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FINANCIAL REPRESSION

Crony Capitalism - Global Rebalancing - Statism

Table of Contents
2012 THESIS............................................................................................................................................................................................... 5
INTRODUCTION .............................................................................................................................................................................................. 5
FINANCIAL CRISIS (2007-2010), ECONOMIC CRISIS (2010-2011), POLITICAL CRISIS (2012) .............................................................................. 6
WEALTH TRANSFER - THE PROVEN GOVERNMENT FORMULA ............................................................................................................................... 9
END GAME ............................................................................................................................................................................................................................ 10
THE UNFOLDING STRATEGY THAT GOT US HERE .................................................................................................................................................... 14

FINANCIAL REPRESSION ........................................................................................................................................................................... 18


SIMPLFYING THE COMPLEXITY ....................................................................................................................................................................................... 18
LIQUIDATION OF GOVERNMENT DEBT ......................................................................................................................................................................... 19
THE LOST DECADE ............................................................................................................................................................................................................. 20
UNDERSTANDING FINANCIAL REPRESSION ............................................................................................................................................................... 24
TOOLS .................................................................................................................................................................................................................................... 25

CRONY CAPITALISM .................................................................................................................................................................................... 26


CORPORATOCRACY & CRONY CAPITALISM ............................................................................................................................................................... 26
LOBBYING - A "DISTINCTIVE COMPETENCE" ............................................................................................................................................................... 32
COPORATOCRACY'S BIGGEST CONCERN ................................................................................................................................................................... 46
DEMOCRATIC CORRUPTION ............................................................................................................................................................................................ 47

GLOBAL RE-BALANCING ............................................................................................................................................................................ 49


REDUCED STANDARDS OF LIVING ................................................................................................................................................................................. 52

SOCIAL UNREST ........................................................................................................................................................................................... 55


ARAB SPRING - EU SUMMER - AMERICAN AUTUMN > WORLD WINTER ............................................................................................................. 55
GROWTH - JOBS - DISPOSABLE INCOME ..................................................................................................................................................................... 55
DISPARITY, UNFAIRNESS, CORRUPTION ..................................................................................................................................................................... 62

STATISM ......................................................................................................................................................................................................... 64
ANGLO-AMERICAN AXIS .................................................................................................................................................................................................... 64
CRONY CAPITALISM - CORPORATOCRAY - FASCISM ............................................................................................................................................... 65

2012 BIBLIOGRAPHY.................................................................................................................................................................................... 81
INTEGRATION - 2010, 2011 THESIS ......................................................................................................................................................82
UNFOLDING DOMINANCE OF FINANCIAL REPRESSION & STATISM ............................................................................................... 82
SITUATIONAL ANALYSIS .................................................................................................................................................................................................... 87
IN A BOX ................................................................................................................................................................................................................................ 89
DEATH OF SHADOW BANKING; BIRTH OF QEx ............................................................................................................................................................ 91

PROCESS OF ABSTRACTION .................................................................................................................................................................... 96


ABSTRACTION & SYNTHESIS ........................................................................................................................................................................................... 96
AGE OF RAGE ...................................................................................................................................................................................................................... 97
CORPORATOCRACY & NEW WORLD ORDER .............................................................................................................................................................. 98
FIAT CURRENCY FAILURE & NEW RESERVE CURRENCY........................................................................................................................................ 99

GLOBAL MACRO OUTLOOK ..................................................................................................................................................................... 100


GLOBAL IMBALANCES ..................................................................................................................................................................................................... 102
ENTITLEMENTS & COLLAPSING WESTERN SOCIAL NET ....................................................................................................................................... 104
REGIONALIZATION & EMERGING MARKETS .............................................................................................................................................................. 106

US ECONOMIC OUTLOOK ........................................................................................................................................................................ 107


ECONOMIC DRIVERS ....................................................................................................................................................................................................... 107
ECONOMIC ROADMAP - 2011-2013 ............................................................................................................................................................................... 108
BEGGAR-THY-NEIGHBOR POLICY ................................................................................................................................................................................ 108

TIPPING POINTS..................................................................................................................................................................................... 113


2012 CHANGES OF SIGNIFICANCE ........................................................................................................................................................ 113
THE YEARS MAJOR SHIFTS ..................................................................................................................................................................... 113
TIPPING POINTS SUMMARY TABLE ....................................................................................................................................................... 114
HIGHLIGHT TABLE ...................................................................................................................................................................................... 117
LEVEL I - RED CONCERNS ............................................................................................................................................................................ 132
SOVEREIGN DEBT ............................................................................................................................................................................................................. 132
EU BANKING CRISIS ......................................................................................................................................................................................................... 135
RISK REVERSAL ................................................................................................................................................................................................................ 139
US STATE & LOCAL GOVERNMENT .............................................................................................................................................................................. 142
FOOD PRICE PRESSURES .............................................................................................................................................................................................. 143
RISING INFLATION PRESSURES & INTEREST RATES ............................................................................................................................................. 147

2012 Thesis: Financial Repression


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SOCIAL UNREST ................................................................................................................................................................................................................ 151


CHRONIC UNEMPLOYMENT ........................................................................................................................................................................................... 155
CHINA BUBBLE ................................................................................................................................................................................................................... 158

LEVEL II - AMBER CONCERNS....................................................................................................................................................................... 160


GEO-POLICAL EVENTS .................................................................................................................................................................................................... 160
RESIDENTIAL REAL ESTATE - PHASE II ...................................................................................................................................................................... 162
COMMERCIAL REAL ESTATE ......................................................................................................................................................................................... 166
PUBLIC POLICY MISCUES ............................................................................................................................................................................................... 169
OIL PRICE PRESSURES & PEAK OIL ............................................................................................................................................................................ 175
BOND BUBBLE.................................................................................................................................................................................................................... 180
PENSION ENTITLEMENT CRISIS.................................................................................................................................................................................... 183
CENTRAL & EASTERN EUROPE .................................................................................................................................................................................... 187
US BANKING CRISIS II ...................................................................................................................................................................................................... 191

LEVEL III - DARK GREY CONCERNS ............................................................................................................................................................. 197


CREDIT CONTRACTION II ................................................................................................................................................................................................ 197
JAPAN DEBT DEFLATION SPIRAL ................................................................................................................................................................................. 200
FINANCE & INSURANCE BALANCE SHEET WRITE-OFFS ........................................................................................................................................ 203
US STOCK MARKET VALUATIONS ................................................................................................................................................................................ 204
GOVERNMENT BACKUP INSURANCE .......................................................................................................................................................................... 208

LEVEL IV - LIGHT GREY CONCERNS............................................................................................................................................................. 212


SHRINKING REVENUE GROWTH RATE ....................................................................................................................................................................... 212
GLOBAL OUTPUT GAP ..................................................................................................................................................................................................... 213
US DOLLAR WEAKNESS .................................................................................................................................................................................................. 215
US RESERVE CURRENCY STATUS ............................................................................................................................................................................... 218
PUBLIC SENTIMENT & CONFIDENCE ........................................................................................................................................................................... 219
SLOWING RETAIL & CONSUMER SALES ..................................................................................................................................................................... 222
NORTH & SOUTH KOREA ................................................................................................................................................................................................ 224
US FISCAL, TRADE & CURRENT ACCOUNT IMBALANCES...................................................................................................................................... 225
CORPORATE BANKRUPTCIES ....................................................................................................................................................................................... 227
TERRORIST EVENT ........................................................................................................................................................................................................... 228
FINANCIAL CRISIS PROGRAM EXPIRATION ............................................................................................................................................................... 228
IRAN NUCLEAR THREAT .................................................................................................................................................................................................. 229
NATURAL PHYSICAL DISASTER .................................................................................................................................................................................... 229
PANDEMIC / EPIDEMIC ..................................................................................................................................................................................................... 230

ABSTRACTIONS ..................................................................................................................................................................................... 231


DEBT SATURATION & DEFAULT ............................................................................................................................................................. 231
SOCIAL UNREST ......................................................................................................................................................................................... 239
GEO-POLITICAL TENSIONS ..................................................................................................................................................................... 243
REGIONALIZATION..................................................................................................................................................................................... 246
RESOURCE SHORTAGES......................................................................................................................................................................... 250
EMERGING MARKETS ............................................................................................................................................................................... 257
SYNTHESIS ............................................................................................................................................................................................. 261
BANKING & CREDIT CRISIS II ................................................................................................................................................................... 261
BEGGAR-THY NEIGHBOR & CURRENCY WARS ................................................................................................................................. 263
COLLAPSING WESTERN SOCIAL NET ................................................................................................................................................... 265
WEST -> EAST POWER SHIFT ................................................................................................................................................................. 267
GLOBAL CORPORATOCRAY.................................................................................................................................................................... 270
SHIFTING VALUE CREATION ................................................................................................................................................................... 271
THESIS ..................................................................................................................................................................................................... 273
FIAT FAILURE .............................................................................................................................................................................................. 273
NEW WORLD ORDER (NWO) EMERGING SIGNS .................................................................................................................................. 276
CONCLUSIONS ....................................................................................................................................................................................... 290

2012 Thesis: Financial Repression


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Copyright 2011 Gordon T. Long All Rights Reserved general@GordonTLong.com