INVESTMENT NEWS

LNR discloses that LNR author has made a significant investment in shares of Freddie Mac (FRE) at $1.12 a share. A fantastic buy, this now famous company was trading at $27 6 months ago and over $50 a year ago. This is a 24-48 month turn around, but at about a buck a share- this baby will grow fast in the coming two year period- climbing back above the $15 mark.

LNR author also made a similar purchase of AIG at $1.61 per share, another great buy- AIG is a giant, and will remain one in the future, sure to climb to $12 within the next 6 months, and over $20 into the 12 month period. FRE and AIG will be fantastic comeback winners !

LNR author also picked up a large block of share in JAS Solar Energy today, it looks like the favored solar energy company for the next 24 months.

LNR Catches On

Starting only a few weeks ago, LNR now has over 120 daily readers. Thank you.

McCain Takes Popular Vote, Loses Electoral Vote

LNR predicts that uncommitted and last minute voters will surge McCain’s popular vote to surpass Obama, but Obama will win a majority of electoral votes.

The FED: How Low Can You Go ??

The Federal Reserve is expected to lower interest rates to 100 basis points (1%) !!!
Has the Federal Reserve ever heard of a country called “ Japan “ Golden Boy of the 80’s, slump king for the next two decades.

The Feds want to lower rates to 1% this early in the financial crisis ? Interest rates are one of the “few” tools they have to use, and taking rates down to 1% so early in this crisis is utterly incompetent. Japan’s Central Bank tried the same tricks early on in their housing bubble collapse- and learned that when the economy is going downhill- banks won’t lend and people and business DON”T borrow !! Japan’s central bank took rates to ZERO and still there was no uplift in the Japanese economy. The same result will occur in America and the world, even at 1% people and businesses are not going to borrow money to expand in a shrinking economy.

As LNR has repeatedly stated, the government now needs to spend massively- including taking 25-30% from the defense budget to hire millions of workers, many can be put to work on badly needed infrastructure projects. By keeping employment up- people will regain confidence and begin spending again- that is the natural cycle which will lead to a quicker recovery and prevent a long recessionary bottom.

Short Notes:

• LNR again emphasizes the only way to soften the coming economic Tsunami is to keep and create millions of jobs and stabilize home prices.

• Total 2009 defense budget spending is slated at $815 Billion, we need 25-30% to defend America from the economic Tsunami- keeping jobs and home prices up is every bit as important as important as military spending as both issues are a matter of national security.

• Karadzic’s proposed defense for the accusation that he was the master mind behind the Srebrenica genocide was that Srebrenica was NOT a case of genocide. LNR’s author was near Srebrenica when it fell and investigated its aftermath. LNR’s author opines that Srebrenica may have been a massacre- but not genocide

Bend Over for America and you get VISA FREE TRAVEL to the USA

LNR’s Czech Analyst, “Klara Dlouha” comments that America has rewarded the Czech Republic for allowing U.S. early warning radar to be based there by giving Czech citizens- visa free travel after November 17th, 2008. The radar deal was signed this summer by Secretary of State Rice and the Czech Republic. Stated “Dlouha” “even though many people in the Czech republic opposed the radar system being based there, the government did not heed the opposition and signed the agreement with the United States anyway, and in return- “they gave us a little sugar.”- (visa free travel)

Bosnia in Danger of Collapse

(the author of LNR spent 12 years in the Former Yugoslavia working with the United Nations as a political affairs officer).
Holbrooke, the American diplomat who apparently made an “immunity deal” with Karadzic, is now again, along with Former High Representative of Bosnia- Paddy Ashdown, calling for the WRONG policy in Bosnia. They warn that Bosnia is in danger of collapse. LNR says- “good”- it’s about time this artificial forced union of people who do NOT wish to live together dies out. Especially with the totally illegal and precedent setting recognition of Kosovo, the Serb Republic and and the Croatian half of the Croat-Muslim Federation wish to leave Bosnia and join Serbia and Croatia respectively. Territorial lines are now established and functioning, so, since Kosovo was illegally and forcibly split from Serbia, why can’t the Serbs and Croats in Bosnia democratically leave a dysfunctional artificial edifice of the international community ? Ashdown and Holbrooke warn of dysfunction and continued antagonism- thereby themselves proving the mistake of creating a Bosnia in the first place by forcing the three people’s to live together when they clearly did not want to, before AND now. Bosnia was a gift to Saudi Arabia to keep oil prices down during the Clinton years, and for Clinton to display to the Arab countries America’s even handedness when it came to Muslim peoples. Plans to partition Bosnia after the Dayton Peace Accords was supported by those of us on the ground, the UN, diplomats, all the people except Izetbegovic’s radically influenced Muslim government who thought that without a Bosnia, they would be isolated and left with too little.

Russia Offers Increased Military Aid to Cuba

With American encroachments on the periphery of Russia (Georgia, former Bloc countries now in NATO, U.S. anti-missile system to be deployed in Czech republic/Poland) Putin is increasing Russia’s presence in Cuba and Venezuela as a counter punch to America. Although the new military aid to Cuba is pretty insignificant, the answer from America should be to cut Russia off at the knees and turn Cuba into a friend and ally of America. With the medical retirement of Fidel Castro, it’s prime time for the US to drop the Cuban embargo, extend relations and begin trade and investment in Cuba. This, in a short time will totally negate any Russian influence in Cuba, and lead to regime change in Cuba making it soon a friend and ally- which is what most Cuban desire.

Financial Tsunami Coming AND It Can’t Be Stopped

It’s ridiculous for media and government alike to now talk about, “solving” the credit crisis. It’s here- and worse is coming- why ? Because markets are now reacting to the economic Tsunami which has started- massive cuts in consumer and business spending- perhaps three (3) trillion dollars may not be spent, which ordinarily would have. This is an “unstoppable” financial Tsunami where the ONLY thing we can do now is better prepare ourselves for it. How? First, take all measures, both in private industry and government- to keep people in jobs and create more jobs- including government hiring millions of people for much needed infrastructure repair. Next, take tax credits for companies to keep people on the payroll. Secondly, the government should now sponsor massive bond funding to enable home owners to remain in their homes (one hardly mentioned idea is to extend loans (for a period of five years) from the average of 30 year amortization to 50, 60 year mortgages to lower payments but keep loans performing), and 5 year mortgages amortized over 50-60 years to help people buy their first new homes- a combined approach to stabilize home prices. The third step is to keep the banks liquid and cash flowing, which the government has begun.

Where do we get the money? Massive cuts in the Iraq war effort must pay for part of it and massive borrowing from the government, not higher taxes.

Global Power Rankings

America 26
M=4, PP=6, EM=4.8 EI=3 W/P=5 DI=4

EU 17.5
M=3 PP=2.5 EM=4 EI=2 W/P=4 DI=2

China 11
M=1.5 PP=1.5 EM=2 EI=2 W/P=3 DI=1

Japan 8.45
M=1 PP=2 EM=2.5 EI=1.7 W/P=1 DI=0.25

Russia 6
M=2 PP=2 EM=0.25 EI=0.25 W/P=0.5 DI=1


M= Military (size and capability/modernity/technology) PP= Power Projection, global military reach EM= Economic might EI= Economic Influence on the world economy W/P= wealth, education of population, population trend, DI= Diplomatic influence on the world

LNR has chosen the relevant categories and have scored the countries by its own estimates.

Iraq: We Can Take It, But We Can’t Hold It

In a follow up to a previous LNR commentary which called for a draft in order to deploy 400,000-500,000 soldiers to Iraq, LNR wanted to be clear why. It is NOT because current U.S. Forces in Iraq cannot defeat any and all enemies inside Iraq, it’s is that we do not have enough soldiers to hold “liberated” or “pacified” areas, and thus as U.S. troops leave an area, insurgents move back in. This is why we need enough boots on the ground to hold territory after the victory.

LNR YOU HEARD IT FIRST HERE

Luko News Review told you Friday, October 10th , more than two (2) weeks ago that we need to “halt” trading on the stock market floor. As usual, the general media is way behind LNR, only reporting yesterday the following story:


From The Sunday Times
October 26, 2008
“ Nouriel Roubini: I fear the worst is yet to come
When this man predicted a global financial crisis more than a year ago, people laughed. Not any more...
What does Roubini think is going to happen next? Rather worryingly, in London last Thursday he predicted that hundreds of hedge funds will go bust and stock markets may soon have to shut – perhaps for as long as a week – in order to stem the panic selling now sweeping the world.”

ah, yeah, thanks Mr. Roubini, but LNR readers knew this more than two weeks ago !

U.S. Dollar Gains in Strength to Record Levels

LNR wears a smug smile at those in the last eight months who lamented and lambasted the falling value of the U.S. dollar. What other currency did people really think world trade would use ? The Yen ? From a Japan that has been economically flat lined for the past 15 years ? The Euro is not a contender because although the EU's economy is larger than the United States, and for all the unity there is- it's not a single economy ( in addition to the fact that the EU is just a temporary respite to a declining Europe). The largest single economy, by far, remains the United States, therefore, it would be completely illogical to think that anything but the dollar will remain the trading and main reserve currency of world economy. And, here it is, even though the United States was ground zero for the financial meltdown, to which currency did nations flock in time of emergency ?? The U.S. greenback ofcourse. The U.S. dollar has completely recovered, and even gained some against major currencies including the Euro.

It's just constantly amazes LNR how normal economic cycles are treated as long term trends, instead of what they are- just short term fluctuations.

ASEM Summit Recklessly Calling for Increased Global Economic Regulation

In the Asia-Europe Meeting (ASEM), being held in Beijing the last few days, world leaders are recklessly calling for "increased regulation of financial markets." This, LNR warns you, will certainly prolong a global economic slump. Increased regulation slows growth- by cutting lending. Without aggressive and somewhat risky lending, you do not get dynamic economic growth. Aggressive and risky lending did NOT cause the current economic meltdown, financial institutions were not adhering to regulations already in place- this is what caused it- but certainly not for the lack of even MORE regulation.


Dow Jones Keeps Edging Lower

As LNR reported many days ago, unlike the optimistic mainstream media that jumps for joy each time the market gains a bit, its clear the market is experiencing ever lower plateau's at the end of each trading session. LNR already informed you that the next, significant resistance level would be 6,900 to 7,200. There we will see sustained market support from large fund managers who need to keep vested in several of the major large caps.

OPEC Stabs the World in the Back

Amid a global financial meltdown, signs of a coming world-wide recession, our so-called "allies" who are members of OPEC stab the world in the back. Falling oil prices is major factor in determining the depth and breadth of a world recession (transport, heating and industry rely on oil). On signs that oil prices continued to fall, from a few months ago- an outrageous $150 per barrel, to now just over $60 per barrel, OPEC is announcing one emergency meeting after another, to call for cuts in production. OPEC aims to keep prices high- even though $64 per barrel itself is a historically high price. Adjusting for inflation, the market equilibrium price is around $24 per barrel.

Now more than ever, OPEC needs to allow prices to drop to what the free market dictates, yet, the oil cartel is looking to make extraordinary profits despite the global economic tailspin. A worldwide economic recession could bring wars, millions of excess starving, untold socio-economic damage. Therefore, this now becomes a matter of global security, and if the world leaders have not already made some "firm" calls to OPEC, NATO, with cooperation of China and Japan, should put the oil fields under protective custody using military means, allowing OPEC to sell oil at no more than $30 per barrel.

During the time of "protective custody", and thus with gas prices significantly lower, there should be a 150% tax on each gallon/liter of gasoline purchased by consumers to be put into an alternative energy fund, to pay for massive and rapid construction of nuclear power plants, clean-coal, hydro-power, wind and solar farms to reduce, once and for all, the dependency on unreliable Middle-Eastern regimes.

In 1996 oil was at $20 per barrel, by 2000 it was $27 per barrel = 35% inflation, from 2000 to 2004 it went to $37 per barrel= 37% inflation, and from 2004 to 2008 it went to $105 per barrel = 183% !!! You accept that kind of inflation ? Does that reflect market demand ? Of course not, its the result of the oil monopoly of OPEC.

The threat of global calamity is no time to deal with corrupt, rotting oligarchies, tin-pot governments who are incompetent in approaching the role of oil in the current economic emergency. The Arab nations are covering their greed under the guise of Iran and Venezuela who are calling for production cuts. At this time, NATO countries already have an overwhelming military presence in the Gulf- its time to turn the crosshairs from Iraq to OPEC !

LNR is Original

LNR articles are original commentary and analysis. LNR does NOT copy or re-report articles.

Path to Citizenship for Undocumented Workers

LNR can’t understand the approach of the Administration and Congress towards undocumented workers. They keep arguing about “how” to get undocumented workers on the “path” of citizenship. Why ? They don’t need “citizenship” to “work and live” in America, all they need is a green card. In fact, giving them a “path” to a green card is NOT what America needs. The utility and demand for undocumented workers is for a pool of largely uneducated people who will work for below minimum wage. There is NO demand for MORE citizens- or green card holders- unless they are educated, speak English and have a marketable skill- WHY WHY would we give green cards or citizenship to millions of uneducated non-English speaking people. Well, the “path” to citizenship would entail- educating them for a skill and English- but that is terrible- the American economy demands “low wage” workers- not more citizens per se. The mainstream immigration debate is completely sidestepping the real issue- American business demands for low wage labor. LNR’s solution is a temporary work card- which makes them documented, pay some basic deductions to cover basic medical costs, some tax contributions for services they use, but, allowing them to be paid below legal minimum wage for certain job categories. This, and ONLY this is, what American business wants from these undocumented workers. If we educate them and upgrade their skills and language- we will be losing the VERY resource industry is demanding- !! low wage workers. The reason you accept a low wage is twofold- most of your low wage earnings are being sent to countries where those earnings equate to HIGH wages- those dollars in Mexico buy a lot more than they do in America- so in that aspect- those lower wages are NOT an exploitation of these workers. In fact, paying below legal-minimum wage is clearly a WIN WIN situation- where industries that require basic manual labor can afford to offer services, i.e. landscaping, at affordable rates- WIN, while those workers – even though being paid below minimum wage- support many family members back in their home country-WIN. If we put those undocumented workers on the path to citizenship where we must pay them legal wages- companies will go broke because if they have to pay higher wages and pass the costs to the consumer- many more American’s will not use those services- i.e. the average American household can pay $150-200 per month in landscaping maintenance- they will not use those services if it will cost $500 per month. You can eat at Denny’s or other restaurants when your average bill for a family is $18-27 , but not if that same meal is going to cost $40-70 per meal.

Don’t put illegal’s on the path to citizenship, put them on temporary work cards and allow them to be paid below minimum wage- they will NOT be stealing any jobs away from Americans. This has been proven by the last 20 years of the lowest unemployment rates in American history- despite 10-20 million illegal workers present in America.

Arrest Greenspan

Alan Greenspan, former Fed Chairman, along with Congressional banking regulators and certain executives from banks should be arrested for treason. These people subverted the U.S. financial system to the point that it has caused a clear and present danger to the national security of the United States.
Greenspan wants to feign ignorance – after years of ads from the likes of Country Wide Mortgage company (the biggest retail lender of mortgages in the US) “Mortgage- no qualifying, a social security number gets you a mortgage” there were low-doc and even NO-doc loans, that were essentially banks giving money away if you were using it for real estate- counting on the fact that real estate prices would trend up allowing unqualified borrowers to pay back those notes via capital gains. How could anyone believe that Greenspan, Congressional regulators and bank executives could not guess that eventually, real estate prices would crest and begin to fall- as all previous real estate cycles do – boom busts come and go.

UN Report: Economic Inequality in America Same as Africa

Yesterday the United Nations Habitat agency publicized its report that, mathematically speaking, the divide between the “poor” and “rich” of some major American cities was equal to that of some cities in Africa. That is to say, the mathematical ratio – the ratio itself- (using the gini-coefficient means of measurement) was equal to some African cities. But so what ! Poverty in America has been consistent- even using the negatively misleading definition of the US Census Bureau- poverty in America has been consistent at 12% for decades now. In addition, the gini-coefficient used by UN Habitat, does not measure wealth, stored assets, savings accounts, access to credit- it makes the statement comparing inequality in US cities comparable to Africa a completely misleading and outlandish statement. The gini-coefficient merely measures the ratio of lowest average incomes with highest average incomes- in given cities- which hardly gives the real picture.

It’s an OUTRAGE for the UN to give such misleading publicity- when they are glaringly ignoring the fact that the “poor” of America still maintain standards that would be the “envy” of the middle class of much of the world. It’s simply outrageous and petty for the United Nations to ignore the huge difference between a poor person in oil rich Lagos- without running water, no food or access to a job or medical care, no credit card, living in a shack to a “poor” person in New Orleans who has shelter, food, education, air conditioning, credit cards, free medical care- the UN is being outrageous! What does it mean to be poor in America- what is the definition? The UN uses the statistics of what the US Census Bureau classifies as “poor” which is: family of four making less than $21,000 in net income (there is a scale of family members to income to determine poverty- family of four is just a median example for 2007), however, that excludes that the family is eligible for thousands of dollars of free government aid, like food stamps, housing benefits, Medicaid, capital gains, other cash benefits- meaning- we could be talking about a family of four with total benefits of $45,000-$60,000 !! that’s poor ? Relatively- maybe- in America, but certainly that is NOT poor compared to the “poor” person in Africa- who has little to no access to similar services. So, what is the point, the UN is using apples and oranges to compare “rates” of inequality between America and Africa. If you’ve ever been to Africa, or other poor areas of the world, you will see the gigantic difference of poor over there and poor over here. (We are not talking about people in America who live on the streets because of other social problems- and chose not to take advantage of free housing, medical, job assistance etc.). As a former diplomat for the United Nations for 12 years, LNR would ask the UN to compare the wealth of those of us who weren’t corrupt and those at the top who were and still are ( the majority of the leadership of UN agencies are)- let’s look at those “rates” !

Why Banks are so Fragile?

It should be no surprise to people why so many banks are failing. When banks have large loan defaults- the reason banks need cash from the government is because they practice- “fractional reserve banking.” This system of banking is well over 200 years old and is universally used around the world at almost all banks.

Fractional reserve banking is where only a portion of deposits remain with the bank, the majority of deposits are loaned out- this is how banks make money. Therefore, if a large part of their operating capital is wiped out- (actually representing a small portion of their overall assets and deposits) the banks cannot function- they are out of cash !! The majority of their cash has been loaned out right ? So why is the media making it sound so incredible and earth shattering that even a small economic crisis can wipe out banks ? Tthe general media is doing a poor job not to explain to the public why these titanic banks are being knocked over so quickly and easily- from the day of announcing a large swathe of bad loans- the bank is bankrupt within a few days. Of course, using fractional reserve banking DEPENDS on the bank having not even a small crisis- either of confidence, operating cash, whatever- a small problem can, overnight, wipe out the small amount of cash that the bank works with.

So, stop the incredulity already.

LNR One Week Ahead of the Competition-again.

LNR wrote our story , more than 10 days ago !!
Saturday, October 11, 2008

Poof ! With the Collapse in Oil Prices- So Goes Russia's Power
Oil prices are collapsing as the markets anticipate lower consumption of oil because of the financial crisis and coming world recession. Hence, a projected long-term downward pressure on oil prices for the next 24 months at least. This, coupled with the recent financial meltdown, is going to put the Russian Bear back in his cave for another hibernation.

LNR’s story already told you back on October 11th that collapsing oil prices was going to stop Russia in its tracks regarding its aggressive behavior and attempt to regain superpower status.
So, as usual, the mainstream media is more than a week behind us- as only today, the New York Times reports:

Oil-Rich Countries Face a Reckoning
By SIMON ROMERO, MICHAEL SLACKMAN and CLIFFORD J. LEVY
Published: October 20, 2008
CARACAS, Venezuela — As the price of oil roared to ever higher levels in recent years, the leaders of Venezuela, Iran and Russia muscled their way onto the world stage, using checkbook diplomacy and, on occasion, intimidation. Now, plummeting oil prices are raising questions about whether the countries can sustain their spending — and their bids to challenge United States hegemony
Simon Romero reported from Caracas; Michael Slackman from Amman, Jordan; and Clifford J. Levy from Moscow. María Eugenia Díaz contributed reporting from Caracas, and Nazila Fathi from Tehran

So does it take a guy from Caracas, a guy in Amman Jordan, and three other people to tell you what LNR told you 10 days ago !! New York Times struggling to keep up with LNR !

Obama Will Turn America into a Wimp

It’s no big revelation that often, the pendulum swings from one side to the other, rather than a moderate middle. It is obvious, even to his own party, that Bush swung the neo-con preemptive (Bush Doctrine) policy too far, too fast. Foreign policy, handled correctly, is like a long oil tanker, it takes time to turn it around. Foreign policy turned on a dime leaves a lot of collateral damage. Bush turned our foreign policy, after Clinton, on a dime.

Now, however, at this time, it seems Obama will win the election in November, less any surprises to the negative of Obama or the plus of McCain. Obama believes he is reading the American will that America be accepted again as a positive actor in the world community. LNR fears Obama will practice foreign policy based on American domestic politics. That is wrong, Obama will end up pushing the pendulum the other way- too far- turning America into an international wimp- as we were in the Jimmy Carter years.

As in business, in politics- you CAN’T admit you were wrong, you CAN’T back down, even if your position is untenable or just plain wrong. You must carefully maneuver your way out to new positions, and even with that, you cannot stand down to challengers. American policy vis-à-vis North Korea, Iran, Iraq, Russia, Venezuela must be hard line without concessions. The real world is “realpolitik” and if you create power vacuums by being ‘nice’ and ‘understanding’ you will be crushed by upstarts ready to fill the vacuum- that’s life, that’s history. For example, with Iraq, once bad intelligence about WMD’s was identified, the U.S. had a window of opportunity to leave with the Iraqi baathist party in control, we did not. In the case that we remained after that window of opportunity closed, we should have then injected the resources required to crush the insurgency and appoint- not elect, a coalition government of national unity. The resources needed to win at that point would have required a draft- a good President, no matter the political damage, would have called for a draft so that we could put 400-500,000 soldiers on the ground. Our military was NOT winning- and your strategy was clear- bring in reinforcements- yet, a weak President just let the situation rot- a crime against our fallen troops, a crime against Iraq.
Obama, if he indeed wins, will “blink” in the real life game of realpolitik. It will end up, just as Joe Biden said correctly yesterday, Obama, if we wins, will be an INVITATION for a global crisis – a challenge to America.

Is America Suffering Entropy in its Power Paradigm?

LNR reported in a previous article that indeed, U.S. global power may have entered a stage of a true downtrend (unlike previous announcements of America's downfall after Vietnam and the Carter years) , but that is only in the context of relative power. Declining relative power means a slow evolution towards a multi-polar world, this is true, however, do not confuse this with any notion that the U.S. will not remain, by far, the leading power of the world, unchallenged in hard power (GNP, military might, etc) and soft power, (influence, diplomacy, dollar being the leading currency). Why ? This is because the nations which are increasing their soft power- relative to the U.S., for many reasons have NO hope of replacing America as the leading power because of their corruption and undemocratic political systems. The Soviet Union could have never hoped to match their economic and military muscle with a communist authoritarian society- as the world was clearly trending towards open democracies with free economies. A "limited" Japanese democracy could not match their economic muscle with a corporate statist government, and lack of military power projection in order to assume, or be sought for any kind of world leadership. (Similar factors would be applicable to China and India). The current financial crisis is not deep and wide enough to cut into the gigantic economic advantage America has over other countries. The current crisis is serious and big, yes, but one must put it in the context of the scale, America's economy alone remains 25% of the worlds entire GDP, that has been consistent since WWII- no change.... it would take the combined GDP's of the next FOUR largest economies to equal the size of the USA: Japan, Germany, China and UK. Even at the growth rate of 10% a year, and an appreciating currency, and.. assuming America's economy did not grow at all- it would still take China at least 14 years to catch to America- assuming America had zero growth for the next 14 years- not likely- thus, we are looking at another 20 years assuming all things being equal, for China, the leading contender, to match American economic might.

Therefore, America remains the ONLY contender for world leadership for the future as it combines an open democracy, economic dominance and an unrivaled military with global reach. These three factors make it, less a force majeure, impossible for America to be replaced in the near or medium term as an uncontested hyper-power, even if its overall soft and hard power is in decline relative to others.

Flowers for the Dead ?

Is North Korea's Dear Leader, Kim Jong-il dead ? As of 11:30pm 20th of October, 2008- we are not sure.

It's likely he is dead or near death and there is confusion in the two ruling groups as to what actions to take. The leading faction, and most likely eventual winner- is Kim Jong-il's brother-in-law, Jang Song-taek, aged 62 who is supported by General O Kuk-ryol along with some other leading generals. Kim Jong-il's Sons are supported by the current government and other parts of the military. Jang Song-taek, officially or unofficially will be ruling North Korea, along with close support of General O Kuk-ryol very soon- which means tomorrow or in the next two weeks by the latest. If Kim Jong-il is still holding on, he is past the point of no return, the running of the bulls has begun.

Government Should Prevent a GM-Chrysler Merger

Don't let the current governments intervention in the banking and mortgage crisis let other companies join in anti-free enterprise activities. A GM-Chrysler merger would leave us with only two major auto makers, don't trust such a "trust" ! Let all three auto makers fall, LNR supported massive government intervention in the financial meltdown because it was a question of national security and macro-economic stability. The big three of Detroit are no longer a relevant factor in America's economy and are themselves to blame for their failures. In the fat bountiful years, the billions they earned during the real estate boom- they failed to squirrel money away for a rainy day. Just as the airlines industry, the auto industry typically goes through booms and busts, and rarely save and stash away money during the booms- to survive the busts. This bust is different because the troubled banks won't lend the billions to tide the auto makers over until the next boom. The big three also failed to make cars that people wanted, obviously people prefer the imports from Japan and Korea.

The last time the government assisted the auto industry, in a big way, was offering loan guarantees for Chrysler in 1980 (contrary to popular belief- the government did NOT give Chrysler one billion dollars (1 billion) but only extended loan guarantees (amounting to $1.5 billion) so that Chrysler could borrow the money. Chrysler recovered and paid back the loan early. However, that was a different time, American cars were still dominant, over 76% of sales in 1980 were American built cars, the auto industry work force represented a larger portion of the unions and workforce than today. It was a decision in a different time. Today, we don't need them. Their products are over priced and under quality. The American auto industry is also guilty of sheer disdain of its consumers by not developing alternate energy vehicles long ago, leaving Americans with NO choice except to buy gas guzzling cars and subjecting Americans to the vulnerability of Arab oil. Let them fall. Vehicle demand will either be picked up by a new company that buys them out or we rely on imports- which offer better for less. The loss in direct and indirect jobs (auto suppliers) will be a much smaller price to pay, than the billions the consumer will loose to a trust of GM-Chrysler overpricing and robbing the consumer over the next few years.

Let'em fall !

Yabba Dabba Dooo FINANCE

Yabba dabba doo finance- we're sorry- we mean to say "Yahoo Finance".

(Today on Yahoo Finance)
By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 1 hr 24 mins ago

WASHINGTON – The nation is on track to build fewer homes this year than at any time since the end of World War II, adding to the woes of an economy that analysts said Friday has almost certainly entered a recession.


What ? its time AP gets a new economics writer. Martin Crutsinger has got it all wrong ! Crutsinger is saying that because the "nation is on track to build fewer homes this year" he says it's "adding to the woes" of the economy ? What have we been saying in the past week, as well as the Wall Street Journal and John McCain- (although remember we said it first) home prices need to stabilize- forclosures to stop- its the only way to sop up excess housing inventory- that is the ONLY way to stop the freefall in America's greatest asset cache for America's main economic engine- the consumer. (including Joe-the-Plumber). LNR called for a restriction in home building permits and halting forclosure evictions (not forclosures per se) and hope that home builders will be wise enough- or bankrupt enough- to stop building for a while until the market demands it- and home prices at least stabilize- if not recover slightly. The drop in value in homes has taken out trillions in equity that homeowners were counting on for retirement, borrowing against, and peace of mind. That confidence makes people spend in the economy, take that away- and you stop the engine that drives 2/3'rds of the economy. As we also said before, with asset destruction (home equities) you deprive collateral assets against which banks can loan.

About Martin Crutsinger: Actually, there are quite a few internet posts about Crutsinger getting it "all wrong" that you can research yourself. For straight economic reporting, cannot AP get someone a little more competent ? On Feb. 2 2007, a blog called "State 29" calls "Martin Crutsinger from the AP failed math class" alleging that Crutsinger used inaccurate numbers to impress the White House. In 2006, "Bizzyblog" said of Crutsinger:

January 3, 2006 Media Blog
Martin Crutsinger of AP Botches Reporting on the November Construction Spending Report

We can't say enough about CNN and AP messing up on financial news and analysis.

STOCK MARKET up or down ?

Today, CNN Money gleefully reported the"although stocks were down yesterday- they were up for the week !" who’s kidding who, at 8,800 the Dow Jones is down over 5,000 points from just a year ago- and the 11,000-12,000 was the resistance level of the Dow Jones for over a year. CNN Money should be reporting that the stock market is near collapse ! You can't solve major macro-economic problems when you can't even analyze what's happening today ! CNN and AP get poor poor marks for their economic reporting.

Waste Your Time- Read Glenn Beck

Wow, Glenn Beck says today, "look out for more economic trouble ahead" now thats worth a multi-million dollar salary from CNN right ? Please, go ahead read Glenn Beck, a friend but a pretty superficial analyst. Reading his financial headline today was a pure waste of time, just some general wise sounding fluff about ' get ready' ' save your money' "things are getting worse" I think you could be as stupid as a doorbell and know that already- come on Glenn-
tell us what we dont know ---
want to know what you don't know ? Read LNR- we told you where the stock market was going to be the next day- in contrast to the media that got Tuesdays market completely wrong- we told you what the government needs to do to stabilize the financial markets- 10 days before the Wall Street Journal, 5 days before John McCain. LNR gives you specific news in advance, specific market predictions and where your money should be now. We told you that gold will keep rising until about $2,000 per ounce- (days before the gold pundits were willing to stick their necks out) so you know when to get in, and when to get out. So, if you need to know specifically what is going to happen, read LNR, if you want general fluff that is totally meaningless- read the major media.

We Told You- we are headed to 7,000

LNR pleaded to readers to understand that the big bounce in the stock market on Monday was due to the government brow beating big fund managers to buy into the market. Now, Tuesday and Wednesday - all you got in return was predicted, profit takers pocketing billions of dollars while pushing the market down to right where we started. Now, its clear we will be bouncing bottom around 7,000 maybe 6,900 on the Dow Jones. Keeping funds in long term utilities, basic technology is the way to go if you're going to remain in the market. Otherwise- it's where the fund managers are going- gold and T-bills.

Hollywood VS. The United States of America

The cacophony coming out of Hollywood is has become stifling! A wall of incompetent leftist trash talk is hurled against the President of the United States of America and the Republican Vice Presidential candidate Sarah Palin. LNR has already disavowed the current candidates and called for a write-in of Hillary Clinton (see our story below – Oct.13- “Hillary for President”) so we are not opposed to intelligent criticism of the current candidates. However, Hollywood media with its direct exposure to MOST Americans, is pushing incompetent views that does not look like a mere expression of views - but rather implementing an agenda.
Oliver Stone’s movie about the President is out “W” … where Josh Brolin (his Wife called the police for domestic battery- but did not press charges against Josh) (Son of James Brolin who believes the government orchestrated 9/11 and said on a radio show about 9/11 “celebrate the day”) said that the movie will be a great education for the American public. What ? We all live Bush’s politics each day and don’t need Hollywood to educate us- a Hollywood that is polluted with the worst kinds of social behavior, drug and alcohol abuse along with their superficial uneducated trash talk. Hollywood is NOT reflective of American society- the jail times, substance abuses exist at much higher rates with the Hollywood bubble heads than the rest of American society. LNR refuses to be lead by the nose by these drugged out sycophants who often believe they really are the people they portray in their movies.
Oprah, the queen of all bubble heads refuses equal airtime to Palin, Matt Damon portrays his absolute stupidity with his comments about Palin, Chevy Chase – traitor to America who lied to avoid fighting for his country in Vietnam, wants Palin to be “decimated.” Throw in Michal Moore’s one-sided incredibly circumstantially based documentaries and you have a Hollywood agenda working against the United States of America to stifle balanced views in the media.

Toot Our Own Horn !!

Well what can we at LNR say ? 10 days ago we wrote our first major story titled:
“Feds Missing Crucial Element to Solve Credit Crisis” where we explained that without stabilizing falling home prices- the credit crisis cannot be addressed in the long term- and that the housing crisis was clearly the root of our current financial problems. We’ve been scanning the media for the past week for any support on our analysis- nothing found- finally- 10 days later, the Wall Street Journal reports:

· OCTOBER 15, 2008 Wall Street Journal
No Quick Fix for Housing PricesEconomists Press for New Programs for Homeowners toStemDownward SpiralBy RUTH SIMON and MICHAEL CORKERY…..

But some economists say the government needs to do more to address the underlying problems that triggered the credit crisis. "It's very disappointing" that the plan doesn't do anything "to stop the spiral in home prices," which is reducing net worth and creating a falloff in consumer spending, says Harvard University economist Martin Feldstein.
One problem with the refinancing program is that it will help only 400,000 troubled homeowners, according to some estimates, well short of the nearly 12 million Americans who owe more on their mortgages than their homes are worth and are in danger of default “

Well, we cannot agree more since we published this analysis 10 days before the Wall Street Journal. Crashing home prices can only be addressed by halting evictions-thereby keeping homes from being dumped on the auction/short sale market, and cutting home building permits for companies until the huge overhang of home supply gets soaked up. -LNR

Stock Market News- Read It Here First !

Yesterday afternoon, after basking in a 900+ stock market rise, the financial media were predicting another big push on Tuesday, saying late on Monday, pre-trading seems to indicate that stocks will go up again. Of course, being smart, you read the Luko News Review which told you that short term traders were going to take profits on Tuesday. Well, we were right- again. Check it out below-

AP: Stocks pull back as profit-taking sets inTuesday October 14, 6:34 pm ET By Tim Paradis, AP Business Writer

The stock market went down on Tuesday, as we told you it would on Monday. How could major financial analysts in the media possibly believe that in an uncertain market, investors could hold back from taking profits after a 936 upward kick in the market ??

Pump It Up !

The U.S. and other governments promised the banks the universe- “unlimited” funding ! this “pumped up” the stock market to soar over 900 points- and who is smiling ? The day traders- the market makers, because they are going to cash in and transfer those billions of stock market short trade profits right into their pockets. Now, why did the stock market go that high ? In our opinion it over-shot the anticipated bump of 300-500 points. This author’s inside sources report that governments- over the weekend, brow beat many influencial fund managers to “buy” into the market on Monday to help the rally gain momentum. It did, for now. But the short term traders and day traders are going to cash in big by selling tomorrow or the next day and pocket huge windfalls, continuing the wild gyrations of the stock market.
As more bad economic news, unemployment numbers, sales shortfalls, and more banks announce that they are tapping into the government bail out money, we will continue to have downward pressure on the stock market. As LNR stated before, the Government needs to address the property market crash before seeing any long term stability in banking.

Look at this story:

It was posted on 13th October and is almost a copy of the story we wrote 4 days ago on 09 October (see LNR Story below: “America’s Global Strategic Losses”) We can’t stop saying it, why read this story on Yahoo- on October 13th when we already gave the you the same story- and more – four days ago ! Read LNR to get the news of tomorrow- today.

Banking crisis challenges US superpower status by Luis Torres de la Llosa Mon Oct 13, 10:56 PM ET NEW YORK (AFP) –picked up by Yahoo News.

This is hotly denied by many who point out the country's role as the world's most dynamic economy and preeminent military force. But US foes say a dramatic shift has already happened and even some allies suggest the time is coming.
Doomsayers point to the costly and unending conflicts in Iraq and Afghanistan, the worst financial upheaval since the depression of the 1930s, and a crisis of confidence in politics and the domestic economy with few parallels.
Countries like Iran and Venezuela gleefully pronounce the end of "the empire," while Russia trumpets the coming "multi-polar world" in which emerging giants like China, India and Russia itself will hold sway.
Even Peer Steinbruck, the German economy minister, broke ranks last month, saying: "The US will lose its financial superpower status in the global financial system."
A similar warning was sounded recently by British political philospher John Gray, who wrote in The Observer that the world is witnessing "a historic geopolitical shift in which the balance of power in the world is being altered irrevocably."

America Removes North Korea from the List of Terrorist Nations

We have NO transparency from the current administration as to how and why North Korea was taken off the list of terrorist sponsoring nations. Officially, the U.S. government confirmed back in 2007 that they would remove North Korea from the list- they didn’t- so why now ? The real story is the lousy reporting from the mainstream media which is not revealing to the public WHY being on the list of state sponsored terrorism was relevant or important. Here is the story to understand. Being put on the list of states that sponsor terrorism leads to some sanctions, mainly implemented by the USA. In the case of North Korea, most of those stated sanctions had little effect on North Korea, i.e. blocking companies doing business with North Korea, cutting tax credits, MFN, etc. which is basically meaningless for a country like North Korea with little to no economic ties to America. Where being on that list really hurt North Korea was the fact that it affected the import of luxury goods to the greedy North Korean leadership. The DPRK leadership imports thousands of pounds of gourmet foods, champagne, big screen TV’s, Mercedes cars, movies, Whiskey, etc. you get the picture- while their countrymen are starving- they are living the high life. These sanctions also included freezing their secret bank accounts around the world and having allied nations cancel visa’s of their children attending schools there. This is what really struck the North Korean leadership hard- and when the U.S. did not immediately lift these sanctions when promised several month ago, North Korea began to rebuild its water cooling tower and cut off Nuclear inspections. So it was the U.S. that reneged on the deal and forced North Korea’s hand to reverse course on halting their nuclear program- so the U.S. caved in and agreed on Oct. 11 to remove North Korea from the state sponsor list- now- France can now once again export the champagne and Foie gras and Germany its Mercedes luxury models (intelligence reports that the North Korean leadership plays with a 7,000 luxury Mercedes vehicle fleet), and the daily fresh lobster imported for the great one himself, Kim Jong-il. THAT- as Sharon Stone likes to say- is what the state sponsor terrorist list was all about for North Korea.

Luko News Review- Right on the Money, (I mean Gold)

It just keeps happening, Luko News Review gives you the news before it happens. In our October 7 blog we predicted gold could top out as high as $2,000 per ounce. That was October 07, today, on October 13th -
Author David Ian Miller, Oct. 13 2008, writes in Slate Magazine:
We're All Gold Diggers By David Ian Miller Posted Monday, October 13, 2008 - 2:57pm
Coyner says that if gold's price went up to, say, $2,000 an ounce, getting it out of the ground in places that are now deemed too tough to mine would become economically viable. (Alan Coyner, the also slyly named administrator of Nevada's division of minerals)
Why read about gold prices at $2,000 an ounce on October 13th i in Slate Magazine when you could have read it here in the Luko News Review a week ago ? Keep reading LNR to be 3 steps ahead of the news.

Hillary For President

This author, generally being a conservative, didn’t think he’d be endorsing Hillary Clinton, but for our current choice of candidates, and the multiple problems we are facing, Hillary as a write-in candidate, is by far our best choice.

Out of 300 million people in the USA, it’s hard to believe that all we can come up with is the current lot of candidates. Obama- totally inexperienced, outsider, without a political base from which to draw from. Clinton’s first four years in office were widely a failure because of an inexperienced staff and a lack of a political base in Congress. Obama is similar to Bill Clinton in having normal to high intelligence but much less experienced. Bill Clinton had been a governor with executive experience for over 10 years by the time he went to the White House (unlike Palin’s two years). Biden- his running mate- intellectually low on the totem poll. He is called an “expert” on foreign policy- this author strongly disagrees. Watching his discussions about foreign policy on youtube and reading his foreign policy reports online, reveal an extremely simplistic comprehension of foreign policy and obviously canned responses and/or reports written by his staff. Biden was also caught plagiarizing his speeches (he can’t come up with his own stuff ?)

McCain is an outsider- he claims- exactly what we DON’T need now- we don’t want someone outside the beltway- we need an insider to bring coalitions together and do backroom deals to settle the economic disaster we are facing. McCain’s military experience was hardly at the strategic level- so, his often repeated emphasis on his military past does not necessarily make him a global strategist. McCain was also badly tainted by the Keating Five financial scandal- cannot we not find a clean candidate ? His running mate- Sarah Palin- entertaining to watch, obviously a great hockey Mom, but with the extra exposure she has reluctantly allowed- its overwhelmingly apparent that she could not take over the Office of the Presidency as even nearly qualified.

So- who then ? Hillary is the only clear cut qualified person, both personally and politically who could step into the current crisis running- without need of a long period to get up to speed of what a President does and how to do it. Write in Hillary !

Close the Stock Market Before We Get "ENRON'ED"

A company called "Enron," as you will recall, with solid stock prices got decimated after its bad debts were revealed- sort of what's happening to many of our banks (upon revelation of its financial scandal- Enron stock went from $90 per share to less than 0.50 cents). These banks have/had such corrupt leadership to utterly ignore the precipice they had gone to with loaning trillions of dollars to unqualified borrowers- and where much of that lending could only have been paid back as long as real estate prices continued its climb.

The financial action plan being discussed this weekend mainly focuses on throwing a gob of trillions of dollars into the world markets- to recapitalize banks, buy bad debt, hoping banks will stay afloat and even begin extending credit again. As Luko News Review wrote earlier in the week- it's still missing the "KEY" to this crises being resolved. Real estate prices are the KEY, and banks will NOT extend credit on collateralized assets (the vast majority of bank lending) when those assets are free falling. How does a bank loan Mr/Mrs. X a $200,000 dollar mortgage on a home when the bank knows that home is going to loose another 20-40% of its value in the next two years ? Answer- THEY DON'T. If banks ask customers to put 30-40% down payment on the homes they want to buy- the banks will have few customers. The drop in home owner equity- as well as investor equity in real estate over the past two years has wiped out many more trillions than the recent drop in the stock market. With less equity, a crashing real estate market will severely depress purchases- which accounts for 2/3rds of the American economy. With that ugly picture- banks will and are holding back major credit extensions to businesses which rely on that cash flow to operate.

Get back to the original problem, the real estate crash, which we all know started this mess, and you'll have the first sign of a recovery and stabilization in the markets. Remember, the stock markets are already closed on weekends and holidays, keep them closed for at least another week.

Special Hello

LUKO NEWS REVIEW extends a special welcome to " G " a regular reader in Guangzhou China.

LUKO NEWS REVIEW – Opps- We Did It Again !

Keeping you three steps ahead of world leaders, Luko News Review- said the unthinkable on Friday October 10- close the stock market (see our story below- Dow Dow Down for the Count-recommending that the stock market be closed to trading)

Today, Bloomberg.com reports:

"Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they ``rewrite the rules of international finance"

New York Post reports today:
"We're way beyond fundamentals. This is just pure panic, that's all it is," said Chris Orndorff, head of equity strategy at Payden & Rygel." You would have known that already yesterday if you were reading Luko News Review.

Poof ! With the Collapse in Oil Prices- So Goes Russia's Power

Oil prices are collapsing as the markets anticipate lower consumption of oil because of the financial crisis and coming world recession. Hence, a projected long-term downward pressure on oil prices for the next 24 months at least. This, coupled with the recent financial meltdown, is going to put the Russian Bear back in his cave for another hibernation. Already in the past few days we have seen Russian pullbacks in areas of Georgian territory that they occupy. Putin- a.k.a Medvedev is going to return being an affable- lets cooperate kind of guy. Putin's first few years in office displayed a pronounced lack of aggressiveness- why ? No money. His military could barely pay for fuel and exercises, not to mention meat in the Russian soldiers diet. His military told him point blank- we cannot afford to be aggressive. Putin listened and bided his time, he thought he could reform the Russian economy and raise his budget that way. He was not successful, then, his luck turned- oil prices began to rise. One can almost follow an increased Russian aggressiveness- parallel to the rise in oil prices- which- the so called experts- claimed- even as late as a few weeks ago- would be a sustained upward trend in oil prices because of increased demand from a growing China and world economy. Well, of course, short term experts are usually wrong- ignoring the reports from the oil industry (as researched directly from this author- including speaking personally to a major official of China's oil exploration team in Beijing) that supplies for the next 50 years remain plentiful. Oil prices spiked as it became a hot commodity to invest in, it's where investment funds shifted to from a dead real estate market. Putin counted on long term high prices in oil to fund a resurgent Russia, to restore its world superpower status. It aint gonna happen, look in the next few days to weeks as a major rollback occurs in the public stance and actions of Russia's leadership as it will count on international cooperation to help stop a complete collapse in its mafia-ridden financial markets.

Macedonia Recognizes Kosovo

For a nation that doesn't even have a name, (Macedonia- recognized only as Former Yugoslav Republic of Macedonia FYROM- because of Greek opposition to the use of the name- Macedonia which is also a northern province of Greece) it's a calculated step to please the US and EU.

Although Serbia lost the moral right to rule Kosovo, it certainly had its legal right stolen by the U.S. when it recognized Kosovo, leading many other countries to follow suit. There was no transparency to America's recognition of Kosovo, nor much media coverage or debate about the fact that recognition of Kosovo was a violation of European and International Laws, as well as the peace agreement that ended the conflict in Kosovo. Since new rules and precedents were written during and after the reunification of Germany at the two plus four talks, its out of the question that without Serbian agreement- Kosovo can be recognized as a sovereign state. U.S. miliary intervention to end Serbian rule in Kosovo was meant to protect the Albanian population and allow for the return of refugees- NOT to militarily force a split of the Serbian/Yugoslav nation state.

DOW DOW..... DOWN FOR THE COUNT

This market is bleeding RED. No one wants to say it yet, but before the Dow drops to ... well... ZERO.. we must do the unthinkable- halt trading. The stock market is no longer- a free market of supply and demand, its into a panic dump of equities which does not reflect the credit situation- which is- plenty liquid with promises of more liquidity from governments around the world. Therefore, its now a question of national security- to halt trading now.

America’s Global Strategic Losses

Iraq , Afghanistan ,Georgia, Iran, North Korea and Venezuela are concurrent, but not convergent, strategic losses. Iran and North Korea are “convergent” losses- two enemies who are both edging closer to being possessors of nuclear weapons (*North Korea’s explosion of a supposed nuclear bomb last year does not prove its ability- as the bomb may have been conventional-purchased- or a partial failure), capable of delivering those weapons. Iraq, Afghanistan, Georgia and Venezuela are geo-political military losses. “Limited” efforts to win wars and geo-political showdowns are yielding clear results- failure. America’s military is being stretched to its limits with Iraq and Afghanistan, the current financial crisis threatens the ability to America to fund its military at current levels, and the balance of global power is ebbing away from America. With a loss of financial clout, government budgets will be sapped by insolvent banks, and the geo-political losses mentioned above, will make it all the more difficult for America to remain a world leader, instead, leading to a multi-polar world as Russian Prime-Minister, Putin, recently talked about. There were people talking about America’s decline- overall as a world power, back in the 80’s and 90’s- they were dead wrong. Now a sustained erosion of American geo-political power is occurring after eight (8) years of incompetent leadership of George Bush.
Iraq seems to be passed any hopes of saving since politically, we are destined to withdraw (Obama) or sustain an eventually small but fortified force to prevent a total radical takeover of the country (McCain). Victory in Iraq was attainable before the surge, with the application of a much larger force, a force which would have required a military draft or stepped up efforts of obtaining recruits and paying for more mercenaries. The allied forces of 140,000 troops simply weren’t enough, and Bush made a terrible mistake of playing the middle ground- afraid to withdraw, thus allowing radical forces to take over in Iraq, or- admitting that the size of forces to win in Iraq was grossly underestimated by Former Secretary of Defense Rumsfeld. An immediate increase of troops to 400,000-500,000 troops was clearly necessary to win and HOLD- territory in Iraq, until such time that economic stability could be restored and a new “appointed” government could assume power over time. The theatre in Afghanistan is a repeat of Iraq, the U.S. and its NATO allies not committing the resources to achieve sustained victory, but instead, a politically influence middle-ground of limited forces which achieves no lasting victory.
Those are two direct battle grounds being lost to the enemy- where, with simply a larger force and a President with guts would attain the quick victories Bush thought he had in the beginning. Bush’s reaction to play the safe middle ground of limited resources for wars seem to reflect the mentality that made him “run” from his Vietnam war combat obligations to the safety of the national guard.
The “indirect” battle ground of Georgia was a humiliating loss for America. The Georgian forces were being trained and supplied by the U.S. and Georgia’s army had almost 200 tanks at their disposal. With the Russian offensive to take back Ossetia and Abkhazia the Georgian army ran away as fast as they could, not even stopping to secure or evacuate its citizens. As this author has spent many years under shelling and open armed conflict, I’ve never seen trained soldiers run away as fast as the Georgians did as when the Serbian militias ran away from the Croatian offensives in the Krajina’s in 1995. The Georgians didn’t even attempt to fight back, but just ran away, making years of American training and spending almost 7% of the GNP on the military- a terrible waste. The flipside of course, was giving more impetus to Putin’s recent comments about a “multi-polar” world.
The U.S. is also loosing North Korea, as they have started their reactors once again and rebuilding the destroyed water cooler required to make plutonium. This week they will test fire several missiles- the means to deliver nuclear weapons.
Venezuela’s Chavez has been taking advantage of the “multi-polar” environment by recently looking to Russia as an important ally. Chavez will host Russian naval ships visiting Venezuela, and intelligence seems to indicate that Chavez will be a major Russian arms buyer and could seek missile and nuclear technology from a willing Russia.
The Bush Administration went from a tough talking cowboy, Iraq invading neo-con phalanx to a wet noodle, loosing wars on all fronts and plunging America into a financial meltdown. A new administration must reconstitute American power by vastly increasing U.S. conventional forces- troop levels, as well as a diplomatic offensive of speaking to our enemies- North Korea, Iran and Al Qaeda- directly- who but your enemies to you speak to ? This author is afraid that Obama is offering only the diplomatic tool but will shun the idea of actually increasing our conventional forces ( in itself a giant mistake by the Clinton administration during the drawdown after the Cold War) and McCain will not have the mandate to increase the size of the military. With this in mind, it seems the only conclusion can be that the near term will see a continued decline in American world power and ever more states seeking to challenge the U.S. to obtain regional power- Iran, Russia, Venezuela and China.

The Problem with Blogs

Blogs are meant to deliver a unique perspective; one that you can't find already in popular media. After extensive reviewing of blogs similar in nature to this one- news, this author found that most of them really suck ! Why ? Most of the blogs- that you can check yourself from the Wall Street Journal blogs- to the Yahoo news blogs- merely repeat what was in the news today without offering some unique perspective or spin. Many other blogs in this genre give opinions- but little analysis, and when they do attempt to give analysis or solutions- they use the often used general vague recommendations : Our congress needs to take immediate actions on the financial crisis - what ? yes ofcourse- but tell us WHAT actions you think they need to take. So, we shall continue to endeavor to keep you as readers by giving you hard details- not fluffy vague generalizations. Thanks.

McCain three steps behind Luko News Review

Back on October 05, 2008, (see our story below of 05 October, "Feds missing crucial element to solve credit crisis" Luko News Review highlighted a key missing element of the Fed bailout program- shoring up home prices by keeping distraught homeowners in their homes !

Today three days later, McCain, as reported by AP- took Luko News Review's advice !


McCain would buy bad homeowner mortgages

Oct 8 02:46 PM US/EasternBy JIM KUHNHENNAssociated Press Writer

"I would order the secretary of the Treasury to immediately buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes—at the diminished values of those homes—and let people be able to make those payments and stay in their homes," he said

It's my proposal," McCain said. "It's not Sen. Obama's proposal. It's not President Bush's proposal WRONG- Senator McCain- it was Luko News Review's proposal first !

Sen. McCain believes this is exactly the right kind of policy," Holtz-Eakin said. "Provide direct help to homeowners; at the same time, support the financial markets and keep them from further damaging the availability of credit to Main Street America, one of the—the real threats to the economy at this point in time
AP

Keep your eye on Luko News Review for news- 3 steps ahead of our leaders !

GOLD 2000

Yes, we will see gold at $2,000 per oz within the next 90 days if the financial crisis does not stabilize. Hot money is looking for a safe haven, for foreigners it seems to be the U.S. dollar, for U.S. investors it’s going to be gold. Other commodities, including the recently run up oil commodity, are items which do not sell well in times of economic decline, as their industrial use will be limited as sales go down. So, money which is being pulled out, at a tremendous rate in the U.S. stock market will flow into gold. In other times, minus the financial meltdown, a lot of hot money would flow into cash accounts- waiting to see where to invest- but in this case, your bank is the last place to park cash. Buy gold !

America’s nuclear policy towards Iran

A major policy and effort of the current administration is to stop Iran from producing nuclear weapons (The Bush Doctrine that Sarah Palin was unaware of)
When a superpower makes major foreign policy and wishes support from the world community, that policy needs to be legitimate and credible. The current nuclear policy on Iran is not legitimate nor credible. Here are the reasons: Superpower- or in the case of the United States, hyperpower, policies need to be somewhat fair in its application, otherwise, it’s merely a hegemonic move against a weaker country. America’s aggressive efforts to halt Iran’s nuclear program and its assumption that Iran is acquiring nuclear weapons is not based on a consistent policy of nonproliferation. America’s close strategic partner in the Middle East, Israel, is known to possess upwards of 100 nuclear weapons, yet, no sanctions or efforts on the part of the U.S. to remove those weapons or pressure for Israel to join the Non-Proliferation Treaty (NPT). For the same reasons it says Iran cannot be allowed to possess nuclear weapons, the same should equally apply to Israel. (although this author is not necessarily against Israel possessing nuclear weapons and Israel is not a signatory to the NPT.) Pakistan, a strategic partner of the U.S.in its fight against terrorism, has exploded a nuclear bomb and possess at least several nuclear warheads, yet again, America is not using the kind of world sanctions and pressure brought to bear against Iran to force Pakistan to join the NPT. Pakistan is an ally and not a signatory to the NPT. India, although not a strategic ally of the U.S., is a growing economic partner of the United States, where again, India has exploded a nuclear bomb and is stockpiling nuclear weapons.
India is not a signatory to the NPT, yet in light of India’s nuclear weapons program and stockpiling- America is not taking an aggressive stance for India to either join the NPT or quit its nuclear weapons program.

Another major reason that the U.S. policy against a nuclear armed Iran is not legitimate is that in part, it’s America’s fault that the Iranians sought nuclear weapons. During the first Gulf War, the U.S. made clear In no uncertain terms- that if Iraq used chemical weapons against U.S. troops, the U.S. WOULD respond with tactical nukes against Iraq. That was a violation of the NPT since Iraq’s possible attack with non-conventional weapons- chemicals- was not supported by a nuclear state (a technical provision of the NPT). So many countries- or as the administration wishes to classify as “rogue” states- are clearly responding to an America that is using its nuclear monopoly to threaten non-nuclear states in cases where the very existence of America is NOT threatened.

Iran is a signatory to the NPT, and so far, it’s not been proven that they have committed any major violations of the treaty. America’s own NIE- national intelligence estimate last year concluded that Iran had halted is weapons program. In addition, as late as 2007 the International Atomic Energy Agency (IAEA) confirmed that there was no evidence of Iran making nuclear weapons. But this article is not to argue that Iran is or is not making nuclear weapons or violating the NPT of which it is a signatory. It is to argue that the reasons for Iran acquiring a nuclear weapon are due to inconsistent application of the NPT, America’s own violation of the NPT and America’s threat to Iraq and North Korea- indicating even more so to non-nuclear states that only nuclear weapons may provide a deterrent to possible U.S. nuclear or conventional attacks upon them.

Nuclear weapons, possessed by the few countries that are allowed to possess them by the NPT, should state clearly that they are weapons for deterrence or as a last resort to save their nations from utter destruction- nothing less. However, since France, the UK and the USA have all threatened at one time or another, the use of their nuclear weapons short of facing complete national destruction- they created nuclear utilization policies which were not soley for the prevention of national annihilation. It made “operational” the tactical use of nuclear weapons- making nuclear war- a usable and viable military operation which is not just for national salvation. It allows the nations that legally possess nuclear weapons to use those weapons to bully non-possessing nuclear states. This is the very reason for non-possessing states to obtain nuclear weapons at all costs. The NPT states have agreed in the past not to threaten to use their nuclear weapons against non NPT states unless themselves threatened by a nuclear attack or a non-conventional attack supported by a nuclear possessing state. The current administration wishes to stress to Iran its requirement to adhere to the provisions of the NPT, while it breaches the treaty itself, i.e. the treaty forbids members to transfer, lend, etc. nuclear weapons to non-possessing states, yet, the U.S. currently does exactly that with NATO allies who are themselves, non-possessing nuclear states. These reasons make America’s nuclear policy towards Iran, illegitimate and hypocritical.

*Many of the same arguments presented in this article apply to Syria and North Korea.

Feds Missing Crucial Element to Solve Credit Crisis

The Federal Government has signed the 700 billion dollar bailout package, but as one reads about the bailout, and, all the commentary on the most popular news and financial web sites, they are missing a crucial element to solving the credit crisis. The bailout plan does not include a massive program to keep homeowners in the homes being foreclosed on. Both financial analysts as well as the Federal Reserve seem to offer the solution as: more of the past ! increase and loosen up credit- grease the credit wheel- get credit out to the consumers ! What ? This is exactly what got us into this mess, loose credit to consumers and investors who could not afford to pay it back unless home prices continued to rise- a veritable pyramid scheme. As long as cash flowed into the housing market, prices went up, people and investors then took out loans they could not afford because they planned on flipping those properties, thus, they planned to service those loans for only a short time until they realized huge capital gains on the sale of those properties. Now that the bottom has fallen out, because home prices in too many locations around the country exceeded what the majority of new home buyers could afford, sales slowed down which in turn, stopped the upward spiral of home prices, the Pyramid collapsed ! We need a massive effort to stem the supply of homes coming on the market as this is applying downward pressure on home prices. Yes of course availability of credit to credit worthy buyers is needed, but, the huge supply of homes on the market can’t be sopped up by a few new buyers, but rather an immediate halt to forcing home owners out of their foreclosed homes needs to be implemented. Home foreclosures of late 2007 and into the new year may total over 3 million and more. This is not to say that banks “can’t” foreclose on homes, but rather, evicting the homeowners should be halted, while given new soft terms on a temporary basis. This adds two much needed and valuable elements, first, it keeps millions of loans off the non-performing loans list and second keeps millions of people in their homes. In this case, you keep families intact, neighborhoods kept up since they are not blighted by dozens of unoccupied homes, it gives an incentive to home owners to abide by the new softer terms until they can comply later with the former note terms and keep the home out of final foreclosure, it keeps most importantly- millions of homes not only off of the home market- but these homes would otherwise be auctioned and dumped at very low prices- depressing the housing market even further by leaps and bounds. Some may say this is rewarding people’s bad economic decisions- yes it is- ! but America’s economic and financial system is not cut and dry, it’s not black and white. When you have a foreclosure rate of 0.5-1.2% it does not affect your overall home price index nor the solvency of banks, but when, for whatever reason, foreclosures begin to climb over 3% and could head to 5% or more- then- you get a collapse in the market which leads to financial banking disaster. In this case, there isn’t much choice but to take the measures needed to prevent a financial and banking meltdown.

Let's Start

LUKOREVIEW blog will comment and analyze major news of the day, both domestic and international.