Current Thesis Advisory
Published November 2009
EXTEND & PRETEND
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LATEST RESEARCH PUBLICATIONS
COMMENTARY for all articles by
Gordon T Long
CURRENCY WARS: Debase, Default, Deny!
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.
CURRENCY WARS: Misguided Economic Policy
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
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
- 2010 TIPPING POINTS aid to
2-EU BANKING CRISIS
5-CENTRAL & EASTERN EUROPE
6-BANKING CRISIS II
8-COMMERCIAL REAL ESTATE
9-RESIDENTIAL REAL ESTATE -
TODAY'S TIPPING POINTS UPDATE
Click to Enlarge
GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN
North Korea: A Secretive State BBC
SOVEREIGN DEBT & CREDIT CRISIS
& LOCAL GOVERNMENT
10 US States That Will Get Murdered If Chinese Slows Its Imports
CENTRAL & EASTERN EUROPE
US banks face $100bn Basel III shortfall
Bulk of equity capital problems at Big Six
COMMERCIAL REAL ESTATE
9-RESIDENTIAL REAL ESTATE - PHASE II
10- EXPIRATION FINANCIAL CRISIS PROGRAM
11- PENSION & ENTITLEMENTS CRISIS
Dying With debt: A dirty little retirement secret
13- GOVERNMENT BACKSTOP INSURANCE
14- CORPORATE BANKRUPTCIES
Chinese Political Cartoon Serves The Government's Interest BI
Here is a political cartoon that appeared this month in China
Daily from the artist
Luojie that blatantly serves Beijing's attempt to convince the
public that its the US causing rapid inflation and not, say, the
government's currency policy.
19- PUBLIC POLICY MISCUES
Full Spectrum Dominance- 8 Examples Of How The Government Is
Attempting To Take Total Control Of Our Food, Our Health, Our Money And
Even Our Dignity Economic Collapse
|Over the past several decades, no matter which political party
has been in power the government has continued to become a larger
part of our lives. These days many people are speaking of the
"nanny state" that we have created, but the reality is far worse
than that. The truth is that the government has become a
gluttonous, out of control behemoth that is gobbling up everything
in sight and that is attempting to exert full spectrum dominance
over our lives. Today, the government seems to have an insatiable
hunger to watch us, track us and control us. Now they even want
to feel our private parts before we get on an airplane. No matter
what politicians we send to Washington D.C., it just seems to get
worse and worse. Anyone who still believes that we live in "the
land of the free" is completely and totally delusional.
isn't just in one particular area that all of this government
intrusion into our lives is so offensive. What we are witnessing
is the government slowly digging its fingers even deeper into our
lives in a thousand different ways. Sadly, most Americans see the
government as the one who is supposed to take care of them from
the cradle to the grave, as the one who is supposed to fix all of
the problems in society and as the one who is their ultimate
This is in direct contradiction to the concept of a
"limited government" that our Founding Fathers tried so
desperately to enshrine in our founding documents. The American
people need a big-time wake up call. The following are 8 examples
of how the U.S. government is attempting to take even more control
over our lives....
#1 Taking Total Control Of Our
Food - S. 510 "The Food Safety Modernization Act"
S. 510, "The Food Safety Modernization Act", is another
huge power grab by the FDA and the federal government over our
food supply. The bill is written so broadly and so vaguely that
nobody really knows what it means. The potential for abuse of
these vague new powers would be staggering. So will the
government abuse these powers? Those who are in favor of the bill
say that of course the government will be reasonable, but those
who are opposed to the bill point to all of the other abuses that
are currently taking place as evidence that we simply cannot trust
the feds with vague, undefined powers.
Fortunately, the Tester
Amendment has been attached to S. 510 at least for now, but big
agriculture is not happy about this, and they
will be doing everything they can to get it kicked out of the
final version of the law. In any event, if this food safety law
does get passed, tens of millions of Americans will be left
wondering what they are allowed to grow in their back yards, what
seeds they are allowed to save and what can and cannot be sold at
In case you think this is paranoid, just
consider what is already happening.
been documented that the feds recently raided an Amish
farmer at 5 AM in the morning because they claimed that he was was
engaged in the interstate sale of raw milk in violation of federal
law. If the feds are willing to stoop so low as to raid Amish
farmers, do you think they will have any hesitation when the time
comes to raid your home?
#2 Taking Total Control Of
Air Travel - The Dehumanizing Full Body Scanners And "Enhanced
Totalitarian governments throughout history
have always sought to dehumanize their subjects. Sadly, that is
exactly what is happening in America today. If you want to get on
an airplane in the United States, you will now be forced to either
let TSA agents gawk at your naked body or let TSA agents grope
your entire body including your genitals.
What these TSA agents
are being instructed to do to ordinary Americans is so bizarre
that it is hard to believe. It is being reported that in many
instances TSA agents are actually
reaching down the pants of male travelers and up the
skirts of female travelers. One retired special education teacher
was left humiliated, crying and
covered with his own urine after an "enhanced pat-down"
by TSA agents. Quite a number of women that have been through
these "enhanced pat-downs" have used the phrase "sexual assault"
to describe the experience.
So is this what America has
become? A place that is so "dangerous" that we all must be
treated like prison inmates? Large numbers of Americans are
swearing that they will simply not fly anymore, but what happens
when these "enhanced pat-downs" start showing up at our schools,
our shopping centers and our sporting events someday?
#3 Taking Total Control Of Our Health Care - The Loss Of
Our Health Freedom
Once upon a time, Americans had
control over their own health care decisions. That is no longer
true today. Thanks to major changes in our health care laws, the
health care landscape in America has been dramatically changed.
Americans are now forced to participate in the
officially-sanctioned health care system by purchasing health
insurance. But Americans cannot just get any kind of health
insurance policy that they want. Our health insurance choices are
now tightly constrained by thousands of regulations.
that, but doctors in America no longer have the freedom to treat
patients however they see fit. Only "approved" treatments are
permissible, and now the federal government is going to be telling
doctors which of those "approved" treatments are "cost-effective"
enough. As the new health care laws are fully implemented over
the next decade, the American people are going to become truly
horrified not only about how much
their health insurance premiums are going up, but also
about how much health freedom they have actually lost.
#4 Taking Control Of Our Money - Multiplying Taxes
Whenever one tax goes down, it seems like several other taxes
either go up or get invented. The truth is that Americans are
being drained by the federal government, state governments and
in dozens upon dozens of different ways. To our
various levels of government, our primary function is to serve as
a revenue source. Each year it seems like they find more ways to
stick it to us. In fact, it looks like 2011 is going to be a
banner year for tax increases. If you doubt this, just see my
previous article entitled "2011:
The Year Of The Tax Increase".
Control Of Our Businesses - Thousands Of Ridiculous Regulations
Why would anyone in America even attempt to be an entrepreneur
today? Most small businesses are literally being strangled by
hordes of red tape.
Just consider how things have changed in
America. The Federal Register is the main source of regulations
for U.S. government agencies. In 1936, the number of pages in the
Federal Register was about 2,600. Today, the Federal Register is
over 80,000 pages long.
The following is just one
example of how bizarre things have gotten in this country. The
U.S. Food and Drug Administration is projecting that the food
service industry will have to spend
an additional 14 million hours every single year just
to comply with new federal regulations that mandate that all
vending machine operators and chain restaurants must label all
products that they sell with a calorie count in a location visible
to the consumer.
Do we really need to spend 14 million more
hours telling Americans that if they keep eating hamburgers and
fries that they are likely to get fat?
But it is not just the
federal government that is the problem. One reader recently
described how difficult it was to try to run a business in the
state of California....
Had 10 employees, but one almost exclusively to deal with
government regs, taxes, reporting etc, Received a $144 penalty
for a .33 (yes, cents)error on my quarterly payroll taxes from
Cal Franchise Tax Board. I called to ask if that was not a bit
repressive, why level penalize someone for what was obvisouly
a didminimus error? I was told “we would have penalized you if
it was .03!” I said, I did not volunteer to be the income tax
collector for the State and Fed government, you should be
paying me to do all this work and insane paper pushing. Reply:
“That is part of the PRIVILIGE of being a business owner!!!”
#6 Taking Control Of Our Environment - The Green Police
The government is using the "green movement" as an excuse to take
an unprecedented amount of control over our lives. From coast to
coast, communities have been given government grants to track our
trash with RFID microchips. The following are just some of the
that will now be using microchips to track what we
*Charlotte, North Carolina
Not only that, but some cities are now starting to
fine citizens for not recycling properly.
In Cleveland, Ohio
if an RFID tracking chip signals that a recycle bin has not been
brought out to the curb within a certain period of time, a "trash
will actually sort through the trash produced by that
home for recyclables.
According to Cleveland Waste Collection
Commissioner Ronnie Owens, trash bins that contain over 10 percent
recyclable material will be subject to
a $100 fine.
Does that sound like America to you?
Now we don't even have the freedom to throw out trash the way we
#7 Taking Away Our Independence - The
Exploding Welfare State
You don't have much freedom if
you can't take care of yourself. But in America today, tens of
millions of Americans have literally become completely dependent
on the government for survival. Over 42 million Americans are now
on food stamps. Approximately
one out of every six Americans is enrolled in a federal
The number of Americans living in poverty
has increased for three consecutive years, and the 43.6 million
poor Americans in 2009 was the highest number that the U.S. Census
Bureau has ever recorded in
51 years of record-keeping.
The more Americans that are
destitute and totally dependent on the government the easier it
will be for the government to control them. Today a rapidly
growing percentage of Americans fully expect the government to
take care of them. But this is not what our founders intended.
#8 Taking Away Our Patriotism - We Are Even Losing The
Freedom To Be Proud Of America
Do you ever think
things will get so repressive in America that a group of high
school students will be forbidden from singing the national anthem
at the Lincoln Memorial? Well, that
has already happened. Do you think that areas of our
nation will ever become so anti-American that they will forbid
students from riding to school with an American flag on their
bikes? Well, that
has already happened.
Fortunately, there was such an
uproar over what happened to 13-year-old Cody Alicea that it made
national headlines and he ended up being escorted to school by
hundreds of other motorcycles and bicycles - most of them
displaying American flags as well. The school reversed its policy
and now Cody can ride his bike to school every day proudly
displaying the American flag.
But what if nobody had decided to
That school would have gotten away with banning the
flag if the American people had allowed them to.
and our freedoms are under attack from a thousand different
directions and they are being stripped away from us at a blinding
It has gotten to the point where most of us just sit in
our homes and enjoy the "freedom" of digesting the "programming"
that is constantly being hurled at us through our televisions. Of
course the vast majority of that programming is produced by just
6 monolithic corporations that control almost
everything that we watch, hear and read.
Power and money have
become more highly concentrated in America today than ever before,
and yet most Americans don't even realize it.
are so busy just trying to survive from month to month that they
don't even have time to think about the deeper issues. At the end
of the night most of them are so exhausted from serving the system
that all they can do is collapse on the sofa and turn on some
But the American people desperately need to wake
up. Without liberty and freedom our country cannot work. But our
freedoms and liberties are being stripped away a little bit more
each and every day.
The America that so many of us grew up
adoring is dying right in front of our eyes. If you plan on
saying something about it, you better do so before it is too late.
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
26-GLOBAL OUTPUT GAP
OECD Report OECD
31-FOOD PRICE PRESSURES
The Wellsprings of the 2007-08 Food Crisis Asia Sentinel
The 25 Countries That Will Be Screwed By A World Food Crisis BI
China is experiencing surging inflation and it is hitting
consumers where it hurts the most: their mouths.
Food price inflation is rampant in China, and authorities are
now developing policies to combat rising prices.
But what if China is just the first of many food crises?
Japanese investment bank Nomura produced a research report
detailing the countries that would be crushed in a food crisis.
Their description of a food crisis is a prolonged price spike.
They calculate the states that have the most to lose by a formula
- Nominal GDP per capita in USD at market exchange rates.
- The share of food in total household consumption.
- Net food exports as a percentage of GDP.
We've got the top 25 countries in danger here and the list,
including a major financial center, may surprise you.
Grain Prices to Soar Pushing Food Standeyo
Excerpts from FAO's Food Outlook (November 2010) MRzine
CENTRAL BANKING MONETARY POLICIES, ACTIONS & ACTIVITIES
After the Fed’s Action, Watching Inflation’s Trajectory
O Deflation, Where is Thy Sting? Mauldin
Is Inflation Lurking Around the Corner? NTrust
Ideological and Hostile Noland
of Happiness Cutting Through the Economic Gloom Stelzer
Smart Money, Honest Voters North
Here's What Investors Should Be Watching! Harding
Hiding From Reality NYT
Investing in Canada while commodities are hot MW
FLASH CRASH - HFT - DARK POOLS
Secular Status Swenlin
Dollar War in Detail Hudson
China Move Could Counter Fed’s Efforts NYT
Is a currency war unavoidable? China Daily
Dollar Gains Versus Most Peers as Increase in Treasury Yields Fuels Demand
US in sweeping insider trading probe WSJ
|The US is preparing insider-trading charges that could ensnare
consultants, investment bankers, hedge- and mutual-fund traders
Gold Bull Seasonals 5 Zeal
AUDIO / VIDEO
QUOTE OF THE WEEK
“The thought that you can create a prosperous economy by
inflating is an illusion”
“We sure have to maintain some confidence in the dollar or
none of this would work"
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1-SOVEREIGN DEBT &
2-EU BANKING CRISIS
4-STATE & LOCAL
5-CENTRAL & EASTERN EUROPE
6-BANKING CRISIS II
8-COMMERCIAL REAL ESTATE
9-RESIDENTIAL REAL ESTATE -
15-CREDIT CONTRACTION II
16-US FISCAL IMBALANCES
19-US PUBLIC POLICY MISCUES
20-JAPAN DEBT DEFLATION SPIRAL
21-US RESERVE CURRENCY.
22-SHRINKING REVENUE GROWTH RATE
23-FINANCE & INSURANCE WRITE-DOWNS
25-US DOLLAR WEAKNESS
26-GLOBAL OUTPUT GAP
27-CONFIDENCE - SOCIAL UNREST
29-IRAN NUCLEAR THREAT
30-OIL PRICE PRESSURES
31-FOOD PRICE PRESSURES
32-US STOCK MARKET VALUATIONS
34-S$ RESERVE CURRENCY
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