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From Jonathan Auerbach of Auerbach Grayson, another interesting report from the field: Last June, a NY Times financial section headline stated 'DESPITE DEVALUATION FEAR, LATVIA STANDS BY CURRENCY'.  This was followed by dire predictions that Latvia, probably hit harder by the ongoing economic morass than any country in the EU, would devalue and thereby begin a domino toppling that would bring down Swedish banks (who were heavily loaned in the Baltics) and thereafter spread through Europe like a virus. In fact at the time the SKR and the Swedish banks (Swedbank had a short-term market price drop of almost 40%) were all under pressure. We decided to organize a quick visit to the Baltics and see first-hand if Latvian devaluation was indeed an option. Alex Doncov and I with several clients met for a week with the likes of the Latvian and Lithuanian Central Banks and Finance Ministries as well as with the Minister of Finance of Estonia. Our conclusion, which we sent to you in early July, stated unequivocally that, based on our many first-hand local meetings it, was clear that Latvia would not devalue, and we thus made a strong case for clients to buy what were clearly cheap Swedish financial institutions (not to mention a couple of Baltic names). Are you with me so far? Ok, let's fast forward to last Friday, when we hosted a lunch here in NY for Karlis Bauze, Head of Monetary Policy, Bank of Latvia. We like to have interesting people for our ad hoc lunches and typically have 9-10 acceptances. Well, 25 people came to hear Karlis. Interestingly enough, he started his talk by asking. 'How many of you think we shall still devalue?  At least 1/3 of the audience raised their hands. Karlis then embarked on a well documented (I

Could disenchanted Libertarians abandon the Republicans and perhaps find critical mass in a third party -- one that would fill the vacuum created by a collapsed GOP?  This idea is advanced by a Randian, Mike Churchill, in an analysis forwarded to us by our friend Jonathan Auerbach of Auerbach Grayson. Click here to access the full essay.

Far from recovering, the global economy is in the early stages of a protracted and severe downturn, writes The Guardian's Larry Elliott:  "But it was always inevitable that, sooner or later, globalisation would run into a crisis, and what we have seen in the past two years is just the start of it. Don't be fooled by the sucker's rally of the past six months – Americans are once again running down savings to consume goods they can't afford; China's exports are booming."  Click here  for the full story.

Looks like the alleged "recovery" may bypass the clothing business, since their biggest lender is going down in flames. CIT has provided funding to 2,000 firms that supply merchandise to more than 300,000 stores. About 60% of America's apparel industry depends on CIT for financing.  Click here  for the full story.

Peggy Noonan hits the bullseye once again with "We're Governed by Callous Children". Click here   to access the Wall Street Journal article from which the following excerpt was  taken: "The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren't rising, they're bobbing, and will settle. No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They'll miss the meaning of this moment, too."

I've often suggested tuning out money-supply definitions of inflation and focusing instead on credit, which has been collapsing.  Thus far, however, the collapse has been more than offset by the Federal Government's expansion of the money supply, according to Frank Shostak, an economist whose work we have featured here before.  In a recent article written for Mises Institute, Shostak explains how deflation could arise from a further fall in credit, but only if the credit that is imploding is of the type that has been created out of thin air. Click here to access the article.

The resignation of Matthew Hoh, a key U.S. official  in Afghanistan, is a body blow to U.S. foreign policy. Click here to read his resignation letter, which questions our mission at the deepest possible level.

Sell half of the Akamai position now, around 22.45. Officially we hold 200 shares with an adjusted cost basis of 16.73.  A sale at 22.45 would give us an an adjusted cost basis of 11.01 for the remaining round lot.

A dollar short-squeeze has always seemed more than merely plausible to me, notwithstanding the dollar's steady decline toward intrinsic worthlessness.  Drowning in dollar-denominated debt, the world is effectively short the U.S. dollar in cosmic size. The last thing debtors need is to have the dollar become scarce when they come under pressure to settle short-term loans that cannot be rolled.  What will happen when that day arrives, and short-term borrowers cannot beg, borrow or steal dollars?  I asked a half-dozen international-finance professors that question a dozen years ago, and they reacted as though I was crazy. A short-squeeze on the dollar!? What on earth was I talking about?  Since then, a few others have joined me in recognizing such an event is not merely possible, but likely. Click here  to access the latest, fascinating article on the topic.