ever? Bear’s Lair
| The Fed's QE2 is definitely in the running; final
outcome will determine if it's the worst. |
QE2 Pits Bernanke Against Obama Export Plan BL
Robert Prechter Explains The Fed, Part I EW
Bernanke's `Cheap Money' Spurs Corporate Investment Outside U.S.
BL
The case against QE Salmon
GOP Wants To Strip Fed Of Power To Combat Joblessness HP
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GENERAL INTEREST
The Coming Sell-Out to the Super Rich and What It Means for the Rest of Us
Hudson
Global Investment Review Bedlam
Monthly
Warren
Buffett's Letter to Uncle Sam NYT FLASH CRASH - HFT - DARK POOLS
MARKET WARNINGS
As speculators withdraw, the market bears awaken Rosenberg
Touch of Grey: Market Takes a Breather Sonders
G20 MEETING
Three Reasons Global Talks Hit Dead End El-Erian
CURRENCY WARS
'Yuan should become reserve currency' WSJ
| Mr Guo said the IMF should “immediately” include the yuan as a
component of its SPDRs |
Yuan Weakens BW
Q3 EARNINGS
MARKET &
GOLD MANIPULATION
AUDIO / VIDEO
QUOTE OF THE WEEK
“The thought that you can create a prosperous economy by
inflating is an illusion”
Volcker
“We sure have to maintain some confidence in the dollar or
none of this would work"
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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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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