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Rpt GMTP 2013 03 Cw Peek

Rpt GMTP 2013 03 Cw Peek

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1 March 2013 Edition Restricted & Confidential

Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com









DESTABILIZING CURRENCY WARS
A Stalled Global Economy is Exposed to Destabilizing Currency Wars





GLOBAL MACRO TIPPING POINTS - MARCH 2013
2/22/2013



2
March 2013 Edition Restricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com


DESTABILIZING CURRENCY WARS
A Stalled Global Economy is Exposed to Destabilizing Currency Wars
GLOBAL MACRO TIPPING POINTS - MARCH 2013

TIPPING POINTS ........................................................................................................................ 9
GLOBAL MACRO: RISK ASSESSMENT ...................................................................................................................................................... 9
SITUATIONAL ANALYSIS ...................................................................................................................................................... 9
POSITIONAL FRAMEWORK: "WE ARE HERE!" ......................................................................................................................................................... 9
Q1 2013 DEVELOPMENTS TO WATCH ..................................................................................................................................................................... 10
GLOBAL TRENDS - NATIONAL INTELLIGENCE COUNCIL ................................................................................................................................... 19
A BROKEN PONZI SCHEME - BOSTON CONSULTING GROUP .......................................................................................................................... 21
RISK CONTINUUM ......................................................................................................................................................................................................... 23

MACRO MONITORING INSTITUTIONS ............................................................................................................................... 24
WEF (WORLD ECONOMIC FORUM) .......................................................................................................................................................................... 24
IMF (INTERNATIONAL MONETARY FUND) .............................................................................................................................................................. 39
OECD (ORGANIZATION FOR ECONOMIC COOPERATION & DEVELOPMENT) .............................................................................................. 54
MAPLECROFT (SCANNING THE GLOBE) ................................................................................................................................................................ 56

GLOBAL RISK SIGNALS ...................................................................................................................................................... 58
RISK - SIGNS APLENTY, BUT NO ONE PANICKING - YET! .................................................................................................................................. 60
RISK - CANARIES SINGING AGAIN ........................................................................................................................................................................... 62
RISK - COMPLACENCY & REPRESSED FEAR ........................................................................................................................................................ 63
RISK - TIED TO EU IN 2012 ......................................................................................................................................................................................... 64
RISK - GLOBAL DERIVATIVE COLLATERAL ............................................................................................................................................................ 65
RISK - GLOBAL RISK MATRIX..................................................................................................................................................................................... 67
RISK - GLOBAL MACRO HEADWINDS / TAILWINDS .............................................................................................................................................. 67
RISK - FOOD A GROWING GLOBAL INFLATION & SOCIAL UNREST RISK ...................................................................................................... 69
RISK - INCREASINGLY DYSFUNCTIONAL CAPITALS MARKETS ....................................................................................................................... 74

RISK - GLOBAL RISK REWARD .......................................................................................................................................... 76
RISK - RISING GEO-POLITICAL EVENT RISK.......................................................................................................................................................... 77
GLOBAL MACRO: RISK LEVELS ................................................................................................................................................................ 81
AGGREGATED GLOBAL FINANCIAL RISK INDEX .............................................................................................................. 81
BANKING RISK - LIBOR-OIS SPREAD (Updated) .................................................................................................................................................... 82
BANKING RISK - TED SPREAD (Updated) ................................................................................................................................................................ 82
CREDIT RISK - GLOBAL CREDIT DEFAULT SWAPS (Updated) .......................................................................................................................... 83
CREDIT RISK - EU CREDIT DEFAULT SWAPS (Updated) ..................................................................................................................................... 84
CONSUMER RISK - HOUSING - RATE OF CHANGE (Reference) ........................................................................................................................ 85
ECONOMIC RISK - ECRI LEADING INDEX (Updated) ............................................................................................................................................. 86
INFLATION RISK - MONEY SUPPLY GROWTH - M3 (Updated) ............................................................................................................................ 87
INFLATION RISK - MONEY VELOCITY (Updated) .................................................................................................................................................... 88
MONETARY RISK - BANK LIABILITIES (Updated) ................................................................................................................................................... 88
COST OF MONEY RISK - INTEREST RATES (Updated)........................................................................................................................................ 90

AGGREGATED RISK LEVEL ................................................................................................................................................ 92
TIPPING POINTS: CHANGES ...................................................................................................................................................................... 93
TIPPING POINT MAPPING: 2013 UPDATE .......................................................................................................................... 93
TIPPING POINTS: TOP 5 FOCUS - FEBRUARY 2013 .......................................................................................................................... 102
I - RISK REVERSAL............................................................................................................................................................ 102
II - JAPAN DEBT DEFLATION ............................................................................................................................................ 105
III-BOND BUBBLE .............................................................................................................................................................. 108
IV - EU BANKING CRISIS ................................................................................................................................................... 108
V - SOVEREIGN DEBT ....................................................................................................................................................... 109
VI - CHINA HARD LANDING ............................................................................................................................................... 111
DRIVER$: RISK-ON - RISK-OFF ANALYTICS ......................................................................................................................................... 115
1- G10 MACRO SURPRISE INDEX .................................................................................................................................... 118
2- CUMULATIVE GLOBAL PMI ........................................................................................................................................... 121


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March 2013 Edition Restricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com


3- SLOWING GLOBAL EXPORTS ...................................................................................................................................... 127
4- US NON-REVOLVING CONSUMER CREDIT ................................................................................................................. 130
5- IBES' RELATIVE GLOBAL PE RATIOS .......................................................................................................................... 133
6- CONSENSUS EARNINGS ESTIMATES - Sell Side Analysts .......................................................................................... 139
7- INFLATION PRESSURES - Global Food Prices.............................................................................................................. 141
GLOBAL MACRO ................................................................................................................... 145
GLOBAL MACRO: ECONOMIC OUTLOOK ............................................................................................................................................. 147
GLOBAL - Credit Fueled Globalization in Retreat ................................................................................................................ 147
GLOBAL - Rogoff's Sovereign Debt Default Levels ............................................................................................................. 149
GLOBAL - Fiscal Adjustments Required .............................................................................................................................. 152
GLOBAL - Imbalances Continue to Increase Along With Financial Fragility ......................................................................... 152
GLOBAL - A 67 Million Jobs Gap ........................................................................................................................................ 155
GLOBAL - Center of Global Manufacturing Confirmed to be Shifting Away from developed Countries ................................ 158
GLOBAL - Mercantilist China the Clear Winner Globally, Mercantilist Germany Regionally ................................................. 159

IMF CUTS ECONOMIC OUTLOOK ..................................................................................................................................... 161
IMF Cuts Advanced Economies Growth by 25% from 2.0% to 1.5% ..................................................................................................................... 161
IMF Cuts Growth from 3.9% to 3.6% and Increases Deficit Multiplier by 100 to 200% ........................................................................................ 168
WARNINGS ........................................................................................................................................................................ 170
IMF WARNS .................................................................................................................................................................................................................. 170
BIS WARNS ................................................................................................................................................................................................................... 174
WORLD BANK WARNS ............................................................................................................................................................................................... 175
GLOBAL MACRO: INDICATORS ............................................................................................................................................................... 177
GROWTH............................................................................................................................................................................ 177
Slowing Global Economies .......................................................................................................................................................................................... 177
Global GDP Growth Trending Down by Region and Cumulatively ......................................................................................................................... 178
Global PMI ..................................................................................................................................................................................................................... 179
Global Recession .......................................................................................................................................................................................................... 181
Slowing Global Growth - Air Cargo Shipments ......................................................................................................................................................... 182
GOBAL UNEMPLOYMENT ................................................................................................................................................. 183
Global Unemployment Rising - 202 Million ................................................................................................................................................................ 183
TRENDS ............................................................................................................................................................................. 185
BRANDS & COMMODITIES: Tell the Global Story .................................................................................................................................................. 185
SENTIMENT ....................................................................................................................................................................... 197
NIELSEN (Global Consumer Confidence, Concerns & Spending Intentions) ....................................................................................................... 197
INFLATION ......................................................................................................................................................................... 208
Food Prices, Driver of Social Unrest ........................................................................................................................................................................... 208
Food Price Manipulation in Thailand .......................................................................................................................................................................... 209
GLOBAL MACRO: MONETARY POLICY & CENTRAL BANKING ........................................................................................................ 210
The "OMF" Trial Balloon Raised .......................................................................................................................................... 211
Financial Times: Martin Wolf - "The Case For Helicopter Money" .......................................................................................................................... 212
Financial Times: Martin Wolf - "The Case To Reset Basis of Monetary Policy" .................................................................................................... 215
Financial Times: Gavyn Davies On Why Helicopters Are Dangerous .................................................................................................................... 216
A Conundrum for the World's Central Bankers.......................................................................................................................................................... 219
PBOC - China ..................................................................................................................................................................... 221
Chinese Liquidity Pump Unplugged ............................................................................................................................................................................ 221
BOE - UK ............................................................................................................................................................................ 223
Mark Carney and "Flexible Inflation Targeting" ......................................................................................................................................................... 223
FED - US............................................................................................................................................................................. 224
FOMC January Minutes Un-Nerve Markets ............................................................................................................................................................... 224
Congress Asks Bernanke For Full Risk Analysis On Fed's Soaring Balance Sheet ............................................................................................. 225
BOJ - JAPAN ...................................................................................................................................................................... 229
Japan's Prime Minister Shinzo Abe prepares to print money for the whole world................................................................................................. 229
Shinzo Abe’s Monetary-Policy Delusions ................................................................................................................................................................... 230
BOJ Governor Job Suddenly Available in Historical "Abenomics U-Turn" ............................................................................................................. 233
Japanese Economic Policy Goes The Full Ponzi ...................................................................................................................................................... 234
ECB - EU ............................................................................................................................................................................ 236
Japan Will Effectively Monetize European Debt ........................................................................................................................................................ 236
TARGET-2 Imbalances - "The Debt Crisis Is Eating Its Way Ever Further Into Europe's Core" ......................................................................... 236
Draghi Will Soon Be Forced to Start Printing - Again! .............................................................................................................................................. 238
COMBINED ......................................................................................................................................................................... 242
Global Balance Sheet Expansion ................................................................................................................................................................................ 242
Where Do these Deflators Come From? .................................................................................................................................................................... 246
First Remove Gold Standard, Now Remove Debt .................................................................................................................................................... 247


4
March 2013 Edition Restricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com


GEO-POLITICAL TENSIONS ..................................................................................................................................................................... 251
CURRENCY WARS ............................................................................................................................................................ 251
BATTLEFIELD - Combatants & Belligerents ............................................................................................................................................................. 253
BATTLEFIIELD - The Race to Debase ....................................................................................................................................................................... 254
JAPAN - The Destabilizing Agent ............................................................................................................................................................................... 256
EUROPE - Euro Exposed ............................................................................................................................................................................................ 256
ARGENTINA - Here we Go Again!.............................................................................................................................................................................. 258
VENEZUELLA - Bad Situation ..................................................................................................................................................................................... 259
BRAZIL - No One Wants to Listen .............................................................................................................................................................................. 259
SWITZERLAND - No Choice ....................................................................................................................................................................................... 259
SINGAPORE - Hot Money ........................................................................................................................................................................................... 260
UK- Pound Joins War ................................................................................................................................................................................................... 261

CYBER WARS .................................................................................................................................................................... 262
The Motivations For Cyberwar .................................................................................................................................................................................... 263
A Potential Destabilizing Catalyst ............................................................................................................................................................................... 270
Rules of Engagement ................................................................................................................................................................................................... 271
Brushfire Battle: China .................................................................................................................................................................................................. 276
Brushfire Battle: Iran ..................................................................................................................................................................................................... 280
Cyber Wars: Rogue Groups Currently More Dangerous than Sovereign Powers ................................................................................................ 281
Cyber Pearl Harbor? ..................................................................................................................................................................................................... 283
US Response................................................................................................................................................................................................................. 284
Cyber Defense - Does it Mean Police State? ............................................................................................................................................................ 288

IRAN ................................................................................................................................................................................... 289
Watch Out for a "False Flag" or "Covert" Activity Event ........................................................................................................................................... 289
Who Is Threatening Who Here? .................................................................................................................................................................................. 289
REGIONAL ............................................................................................................................... 292
EUROPE - MUDDLE STAGE ENDS - CRISIS STAGE BEGINS ........................................................................................................................ 292
SUMMITS ........................................................................................................................................................................... 293
The 20th Summit ........................................................................................................................................................................................................... 293
Muddle" Stage has ended. "Crisis" Stage has Begun ........................................................................................................................................ 293
A Banking Union & Central Budget ........................................................................................................................................................................ 296
Government Debt Dynamics Interactive Model .................................................................................................................................................... 297
Roadmap of EU Hurdles and Surprises Ahead .................................................................................................................................................... 298
"19th Nervous Breakdown" .......................................................................................................................................................................................... 300

MEDICAL CHARTS - Situation Critical ............................................................................................................................... 307
Perceived Reduction in Risk - A Temporary Aberration ........................................................................................................................................... 307
Dangerous Delusional Divergences ....................................................................................................................................................................... 309
IMF Projections for Euro Area and GIIPS .................................................................................................................................................................. 310
Euro-Area Manufacturing Shrank in September ....................................................................................................................................................... 311
Misery Indices Never Been Higher .......................................................................................................................................................................... 311

EUROSIS - A Terminal Disease ........................................................................................................................................ 319
PROGNOSIS: Why the European Situation Will Get Worse ................................................................................................................................... 319
PROGNOSIS: Increasing Structural Imbalances ...................................................................................................................................................... 322
PROGNOSIS: $22T Unaccounted - A Hidden World of Contingent Liabilities, Government Backing & Guarantees. ....................... 324
PROGNOSIS: Monetary Malpractice - ECB's LTRO Not a Solution but ................................................................................................................ 329
PROGNOSIS: Monetary Malpractice - ECB's SMP Effort Futile ............................................................................................................................. 332
PROGNOSIS: Monetary Malpractice - ECB Accepts BBB Collateral ..................................................................................................................... 334
PROGNOSIS: EU Banking Overbanked, Undercapitalized and Now Insolvent .................................................................................................... 335
PROGNOSIS: Monetary Malpractice - TARGET2 "Contingent Liabilities" ..................................................................................................... 336
PROGNOSIS: Bailouts - Unsustainable & Unfundable ............................................................................................................................................ 342

IBERIAN PENINSULA - Spain & Portugal Imploding ........................................................................................................... 344
Credit Downgrades - At Precipice of "Non Investment Grade" ................................................................................................................................ 344
Regional Bailout Bailouts a Massive Problem ..................................................................................................................................................... 345
NPL Going Ballistic .................................................................................................................................................................................................... 346
Spanish Funding Problem ........................................................................................................................................................................................ 347
Banks on Artificial "Ponzi Bond" Life Support ............................................................................................................................................................ 357

ITALY - Cracks Impossible to Hide and Contain .................................................................................................................. 364
Bad Debt Continue to Soar .......................................................................................................................................................................................... 364
UK ....................................................................................................................................................................................... 369
QE Extension Coming .................................................................................................................................................................................................. 369

FRANCE ............................................................................................................................................................................. 371


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March 2013 Edition Restricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com


Has Turned back to Socialism ..................................................................................................................................................................................... 371
ASIA - CHINA-JAPAN CONFLICT EMERGES ................................................................................................................................................... 373

CHINA - POLITICAL TRANSITION ..................................................................................................................................... 375
China' Political Transition & Ongoing Emergence as a Super Power ..................................................................................................................... 377
An Implicit Social Contract ........................................................................................................................................................................................... 379
ChinaManipulated Statistics due to Upcoming Decade Long Regime Change ..................................................................................................... 381
Declining Reserve Accumulation................................................................................................................................................................................. 382
China Has Caught the Gold Bug big time! ................................................................................................................................................................. 384
Increasing Leverage is China's Way of Monetary Easing ........................................................................................................................................ 385
Possible Interest-Rate Liberalization .......................................................................................................................................................................... 386
Shanghai Composite at 2008 Low Levels .................................................................................................................................................................. 387
Shanghai Composite Warnings Signs ........................................................................................................................................................................ 388
China's Credit to GDP .................................................................................................................................................................................................. 390
A Slow Recovery Through 2013 .................................................................................................................................................................................. 391
Manufacturing PMI in Contraction Territory ............................................................................................................................................................... 393
SHADOW BANKING .................................................................................................................................................................................................... 394
Shadow Banking System Report................................................................................................................................................................................. 394
Shadow Banking in China ............................................................................................................................................................................................ 395
Société General Sees a Likely Soft Landing! ............................................................................................................................................................ 396

JAPAN: AUTO EXPORTS TO CHINA PLUMMET 44.5%. JAPAN'S LARGEST EXPORT MARKET ................................... 404
Exports Continue To Tumble ....................................................................................................................................................................................... 406
Intervention Fails Again - It's a Whole new Ball Game ............................................................................................................................................. 407
Japan in Negative PMI and GDP Territory ................................................................................................................................................................. 409
EMERGING MARKETS - SYNCHRONIZED MARKETS ................................................................................................................................. 412
Synchronized Markets .................................................................................................................................................................................................. 413
Export Growth Looks Similar to pre-2008 .................................................................................................................................................................. 415
Global Slowing: A Quickly Worsening Situation Across Asia................................................................................................................................... 416
Risks All on the Downside for Asia ............................................................................................................................................................................. 417
Demographic Headwinds ............................................................................................................................................................................................. 420
Pronounced Flight to Safety......................................................................................................................................................................................... 421
India: Watch Out For RE-Emergence of Food Price Inflation .................................................................................................................................. 422
US ECONOMY ......................................................................................................................... 424
THE GLOBAL MACRO OVERLAY ............................................................................................................................................................. 425
MACRO POSITIONING: A Serious Global Slowdown Underway ........................................................................................ 425
MACRO POSITIONING: Credit Fueled Globalization in Retreat .......................................................................................... 429
MACRO POSITIONING: Notion of Eurozone "Decoupling" Has Ended. .............................................................................. 431
MACRO POSITIONING: Nielsen's Global Survey - "Consumers Cutting Back & Worrying about a Recession" ................... 434
MACRO POSITIONING: Executives Report Deteriorating Economic Environment .............................................................. 437
PROSPERITY AT RISK: Harvard Strategy Study Spells Out US Problem ........................................................................... 440
US INVESTMENT CYCLE ........................................................................................................................................................................... 444
GORD'S BIG PICTURE ECONOMIC CYCLE ...................................................................................................................... 444
ECONOMIC INDICATORS .................................................................................................................................................. 445
MONTHLY INDICATORS OF NOTE .......................................................................................................................................................................... 445

THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ....................................................................................... 451
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION .................................................................................................................... 451
JOBS - CONFIDENCE - CONSUMPTION - GROWTH CYCLE ............................................................................................................................. 455
JOBS .............................................................................................................................................................................................................................. 456
CONSUMER & BUSINESS SENTIMENT .................................................................................................................................................................. 465
CONSUMPTION ........................................................................................................................................................................................................... 482
GROWTH ....................................................................................................................................................................................................................... 496
US INVESTMENT CYCLE ........................................................................................................................................................................... 508
GORD'S BIG PICTURE ECONOMIC CYCLE ...................................................................................................................... 508

ECONOMIC INDICATORS .................................................................................................................................................. 509
MONTHLY INDICATORS OF NOTE .......................................................................................................................................................................... 509

THE CURRENT BUSINESS CYCLE - SITUATIONAL ANALYSIS ....................................................................................... 515
ECONOMIC CYCLE, INVESTMENT CYCLE, SECTOR ROTATION .................................................................................................................... 515
JOBS - CONFIDENCE - CONSUMPTION - GROWTH CYCLE ............................................................................................................................. 519
JOBS .............................................................................................................................................................................................................................. 520


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March 2013 Edition Restricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com


CONSUMER & BUSINESS SENTIMENT .................................................................................................................................................................. 529
CONSUMPTION ........................................................................................................................................................................................................... 546
GROWTH ....................................................................................................................................................................................................................... 560
US GOVERNMENT SURRENDERS 'RISK FREE" .................................................................................................................................. 572
Exorbitant Privilege ............................................................................................................................................................. 572
US Firmly in Stage 5 of the "Sovereign Life Cycle" .............................................................................................................. 577
The Price of Political Chicanery ........................................................................................................................................... 580
"Kick the Can" Politics .................................................................................................................................................................................................. 580
US PUBLIC POLICY - SOME NOTABLE POLICY PROBLEMS ............................................................................................................. 581
POLICY: Congressman Ron Paul's Farewell Speech to Congress ...................................................................................... 583
POLICY: Credit Growth Solely Government Funded ........................................................................................................... 588
POLICY: Government's Consumption Spending versus Investment Spending .................................................................... 590
POLICY: FHA is a Case Study in Failed Public Policy ......................................................................................................... 592
POLICY: What Was Intentionally Avoided During the Election Promises By Both Parties .................................................... 596
What about the $84T in Unfunded Federal Entitlements? ....................................................................................................................................... 596
What about the $5T in Unfunded State & Local Government Pension Obligations? ............................................................................................ 597
What about the $1T in Student Loan Bubble? ........................................................................................................................................................... 600
What about the ...... ? ................................................................................................................................................................................................... 601

POLICY: Failure to Recognize & Alter Policy When it is Clearly Not Working ...................................................................... 601
Stimulus Hasn't Worked. It is Camouflaging Something Deeper ..................................................................................................................... 606

POLICY: A Capitalist System No Longer Realistically Operate When the State Borrows at a Negative Cost ....................... 608
MONETARY POLICY - ELECTILE DYSFUNCTIONAL .................................................................................................................................... 611
HIGHLIGHTS ...................................................................................................................................................................... 611

QE III POST MORTEM - BROKEN FED MODEL ................................................................................................................ 613
POST MORTEM: Market Reacts Badly...................................................................................................................................................................... 613
POST MORTEM: Currency War Salvos & The $67T Shadow Banking Currency Cartel ..................................................................................... 615
POST MORTEM: Fed's Broken Model ....................................................................................................................................................................... 624
POST MORTEM: QEfinity Working Psychologically the same as 1987 Pre-Crash Portfolio Insurance ............................................................ 626
FED'S NEXT STEP ............................................................................................................................................................. 628
NEXT STEP: Current Fed Thinking ............................................................................................................................................................................ 628
NEXT STEP: Fed Lays Foundation for Further Policy Changes ............................................................................................................................. 629
NEXT STEP: High Probability Direction ..................................................................................................................................................................... 635
NEXT STEP: Communications to Ensure "Duration" Understood .......................................................................................................................... 637
FED INDICATORS .............................................................................................................................................................. 638
PATTERNS: Velocity of Money ................................................................................................................................................................................... 638
PATTERNS: Real Negative Rates .............................................................................................................................................................................. 640
PATTERNS: Short Interest Rates a Fed Problem .................................................................................................................................................... 642
CHARTS: Fed Deliberately ignoring data on both growth and inflation .................................................................................................................. 643
PREVIOUS QUARTERLY SUMMARY - REFERENCE ............................................................................................................................... 645
FISCAL POLICY - FROM POLITICAL POLLING TO POLITICAL BRINKSMANSHIP ......................................................................... 646
HIGHLIGHTS ...................................................................................................................................................................... 646
TIMELINE: Calendar of Events Ahead ................................................................................................................................ 650

PREDICTIONS.................................................................................................................................................................... 651
PREDICTION: The High Probability Outcome .......................................................................................................................................................... 651
PREDICTION: Political Brinksmanship & Vigilantes ................................................................................................................................................. 652
PREDICTION: US Unwittingly Surrenders "Risk Fee" Status.................................................................................................................................. 660

PERSPECTIVES ................................................................................................................................................................. 661
PERSPECTIVE: One Non-Mainstream Analyst's Views .......................................................................................................................................... 661
PERSPECTIVE: One Mainstream Analyst's Views .................................................................................................................................................. 664
PERSPECTIVE: A Collection of Wall Street Views................................................................................................................................................... 669
PERSPECTIVE: Barron's Weigh In ............................................................................................................................................................................ 671
PERSPECTIVE: Goldman's Fiscal Cliff Scenarios ................................................................................................................................................... 674

CHARTS ............................................................................................................................................................................. 678
KEY CHARTS: Growth & Jobs .................................................................................................................................................................................... 678
KEY CHARTS: Taxes & Spending .............................................................................................................................................................................. 681
KEY CHARTS: Politics & Policy .................................................................................................................................................................................. 684
KEY CHARTS: The Stakes .......................................................................................................................................................................................... 685
KEY CHARTS: Payroll Tax Holiday ............................................................................................................................................................................ 688
CHARTS: Tax Rate Comparisons ............................................................................................................................................................................... 689


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March 2013 Edition Restricted & Confidential
Copyright 2012 © Gordon T. Long All Rights Reserved general@GordonTLong.com


CHARTS: Risk Perceptions ......................................................................................................................................................................................... 690
CHARTS: 2013 Quarterly Impact ................................................................................................................................................................................ 691
CHARTS: Budget Deficit .............................................................................................................................................................................................. 692
CHARTS: Sovereign Debt ............................................................................................................................................................................................ 694
CHARTS: State & Local Government Drag ............................................................................................................................................................... 695
CHARTS: Government Dependence .......................................................................................................................................................................... 698
CHARTS: Coming Demographic Shock ..................................................................................................................................................................... 698

TREASURY FUNDING ....................................................................................................................................................... 701
TREASURY DEBT: Latest TIC Table ......................................................................................................................................................................... 701
TREASURY DEBT: Who is Buying? ........................................................................................................................................................................... 702

BUDGET ............................................................................................................................................................................. 704
STATEMENTS: As A Corporation it is Both Insolvent & Exhibits Fraudulent GAAP Accounting Practices ....................................................... 704
QUARTERLY US BUDGET UPDATE ........................................................................................................................................................................ 711

PREVIOUS QUARTERLY SUMMARY - Reference ............................................................................................................. 715
KEY DRIVERS - CATALYSTS OF CHANGE ............................................................................................................................................ 716
EMPLOYMENT ................................................................................................................................................................... 720
1- CAPITAL SPENDING .............................................................................................................................................................................................. 720
2- SMALL BUSINESS OPTIMISM .............................................................................................................................................................................. 723
3- DEMOGRAPHIC SHIFT .......................................................................................................................................................................................... 727
RESEARCH OF NOTE................................................................................................................................................................................................. 732

REAL DISPOSABLE INCOME ............................................................................................................................................ 737
RESEARCH OF NOTE................................................................................................................................................................................................. 741

US RESIDENTIAL REAL ESTATE ...................................................................................................................................... 746
OVERVIEW .................................................................................................................................................................................................................... 746
CURRENT SITUATIONAL ANALYSIS ....................................................................................................................................................................... 750
CURRENT HOME OWNERSHIP TRENDS ............................................................................................................................................................... 750
NEW HOME SALES - Not as Strong as Headlines & Excitement Suggests ......................................................................................................... 754
HOUSING - Potentially Increasing Supply v Demand Problem ............................................................................................................................... 758
NATIONAL STATISTICS: PRICE ............................................................................................................................................................................... 760
NATIONAL STATISTICS: EXISITNG HOME SALES ............................................................................................................................................... 762
NATIONAL STATISTICS: NEW HOME SALES ........................................................................................................................................................ 764
RESEARCH OF NOTE................................................................................................................................................................................................. 765

US COMMERCIAL REAL ESTATE ..................................................................................................................................... 771
OVERVIEW .................................................................................................................................................................................................................... 771
NATIONAL STATISTICS: COMMERCIAL REAL ESTATE...................................................................................................................................... 772
RESEARCH OF NOTE................................................................................................................................................................................................. 773
CAPITAL SHRUGGED ................................................................................................................................................................................ 777

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