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Published November 2009
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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12-10-10
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1-
SOVEREIGN DEBT & CREDIT CRISIS |
Markets Defy Fed's Bond-Buying Push FT
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A Federal Reserve Bank of Boston study estimates that through
2012 the bond purchases will result in 700,000 jobs that wouldn't
otherwise be created, a big number, yet a fraction of the 8.3
million jobs wiped out in the recession. In a December Wall Street
Journal survey of private economists, 42 of 52 called the estimate
too optimistic.
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Four Charts That Will Make Bond Vigilantes Shriek In Terror
BI
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4- STATE
& LOCAL GOVERNMENT |
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5-
CENTRAL & EASTERN EUROPE |
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U.S. nonfinancial businesses increased their liquid assets
$1.932 trillion in the third quarter, a jump of $243 billion from
a year earlier, according to the Fed. Banks' commercial and
industrial loans outstanding in November were down 7.2% from a
year ago; their holdings of low-risk Treasurys were up nearly 17%.
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Firms, Funds Feel Squeeze of Low Rates WSJ
Bank of Canada warns risks to financial system rise on family
debt, euro woe G&M
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8-
COMMERCIAL REAL ESTATE |
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9-RESIDENTIAL REAL ESTATE - PHASE II |
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About 11 million homeowners owe more on their mortgages than
their homes are worth, making refinancing practically impossible.
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About 70% of U.S. mortgage holders were paying at least one
percentage point more than the going interest rate for 30-year
fixed-rate mortgages in October, according to a Wall Street
Journal analysis of data from research firm LPS Applied Analytics.
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Mortgage rates hit 4.61 pct.; refi's could slow
AP
U.S. Home Values May Drop by $1.7 Trillion This Year
BL
Wall Street Sees New Profits In Homeowner Distress
HP
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10- EXPIRATION FINANCIAL CRISIS PROGRAM
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11- PENSION & ENTITLEMENTS CRISIS
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The 10 worst states for retirees MW
About 6 Million Didn’t Work at All Last Year
WSJ
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13- GOVERNMENT BACKSTOP INSURANCE |
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14- CORPORATE BANKRUPTCIES |
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At Ford Motor Co., "We've got to get debt down," Neil Schloss,
the company's treasurer, said in an interview last week. Although
Ford's car-finance unit tapped bond markets in September as
interest rates fell—and although Ford on Thursday said it would
invest $600 million in a Louisville plant—executives are averse to
doing much borrowing because they want to win back an
investment-grade credit rating. Ford's overall borrowing is down
by $15 billion from a year ago.
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While companies are grabbing cheap credit, many are investing
and hiring outside the U.S. Chemical company
Huntsman Corp. leapt at the chance to refinance $530 million
of long-term debt in September and November. This reduced interest
costs and pushed out repayment dates, helping Huntsman to invest
in its business, according to its chief financial officer, Kimo
Esplin. But the Texas company's biggest investment plans, which
could result in roughly $400 million of spending in 2011, are for
fast-growing economies in Asia. "Companies like Huntsman have easy
access to capital markets, but they're taking that capital and
they're funding growth outside the U.S.," Mr. Esplin said.
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Two Chinese firms dazzle in U.S. market debuts AP
| The impressive initial public offerings
kick off a week that will see about half a dozen Chinese companies
go public. |
Chinese IPO Frenzy BeSpoke
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19- PUBLIC POLICY MISCUES |
House Democrats Reject Tax Plan Unless Changed
ABC
Larry Summers says tax cut deal must pass soon to avoid 'double
dip' WP
Deficit commission's leader knocks tax cut plan
AP
Why the Obama tax deal with Republicans is insane
Corrente
The Madness of Obamanomics Spectator
Quantifying the second stimulus Salmon
Cities see a new spike in property bubble China Daily
Special Report: The Chinese consumer awakens Reuters
OTHER TIPPING POINT CATEGORIES NOT LISTED ABOVE
24-RETAIL SALES
26-GLOBAL OUTPUT GAP
31-FOOD PRICE PRESSURES
32-US STOCK
MARKET VALUATIONS
GENERAL INTEREST
How west can reverse a decade of decline Gordon Brown
FLASH CRASH - HFT - DARK POOLS
Is a stock-buying panic possible? MW
MARKET WARNINGS
CURRENCY WARS
Demand for U.S. Cash Surges WSJ
| The world-wide interest in holding cold,
hard dollars is driven substantially by fear. |
Who gains from a revaluation of China’s currency? VOX
Brazil ready for more currency warfare FT MARKET &
GOLD MANIPULATION
Why 'smart money' is betting on gold... and housing TTicker
GCC urged to boost gold reserves National
AUDIO / VIDEO
QUOTE OF THE WEEK
"Germany cannot keep paying for bail-outs without going
bankrupt itself. This is frightening people. You cannot find a
bank safe deposit box in Germany because every single one has
already been taken and stuffed with gold and silver. It is like an
underground Switzerland within our borders. People have terrible
memories of 1948 and 1923 when they lost their savings."
Professor Wilhelm Hankel, of Frankfurt University
EU rescue costs start to threaten Germany itself - Telegraph
"We're not swimming in money, we're drowning in debts"
German finance minister Wolfgang Schäuble before Bundestag
EU rescue costs start to threaten Germany itself - Telegraph
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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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