Guest Post: Extend And Pretend - A Guide To The Road Ahead

Tyler Durden's picture

Submitted by Gordon T. Long of Tipping Points

Extend And Pretend - A Guide To The Road Ahead

It will likely surprise you but like a trolley car we are now locked into economic tracks that determine our financial destination. Unfortunately, it isn’t a place anyone would choose knowingly other than possibly the Bilderberg elite.

Financially and economically we are lurching along, rocking from side to side with the occasional unexpected jarring flash crash jolt. But unlike a trolley line, for some reason no one seems to know what the destination is. Many are asking but few are willing to tell.

This road is well travelled and documented if you were to take the time to study the maps and not rely on the happy face media spin doctors for directions. Since the route of the current global economic path is now locked in, we need to either accept the ride or hastily exit. I’m up from my seat and headed for the door. What are you going to do?

HISTORICAL FACT: A Financial Crisis is almost always followed by an Economic Crisis which is subsequently followed by a Political Crisis.


                      Banking Crisis              Sovereign Debt Crisis             Currency Crisis


When the financial crisis arrived in 2008, those who foresaw it in 2007 were not only prepared to capitalize on it, but ready to position for the economic crisis that they knew lay ahead. We are currently still in the midst of an economic crisis evidenced for some time by slowing global trade, unemployment, falling tax revenues and more recently, a sovereign debt crisis.

Have you prepared for the soon to emerge financial opportunities as the Stage 3 - Political Crisis unfolds?

I want to lay out the roadmap as simply and clearly as I can. Some no doubt will dispute it. What the nay-sayers need to fully understand however is that the roadmap, which this is part of, has served me remarkably well and resulted in a highly profitable decade. Maybe even more importantly, it has allowed me to sleep peacefully at night. The market drops for the most part have been ‘buying opportunities’ and market spikes have been excellent exit points.

Knowing the trend and destination has made all the difference.


The soon to unfold political crisis will be marked with beggar-thy-neighbor policies that foster political conflict, a currency crisis which dramatically impacts standards of living and a broad curtailment of entitlement programs that will devastate generations of retiring lower and middle income citizens. We are early in what the future may possibly label as the Age of Rage. Paradyn adjustments in expectations and sense of entitlement lay ahead for those living in the developed G7 democracies.

Let me show you why a Political – Currency Crisis is just as predetermined as the tracks of our trolley ride and will have serious consequences for your investment strategy.

For the full research report with a detailed expansion of the following roadmap: See TIPPING POINTS



Though we are still in the midst of the full emergence of Stage II, Europe has recently overtaken the US in the rate of the expected, unfolding events.

There is no mistaking the fact that the US has a sovereign crisis as measured by many indicators such as: Debt to GDP, deficit percentage, balance of trade, state, city and local government financial imbalances, underfunded pension plans and excess unfunded entitlement programs. However, relative to Europe, the US is still lagging and therefore is not currently getting the media attention that it will soon receive.

What will mark the beginning of Stage III is a major shift in political policies. In Europe, early signs were witnessed with the European bailout of Greece and the  $1 Trillion Euro “TARP” like program. Both political decisions decisively diverged from the basis upon which the Maastricht Agreement was constitutionally approved. The level and urgency of the crisis forced this structural shift. Though this level of political shift has not yet occurred in the US, it soon will (the ‘Tea Party’ advocates would likely vehemently suggest we are well on our way).

The $61 Trillion unfunded entitlement problem associated with Medicare / Medicaid and Social Security is presently a monster on the door step now that baby boomers are beginning to retire at accelerating rates each month. No longer can the government obscure the true size of annual budget deficits through the use of payroll entitlement payments. State, city and local governments are increasingly in crisis as more and more can no longer fund what Americans have taken for granted as basic necessities such as police, fire, K-12 education and public works.  Without greatly increased and urgently needed tax revenues, these programs will be drastically cut. We read of 100,000 to 300,000 teachers being cut which less than 18 months ago would have been thought unimaginable in America. With 40 million Americans on food stamps, tax revenue deficits are making what is a monumental problem even more intractable. All of this and more will lead to political decisions that will lead to major social unrest and public policy initiatives which will be startling breaks from the past.

I fully expect to see a new $5 Trillion Quantitative Easing (QE) program marking the upcoming shift in the US to Stage III.

This will be what kicks off an accelerating increase in Velocity of Money that many inflations have been expecting. This has the potential to ignite a Minsky Melt-Up (Read: Extend & Pretend: Manufacturing a Minsky Melt-Up), though definitely not a certainty. The present rate of collapse in MZM, M1, M2  and M3 which supports the deflationists views, which I have held, is the ‘oil in the ointment’. The $5T QE program will be a desperate attempt aimed at reversing this

Massive monetization will eventually lead to a US currency crisis in the US by 2011- 2012.

Europe will continue to accelerate with problems associated with currency pegs and Euro denominated lending finally coming home to roost for Central and Eastern Europe (CEE). The CEE as the ‘sub-prime” of Europe will be the final catalyst to tip the UK and France over the edge into a sovereign crisis and subsequent major political confrontations. The new government in the UK is already warning the British electorate on an almost daily basis of the gravity of the situation and the degree to which changes in social entitlement expectations will need to change in the near future. Like France they are afraid to be specific – yet!

The US is experiencing a major shift with government employment becoming the primary creator of jobs. The fundamental shift is most evident through a movement towards larger government with more regulation and control.

POLITICAL SHIFT- It will be about choices which this generation has never had to confront.

The political shift is not primarily a shift from right wing to left wing politics as many in the ‘party oriented’ media might suggest or debate.  It is rather a shift that the current generation in western developed nations haven’t witnessed - a shift in direction that is other than left or right and is more about a movement in Economic freedom versus Personal freedom. 

It would make this particular article too long to explain the above Nolan Diagrams to show how and why these changes will occur (I will do so in the next Extend & Pretend series article entitled: “A Matter of National Security” – sign-up). But suffice it to say that there will be clear tell-tales that will emerge.


You must be alert to and carefully watch for these tell-tale signals in the not too distant future.



Expect the unexpected going forward since markets hate uncertainty and nothing creates more uncertainty than political decision making and policy legislation. Markets will experience increasing levels of volatility with steeper rates of price movement both up and down. Flash Crashes and Flash Dashes will be common as millisecond advantages separate the dynamic hedging winners from losers.

Hard assets such as physical gold and silver have traditionally been the ideal vehicle for an environment of high inflation coupled with a currency crisis. I fully expect governments will strip these assets from holders either directly or through predatory taxation, fees or other trading limitations. They will be classified somewhere in the four categories discussed above. Alternatively, if it is not done in this fashion it will be controlled through intervention similar to national currencies in the forex arena. I personally suspect it is already being controlled in some fashion based on the March 25th whistleblower testimony by Andrew Maguire. It is a matter of national security in a beggar-thy-neighbor environment since gold and silver are the only real money in a fiat based system. Protect yourself accordingly.

The only protection from the future storms will be unencumbered, revenue producing assets. The trick is knowing which investments will sustain their ability to produce inflation adjusted free cash flow in the midst of a contracting economic environment. They may not be in the publicly traded or manipulated markets.

Thinking for yourself and thinking outside the box is paramount if you are to capitalize on this bumpy trolley ride.

For further background read: EXTEND & PRETEND - Manufacturing a Minsky Melt-Up.


Sign Up for the next release in the EXTEND & PRETEND series: Commentary
The previous EXTEND & PRETEND article: EXTEND & PRETEND: The Flash Crash Omen
Gordon T Long        
Tipping Points

Mr. Long is a former senior group executive with IBM & Motorola, a principle in a high tech public start-up and founder of a private venture capital fund. He is presently involved in private equity placements internationally along with proprietary trading involving the development & application of Chaos Theory and Mandelbrot Generator algorithms.

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, you are encouraged to confirm the facts on your own before making important investment commitments.

© 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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ZeroPower's picture

Very nice, i will study this more, but for now id like to say the CRE crisis hasn't yet hit. At least, by 'it hitting' i mean when its talked about in the MSM and thus is recognized. 

ZerOhead's picture

Oh it's hit alright... almost nothing is moving these days. List prices are still very high and offers are few and low (at least ours are :)... but yes you are correct in stating that we haven't seen much on the MSM.

WaterWings's picture

It's a blackout like BP in the Gulf. We get bits and pieces but there are still roadblocks, flashing lights, and "What are you doing here?" "Filming." "You can't do that. Go. Now. Notice my tazer."

ZerOhead's picture

It's still going to be getting much worse in the months ahead as conditions deteriorate further... and the BP 'blackout' is just the tip of the iceberg I fear. On what grounds can they do these things WW? To protect BP from incurring losses (paying out claims) from concealing the true magnitude of this disaster? That is precisely what it appears they have done. 5,000 barrels my ass.

And what else are they not telling us? (rhetorical cuz we don't know.)

jeff montanye's picture

imo another equity leg up anything like the magnitude of the run from march '09 to april '10 stretches credulity.  the fed leaping back into a quantitative easing 2 might just as easily spook the credit markets with spill-over effects in equities.  maybe not but the average result of over-bought, over-bullish, over-valued equity markets that undergo profound leadership reversals is, on average, quite bearish.  and isn't the word "principal" if it's a person?

WaterWings's picture

Yeah, 'what grounds'. Exactly. It's just another prime example of extra-constitutional action, that's all. BraindeadMerica doesn't even care. Well, they do. But the apathy is thicker than that oil goo. Each step towards martial law...this post-WWII prosperity has somehow suspended the march of history in the eyes of our fellow "citizens", if you can still entitle someone that cannot describe three out of ten in the Bill of Rights a citizen. They can't even defend themselves. They rely wholly on the action of the state. They are at its complete and total mercy. I would call that a slave. If they "confiscate" gold these slaves will be glad and feel so smart that they never bought any PMs in the first place; scoffing at the more in tune slaves. 

Listen all, you better either expatriate yourself soon, our gather yourself into a group of trustworthy, self-sufficient, fiercely-set-on-self-defense individuals that can produce their own daily 2,000 calories for the next few years or your losses will be greatly intensified. Unless you can guarantee that you have no floor; no foundation; you will most likely endure 'total loss'. Get yourself in shape, get a rifle, and put storable food in a storage locker in a rural community if you have no other contingency plan. Consider it the best insurance your money can buy. Get a bike so you can get there within a day or less in case the roads are gridlocked.

War is on the way. I'm sticking around.

Hephasteus's picture

Am I the only one that noticed that this week started out with a sort of odd mania in the MSM. Now it's down to a relentless ad roll but it's just seemed very strained to me. 

ZerOhead's picture

Perhaps they are experiencing their own cognitive dissonance these days... or perhaps they just dislike the growing number of people ridiculing them...

Rainman's picture

.....and my bet's on the latter.

Never assume the press is as smart or dumb as we think they are. They  serve a primary master only.....Corporatas Giganticus.

Miss Expectations's picture

Biggis Dickis Swingis  (I'm going for Latin)

faustian bargain's picture

I'm still seeing headlines about the 'upbeat jobs data'...also one of the SF papers had some front-page headline about some survey of local CEO's showing they are more positive on the economic outlook. Desperation cheerleading.

Crab Cake's picture
Tishman Speyer Joins Ranks Of TBTF As Fed Gives Real Estate Firm Taxpayer Subsidized Tip

MsCreant's picture

After all the buying the Simon Group has been doing, I have been waiting since last year to hear that they too will position for a bailout. Not irresponsible, criminal. But is there a law against it? Is it fraud. Sure feels like it. My butt is sore.

jeff montanye's picture

thank you crab cake.  belaboring the obvious, but this is precisely what one gets with a government of men not laws (crony capitalism): each situation is handled how "they" feel like handling it, based on connections, a balancing of how they feel about the ones involved, the politics of the moment, what just happened and what might happen next such that none of it will make sense when the forensic auditors and the historians have a go at them.  

it is a black hole that is sucking our treasury and, eventually, our constitution into it.  

bush, with some help from his dad and reagan, cranked up the engine and put it in gear but obama has floored it and grips the wheel, white-knuckled, silently screaming.

AnAnonymous's picture

The government of laws has one well known limit: it works very well when it only encompasses the people for whom it is  designed to work very well.

In normal times, a law stating that food should not be stolen is easy to respect by the man with a full belly. The underfed man is weaker and easy to pin.

When famine strikes, suddenly, the law no longer operates and the man with a full belly now finds interest in stealing food.

Crisis are crisis in that they always reveal how shallow a government of laws is.

IQ 145's picture

 We're running the Thelma and Louise national financing plan.

anony's picture

Could be why the trillions we know about (and those trillions we don't) that were given to the banks, first by Paulson, and then Benny, and why they haven't lent much if any of it out, is the reason. 

They are using those trillions it to shore up their non-performing commercial and other R.E. Loans.

This could go on for decades, never recognizing the losses until they magically disappear.

I wouldn't count on any disclosure like there was on residential mortgages, which come to think of it wasn't very transparent at all.


Modern Money Mechanics's picture

 You have to see this. It is a bubbly Max Keiser with Stacy Herbert. He is singing Obama Baby, RICO, RICO. I swear he must be banging her.


Stacy Summary: Not that we all didn’t know this. But here it is, Israeli documents acknowledge Gaza blockade is economic war. [KR50] Keiser Report – Sucking Gold & Slurping Silver with Freddie, Fannie & Confucius

jeff montanye's picture

thanks.  if mcclatchy counts as msm, it is one of the very best parts.

Woosirsir's picture

What is unencumbered asset? Anybody know? Any example?

Woosirsir's picture

What is unencumbered asset? Anybody know? Any example?

merehuman's picture

Free and clear. value without counter party.Gold in hand.

Crab Cake's picture

"Unfortunately, it isn’t a place anyone would choose knowingly other than possibly the Bilderberg elite."

And choose it they did.  Nobody, however, is asking the relevant question.  To what end?

MayIMommaDogFace2theBananaPatch's picture

They're just taking us for a nice little drive through the countryside...

Look!  Cows!

SMG's picture

You see the people who brought you the Bilderberg, view themselves as the master race and quite simply view us, the regular people, as "useless eaters" , using up the resources that are theirs.  The end is simple, it's to break us.  The great depression that's already starting will break many financially, mentally, and spiritually.

And after all is said and done the "master race" of eyeball triangle worshipers will firmly be in charge and have the world and it's resources to themselves. 

At least that's what they want, whether we as citizens let them achieve that goal, we'll see.



merehuman's picture

Its small comfort to know the Puppeteers have to breathe the same chem trailed air we do. Many of their comforts will be taken away and their own offspring are in danger. So why would anyone do this? Nuts.

The air we breathe is compromised. Jobs gone , and we cant trust our own government.

And the folk are still asleep. Damn. 

the list of trouble is way to long.

desgust's picture

Merehuman, they have some chances to protect themselves from chemtrails and GMO, but how long do WE have these means?

merehuman's picture

why you would get junked for saying that beats hell outa me. I think we are a lost cause. I find it difficult to understand why our people are so complacent. Perhaps the spraying, or something in the water made a lot of us stupid combined with the upbeat tv lies and poor education.

By now i expected just a little bit of rebellion. Nada. The 3% that we are isnt enough to make a difference, we will be lucky to save ourselves.

I count my blessings that i live in a small town and know my neighbors.

Looking back at the civil war i noticed the militias and armys took what they needed from those they chanced upon. Too many unknowns to prepare adequately.   Be well friend

Mesquite's picture

> merehuman #407707

imo-- tv is, and always has been a big part of the problem..

of course, there are the others..flouride, fructose, artificial sweetners..

'controlled' education, censorship..

the 'chess game' goes on... 

Ripped Chunk's picture

+ !!!!!!!!

"And after all is said and done the "master race" of eyeball triangle worshipers will firmly be in charge and have the world and it's resources to themselves."

I am sure they have well paid military consultants that are assuring them that they will remain safe even if there is large scale revolt. Of course if you pay someone enough they will give you the answer you want to hear.  Might not be the right answer though. 

The most well paid, well equipped merc army may not have the level of motivation that people with nothing to lose who are full of hate have. And there will be many of them. 

mkkby's picture

Don't be so sure merc armies will stay with their paymasters once fighting begins.  They are not themselves elite and they will hate their bosses just as much as we do.  Many of them will storm and loot the castles they are paid to protect.

CPL's picture

Just have to starve them.  Three weeks tops.  Even MRE's only last as long as the mouths to feed and also have an expiry date.

Gotta know how to grow food to live.


People are talking as if we get to keep what we've built, I honestly don't see how.  Everything from the power grid, internet, hospitals or even something as simple as road development/civil engineering, politics/power structures.  I wouldn't put any promises on even an army being there.  I'm pretty sure we'll see the rise of the township again over a city state.


Woosirsir's picture

Gotta know how to grow food to live? Marc Faber had already moved to Thailand living in a big rural area where he can grow food too. Looks funny but he really did it !!! But in this world, how many people used to live in city will do this kind of funny decision? Only those as rich as Marc.

Treeplanter's picture

We all took easy street for granted.  The Bilderbergers couldn't design this, they are just rich people who think they know a lot more than they do.  Just look at the names on the list.  A club full of losers. It's always turning out different from what they wanted.  They never expected Obama to fall apart in 18 months.  They never saw the Tea Party coming. They are more like mosquitos and vultures than our overlords.  I expect they all have their gold stashed away and will make out fine.  But no one will be listening to them when the house of cards goes flat.

moneymutt's picture

they never saw the Tea Party coming? Fox promoted it endlessly, if Murdoch isn't connected who is...he's not a revolutionary...maybe the Tea Partiers can morph into something beyond being a bit more partisanly conservative than Repubs, til then, it seems Beck's job is to lead them into political marshes...just as liberal pundits stick to gay issues, environmental issues, and do little on financial issues...

Currently Smoking Cannabis's picture

They never saw it coming.  They just hijacked it once it got up steam.

Unless you think the Tea Party dudes drifted from Ron Paul to Sarah Palin without "help".

I don't.

Annonomous's picture

You know how when the cops come and bust all the guys selling drugs in one park, the insiders in the game set up shop on the other side of town?

Now that news outlets are filming and releasing lists of attendees at Bilderberg meetings, couldn't that now just be the old spot?

John McCloy's picture

Tyler C-SPAN has the congressional committee on financial reform.

Crab Cake's picture

"What are you going to do?"

So, what are you going to do? 

I think we should attempt to blog away the problem, and see how we can profit from it all...

longjohnshorts's picture


Blogging is the new DotCom-ing. "Knowledge" is the new stock option.

Crab Cake's picture

Thank you for your +100.  At least you responded, if not with an answer, still a response.

The people on this site are light years ahead of the herd, but still their cognitive dissonance will not allow them to truly face this question. 

There was one answer given below in a snarky way... I'll buy options as insurance.  I'm sure that's going to ward off tyranny. 


This is the best you have?  You folks, yes you reading this right now, KNOW what is going down.  It's right above you in this very article, if you are in doubt, and Tyler writes about it every day.  The situation is clear.

You know where this is headed, you know the implications, so let me rephrase, what are you going to fucking do? 

A gun is pointed at you and your family, and the best that y'all can come up with is to intellectually pick the situation apart, attempt to profit from the fraud and manipulation, wait for the criminals to finish looting your house, hoard gold, and spectate the collapse? 

The knowledge of what is to come that you have is a gift.  It is a gift that allows informed action, and action is what you are refusing.  TEOTWAWKI is here, and you are deer in headlights; I suggest you move.  Wake the hell up.  What are you going to do?

You are so much more powerful than you know, I wish more of you knew that.  We are not helpless, and this doesn't have to go down the way TPTB want it to.

Day_Of_The_Tentacle's picture

It would depend entirely on how things play out. If there is serious unrest or war, I would probably get as far away as possible.

If the situation stays within the realm of reasonably non-violent hardship, I would probably try to bring the people around me together, because working in together a small community will be better than going alone. I have prepared for my family as well as myself, and there is not much more I can do, where I am now - other than to try to stay healthy and employed as long as possible, and saving all I can moneywise.

On a macro level, I feel the urge "do something" - "to organize" - "to join someone/thing" to more actively work to prepare alternatives - to safeguard the communication, to present the monetary alternatives, to plan for food and energy security etc.

But everytime I look into a webnewspaper from back home, I get discouraged, because I think the debate is extraordinarily stupid and people are so incredibly spoiled and selfcentred that many deserve good oldfashioned spanking. And the mere thought of discussing with them, until reality sinks in a bit more, seems fruitless.

But if I was ever to engage in the political side of the situation it would be based on an ideal of building a tight community of mutual responsibility and respect based on libertarian principles. 


Bananamerican's picture

my view as well (although i intend to get as close away as possible-Canada, if possible) with my family. We are "doomed to repeat it" imho (or some nasty, tattooed variant of "it"). 

Collective, wisdom sweeps upon Man like a virus, after the fact.

Geoff-UK's picture

And your obvious solution is...what?  A benevolent dictator who will reinstate capitalism and abolish TBTF?  Or remove voting rights from women, who either don't understand economics or don't care that you can't have your cake and eat it too?  Put Blankfein and Ron Paul in a cage a la Thunderdome=="two men enter, one man leaves"?


I appreciate your optimism, but in a perfect election turnaround where Tea Party activists win EVERY SINGLE HOUSE AND SENATE SEAT this November...what could they do to fix this?  $61.9T govt debt=$61.9T govt debt.  Game over.

Cathartes Aura's picture

y'know Geoff, that's two posts in one day where you mention women + voting rights. . . and you say you're in the military too, hmm? 

are you clear about which side you are fighting for?