Brad's Economy vs Politics Blog

A Unique Insurance Policy That Soars During Chaotic Times

noreply@blogger.com (Brad Hunter) — Wed, 02 Feb 2011 23:05:00 +0000

A Unique Insurance Policy That Soars During Chaotic Times

By Matt Badiali, editor, S&A Junior Resource Trader

Wednesday, February 2, 2011

In early 2010, I introduced DailyWealth readers to the idea of "oil insurance."

You see, a majority of the world's largest oil deposits are located in the unstable Middle East. Any major disturbance there – like a shooting war in Iran – will cause the price of oil to skyrocket.

Since oil is a major cost for many different kinds of businesses, big price spikes can damage earnings and drag down an investment portfolio. Of course, they also cause the value of safe crude oil assets to skyrocket in value… assets like the Canadian oil sands.

That's how oil insurance works.

As I wrote in March, the Canadian tar sands are one of the world's greatest, safest oil deposits… second only to Saudi Arabia's reserves.

The latest estimates put the recoverable reserves here at 170 billion barrels. This huge store of oil is located in a safe, stable country… just a pipeline ride away from the world's most voracious consumer of oil. And while most Americans believe we are addicted to Middle Eastern oil, we actually import more oil from Canada than we do from Saudi Arabia.

So how has the "buy Canadian" oil insurance idea done? Take a look…

This is a chart of Suncor Energy, a $65 billion world leader in tar-sand oil. When large investors want to make a pure play investment in the oil sands, they usually turn to Suncor. S&A Resource Report readers are up 43% on the stock in less than a year.

And while most of our gains are due to the uptrend in crude oil, our Suncor oil insurance policy jumped 7% in response to the uprising in Egypt. In other words, it behaved just as I expected.

As you can see, with the threat of political upheavals in Africa and the Middle East… and with the constant threat of the U.S. government debt leading to debasement of the U.S. dollar… it's essential to own assets that can actually thrive during periods of instability. That means owning plenty of gold and silver bullion, and stakes in vital oil and gas fields located in safe, stable countries.

Daniel Yergin got the name for his definitive history of the oil industry, The Prize, from a geologist's claim many years ago that Middle Eastern oil is "the single greatest prize in all history."

The Canadian tar sand deposit is the single greatest prize in North America. As you can see with Suncor's Egypt bounce, buying stocks operating in this area at the right price is – and will continue to be – one of the greatest forms of wealth insurance in the world.

Good investing,

Matt Badiali

P.S. Suncor has enjoyed a huge run in the past few months, so it's a little expensive for new buyers. There's a much, much better deal in the oil sands right now… A quirk in the Canadian tax law system has created an incredible way to cheaply buy a stake in a massive tar-sand deposit.

While most Americans have no idea this stock exists, it's by far the safest and best way to own a share of the Canadian oil sands… and to start collecting a solid dividend.

Brad:-)

ObamaCare Faces Supreme Court Defeat

noreply@blogger.com (Brad Hunter) — Wed, 02 Feb 2011 20:38:00 +0000

ObamaCare Faces Supreme Court Defeat
by Michael A. Robinson

Dear American Wealth Underground Reader,

I can honestly say you heard it here first. Of course I am writing about the thrilling – and common sense – decision by a Florida federal judge to strike down ObamaCare as unconstitutional.

Clearly this is a momentous decision in favor of American liberties that protect us from an overzealous federal government. And why is this important for investors?

Because without constitutional restraints, a federal government drunk on its own power can do virtually whatever it wants to with your wealth.

After all, it took a total rout of the Democratic party last November to get Congress to extend the Bush tax cuts and temporarily fix the alternative minimum tax that threatened to pose a financial strain on millions of American families.

This ruling should serve as a wake-up call to all fiscal liberals and to President Obama in particular. Oh yeah, and their media lapdogs.

Unfortunately, I seriously doubt that will occur. Indeed, when I predicted last March that ObamaCare would be declared unconstitutional fiscal liberals snickered.

Of course they did. They've shown total disrespect for the bedrock of our freedoms – the U.S. Constitution.

If that weren't true, then why did former House Speaker Nancy Pelosi and her cadre of limousine liberals shove healthcare reform down our throats along strictly partisan lines?

I have said from the beginning this ill-considered, poorly written, bureaucracy-building law cannot stand.

Consider that no law of this scope or magnitude has ever passed without bipartisan support. As financial failures go it's hard to top Lyndon Johnson's Great Society program. But at least it had strong Republican support.

Do Americans really want to be governed by a federal phalanx created through legislation no member of Congress actually read? Trust me on this folks, any law that's 2,500 pages long and that was adopted unread has lots of hidden booby traps.

If you support ObamaCare stop and ask yourself this question: If Republicans gain a supermajority of Congress next year should they be allowed to force all adults to buy and carry a Smith & Wesson revolver?

Why not? They certainly could argue that self-protection enhances interstate commerce by cutting down on crime.

Now we find Mr. Obama laying 5-4 odds his signature "achievement" will survive scrutiny by the U.S. Supreme Court, which will almost certainly take up the matter.

Mr. Obama is betting he can convince Justice Anthony Kennedy, who is often the high court's swing vote, to side with the president's poor legal reasoning.

We know this is true because the Obama administration immediately said it would continue to implement the healthcare reforms despite the fact the federal judge struck down the entire program.

The time has come for Mr. Obama to shed his arrogance and abandon his liberal idealism so the nation can move forward. Will America really be well served for two more years of political wrangling over a deeply unpopular law?

The U.S. House has voted to repeal ObamaCare. More than two-dozen states sued and beat the pants off the president in court.

Senate Republicans show no signs of backing down from their attempts at repeal, the first round of which was scheduled to occur around deadline today.

They seem like a pretty determined bunch to me. I predict they will continue slipping repeal amendments into as many bills as possible for at least the next two years.

Meantime, the Obama administration is quietly letting dozens of employers opt out of the healthcare program. And why, you might ask?

Because, ironically, the president's opponents are correct: ObamaCare is simply too expensive and has too much red tape.

Let me close by with another prediction. The Supreme Court will eventually take up ObamaCare and will strike it down by a 5-4 vote. And for a very simple reason: It really is unconstitutional.

Good luck and happy investing,

Michael A. Robinson
Editor, American Wealth Underground

Brad:-)

Gerald Celente Trends

noreply@blogger.com (Brad Hunter) — Wed, 17 Feb 2010 07:18:00 +0000

Gerald Celente Trends

Gerald Celente we have the skills and the inventive capacity to start a renaissance , Quality is going to be the keyword

Posted: 16 Feb 2010 05:53 PM PST

Gerald Celente on Engineer.netwe can still become the strong and productive nation that we were in the past

Smart is going to be the keyword says Gerald Celente talking with the engineers at www.engineer.net , necessity is the mother of invention , we do not need stadiums that collapse bridges that last 50 years , engineering in this country has gone low quality with so many other things ...This is a new era only the greatest are going to be able to make it , quality is going to rise to the top , people are going to be forced to be using their brains rather than thinking about the bottom line , this is going to be a glorious future a renaissance 'Alla Roma Antica '

Gerald Celente is a respected media commentator on business and consumer trends in the US, and publisher of The Trends Journal. His presentation aims to help exporters understand the key global niche markets they should be designing new products and services for, and signal what the key business and consumer trends will be. The Trends Research Institute is on record as accurately forecasting many major social, economic and political trends. such as the dot.com crash, the rise of gourmet coffees and organic foods. They are currently predicting a rise in 'simplicity hip' for the average US family with downsizing in cars,houses and extravagances but a strong requirement for quality products that reflect personal styles and which are simple, reliable and can be repaired – not trashed – when broken.
Trends Expert Gerald Celente is also known as Dr Doom and the Nostradamus of Modern Times , Gerald Celente is regarded as one of the foremost trend predictors in the world. This author of Trends 2000 and Trend Tracking, and publisher of The Trends Journal, is frequently a guest on television news and talk show programs. The New York Post said "if Nostradamus were alive today, he'd have a hard time keeping up with Gerald Celente." Subscribe to the Trends Journal >>>

Following are Gerald Celente's Forecasts for 2010: · The Crash of 2010: The Bailout Bubble is about to burst. Be prepared for the onset of the Greatest Depression. · Depression Uplift: The pursuit of elegance and affordable sophistication will raise spirits and profits. · Terrorism 2010: Years of war in Afghanistan and Iraq and now Pakistan have intensified anti-American sentiment. 2010 will be the year of the lone-wolf, self-radicalized gunman. · Neo-Survivalism: A new breed of survivalist is devising ingenious stratagems to beat the crumbling system. And, they're not all heading for the hills with AK-47's and pork & beans. · Not Welcome Here: Fueled by fear and resentment, a global anti-immigration trend will gather force and serve as a major plank in building a new political party in the US. · TB or Not TB: With two-thirds of Americans Too Big (TB) for their own good (and everyone else's), 2010 will mark the outbreak of a "War on Fat," providing a ton of business opportunities. · Mothers of Invention: Taking off with the speed of the Internet revolution, "Technology for the Poor" will be a major trend in 2010, providing products and services for newly downscaled Western consumers and impoverished consumers everywhere. · Not Made In China: A "Buy Local," "My Country First" protectionist backlash will deliver a big "No" to unrestrained globalism and open solid niches for local and domestic manufacturers. · The Next Big Thing: Just as the traditional print media (newspapers/magazines) were scooped by Internet competition, so too will new communication technologies herald the end of the TV networks as we know them.

This posting includes an audio/video/photo media file: Download Now

Get in now - get a 10 million mailing free...

noreply@blogger.com (Brad Hunter) — Sun, 14 Feb 2010 18:14:00 +0000

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-----------------------------------------------------

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:-)

Taipan Daily: Do you know how to use the new "Direct IRAs"?

noreply@blogger.com (Brad Hunter) — Sun, 14 Feb 2010 17:21:00 +0000

Dear Taipan Daily reader,

You're probably not aware of this, but there is a small fraction of Americans who know how to use "Direct IRAs" to potentially build retirement fortunes flat-out faster and better than ever before. I'm talking about amounts like $300,000, $400,000 even $500,000 or more added to your retirement portfolio with relative ease.

"Direct IRAs" have been around for years... except they've been deliberately hidden from you. But Editor Kent Lucas of Safe Haven Investor is blowing the whistle on the network of secrecy deep inside Wall Street. In his report, which I've included in this e-mail, you can read all about "Direct IRAs" and how they can help you add tremendous amounts of money to your retirement portfolio.

Please read his report and then let us hear from you as soon as possible.

Sincerely,

Sandy Franks
Executive Publisher, Taipan Daily

Wall Street Outraged
Over New "Direct IRAs"

They sidestep overpriced brokers and
blow away conventional retirement plans
with returns of 2,300% or more...

"Want to make your broker mad? Want to buy stocks without paying a commission? Want to make money in your spare time? Consider ["Direct IRAs"]."

-- CNNMoney

Dear Reader,

If everyone in America knew what I'm about to tell you, money-hungry brokers and crooked investment banks would be out of business by the end of the month.

Those greedy fat cats would be trading in their Bentleys for bus passes...

Moving from their McMansions to studio apartments...

Canceling their steakhouse reservations and heating up a Cup o' Noodles instead.

Why?

Because the new "Direct IRAs" I'm about to reveal to you allow an exclusive segment of American investors to cut these glorified middlemen completely out of the picture...

And if you give me just five minutes of your time right now, I'll make YOU part of the small fraction of Americans who know how to use "Direct IRAs" to potentially build retirement fortunes flat-out faster and better than ever before.

I'm talking about amounts like $300, $400, even $500,000 or more added to your retirement portfolio with relative ease.

You see, once you're freed from the needless junk fees and transaction restrictions that plague corrupt mainstream investing, you could end up with more money in your pocket -- so you can keep living the good life longer.

The money-grubbing suits up and down Wall Street will do anything they can to keep YOU from finding out about "Direct IRAs."

So far, they've been successful in keeping it under wraps from nine out of 10 American investors...

According to Moneypaper, "Direct IRAs" are (for the moment)...

"... The best-kept secret on Wall Street"

All thanks to one government regulation that lobbyists for the investment banking industry no doubt cooked up to bury this secret moneymaker from the public:

Currently, the SEC actually forbids companies from advertising their participation in "Direct IRAs" to anyone besides their shareholders.

Why do you think that is?

MarketWatch explains it best:

"Most people haven't heard about them for one simple reason... Because brokers and fund managers can't sock you with big fees and commissions... So they won't tell you the 'best-kept secret' and they've made sure Congress and the SEC keep it a secret too."

And they're doing a great job of it. Believe it or not, it's estimated that out of the 45 million Americans who invest in today's markets, only 5 million actually are aware that "Direct IRAs" even exist.

That means 89% of the investing public is losing huge chunks of their retirement savings to insanely inflated bank fees and commissions simply because they don't know any better...

But it doesn't have to be that way.

The "Direct IRAs" I'm going to tell you about have been proven to deliver gains of as much as 2,300% or more... far outpacing the average returns of conventional Roth IRAs or 401(k) plans... straight from blue chip companies themselves.

And the best part about them is -- their returns, which could top $500,000 or more, can start with as little as $60.

"Direct IRAs" are simply:

Easier to use...
Quicker to deliver...
And far more effective in helping ordinary people just like you retire sooner and better off than they ever dreamed possible.

Take people like Carol and Charlie Urban, for instance.

Charlie, a retired school bus mechanic, was watching his retirement account flip-flop back and forth for decades. Carol stayed home taking care of their five kids.

On the surface, life was good...

But Charlie knew that simply funneling a portion of his paycheck into a stagnant retirement plan every two weeks wasn't going to cut it if the two of them wanted to eventually live comfortably in their golden years.

Not to mention, the valuable funds he was losing to the unending fees his money manager was charging him...

"[Direct IRAs] over time can substantially boost returns."

-- Forbes

Then one day, one of Charlie's co-workers mentioned the success he was having with a "Direct IRA."

Never having heard of "Direct IRAs," Charlie was naturally skeptical. But going off his friend's advice, he decided to take $100 of his hard-earned money and start one of his own.

Today, his "Direct IRA" is worth around $334,000... and counting.

And he didn't have to shell out one cent upfront beyond that initial $100, PLUS he doesn't pay one red cent to any "professional" retirement planner either.

This isn't an isolated incident. Millions of Americans -- once they find out about "Direct IRAs" -- are dropping their old-fashioned retirement plans...

And rest assured, these people who are building their retirement fortunes faster and higher than they ever thought possible are NOT risking their nest eggs on some shady fly-by-night outfits either.

Quite the contrary. "Direct IRAs" are available through rock-solid blue chips like Coca-Cola, Home Depot, BP, Toyota, Johnson & Johnson, Wal-Mart and more.

Meaning your risk is utterly minimal -- but your potential reward is off the charts.

Let me show you what I mean...

America's Best-Kept
Retirement Secret -- Revealed

If you've got a moment, sit down, call your broker and ask if he can set you up with a "Direct IRA."

Chances are they'll either play dumb, have another (more important) call come in, or just flat-out hang up on you.

That's because they don't want to risk a cent of their "hard-earned" commissions by telling you how to build your retirement by buying stock directly from companies themselves, rather than through him.

It's the same reason the SEC won't allow those companies to tell you about "Direct IRAs" either.

You really think they're going to risk ticking off the big investment houses by advertising a way for you to avoid putting more money in their pockets?

The usual suspects down on Wall Street are all keeping this news under wraps... and that's a shame, because:

"[Direct IRAs] are a great way to invest dollars... create a long-term savings plan and build a retirement portfolio of solid blue chips," according to The Wall Street Journal.

Consider this:

If, back in 1985, you had invested $10,000 in the S&P 500 index as part of your retirement plan and not touched it for the next decade, you would have ended up with $29,150 at the end of 1995.

And consider this:

If, back in 1980, you'd bought $10,000 worth of stock in a company that paid you a healthy 6% a year PLUS a nice 3.5% dividend to boot, and simply held that stock in your portfolio for the entire 30 years you would have ended up with $76,764 today.

Not a bad return on your investment... but check out what you could have made if that same company offered a "Direct IRA" program for you to invest your $10,000 in instead.

With the same return and dividend being paid on the stock, but with the "Direct IRA" program in place for you... today you'd instead have a $145,756 cash infusion coming your way.

In other words, the slightest difference in your retirement planning could have meant an extra 89% gain in your pocket!

And that's without having ever added a single cent to your original $10,000 investment!

If you'd continued to add to that investment year after year and held over an even longer period, your $10,000 "Direct IRA" could have transformed into hundreds of thousands of dollars.

After all, check out what a contribution of just $100 a month on top of your original 10 grand would end up netting you with several companies' "Direct IRAs":

Reynolds American's "Direct IRA" would have accumulated as much as $38,154...
AT&T's "Direct IRA" would have handed you retirement savings of as much as $99,324...
Pitney Bowes' "Direct IRA" would have padded your retirement account with as much as $122,189...
Progress Energy's "Direct IRA" would have built your portfolio up as much as $108,413...

And amazingly enough, if you had just contributed a paltry $1,200 a year ($100 a month) -- less than the amount many Americans waste on brokers' fees annually -- Home Depot's "Direct IRA" would have sent your retirement nest egg skyrocketing as much as $504,411.

Today I'm going to introduce you to three of the absolute BEST "Direct IRA" opportunities in the world today.

These "Direct IRAs" have returned as much as 2,300% to their holders over the years, and they're as strong today as they've ever been.

And in just a moment, I'll tell you how to receive all the information you need to enroll yourself in these untouchable plans.

Hundreds of Thousands
in Retirement Riches...

Despite the intense secrecy Wall Street has worked so hard to veil over "Direct IRAs" in order to save their bottom line, many savvy Americans have been using them for years in order to achieve their retirement dreams.

Take someone like Maxwell Buckley, for instance...

Max works as a pharmacist at a local grocery store in Springfield, IL. He's 45, single, owns a home and makes a decent living.

But he doesn't want to be filling prescriptions until he's 80. And if he'd chosen to stick with a traditional retirement plan, that's almost certainly what he'd have to do.

Fortunately, a person like Max Buckley chose a different route. A route that saves him money, gives him the freedom to pick and choose what companies he builds his retirement with, and ends up outpacing traditional plans by a country mile.

Max started his "Direct IRA" through Wal-Mart, one of America's most successful and rock-solid business titans.

He chose wisely too, because even as the retail sector has suffered over the past few years with people spending less... Max's Wal-Mart "Direct IRA" has still been building his retirement fortune fast and furious.

Contributing only $100 a month over the last 25 years to his "Direct IRA" through Wal-Mart, Max has seen his nest egg grow to $213,000.

And an amazing $183,060 of that amount is PURE PROFIT for him.

That's right, Max was able to add over $183k to his retirement savings by only contributing a paltry $100 a month. Not one cent more.

He didn't have to empty his savings account and start out with a huge initial investment of thousands...

That's the incredible thing about how much money these little-known retirement gold mines can make you... that you pay almost next to nothing out of your pocket to make it happen!

What it all ends up meaning is that Max spends way less time worrying about when and how comfortably he's going to retire...

And instead enjoys his weekends building model fighter planes -- a hobby he'll be able to continue long into his golden years.

But what if Max had NOT chosen Wal-Mart's "Direct IRA" profits -- and instead simply contributed to his employer's 401(k) plan? What kind of return would he have seen instead?

Well, consider this: Even in the best of times, the most common types of 401(k) plans have averaged the following:

Money Market Funds: 4% a year
Bond Mutual Funds: 8% a year
Stock or Equity Mutual Funds: 10% a year

Max's "Direct IRA" has given him a total return of 611% so far...

He didn't need to pay a huge fraction of his savings to a broker or bank either. He kept all of it for himself!

And in just a moment, I'll present to you three "Direct IRAs" you can enroll in right now... one of which has returned over 2,300% to its holders over time.

Think about the returns your account is seeing right now, and what a 2,300% gain on your retirement contributions could do for you instead.

That's what someone like Carmen Gioso had to think about back when she started her own interior design business at age 30 in the picturesque town of Collingswood, NJ.

Being a small-business owner, and not having access to a corporate 401(k) plan, Carmen knew it was up to her to decide her own retirement destiny.

That's why in the late '80s she decided to invest in "Direct IRAs," taking advantage of one offered by cleaning giant Clorox...

Carmen's been a bit more aggressive contributing to her "Direct IRA." She takes $150 out of her paycheck every month to put toward it.

But boy, has it paid off. Today, after just over 20 years, with hardly any work, hardly any upfront investment and NO nickel and diming by greedy brokers, her "Direct IRA" account balance sits at $169,461.

Meaning her $150-a-month contributions have produced $130,311 in profits for her!

Carmen is now so confident in her future retirement plans, she's already starting mapping out the next phase of her career -- a small baking business she calls "Carmen's Cakes and Cookies."

But would Carmen or Max be in the enviable positions they are today if they'd gone the traditional route -- and went through a broker or investment bank for their retirement needs?

How Much Money Could You
Save Cutting Out Brokers?

A quick survey of just the online "discount" brokers shows the following trading fees...

Scottrade: $7 per trade
E*Trade: $8 per trade
ShareBuilder: $10 per trade
TD Ameritrade: $10 per trade if you do it online by yourself... $45 a trade if you have a broker "assist you"!!!

"After one of the most awful years in the history of the mutual fund industry... you might expect fund companies would give investors a break and lower their fees. But just the opposite is true."

-- CBS MarketWatch

And these are the DISCOUNT brokers!

If you're not comfortable executing these orders on your own, and want some assistance by a "professional," the price absolutely explodes.

Never mind what you'd pay if you go to one of the really prestigious investment banks that require an appointment weeks ahead of time...

That could be in the hundreds of dollars.

In fact, investment research firm Morningstar recently conducted a study that shows over the past year, brokerages have raised fund fees in almost every category.

And that's despite those same investment houses losing money hand over fist for nine out of 10 investors over the last year!

What's wrong with this picture???

Forbes states -- "Costs are the biggest problem with [retirement funds]. These costs eat into your return, and they are the main reason why the majority of funds end up with sub-par performance."

Just take a look at the chart below to see what I'm talking about.

See the insane amount of money you end up handing right back over to your broker?

An initial $10,000 into a broker-managed fund over 50 years should end up returning $1.1 million, but only paying 2% fees to that broker every year actually results in your LOSING an incredible $700,000 of that return.

In other words, over half of your 50-year retirement savings goes right into your broker's pocket.

The bottom line is this: Depending on how you're building your retirement, you're handing over a significant chunk of it every time you want to move your OWN money around to try to improve your returns.

Doesn't seem like a very productive way to get where you want to go, does it?

With "Direct IRAs," you never have to worry about throwing money away like this.

Unless you've got tons of disposable income lying around that you don't mind handing to a broker in exchange for a two-minute phone call and some pencil pushing, this is your money you've earned -- and you deserve to see it last...

"... critics of the industry say that... fund companies get away with the fees they charge only because the average investor does not understand what he/she is paying for."

-- Forbes

That's what any average Joe who's worked hard his whole life wants.

An average Joe like Freddy McNulty.

Freddy drove a UPS truck around Madison, WI, for 35 years. He always delivered his packages with a smile and never spent less than half his day laughing and telling corny jokes to co-workers and customers.

But underneath that everyman exterior, Freddy was actually a shrewd investor. He knew he couldn't depend on conventional methods to retire the way he'd always dreamed. And he didn't make a good enough living to throw gobs of money away on broker and transaction fees.

So Freddy opened a "Direct IRA" through General Electric.

Now, because money was tight for him, Freddy was only able to put aside $50 a month for his "Direct IRA."

But that didn't matter one bit. Because he kept steadily adding to it over his entire career, Freddy ended up with a small fortune.

His GE "Direct IRA" is now worth a whopping $397,081.

That means his simple $50 a month ended up netting him $373,131 over the long haul!

Today, Freddy is 61, and lives in Mesa, AZ -- where every spring he heads out to see each and every one of his beloved Chicago Cubs' spring training games.

Just like he always dreamed of...

And it's all possible thanks to his decision to open a "Direct IRA."

But it doesn't always take the span of an entire career to start seeing results with "Direct IRAs."

In fact, you can start early, at a young age, and begin to see the cash start to pile up almost immediately.

Younger professionals across the country can avoid the crisis that's gripping America right now -- and begin planning early retirements with a "Direct IRA."

Young people like Byron Charles, for example.

Byron is a high school basketball coach and history teacher. He's at an age where retirement is still a long way off...

But thanks to some good advice in his 20s, Byron started preparing early.

While playing ball in college, a business professor of Byron's told him about "Direct IRAs" and the advice stuck.

A few years later, when he started receiving his first steady string of paychecks, Byron headed straight for the safety and profitability of these "alternative" retirement plans.

But even though he was making a passable living, Byron still didn't have wads of money to be setting aside for retirement.

So with just $75 a month -- the price of dinner for two at a casual restaurant -- Byron started his "Direct IRA" with a company called Illinois Tool Works.

And after only a few years, he's already seen his retirement savings grow to $55,771.

And $38,596 of that total has come right from his "Direct IRA" returns... NOT from his pocket!

Today, Byron doesn't worry much about the future, because he knows he started early and started smart. In fact, his biggest concern these days is the marathon he's training for this summer!

And while Illinois Tool Works might not be a household name, it's still providing Byron with outsized returns for his future retirement.

That's the beautiful thing about "Direct IRAs." You can participate in them through household name companies like Coca-Cola or Wal-Mart -- or through little-known rock-solid businesses like Illinois Tool Works.

But while I've clued you into some of the companies you can set up a "Direct IRA" through, there are still some that are better than others.

And I've set aside three such companies I think you'll want to start with immediately once you choose to open a "Direct IRA" for yourself.

Here's a brief preview of each one...

The Three Best "Direct IRAs"
for You Right Now

"Direct IRA" Company #1: This global energy corporation has its hands in one of the most lucrative sectors of them all -- oil. And even though oil rises and falls quite often, its "Direct IRA" maintains a massive return throughout.

Over the last 30 years, $80 a month filtered into its "Direct IRA" program would have ended up today handing you a retirement windfall of $298,321... $268,641 of which is straight-up profits...

What other retirement plan allows you to turn $29,680 into $298,321???

"Direct IRA" Company #2: This company is one of the most recognizable brand names in the world, but what most don't recognize is its immeasurable potential to help you secure a lavish retirement.

Starting with as little as $60 this company's "Direct IRA" could have accumulated $564,852 over the last 32 years for those who knew about it.

And remember, that number could go much, MUCH higher if you choose to be more aggressive and up your monthly contribution. The rate at which your "Direct IRA" inflates your retirement account is totally up to you!

"Direct IRA" Company #3: This industry leading health & beauty company will no doubt be familiar to you once you hear it, but thanks to years of Wall Street cover-ups, very few know it offers one of the best "Direct IRA" opportunities on the market today.

In fact, if you had opened up a "Direct IRA" with it 35 years ago and contributed just $100 a month to it over that time, today you'd be sitting on a retirement fortune of $1,090,444!

That's a 2,330% return on your contributions!

Try finding a Roth IRA or 401(k) that'll hand you that...

There's really no point in looking. It doesn't exist. Only a "Direct IRA" can offer you the kind of pure profit power you're reading about today.

And in just a moment, I'm going to tell you exactly how to receive the names of these three companies, plus complete instructions on how to set up a "Direct IRA" with one or all three of them, WITHOUT the help of a broker...

But first, let me take a moment to introduce myself...

A Safe Haven for Your Money Equals
a Retirement That's Second to None...

My name is Kent Lucas.

I'm a proud Harvard graduate with a master's from Stanford.

I've spent 20 years in the finance industry, including seven years managing portfolios for a leading investment firm -- during which I actively oversaw roughly $1 billion worth of assets for some very powerful and influential clients.

I don't tell you this to brag, believe me. That's not my style.

The only reason I'm bringing it up at all is to prove this point...

After two decades of researching the markets for a living -- it takes quite a bit to surprise me.

And I'm utterly shocked at how well Wall Street has kept "Direct IRAs" a secret.

What doesn't surprise me, however, is that they'd be so hell-bent on doing it.

After all, this is their livelihood we're talking about. A livelihood built on charging billions upon billions of dollars in needless junk fees to hard-working folks who are just trying to retire comfortably.

So it's no wonder they're seething mad every time somebody pulls their money out of their hands and moves it over to a much cheaper, much more potentially profitable "Direct IRA."

But guess what? That's not your problem. Not anymore.

Because if you choose, I'll immediately e-mail you a copy of a FREE report I've just completed, titled "'Direct IRAs': The Retirement Secret Wall Street Doesn't Want You to Know."

Inside it, you'll discover:

How to start investing in broker-free "Direct IRAs" with as little as $60
Complete details on how you can use "Direct IRAs" to build the retirement of your dreams
All the information you need on how to get started with the three "Direct IRA" companies I previewed for you
How you could begin accumulating accelerated retirement savings through these three "Direct IRAs" starting as soon as tomorrow morning

It's simple, hassle-free and above all keeps your money in YOUR pocket, rather than in some slick, fast-talking Wall Street resident's.

But look, put all that business aside for a moment. Take the brokers out of the equation and boil it down to the most important thing we're talking about here:

Your future.

You control your own destiny. How do you want to spend your retirement years?

Traveling... spending time with family... relaxing with friends... catching up on all the things you've wanted to do, but never had the time?

Or spending sleepless nights worrying about having enough to pay for groceries and the electric bill... having to go back to work at Wal-Mart or McDonald's... never being able to enjoy the fruits of your working years the way you deserve?

I hope you don't think I'm being melodramatic by asking that.

Because these scenarios are playing out every day in America... and sadly, many retirees are experiencing the latter.

But with a little smart planning, and the help of a "Direct IRA," this most definitely doesn't have to be you. Today you can make the choice -- no matter how close you are to retirement -- to start preparing for a potentially richer one, sooner, with "Direct IRAs."

Here's exactly how to make it happen...

Safety First... Profits Always

It's been a rough couple of years for investors. That's no secret.

But now things finally seem to be turning back around -- slowly but surely.

That's probably why people are constantly asking me how to make money in such a crazy market... how to avoid losing money... and even how to read the market for the biggest gains out there.

More people than I can even begin to respond to...

Of course, there are tons of people out there who are willing to share a piece of their minds about money and investing.

Not so lucky for you, however, is the fact that most of those people have no idea what they're talking about.

And many of the ones that do... the brokers, money managers, retirement planners... I can assure you that a great deal of them DON'T have your best interests at heart.

If they did, why would they be keeping "Direct IRAs" a secret from you?

They do it for the same reasons you scrimp and save and invest so diligently: For THEIR retirements...

That doesn't sound like someone whose mission is to ensure you retire safely, securely and -- above all -- happily, does it?

So the dilemma you're left with is: Whom can you trust?

Who can offer you sound, intelligent research and analysis without the ulterior motive of milking every last cent out of you in return?

That question is exactly why I decided to go to work as the executive editor of Taipan's Safe Haven Investor, an independent financial research service headquartered in Baltimore, MD.

After years of watching people lose money thanks to bad advice from friends and so-called "experts," I decided that writing a newsletter like Taipan's Safe Haven Investor was really what I got into this business for in the first place.

You see, unlike most of the "advice" out there, this newsletter is completely based on helping you keep your hard-earned cash protected in challenging markets like we're experiencing now...

While at the same time giving you the chance to learn about little-known ways to grow your assets far more than what mainstream investors ever get the chance to do...

(And "little known" is exactly the term I'd use to describe a retirement jackpot like "Direct IRAs.")

To me, it all adds up to a very realistic way to grow an investing portfolio AND pocket huge sums of cash along the way.

There's Always a Way to Make Money --
You Just Have to Find It

Throughout my career, I've made it a mission to find the right investment at the right time for my readers.

And it certainly isn't easy.

In fact, it's quite a bit of work. It means two-hour conference calls, sitting in on three-day-long meetings, and sifting through hundreds of financial reports each week...

But all this work pays off. I'm proud that I've been able to steer my readers toward positive returns, no matter what the markets are doing.

Even though the economic climate has been pretty lousy lately, Taipan's Safe Haven Investor readers have still seen some pretty nice gains so far in 2009.

In fact, four of my open recommendations right now have racked up gains of 102%, 117%, 90%, and 118%.

And as I mentioned, those gains are all on current picks -- they still have the chance to go much higher...

PLUS... those four triple-digit winners are all part of the larger Safe Haven Investor portfolio that, as I write, has racked up cumulative gains of 931%!

Now don't get me wrong, those are great numbers... and I'm thrilled I've been able to provide them to my readers. But what I'm writing you with today is so much more than that.

I'm 100% confident that the three "Direct IRA" opportunities I'm ready to send you inside this FREE special report could have the potential to change your financial future forever.

We're talking pure retirement profits that measure into the hundreds of thousands of dollars -- and perhaps even higher, depending on how much you're willing to contribute each month.

This truly could be the break you've been waiting for to finally accelerate the retirement game plan you've been putting off for years.

But the only way you'll receive complete details on each one of these "Direct IRA" plays is to respond to this letter NOW. As with any red-hot opportunity, only those who take advantage before the masses stand to see the biggest gains...

And as retirement becomes a bigger and bigger issue in America -- especially with a whole generation of baby boomers reaching that age -- the secret of "Direct IRAs" can't stay hidden forever.

That's why I'm going to make sure you get this time-sensitive report, "'Direct IRAs': The Retirement Secret Wall Street Doesn't Want You to Know," the minute you respond to this letter.

I want you to have this zero-risk, yet potentially wildly lucrative opportunity in hand seconds after you request it.

I don't believe in dawdling when it comes to the possibility of my readers pocketing a half million dollars or more for their retirement...

Once you have FREE report, you'll know exactly how to take set up a "Direct IRA" of your own -- and most importantly: How you can begin outpacing traditional retirement plans with gains of 2,300% or more.

So, how will this information arrive at your fingertips?

It's simple.

Sign up for Safe Haven Investor -- with zero risk or obligation -- and you'll immediately receive, via e-mail, your Special Report "'Direct IRAs': The Retirement Secret Wall Street Doesn't Want You To Know."

As I've mentioned, this report is absolutely FREE. All you have to do is claim it, with no risk (I'll tell you how to do this in just a second).

It really is as straightforward as it sounds.

Respond to this letter... read the Special Report... watch your retirement savings skyrocket.

It doesn't get any easier than this to potentially make more than half a million dollars, as far as I know.

Now, I bet I know what you're thinking:

"What's the deal here? I'm sure I have to do something to receive this kind of information, right?"

True enough. But if you read on for a moment longer, I'm sure you're going to be surprised at how little I'm asking of you...

One Proven Investment Research Service --
8 FREE Ways to Profit From It

First, I want you to realize I'd never ask you to spend a dime unless it was 100% risk- and obligation-free...

All I ask before I send the special "Direct IRA" report I've promised is that you accept a simple, risk-free trial to my newsletter, Taipan's Safe Haven Investor.

And for simply agreeing to test my service, you'll get a wealth of powerful profit resources:

12 Monthly Issues of Safe Haven Investor -- Each issue is loaded with commonsense market analysis... not to mention stock picks you can use for the opportunity to build your wealth without the risk and uncertainty that usually go along with investing.
FREE Weekly E-mail Updates -- Every week, I'll give you an update on the market's pulse via e-mail, detailing what's happening in the world of money... plus I'll give you current info on my open model positions.
FREE Private Access to Our Members-Only Web Site -- Think of this as your electronic portal into a powerful world of investment opportunities. Safe Haven Investor online gives you easy access to investment updates, special investment articles, and unlimited access to all the research we've compiled over the past several years.
FREE Subscription to Taipan Daily -- Your inbox becomes a virtual ATM with all the FREE financial news you can use to build wealth. These alerts provide expert analysis of global trends, giving you useful information to help you profit on commodities, foreign stock markets, and hard-to-find opportunities that slip past your broker.
FREE Privately Circulated Taipan Insider e-Letter -- You will see firsthand how our publishing group uncovers the many ideas we pass your way, and you'll also learn what our editors think are the most important and pressing economic issues that could impact your wealth.

Most importantly, you'll immediately receive your FREE copy of "'Direct IRAs': The Retirement Secret Wall Street Doesn't Want You To Know," my Special Report revealing the details of the game-changing retirement builder that Wall Street and the SEC are working so hard to keep secret.

It's not every day you get a chance quite like this one.

And for the chance to build as much as $300,000, $500,000 -- maybe even $1 million -- in retirement savings while shelling out less than you'd ever have to in a traditional plan, most people would be willing to pay a boatload...

$1,000... $2,000... certainly even $5,000 or more.

After all, we're talking about enough money to keep you living the good life for literally decades...

However, if you think my newsletter costs anywhere near that, you're going to be shocked at what I have to tell you.

But before I get to that, let me tell you about two bonus gifts I want to give you in addition to everything I listed above.

And all of it for simply agreeing to try my Safe Haven Investor newsletter with absolutely no risk.

Special Bonus #1:
Profit Report: "How to Bank $540,000 Worth of the New World Reserve Currency"

In 1913, seven men -- who collectively represented 25% of the world's wealth -- gathered on a seven-mile strip of land called Jekyll Island off the Georgia coast. Ostensibly, their purpose was a friendly duck-hunting expedition between old friends...

However, not a single duck was shot that weekend.

Instead, this secret alliance changed the world's definition of "money" for the next century.

You see, what came of that meeting was the creation of something you know as the American Federal Reserve -- an institution that's been in power now for more than 95 years.

Today, a similar red herring is on the horizon.

Five men from around the globe will meet -- much like the Jekyll Island Seven -- under the pretense of a routine get-together.

When that meeting ends, the way you think about money will change forever.

Thanks to a high-placed source, we have a pretty good idea what the outcome of this future meeting is going to be.

Those who are in the know and take action immediately stand to be rewarded with the payday of a lifetime.

You could easily walk away with as much as $540,000 -- in one fell swoop -- if not more.

You can learn all the details of how this classified meeting could end up shaking the very foundation of our world's economy inside this special bonus report titled "How to Bank $540,000 Worth of the New World Reserve Currency."

I'll happily send it to you, at no charge, once you become a subscriber to Safe Haven Investor. Just another perk of being a member...

And speaking of perks, here's ONE MORE bonus I'd like for you to have:

Special Bonus #2:
Profit Report: "Cash In With 'Crisis Bonds'"

In 1970, a young Greek-American immigrant named John, fresh off a tour of duty in Vietnam, came home to launch his business career -- and plowed every penny he had into a very special kind of investment.

That investment eventually helped him amass a $1.7 billion fortune and transformed him into one of today's most respected industry players.

In 1990, Kenneth, a recent college graduate -- using the same special kind of investment -- laid the foundation for what would eventually become one of the most successful hedge funds in America.

In 2008, this fund was valued as high as $18 billion.

And as recently as this past November, the former chief investment officer of a major American bank went on a shopping spree -- pouring $17.5 million of his portfolio back into the very same investment.

Guess what? He locked in double-digit returns in the midst of one of the worst months in American financial history.

So why am I telling you these stories?

Because right now, you can get your hands on the same special investment all of these men built their massive fortunes on for less than half its true value!

I call these special investments "Crisis Bonds," and they're specifically tailored to investors looking to both protect their assets AND build their wealth during tough times.

And here's the thing. "Crisis Bonds" aren't just for the ultra-rich either.

Greek-immigrant John started buying "Crisis Bonds" at the age of 28. He didn't have much formal investing education or trading experience. Plus he had very little money to get started...

Kenneth began purchasing "Crisis Bonds" from his Harvard dorm room in the late 1980s. Little did anyone else know that they'd eventually turn him into one of the most powerful men on Wall Street...

These financial geniuses both realized early enough that "Crisis Bonds" are some of the safest and most reliable moneymakers you can ever hope to own. What's more, there's never been a better time to add them to your portfolio.

And right now, you have a chance to grab "Cash In With 'Crisis Bonds,'" the exclusive Special Report I wrote on these stellar investments.

Again, this Special Report is absolutely free. Both of the reports are.

Consider it my "thank you" for agreeing to test my Safe Haven Investor research service.

So how much will it cost you?

You're Probably Going to Be
Shocked When You Read This...

As I said before, most people would be willing to shell out quite a bit of money for hundreds of thousands of dollars in direct retirement returns.

And investment advisory services that actually have a chance at delivering these kinds of gains can cost a good chunk of change -- anywhere from $1,000 to $10,000.

In fact, I personally know people who pay well over $5,000 per year for the same kind of information you're going to get from Safe Haven Investor.

But Safe Haven Investor normally costs just $129.

Astounding, right?

Well, I'm about to make the deal even sweeter.

If you give us the go-ahead to rush you your 8 FREE profit tools today, I'll offer you a very special subscription fee of just $49...

Not only is this 62% off our regular price, but it's far, far less than most people would be willing to pay for a moneymaking opportunity this powerful.

In other words, for about 14 cents per day, I'll give you the same cutting-edge investment information that costs some people over $5,000.

Why am I offering this information so cheap, when I could easily get 100 times more money for it?

Because frankly, I'm fed up with Wall Street's sleazy cover-up of "Direct IRAs."

The power they have to help ordinary Americans live the retirement dreams they've worked so hard to achieve is phenomenal.

Believe me, if the word on "Direct IRAs" were to make it out into the mainstream...

If the SEC actually allowed companies to advertise that they offer them...

Well, those brokers would be out a serious amount of money. YOUR money.

Money you could be using to pay off bills, enjoy your golden years, or to flat-out stop worrying about your retirement.

It's time that more people knew about this. And if I'm the one to get the word out, so be it. I'm not going to charge a fortune for information you have every right to know about anyway.

These three "Direct IRA" opportunities I'm ready to send you are some of the absolute best you'll find on the market today. Believe me, if you're going to open up one (or more) of these fantastic retirement builders, you'll want to start with these three companies.

I'll explain to you exactly why these three "Direct IRAs" are the cream of the crop inside your FREE report. But rest assured these aren't the only great opportunities you'll have headed your way.

With Safe Haven Investor, you'll be connected for the foreseeable future to an endless pipeline of safe and potentially lucrative wealth builders -- delivered right to your doorstep and your e-mail inbox.

Things you won't hear about in the mainstream press... or from your broker either.

I think you'll agree it's a bargain.

But because I want to make this an absolute "no-brainer" for you, I'm going to go a step further to make sure you're absolutely comfortable trying Safe Haven Investor...

So here's your zero-risk, money-back guarantee of satisfaction...

I Give You Not Just My Word -- But Also
an Ironclad Money-Back Guarantee

If at any time during the first three full months -- for any reason -- you are unhappy with your Safe Haven Investor subscription, just say the word...

I'll send you a check to cover every penny of your subscription expense, NO QUESTIONS ASKED.

Yes, you read that right.

Invest on the tips in your three Special Reports...

Pick and choose from the red-hot plays in the Safe Haven Investor portfolio...

Read, print out or save back issues from our archive of past issues...

Enjoy every one of your 8 FREE Profit Tools...

And then -- on the 90th day -- decide whether to let me keep your small subscription fee or not.

Even if you decide to take a 100% refund, you'll keep everything I sent you -- including the urgent information on how you could build retirement wealth in the millions thanks to "Direct IRAs"...

You have absolutely nothing to lose. And I've already proven that your upside on this opportunity is enormous.

But you must move quickly...

This opportunity won't wait, and I'd hate to see you miss out.

$50 a Month Made Them $480,000...

When you think about your retirement consider the two roads you could go down.

You could be 75, living in a meager home or apartment, taking the bus to a minimum wage job at McDonald's every morning just so you can afford your basic everyday needs like food, electricity or medicine.

Or you could use "Direct IRAs" on a company like McDonald's to ensure that you never have to live out this nightmare scenario.

That's what retirees like Anna and William Hanson of Cleveland have done.

Over the course of four decades, Anna worked at the cosmetics counter at Macy's, while William walked a city beat as a police officer.

Sure, they had William's pension to fall back on. But civil servants are always the first to feel the pain when times are tough -- and the Hansons knew that pension would never be enough if they wanted to retire in style.

So with the help of a "Direct IRA" from -- you guessed it, McDonald's -- the Hansons made a bold move to make sure they weren't caught watching their retirement dreams turn into nightmares.

With just a miniscule $50 contribution each month, Anna and William began building the foundation of their future.

A foundation that grew bigger and bigger over the years until today -- when their "Direct IRA" is allowing them to live the life they've always wanted.

Today, as I write this, their McDonald's "Direct IRA" is worth an incredible $480,966.

And the best part is -- over $460,000 of that fortune came directly from McDonald's!

Now Anna and William travel regularly to Pennsylvania and North Carolina to visit their grandkids.

They go on a Caribbean cruise once a year, and they're even considering relocating to the more expensive East Coast to be closer to their family.

None of which they'd have been able to do without the help of their "Direct IRA."

It's easy, it's inexpensive, and best of all -- your money STAYS your money.

It doesn't get nickel-and-dimed away by some corner office fat-cat broker who'll never even take the time to meet you face to face.

No, because "Direct IRAs" do exactly what their name says. Return the money directly to you.

Directly toward the retirement of your dreams.

Now's the time to make the switch and experience for yourself what Wall Street has been trying so hard to keep you from finding out.

Send for your FREE report today...

Cordially,

Kent Lucas
Executive Editor
Taipan's Safe Haven Investor
February 2010

P.S. Remember, you can always cancel your Taipan's Safe Haven Investor subscription at any time within those first 90 days -- not a single question asked. Just call us, and we'll issue you a check right away, and you'll receive ALL your money back pronto.

China and Greece Slam Stocks, Marc Faber's Latest Forecast, Strange Lumber Prices and More!

noreply@blogger.com (Brad Hunter) — Sun, 14 Feb 2010 17:02:00 +0000

5 Min blog | agorafinancial.com | login | contact

February 12, 2010

Retail sales delight… The 5 suggests a reason that should give Pollyannas pause
China and Greece send U.S. stocks tumbling… Why the Greek bailout is looking shaky
Forget "the next Greece"… Faber forecast sends CNBC talking heads into frothing frenzy
A real-world economic stat that actually looks healthy
Readers write: Are the Olympics a boondoggle? Are taxes really going up? Sit back and watch the show…

Bummer. The federal government is back on the job today -- just in time to juice up Wall Street with these retail figures: Retail sales for January rose 0.5% from December -- more than the mainstream consensus expected.

Even better, the numbers weren't particularly skewed by rising gasoline prices. Take away gasoline and auto sales and retail sales rose 0.6%.

Looking over these numbers, we recall a little news that flew under the radar last week. A report from TransUnion revealed the percentage of consumers current on their credit cards but delinquent on their mortgages grew to 6.6% in the third quarter of 2009 -- up substantially from 4.3% a year earlier.

That's a lot of people who can maintain -- or even increase -- their standard of living by staying in their homes for free. Their lenders are only too willing to go along because they don't want to book the losses that would come with foreclosure.

Everyone is happy in this fantasy world.

Alas, strong retail numbers aren't enough to perk up traders this morning. The major U.S. indexes opened down 1.4% because…

The China sneeze play is back in action. For the second time in a month, Beijing has jacked up banks' reserve requirements. Big banks now have to keep 16.5% of their deposits on reserve, smaller ones 14%.

Evidently, the last tightening wasn't enough to slow the growth in either loans or property prices. Once again, U.S. traders assume Chinese domestic demand will collapse, and so will the world economic recovery.

Nor is the news from euroland helping matters.

The Greeks have put Wall Street in a headlock for more than 24 hours now. Let's recap…

Before market open yesterday: Greek debt deal announced, traders rejoice. Futures up
After market open: Traders realize there are no specifics to the deal. Market down
By midday: European Council president clarifies -- the EU stands ready to help Greece, but help isn't actually needed right now. Best of all worlds. Market up
After market close: German Chancellor Angela Merkel let it be known Athens would have to get its own act together and, in the words of the U.K. Guardian, she "brushed aside all questions of financial support." Bummer.

Is Frau Merkel acting wisely? Behold…

Fourth-quarter German GDP figures just came out… and they're flat. Not good after two consecutive quarters of growth. Year over year, the German economy shrank 1.7%.

French fourth-quarter GDP came in better than expected, up 0.6%. The eurozone as a whole grew barely -- 0.1%.

This news sent the euro to a nine-month low against the dollar, at $1.3533. The dollar index in turn is up to 80.75, a seven-month high. For now, as long as the euro looks shaky, the dollar retains its sheen as a safe haven. For now….

The U.S. Treasury auctioned $16 billion in 30-year bonds yesterday, and it didn't go very well. Before the auction began, yields were 4.68%. Afterward, 4.72%. Clearly, buyers are getting more nervous about the notion of going "long America" for the next three decades. The bid-to-cover ratio looked lousy, at 2.36.

Maybe all this talk of who's going to be "the next Greece" is rather beside the point when debt is weighing everyone down -- including the keeper of the world's reserve currency.

"All governments will eventually default, including the U.S.," says Marc Faber -- except for a handful like Singapore that have their debts more or less under control.

This comment drew gasps, first of horror, then of outrage, from CNBC anchors Sue Herera and Dennis Kneale. You can watch for yourself here -- the moment of truth comes around 2:15.

Still, the guardians of the Temple of the Perpetual Bull gave Faber a chance to explain himself. "In the developed world, we have huge debt to GDP, in terms of government debt to GDP and unfunded liabilities that will come due, and these unfunded liabilities are so huge that eventually these governments will all have to print money before they default."

(An aside: if you type Dennis Kneale's name into Google, the first auto-fill suggestion that pops up is "idiot." Seriously. Heh.)

Dr. Faber was one of the most popular speakers at last year's Agora Financial Investment Symposium in Vancouver, and we've just confirmed he'll be back this year as well. There's nothing like seeing and hearing him and his candid assessments in person. Early bird registration is still available. I urge you to book early… make a vacation out of it. Vancouver is very nice in July.

"Like Pandora's box," says our forex maven Bill Jenkins, "what is let out is not so easily put back."

"The widely heralded recovery that we heard about during the closing months of 2009… rising CPI, increases in retail sales, the uptick in home prices and sales, increases in manufacturing, elevations of consumer confidence… it's all completely and fully because of the stimulus that has been delivered -- and it will absolutely require additional and ongoing stimulus in order to continue. However, even with additional doses of money, the outcome is still problematic.

"If the powers that be actually believe that removing stimulus will work, and they continue to attempt to do so, I will tell you now, what they will see is a decline in demand.

"Take my word for it. With the same confidence with which I predicted the massive debt troubles in Europe and the contagion it would become, this too is my prediction for the United States. Sadly, when it comes to adding stimulus, we'll be danged if we do and danged if we don't. If we don't, the economy will tailspin. If we do, it only becomes more apparent that the debt we have racked up has become insurmountable."

A review of the open positions in Bill's Master FX Options Trader shows his readers are sitting on quick gains of 36% and 66%. For access to all of Bill's recommendations, go here.

Meanwhile, dividend hounds are taking note of a proposed takeover in the utility space. Electricity provider FirstEnergy is offering $4.7 billion for Allegheny Energy -- forming a mid-Atlantic powerhouse in four states.

Assuming it gets past the usual regulatory hurdles, this is a big deal to our income investing specialist Jim Nelson. "It would create one of the largest electric utility companies in the country, with more than $17 billion in annual revenue. FirstEnergy also expects an additional $530 million in cost savings in the first two years.

"We are bullish on the utility industry in the long term. This proposed deal marks the beginning of what we expect to be a massive industry consolidation. We could easily see a few of our plays experience the effects of this merger-and-acquisition landscape."

Jim has two companies in mind, already in the Lifetime Income Report portfolio. For access to his full range of star dividend payers, go here.

For reasons we can't quite figure out, the Internet is awash with jobs forecasts for the rest of 2010. Here are a few:

A consensus of 62 economists polled by Bloomberg says unemployment already peaked last October, and will close the year at 9.5%, slightly below the present 9.7%
A consensus of 56 economists surveyed by The Wall Street Journal believes unemployment will fall to 9.4% at year's end
The White House, choosing to be gloomier (perhaps on account of our relentless mockery), is figuring on average 10% unemployment throughout 2010.

The economy needs to add at least 100,000 jobs every month just to accommodate new entrants to the work force. And the White House expects average monthly job growth of only 95,000 for the rest of the year.

Not ones to miss a party, we'll offer our own 2010 jobs forecast: On the first Friday of each month, much like we got this month, we'll learn where the economy is losing jobs, but the unemployment rate will continue to go down… as "discouraged workers" no longer count. Good times.

After a post-credit crisis lull, looks like thefts of scrap metal are back. Someone's removing the brass hardware from plumbing fixtures all over the University of California-Berkeley campus. Total losses to date: $9,000.

For the record, copper is about $3 a pound right now, about 25% off its 2008 high. Zinc is just under $1, still 50% off its 2006 high.

Now for a "real-world" statistic that would make Warren Buffett and James Howard Kunstler giddy.

As you'll recall, the brand-new Pulse of Commerce Index measuring truckers' purchases of diesel dropped like a stone in January. But rail shipments are looking sharp…

This looks especially encouraging compared with two weeks ago, but we caution this number is still skewed by a big increase in auto shipments -- 53% over this time a year ago. Lumber and coal traffic are actually down year over year.

Still, lumber prices stand at a two-year high -- up 60% year over year.

How can that be when home building is in such sorry shape? Turns out production is down by around 30% over the last two years. Supply and demand.

Our short specialist Dan Amoss sees the price spike as a "likely temporary" phenomenon. He tells MarketWatch that "if not for [the] stimulus and housing tax credit, there would be practically zero housing starts in the U.S." You can read more of his comments here. For steps you can take to profit from the slump, you can still take advantage of Strategic Short Report for up to 60% off full price. Here's how.

"I am from Vancouver too," a reader writes in objection to yesterday's Olympic kvetching, "and most of us are proud to host the Olympics and welcome the visitors.

"I also remember 1986, and at the time, the situation was much the same. There was intense opposition to Expo 86 from those who believed the money should be spent on health care and housing for the poor, but after the fair got under way, most of them participated and we lived to see the great benefits to the city. The same seems likely happen again."

"To correct any misunderstandings concerning Olympic costs for the complainers from Vancouver," writes another, "I would like to point out to them that all residents of British Columbia are on the hook for the costs of this fiasco. Just like the Montreal Olympics, we'll be paying for this extravaganza for years to come, yet we in the outback will have to content ourselves with watching events on television (not necessarily a bad thing) with little likelihood of attending in person.

"Already our provincial government is covering some of the costs with reduction in services (already paid for with taxes) and additional fees, increased premiums for health care insurance and cancellations of other services also already paid for through taxation. The whole catastrophe is all about egos, politician's legacies; vanity, vanity, all is vanity. 'Twas ever thus."

"It's not a new tax in B.C.," writes yet another reader, calling foul on someone who wrote in yesterday. "The current provincial sales tax (which has been around my entire life) is being HARMONIZED with the federal sales tax (GST).

"It's impossible to sell tax reform to the public, because they don't understand. When the GST replaced the MST, the GST was called a new tax on the public, but they never mentioned the ending of MST.

"I actually thought your readers were smarter."

The 5: We thought they were smarter, too. Darn. After yesterday's comments, we took a look under the hood: Last year, we brought speakers, investors and thinkers from 22 countries to Vancouver. And all seven continents, as one attendee had come from a "vacation" at the science outpost in Antarctica.

Heh. That's part of what makes the Vancouver event so great. You never know who you'll meet. Just one more reason to carve out space in your calendar and join us this year.

Regards,

Addison Wiggin
The 5 Min. Forecast

P.S. "Chocolate has emerged as an inexpensive indulgence," Alan Knuckman reports keeping an eye on another popular commodity, "along with coffee, that has remained popular during this current economic crisis," he comments in a recent MarketWatch article. Members of Alan's Resource Trader Alert just laid on a cocoa play this week he figures has $3,500 profit potential.

Just three weeks ago, he recommended closing out a play that delivered a 67% gain. If you'd like in on his next recommendation, here's where to go.

Thank you for reading The 5 Min. Forecast! We greatly value your questions and comments. Please send all feedback to 5minforecast@agorafinancial.com

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Taipan Daily: Does China Want a Lower Gold Price?

noreply@blogger.com (Brad Hunter) — Wed, 10 Feb 2010 13:29:00 +0000

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Wed., February 10, 2010

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Taipan Daily: Does China Want a Lower Gold Price?
by Justice Litle, Editorial Director, Taipan Publishing Group

As you have no doubt heard, Beijing is sitting on something like $2 trillion in excess reserves. It's actually more than that. According to Michael Pettit, a noted in-country China watcher, the figure is "pretty close to $3 trillion" depending on how you account for it.

This massive sum is no guarantee against a China market crash. Pettit goes on to point out that China's huge reserves amount to "5-6% of global domestic product." This is the same rough percentage as the total central bank reserves accumulated by the United States in the 1920s.

It was fashionable to sweat the hoard of U.S. reserves back then, just as it is fashionable to sweat China's hoard now. In the late ‘20s, John Maynard Keynes spoke of "all the bullion in the world" piling up in America's coffers. And yet, despite all that backstopped loot, 1929 still happened. The 1930s still happened.

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More evidence that even a rich-as-Croesus central bank can lose control, perhaps... or never had true control in the first place. This makes sense when you think about the monetary "pipes" analogy we used just recently in these pages. It's no easy to trick to pump a vast quantity of cash into the system without seeing it pool stagnantly – or making the boiler explode. Bernanke and crew are like plumbers wearing oven mitts. Are the Fed's Beijing counterparts really that much smarter?

Of Gold and the Dollar

But anyhow, moving on to today's inquiry: Does China want a lower gold price?

In the long term, almost certainly not. But in the short term, maybe so. Consider the following:

Via its mountain of excess reserves, China has the biggest "long dollar" trade on the planet.
China hopes to build a far larger "long gold" position than it has right now.
When building a long-term position, lower buy-in prices are preferable to higher.

On balance, a strengthening $USD is a mixed bag for China. The stronger the greenback gets, for one, the more that U.S. politicians squawk. (American exporters of manufactured goods want a weak currency, not a strong one, and they see China as "cheating" by holding their currency down to spur exports. This creates a natural correlation between a rising dollar and rising trade tensions.)

A firmer buck is a good thing for China, though, in that the dragon has such a huge pile of them to dispose of, i.e. to exchange for more useful assets. When the dollar gets stronger, all kinds of things get cheaper in relative terms. Like South American farmland, for instance... or metal mines in Africa... or coal and LNG from Australia... or gold.

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The Long-Run Perspective

In the long run, China craves power (or at least the mandarins who run the place do). Economic power, financial power, military power, you name it.

In getting from here to there – from a world where America is top of the heap to a world where China is – China will have to do a few key things to see its geopolitical ambitions met. It will have to dig out from under a mountain of paper dollars. And it will arguably have to build up a massive stash of gold, much bigger than the one it has now.

The strategic nature of this endeavor creates some odd incentives in the short term. Think of two large investors: one who is trying to quietly buy up the shares of a small public company, and another who is trying to get rid of a massive stake.

Gold is like the small public company in this analogy. The total "float" of gold available for purchase is tiny – a few trillion dollars' worth at the maximum. (Much of the world's gold is in private hands and not for sale.) China is like the large investor trying to quietly buy up shares.

Given the intimate knowledge of its own long-run plans, China likely wants to exchange dollars for gold at the most favorable price possible – which, here and now, means a lower gold price. This is no different than a large investor wanting to get the best average cost on his position.

China is like the other large investor – the one who wants to get shed of a massive stake – in terms of its divesting its mountain of dollars. In this case, it is a higher price (i.e. stronger dollar value) that is desirable, as it means a better rate of exchange on greenbacks going out the door.

Playing the Game

This is why, your editor would argue, China is predisposed to a lower near-term gold price, not a higher one. As a large buyer with a very long-term outlook, Beijing wants to get the best prices it can... both on the dollars it sends out and the metal it takes in.

This is also why, from an investment standpoint, your editor is not perturbed by a near-term weakness in gold. To the degree that the gold price falls (and the dollar rises), we are witnessing a giant geopolitical chess game in progress. The endgame, when it comes, will look very different.

Warm Regards,

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The Global Guru: Asian Tigers Revisited, Part 4

noreply@blogger.com (Brad Hunter) — Tue, 09 Feb 2010 22:33:00 +0000

TheGlobalGuru.com | GlobalBullMarketAlert.com | GlobalStockInvestor.com

February 9 , 2010

Vol. 5, No.6

Fellow Investor,

Asian Tigers Revisited, Part 4

Hong Kong: China's Capitalist Success Story

Hong Kong is a paradox. Although it reverted back to Communist China's rule in 1997, Hong Kong has remained the "freest” economy in the world for 15 consecutive years, as ranked by the Index of Economic Freedom. As one of the original Asian Tigers, Hong Kong also is one of the world's great economic success stories. Its GDP per capita not only soared 87-fold between 1961 and 1997, but also by 2010 Hong Kong had successfully transformed itself into one of the world's leading financial centers. Despite the global economic slowdown last year, this city of only seven million attracted over $60 billion in foreign direct investment in 2008 -- more than twice the figure of India, a country with 157 times Hong Kong's population.

The "Second Round of Pain"

noreply@blogger.com (Brad Hunter) — Tue, 09 Feb 2010 20:25:00 +0000

The Daily Reckoning
Tuesday, February 9, 2010

Dow goes sub-10,000...but on the way to where?
Sovereign debt crises threaten to dwarf Greenspan's bubbles,
Plus, Bill Bonner discusses the economic battle on all fronts and zombies at the Treasury...

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A moment of silence, please, for our fallen comrade, the Dow Jones Industrial Average...

Yes, it's true; the beleaguered index fell through 10,000 yesterday to finish the trading session below where it stood last November. But yesterday was not the first time the Dow ever fell below 10,000. In fact, it was the 28th time since March 29, 1999 - the Dow's very first close above 10,000.

When the Dow scaled 10,000 in March of 1999, the stock market had been rallying for several years already. Just five years earlier, the Dow had breezed through the 5,000-level. Therefore, almost no one doubted that 10,000 would be a mere stepping stone to 15,000...or 20,000...or yes, even 36,000, as James Glassman and Kevin Hassett infamously predicted in their 1999 classic: Dow 36,000: The New Strategy for Profiting From the Coming Rise in the Stock Market.

But Dow 36,000 would have to wait awhile. Instead of continuing its vertical ascent, the Dow would spend the next eleven years tripping over itself. On twenty-eight separate occasions, the Dow would climb through 10,000...only to slip back below 10,000 sometime later. Each failed attempt produced more discouragement and fatalism than the time before. Stocks are supposed to appreciate over time, we are told - not to muddle along for years at a time. The Dow was supposed to blast through 10,000 in 1999 and never look back. It was not supposed to return to 10,000 as frequently as a "B-actor" to rehab.

What went wrong?

The short answer is: Alan Greenspan. (The long answer is also Alan Greenspan). The former Chairman of the Federal Reserve nurtured an epic financial bubble during most of his 19-year reign.

After slashing interest rates sharply during the early 1990s, Greenspan hiked them a bit in 1994, before cutting rates again between 1995 and 1998. The stock market tripled between 1990 and 1998. But here's the interesting thing: when Greenspan hiked rates in 1994, the stock market struggled...and so did Greenspan's popularity.

Greenspan did not regain his adoring followers until the back half of the 1990s, when he resumed cutting interest rates and stocks resumed their climb. But then he hiked rates slightly once again, as the stock market bubble reached its zenith in 1999. The bubble burst...and so did the aura of infallibility that had calcified around Greenspan's reputation. Suddenly, he had critics again...and he did not seem to like it very much.

He had learned his lesson: He would never be unpopular again...no matter how many bubbles he would have to inflate or reflate. As the stock market bubble began bursting in 2000, Greenspan quickly sprung into action - replacing the stock market bubble with an even more magnificent housing bubble. Between mid-2000 and mid-2003, Greenspan slashed short-term interest rates from 6.5% to 1.0%. He implemented "emergency interest rates without an emergency," as Jim Grant observed at the time.

The rest is history. The stock market rebounded, home prices rocketed and Wall Street bankers figured out how to convert junk mortgages into AAA securities. Greenspan is not to blame for everything, of course, just...almost everything.

What does this condensed and biased portrayal of history have to do with Dow 10,000? Just this: without easy credit, and the mania it spawned, Dow 10,000 would not have been possible. When the Dow first reached that magical level in 1999, the blue chip index was trading hands for about 28 times earnings - its highest valuation in 70 years.

Stocks were grossly overpriced. No doubt about it. Thus, to be an eager buyer of stocks in March 2000 was to believe that price mattered less than Alan Greenspan's magic touch. Eleven years later, we have discovered that price matters more.

But don't be discouraged. The Dow's disastrous decade does not invalidate the theory that stocks are an excellent long-term investment. Instead, the Dow's lost decade merely adds two corollaries to the theory: 1) Beware popular Fed Chairmen; 2) Price matters.

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The Daily Reckoning PRESENTS: The plot thickens by the day...the global players are all lined up...the talking heads say we're in the clear...but have these recoveristas made a crucial error? It wouldn't be the first time. Dan Denning lays down some hard facts in today's guest essay...

The "Second Round of Pain"
By Dan Denning
Melbourne, Australia

If you've been thinking about reducing exposure to stocks, now might be a good time. And if you've been thinking about increasing your exposure to precious metals, now might be a good time.

According to Morgan Stanley economist Gerard Minack, the stock market is in for a correction after its 9-month "relief rally." In a note to clients Minack wrote, "We see the rise from March 2009 as a typical relief rally that follows major bear markets. Those relief rallies can occur regardless of underlying macro conditions, regardless of liquidity conditions and - most importantly - regardless of what happens next... We think risk assets have swung to pricing a better outlook than is likely."

Minack says that a 25% correction is now in order. To be fair though, he doesn't think the market will make new lows after that, only that it's gotten way ahead of itself at these levels. The Grand Old Man of Dow Theory, Richard Russell, is even more direct. He's predicting a "second round of pain" for stock markets. "I note that most analysts are now bullish," he observes, "and that they are recommending stocks for the 'continuing advance.' At the same time, most economists are optimistic, arguing that the 'longest recession since World War II has ended.'

"Typical," Russell gripes, "last March everyone was bearish and the market was establishing a temporary bottom. Now that everyone is optimistic, the stock market is topping out and the public (the amateurs) are about to receive their second round of pain."

What to do?

Last time the world's financial markets panicked, something strange happened: the US dollar and US bonds rallied while stocks, commodities, and emerging markets sold off. The same thing could be happening now. It's not so much a flight to quality as it is a flight to liquidity and a massive case of global risk aversion. During the dollar's big rally late 2008 and early 2009, stocks and commodities fell. Yet once low interest rates and government stimuli found their way into stock markets, leveraged traders again bet on equities and higher-yielding risk assets around the global. The dollar fell and the stock market rally got pretty carried away with itself.

This time around, we wouldn't expect the dollar rally to go as high or last as long. We don't think the monetary authorities would be inclined to let a deleveraging positive feedback loop set in again. That is, the powers that be don't want to see falling asset values trigger forced liquidations by leveraged players, leading to more asset sales and further liquidations in property, commodities, and equities.

Now just because Ben Bernanke and the global cabal of counterfeiters don't want something to happen doesn't mean it won't happen anyway. The deflating of the world's asset bubbles is going to happen sooner or later. The world's massive inverse pyramid of debt is supported by a very small asset base. When the underlying assets (often commercial and residential real estate) fall, the whole structure becomes unstable (this is what happened in 2008).

That means that this time around, you wouldn't expect the monetary authorities to let liquidity to dry up again. A ten percent fall in stock prices is just the thing to get policy makers in an accommodative mood again. The US employment figures still stink. And markets are increasingly confused and worried about whether certain sovereign nation states (like Greece and Portugal) can finance their deficits and/or reduce public spending without increasing civil unrest.

Mind you, we don't think more money, credit, or liquidity is the answer. It is, in fact, the problem. The modern world economy is built on a foundation of unsound money.

When central bankers change the cost of capital willy nilly, they corrupt all sorts of incentives in the real economy. And they alter the economics of tens of thousands of investment decisions. If they make money too cheap (always the preference of governments), they create asset bubbles (in stocks, real estate, and commodities).

In fact there's a pretty persuasive argument that the commodity super cycle is itself a symptom of the de-facto dollar devaluation engineered by Richard Nixon in 1971. Once the world moved to free floating exchange rates and fiat currencies not backed by any metal, a tsunami of paper, credit, and debt has lifted (inflated) prices for everything (houses, stocks, commodities, and bonds).

Some people call this wealth.

But if the super cycle of paper money is ending (a big claim for sure), wouldn't it mean a dramatic contraction in global economic activity? Not just a severe recession like in 2008 but really, a long depression in which debts are worked off and paid down, or in which debtors simply default and their creditors must take capital-destroying losses?

Well, yes. All that would happen if the super cycle in paper money is ending. We've argued that it IS ending and that one symptom is a series of escalating sovereign debt crises. The funding model for the welfare state is broken because it's base on unsound money.

But paper money has always been a con game based on belief. Neither the emperors of Rome, the Kings of France and England, or the chairmen of the Federal Reserve have been able to resist debasing the currency. It makes both warfare and welfare possible. Guns and butter are the health of the state and the death of sound money.

The counterfeiters always get first use of the bogus money before its purchasing power is diminished by the increased supply. This is a pretty dodgy way to run a world economy. But the assumption - encouraged by the powers that be - is that the an economy can be controlled with the right tweaks to the right dials by the right people wearing the right suits in the right government offices with the right university degrees.

This is also absurd.

But enough of the theory. What now? If the correction becomes a rout, expect more quantitative easing or policy measures designed to mask the pain (more stimuli). In other words, expect measures that will rekindle inflationary forces. Gold is correcting at the moment. But the risk of inflation remains as real and as potent as ever. So we'd say this is a chance to "buy the dip" on gold and other precious metals.

Regards,

Dan Denning
for The Daily Reckoning

---------------------------------------------------------------

And now to Bill who has today's reckoning from TK...

Trichet to Greece: Drop Dead!

Obama to California: Uh...

Yesterday, stocks lost 103 points on the Dow. This looked like a confirmation to us. The stock market appears to have begun its next and final phase...

AP seemed to think so too:

"Stock investors see threats from all directions," said the headline.

We didn't bother to read the article. We already know the directions.

From the north, investors worry about falling consumer demand. Consumers are in a funk - they have more debt, less income, fewer jobs, and less access to credit. The only news on that front we have today is that even jumbo housing loans are going bad...delinquencies are up to 9.6%.

From the east, investors worry about the continued invasion of cheap consumer goods and cheap services. China's economy is said to be growing at double-digit rates. How can US firms compete? And what if China is a bubble, as Jim Chanos believes? When it blows up, US stocks will come down too.

From the south comes the threat of higher interest rates. The poor dopes think the recovery might be for real. If so, inflation will rise and the feds will increase interest rates...possibly cutting off the new boom.

And from the west what do they have to fear? Well, there's that business in Europe. You know, Greece and all. The PIIGS - Portugal, Italy, Ireland, Greece and Spain... Europe's peripheral countries are in trouble. Lenders fret that they might be forced to default on their debt. So, they want higher interest rates. This, of course, just makes state finances worse...pushing the PIIGS closer to default.

The PIIGS owe $2 trillion, which might need to be restructured. Yes, dear reader, the sovereign debt problem is a big one - much bigger than Bear Stearns, Lehman Bros. and AIG. But the biggest porker of all - the USA - has fives times as much sovereign debt as all the PIIGS put together.

It won't take investors long to figure out that there isn't a whole lot of difference between Greece's finances and those of the US. Each has about the same amount of debt and the same size deficit, relative to GDP. The big difference is that the US ultimately controls the currency in which its debt is calibrated. Greece does not. Neither does California.

Both California and Greece borrow long-term at about the same rate...around 6%. Lenders know that when their backs are to the wall, both governments will have only two choices, not three. They can cut spending. Or, they can default. What they can't do is wiggle out of their obligations by inflating their currencies.

Jean Claude Trichet has already made that clear:

"...belonging to the euro area, you...have an easy means of financing your current account deficit. You share a currency that is credible, so that you have a quality of financing that corresponds to that of a credible currency."

He went on to say that Greece contributes only about 3% to the total output of the euro-zone. If push comes to shove, Greece will be pushed out rather than allowed to weaken the euro.

Then, Mr. Trichet made an odious comparison. California is a much bigger part of the US economy than Greece is of the euro economy. In fact, it is more than four times as large. Will the US come to California's aid? Mr. Trichet didn't say.

It is possible, of course, that Mr. Obama will say to the Golden State what Gerald Ford said to the Big Apple. In 1975, New York City's back was to the wall. It appealed to Washington for help. "Ford to City: Drop Dead," was the famous headline in the New York Daily News, reporting the president's response.

New Yorkers were incensed. Later, they realized that by vowing to veto a bailout President Ford had done them a great favor; he forced New York to clean up its act. The city went on to its greatest years. Likewise, the feds would be doing all of us a favor by letting failure fail with dignity.

Will Obama help California mend its ways? Or will he turn it into a zombie state?

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And more thoughts...

Snowmageddon has paralyzed the nation's capitol. Once again, the feds announced that only 'emergency workers' had to report to work. And once again, we wondered about all the rest. As near as we could tell, the pumps still worked when we went to fill up our pick-up truck. The coffee tasted the same. Plumbers still plumbed. Bakers still baked. Economists still pretended to know what they were talking about.

All the things that mattered continued...without the intrusion of federal employees.

And here comes more snow! No kidding. Now we have a storm warning for this afternoon. Ten to twenty inches of new snow are forecast.

The highway crews are beaten. They've been piling up snow since Friday. Many have worked around the clock. This new weather forecast must be depressing to them. They must feel like Custer's troops when scouts reported that more Sioux warriors had arrived.

We spent the weekend digging out our driveway. We had only begun when a young man with a heavy Spanish accent came up to us.

"You want some help?"

"How much would you charge?"

"One hundred dollars."

"Hmmm....well, thanks...but I'll do it myself."

Actually, we didn't do it ourselves. Daughter Sophia and son Edward lent a hand. Between the three of us, we did the work in about 3 hours. It was fun. Besides, what else did we have to do? We were snowed in.

As we were working, we noticed other Latin Americans walking up and down the street with snow shovels on their shoulders. After 3 hours, your editor felt his muscles ache. These guys must have done it all day long...Saturday and Sunday.

In this area, the Latinos seem to do all the housework, the roadwork, gardening, landscaping and much of the construction. They truck, they bus, they tote and lift. They're everywhere. They don't seem to mind hard work. And they are enterprising - like real Americans! This weekend, they hustled. And each one of them probably made $500 to $1,000. In cash.

By 6PM yesterday, Baltimore had an eerie feeling to it. The sky was clear. The park in front of our office was covered with snow. No car moved. No human being either.

What had happened? There was something unearthly about it... So quiet. So dead. Had zombies taken over?

Life imitates art. There are so many movies about zombies. Maybe now, zombies really are taking over. They don't foam at the mouth. They don't eat human flesh in public. But many of our fellow Americans are exhibiting some very strange behavior.

Mr. Timothy Geithner, for example. We're not saying he's a zombie. We're not accusing him. We just don't know. All we know is that he's saying remarkable things. For example, he told the nation that the US bond rating was safe. The Wall Street Journal went on to report that he said we would 'never' lose it.

Huh? Of course, US bonds will lose their triple-A rating. The only serious question is when.

Zombies will say the damndest things, won't they?

Regards,

Bill Bonner,
for The Daily Reckoning

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Fiat Currency: Using the Past to See into the Future

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About The Daily Reckoning: Now in its 10th anniversary year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists.

Obama Hates Fox News, Inside Story Revealed

noreply@blogger.com (Brad Hunter) — Tue, 09 Feb 2010 19:39:00 +0000

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noreply@blogger.com (Brad Hunter) — Tue, 09 Feb 2010 16:16:00 +0000

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Investor's Daily Edge

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A Look Ahead To 2010 With Ted Peroulakis: Four Growth Sectors You Can Count On

noreply@blogger.com (Brad Hunter) — Wed, 30 Dec 2009 11:30:00 +0000

Wednesday December 30, 2009

The 2010 Outlook: Four Growth Sectors You Can Count On

By Ted Peroulakis, Editor of Options Power Trader

Dear Investor's Daily Edge Reader,

2009 was an unusual year for the stock market. In March, we saw the end of one of the worst bear markets since the Great Depression. Then we witnessed one of the most impressive stock market rallies ever… the S&P 500 rallying more than 67% from its March lows.

I showed my readers how to make substantial gains on a slew of winners in 2009. And I'm even more excited about 2010. There is still a ton of money to be made in this market.

In March of 2009, many investors were selling their stocks and heading for the exits. But I saw an opportunity to buy some high-quality stocks at a discount. During that hectic period – when it looked like the end of the world was upon us – I was telling my readers to buy select undervalued stocks.

In fact, every single one of the stocks that I recommended in the first half of 2009 went up! They went up 69%, 77% – and one went up a whopping 192%.

My Options Power Trader did even better. I sent 17 alerts telling my paid subscribers to bank triple-digit gains. I'm talking about gains of 116%, 122%, and 194% in just days with my options plays.

I expect next year to be even more lucrative for my readers.

I'm bullish on the markets going into 2010. We could certainly see heavy volatility come back, and even some major pullbacks along the way. All in all, though, I believe that you have to be optimistic on stocks right now. Interest rates are set very low and capital is getting easier to come by for businesses. The economic stimulus coming from the government may be artificial, but it will continue to have a lifting effect on stocks. Once interest rates start to head higher, watch out! That will be your signal to be cautious and even go short…

Where to Invest in 2010

* Commodities

I'm extremely bullish on the commodities sector. I expect commodity prices to head higher for two main reasons:

(1) Increasing demand due to a rise in economic activity. Economies around the world are doing much better. The U.S. reported positive GDP growth for the third quarter, so we could be out of the recession. Germany and France could also be coming out of the recession. And the economies of China, Brazil, and India are once again running strong. This will lead to an increase in demand for commodities like oil, copper, grains, etc. A steady supply of commodities is needed to keep the engine of economic growth running.

(2) The prospect of higher inflation. America has a national debt of over $12 trillion. And deficit spending is out of control. I agree with Bob Irish and Andrew Gordon that the government's policy will be to inflate their way out of this problem. Washington can simply fire up the printing presses and print their financial obligations away. All that extra money in circulation should lead to higher inflation down the road.

Keep in mind that America was not the only country to dump money into its economy in order to save it. Many countries did it. Because of this, many major world currencies are destined to see high levels of inflation. The explosion in global money supply could lead to a decline in the value of all paper money around the globe. Investors everywhere are having less and less confidence in fiat paper money that's not backed by anything. As a result, they are jumping into commodity investments to protect themselves.

To protect against inflation rearing its ugly head in 2010, you want a portion of your portfolio allocated in commodities.

I suggest you look at energy, agriculture, metals, and even commodity-rich foreign markets.

Oil is certainly the lifeblood of our society. Gasoline made from crude oil is still the cheapest and most efficient fuel for our vehicles, and demand for gasoline is not going away any time soon. Oil is now an alternative currency to paper money and will rise as the fiat currencies lose their luster. Oil demand is increasing in emerging markets like China and India. Plus, the worldwide supply of oil is running thin and it's getting harder and more costly to get oil to the consumer. I expect oil prices to head over $100 per barrel in 2010.

I like the prospects for clean energy. This industry includes wind farms, nuclear power plant operators, and solar stocks. Governments around the world are offering tax breaks and other incentives to encourage clean energy use. This opens up significant potential for investors to profit.

Agriculture prices are poised to blast higher. The world's population continues to explode and food demand is constantly increasing. The standard of living in developing nations is rising – and that will push food prices even higher. I expect higher prices for food. There will be plenty of opportunities to profit by investing in raw food commodities and the fertilizer producers.

Prices for metals are poised to head higher due to growing demand. The industrial metals (copper, aluminum, and silver) will see strong demand as economic activity picks up. And gold will head higher as people lose faith in paper currencies and turn to gold as an alternative currency. (Remember, gold can't be produced out of thin air on a printing press.) I expect gold to continue to hit new highs in 2010. I predict that gold will head well over $1,500 and silver will head over $20 per ounce.

There is also an opportunity to take gains in select commodity-rich economies. I like Brazil and Australia. These are just two of the countries that will benefit from a continued bull market in commodities.

Yes, I'm bullish on commodities. But in case the economy weakens or the dollar strengthens, it's important to diversify your portfolio with other asset classes. That said, utilities, technology, and health care are three additional sectors that I expect to perform extremely well in 2010.

* Utilities

This sector includes companies that deal with the delivery of electricity, gas, and water to customers.

Utilities need considerable infrastructure to operate. So they often hold high levels of debt. Interest rates should remain low well into 2010, and utilities will benefit from the lower borrowing cost.

Investing in the utility sector is considered a non-cyclical defense play because it's less susceptible to a market selloff. I recommend that you hold utilities in your portfolio because of that and for added diversification.

* Technology

The companies in this space include those that make computers and cell phones as well as those that create software.

Tech was one of the best performing sectors in 2009, and should do exceptionally well into next year too. It will benefit from economic growth, which will boost orders and profit margins.

People are still spending money on technology, even in this difficult economic environment. Tech companies have been cutting costs and building up large cash reserves. The tech sector is quite healthy, indeed.

I expect some of the best plays to involve cutting-edge technology that can change the world. This includes cloud computing, smart phones, and military technology.

* Health Care

This sector includes hospitals, drug manufacturers, and producers of medical products.

Some kind of health care reform is coming soon, and you can profit from it. There will be many winners as a result of this new legislation, like hospitals and pharma companies.

With more Americans getting health insurance coverage, health care use will go up – and so will drug sales. That means higher revenues for the drug makers.

In Conclusion …

So there you have it. In 2010, put your money in commodities, utilities, technology, and health care. I'll be recommending highly leveraged plays on these sectors in Options Power Trader. My goal is to continue to show my readers 100% or more winners with my options plays.

Best Wishes,

Ted Peroulakis

FINANCIAL ADVISORY BOARD
Bob Irish - Investment Director Andy Gordon - Editor Jon Herring - Editorial Contributor Ted Peroulakis - Editorial Contributor	Christian Hill - Managing Editor Dr. Russell McDougal - Editorial Contributor Steve McDonald - Editorial Contributor Michael Masterson - Consulting Editor

The Debt Bomb

noreply@blogger.com (Brad Hunter) — Tue, 29 Dec 2009 22:38:00 +0000

The Daily Reckoning
Tuesday, December 29, 2009

What an explosion in the world's monetary base means for your stash,
Tracking the 'flation wars in an era of "Great Moderation,"
Plus Bill Bonner muses on why he's moving back to the US and more....

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Joel Bowman, with a few quick words from Taipei, Taiwan...

We're approaching one tenth of the way through this new century and already the world is getting a taste of things to come...

The world's temporary reserve currency, the US dollar, has shed roughly one third of its purchasing power against a basket of major paper competitors this decade. Gold, having begun the millennium in the dumps, has roughly quadrupled against the greenback over that same period. And stocks, after peaking back in 2007, are down about 7% for the same period.

Booms...bubbles...busts of epic proportions...

In short, the era was everything except what Federal Reserve Chairman Ben Bernanke thought it would be: an era of "Great Moderation." In fact, it would be hard to think of a more incorrect way to describe the times we live in.

We carry wars into the new decade, too. There are wars on terror, on unemployment, on the economy and, yes, even on the weather. That's not to mention the carry-over wars from political rally posters of yore; wars on drugs and poverty, wars so poorly-fought, grossly-mishandled and ill-defined that they've become permanent taxes rather than popular election talking points.

Then there's the war being waged between the forces of inflation and deflation, with the market pulling in one direction and the Feds yanking in the other. And that's where we begin today's musing. In the issue that follows, Dan Amoss, Puru Saxena and Daily Reckoning founder, Bill Bonner, talk us through the epic battle being waged in The War of the 'Flations.

First up, Dan Amoss, editor of the Strategic Short Report, described the scene in yesterday's 5-Minute Forecast...

"Now that fears of a deflationary spiral have waned, a rising Treasury note yield is bearish for stocks. Rising Treasury yields increase mortgage rates and decrease the attractiveness of rate-sensitive stocks like utilities, banks, and REITs.

"A rising trend in Treasury yields is especially dangerous," continued Dan, "when you consider that the biggest threat to the economy in 2010 is the backlog of mortgage foreclosures that have yet to work their way through the system. As these homes work their way through the system, it will be another deflationary shock to the banking system. In this deflationary shock, I doubt we'll see Treasury yields move anywhere near their 2008 lows. Higher Treasury yields will keep pressure on interest rate-sensitive stocks, while the continued deflationary pressures in housing will keep pressure on credit-sensitive stocks.

"All of this adds up to a much more hostile environment for the stock market than we've seen in 2009. With valuations high, long-term interest rates heading up, and credit stress still an issue, the environment for short selling is growing more favorable."

And now, over to Hong Kong where Puru Saxena has a few thoughts...

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The Daily Reckoning PRESENTS: Can the world's governments mop up their liquidity spills before it's too late? Do they even want to? Most people think their central banks are trying to protect their nations' currencies – probably because that's the line they feed the public. But, as usual, what we're told ain't necessarily so. In today's issue guest essayist, Puru Saxena, offers a few words on the consequences of "competitive devaluation." Please enjoy...

The Debt Bomb
By Puru Saxena
Hong Kong, China

Make no mistake; the developed world is drowning in debt and there are only two viable options – a global economic depression or very high inflation. It is our contention that the policymakers have chosen the latter option and over the following years, we will experience the trauma of severe inflation.

Look. The American government is staring at total obligations of US$115 trillion, America's debt-to-GDP ratio is off the charts and the American public is also up to its eyeballs in debt. Under this scenario, you can bet your bottom dollar that the American establishment will try to reduce this debt overhang through a process known as monetary inflation. If you have any doubt whatsoever, take a look at the chart below, which captures the incredible expansion in America's monetary base.

As you can see, over the past two years, the monetary base in America has expanded from US$827 billion to an astonishing US$1.93 trillion! Until now, this surge in the monetary base has not produced a highly visible inflationary impact...yet.

But it is notable that America is not alone in pursuing inflationary policies. All over the world, the developed nations are printing money and debasing their currencies. In this era of globalization, no country wants a strong currency and everyone is engaged in competitive currency devaluations. This massive money and debt creation will cause an inflationary boom over the coming years.

In fact, those who erroneously believe that deflation is unavoidable should review Figure 2, which highlights the mind-boggling expansion in the balance sheets of various central banks. As you can see, America is not the only nation guilty of printing money; the Europeans have also jumped on this train to Inflationville.

Now, we are aware that many prominent commentators are still calling for deflation. "After all," they argue, "how can inflation be a problem when bond yields are so low?" Well, these deflationists seem to be missing the point because the US Treasury market is no longer an entirely free market. We would argue that the Federal Reserve's intervention is largely responsible for keeping bond yields artificially low. Over the past several months, the Federal Reserve has purchased most of the net new issuance of Treasury securities. The American central bank is engaged in this desperate act in order to keep interest-rates low. However, it is buying these Treasuries by creating money out of thin air. This is inflationary.

If our assessment is correct, somewhere down the road, the Federal Reserve will lose its battle and T-bond yields will soar. As more and more bond investors wake up to the looming inflationary menace, they will start demanding a higher rate of return on their capital. When that happens, the dyke will break and the Federal Reserve will become irrelevant.

America has run out of choices. If the Federal Reserve does not inflate away this mountain of debt, the biggest sovereign default in history is guaranteed. Now, given the ability of the Federal Reserve to create confetti money, we are convinced that it will opt for the inflationary solution. Inflation would certainly make America's debt more manageable, but it would also dilute the purchasing power of the dollar. Of course, this inflationary agenda is not a secret and this is why many creditor nations with huge reserves are beginning to diversify away from the American currency.

In the past, when inflationary episodes spiraled out of control, hard assets were the prime beneficiaries and this trend is likely to remain intact in this inflationary episode. If our assessment is correct, over the coming years, stocks, precious metals, commodities and real estate will appreciate in value versus paper currencies. Furthermore, on a relative basis, we expect precious metals and commodities to outperform all other asset-classes. Conversely, we anticipate that cash and fixed- income instruments will probably turn out to be the worst assets to own over the next decade.

Bearing in mind the looming inflationary nightmare, we urge you to protect your purchasing power by allocating capital to precious metals and commodities-related businesses. Finally, we suggest that you consider allocating a portion of your capital to the fast-growing economies in Asia, like China, India and Vietnam. Such investments should prosper during the low-growth, high-inflation environment to come.

Joel's Note: Puru Saxena publishes Money Matters, a monthly economic report, which highlights extraordinary investment opportunities in all major markets. In addition to the monthly report, subscribers also receive "Weekly Updates" covering the recent market action. Money Matters is available by subscription from www.purusaxena.com.

Puru is also the founder of Puru Saxena Wealth Management, his Hong Kong based firm, which manages investment portfolios for individuals and corporate clients. He is a highly showcased investment manager and a regular guest on CNN, BBC World, CNBC, Bloomberg, NDTV and various radio programs.

Copyright © 2005-2009 Puru Saxena Limited. All rights reserved.

---------------------------------------------------------------

And now over to Bill Bonner, who has today's reckoning from Ouzilly, France...

"It's not that simple!"

We wish it were easier, simpler...more predictable. We wish there were a reliable road map. Will someone please give us an owner's manual!

What are we talking about? Stocks...the economy...the gold market?

No, we're talking about life!

"Your children are all at a transitional age," explained a neighbor last night. "They don't know what they are going to be doing in life...or how to do it. So, they need a lot of support. I don't know whether they need advice, exactly....and it's probably better not to give it in many cases...but they need to know you are there."

But where are we? More on that below...

Meanwhile, we return to our dreary métier on a dreary day. We are looking back at the year almost finished, and trying to figure out what lies ahead. The surprise of 2009 was that the stock market didn't turn down again. Stocks worldwide were cut in half. Then, they bounced. A textbook, classic bounce...Normally, you'd expect the bounce to peak out after 5 or 6 months. This one hasn't...yet. Our guess is that it will...

Of course, we could be wrong...

The 'classic' depression...a la Japan...comes about when an economy needs to make some fundamental changes. It discovers that a lot of what it has been doing was wrongheaded. Assets, valued at bubble levels, need to be marked down. People need to find new jobs; because the old ones no longer make sense. Businesses need to be restructured and retooled. Households, typically, need to stop spending and pay down debt.

This process is long and hard. The story of bubbles always begins cheerfully enough. But it always ends at Chapter 11, in long workouts...painful write-offs...and court cases.

"Recession Begins Flooding into the Courts," says a headline in yesterday's New York Times..

If this were a classic depression, we could anticipate another leg down in the stock market...more unemployment...and on-again, off-again growth over the next few years.

Our guess still is that it IS a classic depression...and that we should see stocks go down...along with all the other phenomena that usually accompany a depression.

But, it's not that simple.

Because there are a lot of other things going on too. The feds are hell-bent on avoiding a painful restructuring of the economy. First, they made sure the bankers got their bonuses. The banks deserved to go bust...and the people who ran them should have been fired. But the fix was in from the beginning.

Then, they turned to consumers. The feds are using every trick they have to lure consumers back into bubble mode – buying things they don't need with money they don't have.

Is it working? Well, the results are mixed and confusing. Every day seems to bring more noise. Today, for example, we learn that spending is up 3.6% this holiday season. We have to wonder...how could that be? Fewer people have jobs. Those who have jobs are working fewer hours and earning less money. And the bankers – bless their greedy little hearts – are not passing on the feds' cash to consumers. Consumer credit is going down at the fastest pace since the Great Depression. So, how can consumer sales go up? We'll just have to wait to find out.

The Dow rose 29 points yesterday. Gold went up $3. We would like to see both of them go down. Then, we would sure our 'classic depression' hypothesis is correct. In the meantime, we're watching...waiting...and wondering...along with everyone else.

And more thoughts...

We reported that the US government would need to roll over $2.5 trillion worth of debt next year. We probably erred. The number was right, but it was meant to be over the next two years. During the next two years also, worldwide, banks need to roll over $7 trillion. Whether it is over one year or two years, we're talking big money.

Most people who bother to think about it are coming to the conclusion that this is very inflationary...and very bullish for gold. They think the Fed will need to "monetize the debt" directly, or indirectly. One way or another, they say, the central bank will have to increase the volume of money so that the government can finance its deficits.

Paul Krugman, Nobel Prize winner in economics, suggested that the Fed add another $2 trillion to the nation's monetary base, partly to accommodate federal borrowing...and, he believes, to stimulate employment.

This idea is widespread. Richard Koo, one of the few economists to understand the Japanese depression and what awaits the US, thinks along similar lines. The US economy is going into a depression, like Japan; the government must spend huge amounts of money in order to keep GDP from falling.

Japan's top man shocked the nation last week when he announced the largest budget deficit ever. The government will spend about $1 trillion – a new record. And it will collect less than half that much in taxes. Meaning, most of what the Japanese government spends is borrowed – something the Japanese haven't done since the days when Americans were dropping bombs on them.

The Japanese government is doing what it should do, says Koo. It is replacing missing private spending with public spending. So doing, it has avoided a drop in GDP and employment. Throughout its 20 year slump, Japan's GDP has never fallen below the peak set in 1989. Nor has unemployment ever risen above 6%. Bravo!

Bravo?

Thanks to this new budget, Japan's national debt will reach a new record...nearly 200% of GDP. The Japanese have a lot of private savings, but they also have a lot of public debt. And what have they gotten for it? Well, they have kept people employed....and have allowed the private sector to pay down its debts. Or, to put it another way, they have lived through a classic depression fairly comfortably. Instead of forcing the banks to fess up to their mistakes and clean up their balance sheets, the Japanese government saved them. Instead of allowing big companies to go broke...and other companies to take their places...the Japanese propped up the 'brain dead' firms...and kept them alive with taxpayers' money. Result? A depression that should have been over in, say, 5 years...has been stretched out to 20. And now the Japanese face a public debt that is bound to cause them big problems in the years ahead.... What kind of problems?

Well, Japan is going broke... just like the US.

But we will save that for another day... You editor is on the move again... Most of his children are already in the US...or headed in that direction. He is following them.

Yes, dear reader, after 15 years in Europe, your editor is headed back to the US. He will take up residence in Bethesda, Maryland. Why Bethesda? Why not the ol' family farm near Annapolis? Because...

Our youngest child, Edward, has another year and a half of high school. But he's done all his education in French...and in France. Putting him into an American high school would be a big shock. Yes, he'd probably adapt without any trouble. But we figure he might as well finish up in the same system he began – the French school system. Fortunately, there's a French lycee in Bethesda, Maryland. It's where French diplomats send their children. From what we hear, it's not a bad school.

But why follow the children to the US?

Here's the way we look at it. The children are all starting out in life. There will be a couple of years in which we MIGHT be of help to them. After that, it will be too late. They will have set their course in life, for better or for worse.

Most likely, there's probably not much parents can do. We give advice when it is asked for. We try to anticipate problems. We look back at our own experience and try to warn the children against falling into the same traps.

Does any of this really make any difference? We don't know. But we have been working on these children for the last three decades. This may be the last time we have any influence at all. Beyond that, it may be helpful to them to know that we are on the same continent...and ready to help out, if the occasion arises.

So, for the next two years – more or less – your editor will make Bethesda his home. Back in the USA...

What will it be like living in the US again after all these years? Has the country changed? Have we changed?

Don't know...but going to find out...

Regards,

Bill Bonner,
for The Daily Reckoning

The Daily Reckoning - Special Reports:

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Fiat Currency: Using the Past to See into the Future

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About The Daily Reckoning: Now in its 10th anniversary year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists.

The Mother of All Balance Sheets, Stock Tips for 2010, Government Guaranteed Growth and More!

noreply@blogger.com (Brad Hunter) — Tue, 29 Dec 2009 19:18:00 +0000

5 Min blog | agorafinancial.com | login | contact

December 29, 2009

Fed balance sheet back to near record… details reveal Bernanke's new master plan
Dan Amoss on the market that's just been "de facto nationalized"
Chris Mayer wraps up the worst decade for stocks ever…. and shares his focus for 2010
Plus, one sector on the verge of a new (government backed) boom

The 5 hasn't kicked off with an announcement like this in almost a year, so hear us out:

At midnight tonight, we will stop accepting new members to the Agora Financial Reserve. If you're serious about investing in 2010 – and beyond – this is the best help we can possibly offer. There's no telling when we'll accept new members again, and when we do, the membership fee will almost certainly be higher. So if you want in, this is the absolute last chance.

One good reason to guard your finances in 2010: The Federal Reserve's balance sheet has quietly ballooned back to near-record highs. The Fed announced yesterday that it's balance sheet expanded to $2.22 trillion last week, it's grossest level in nearly a year and just a hair from an all time high. Hmmm… if Mr. Bernanke assures us the recession is "very likely over," then why is the Fed balance sheet in crisis mode? What are they worried about? Here's the answer:

The Federal Reserve went from a non-existent player in the mortgage backed security market a year ago to owning $904 billion of the stuff today. The "private" bank has clearly moved its aim from the financial sector to housing, loading up on MBS, debt spilling out of Fannie Mae and Freddie Mac and Treasury bonds (a handy way to suppress mortgage rates).

Coupled with the Treasury's black check to Fannie and Freddie, we're detecting a trend.

Fannie Mae reported yesterday that "serious delinquencies" in its mortgage portfolio rose to 4.98% in October. That's up 172% from this time last year.

"The market will eventually adopt the view that Fannie Mae and Freddie Mac have been nationalized," opines Dan Amoss of the Strategic Short Report. "Last week's elimination of limits on Treasury's capital infusion into Fannie and Freddie is a de facto nationalization. In other words, there's no longer much chance of a re-privatization, but instead we'll see a gradual transformation of these Frankensteins into new branches of government. They'll implement the official government agenda for housing, without much regard for prudent lending.

"This will have huge consequences for the Treasury market. While the federal government will stick to its Enron-style accounting, and not officially consolidate Fannie/Freddie assets and liabilities onto the government balance sheet, the smarter foreign creditors will. These creditors will start viewing Fannie/Freddie liabilities as equal to Treasuries in terms of default risk. But this doesn't mean that spreads on Fannie/Freddie liabilities will tighten down to Treasuries; rather, it will substantially increase the long-term default risk of Treasuries, and Treasury buyers will demand higher rates to compensate for this risk.

"In summary: the Treasury's Christmas Eve announcement (link)adds substantially to the case for higher Treasury yields in 2010."

The stock market is enjoying a bit of a Santa Claus rally. The S&P has risen (albeit by small amounts) six days in a row, and along with the Dow, started this morning at a 2009 high. These indexes opened to small gains today, as the Case Shiller home price index showed a very moderate improvement for October while the latest consumer confidence reading inched up in December.

More proof investment optimism is back: Investors dumped $11.1 trillion in U.S. stock funds last week, the highest level since June 2008 (three months before the market crashed).

"We're just about to wrap up the worst decade ever for owning stocks," Chris Mayer writes to his Special Situations readers. "That's not really a surprise to those of us who pay attention to the price paid to own stocks. They were too expensive and too popular for a long time. In late 1999, the S&P 500 traded for 44 times earnings -- an all-time high. In 1982, when the great bull market began, the S&P 500 traded for something like 8 times earnings.

"These are overly simple measurements and not worth paying attention to most of the time, but when they reach extremes, they can tell us something valuable. We are not in extreme territory anymore. The WSJ points out that the S&P 500 trades for 20 times earnings today. That's not cheap. But it's also not horribly expensive, either, especially if you consider that we are in a recession and profits may well improve big-time over the next few years…

"I think there are more bargains in the smaller-cap stocks than the big stocks. Jeremy Grantham thinks U.S. large-cap stocks are about 30% overpriced. Grantham is co-founder of money manager GMO. He has made a lot of good calls, including his 1999 prediction that stocks would lose money in the next decade. (They did, though not as much as he thought.)

"I can see this too in my own research. I always have ideas for Mayer's Special Situations because MSS makes its living in small and underfollowed stocks. In MSS, all of the stocks we picked up in 2009 -- save one -- had a market cap below $1 billion. I'd expect this trend to continue in 2010."

"The market for dividend yielding stocks is becoming overpriced," cautions our income investor, Jim Nelson. "Dividend changes are cyclical. So instead of tracking them on a rolling monthly basis, let's look at the rate of year-over-year change. Below is the rate of change for only dividend increases…

"In November, the downward slide ended. It was the first month since pre-recession to see the number of positive income actions increase year over year.

"Now, if you've been reading The 5 long enough, you probably aren't surprised by this. After all, the market is never logical. It is constantly overcompensating for momentum. Oftentimes, this gives us opportunities to buy cheap shares of income payers. Unfortunately, we are at the other extreme right now -- an overpriced market.

"You hear pundits and politicians alike claim that we may not be fully recovered to pre-recession levels, but we are on a straight path toward it. That's what the chart is showing. The boards of directors behind the recent dividend changes are, obviously, listening to the pundits and politicians. This will most likely cause a second crash in both share prices and income payments.

"In short, there will be safe plays out there, but not necessarily the ones jacking up their dividends. We strongly believe our Lifetime Income Report portfolio will stand up to the test. As we write, there are four companies in the portfolio left in our buy range. We suggest you get into them as soon as possible."

Commodities are staying on the sidelines today. After a hefty rise over the last week, oil is taking a breather at $78 a barrel. Gold's been in trouble lately, and is now resting at $1,100.

Last today, and opportunity: Nuclear power in America is about to enter a new era. Likely this week, the Energy Department will announce the first wave of nearly $18.5 billion in loan guarantees for expanding the nuclear industry in the U.S. This is a subsidy almost five years in the making, and should it pass, the first of its kind since the Three Mile Island fiasco.

"I find it interesting," a reader writes, "that Hugo Chavez is dictating to Toyota about production quotas on SUVs with a threat to seize the production plant and getting the Chinese to run it. Chavez has no clue how the Toyota production system works. It is set up to meet demand as demand dictates. All other manufactures work on a batch production system and if you try to use batch methods in a TPS environment, it will fail badly. And if the Chinese aren't familiar with the Toyota system, they won't be able to make it work either. I would like to see Chavez take over the Toyota plant and see how many pieces of junk that won't work he can get produced."

The 5: We doubt he knew more about oil services than Exxon, but that certainly didn't stop him.

What's interesting to us is his point of view. Currency controls in Venezuela make it tough for any foreign company to do business. Labor laws make it even harder for a large manufacturer. And the auto market there is really small to begin with. Yet Chavez says Toyota (capitalism in general) doesn't play fair.

"The founding fathers would have NEVER supported an internal ethical and moral compass as far adrift as we find now," a reader writes, referring to yesterday's inbox. "NEVER would they have advocated the road to communism we now find ourselves on. Should this administration achieve all that is proposing, the Federal Government will own/run 71% of the entire U.S. economy. Want to see the U.S. not far from now? Just look a little south to Venezuela. We're on an express train.

"The 5 is the only newsletter I seek out to read daily. Keep up the great work."

"I would LOVE to see the faces of the founding fathers if they reappeared today!" exclaims another reader. "Can you imagine how they would react to seeing a 'slave' (?) running the country! Probably about the same as Charlton Heston's character in Planet of the Apes. After all, most of them had slaves when they started this "mess" we love so much."

Best,

Ian Mathias
The 5 Min. Forecast

P.S. Last call. At midnight tonight, the doors slam shut. If you want to join the Agora Financial Reserve and get our best investment advice for the rest of your life, you cannot delay any longer. Details are here.

Thank you for reading The 5 Min. Forecast! We greatly value your questions and comments. Please send all feedback to 5minforecast@agorafinancial.com

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Editor, 5 Minute Forecast: Ian Mathias
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Harry Reid's power.

noreply@blogger.com (Brad Hunter) — Tue, 29 Dec 2009 16:59:00 +0000

Below please find a special message from one of our advertisers, Sue Lowden for U.S. Senate. From time to time, we receive opportunities we believe you as a valued customer may want to know about. Please note that the following message reflects the opinions and representations of our advertiser alone, and not necessarily the opinion or editorial positions of Human Events or Eagle Publishing.

Fellow Conservative,

Harry Reid has sold out to the liberal special interests and used pork projects to buy the votes of Democrat Senators with our tax dollars. He's spent millions of campaign dollars claiming to be the most powerful U.S. Senator in our state's history. But he's used that power to make taxpayers pay for abortions, raise the cost of health care, and dramatically increase our national debt.

Harry Reid knows I'm the proven conservative who can kick him out of the Senate. He'll lose the power he covets and his ability to do any more damage to America's taxpayers. I'm the proven conservative who beats him by ten percentage points and I'm the only conservative who according to recent polls would beat him with more than 50% of the vote!

With December 31st quickly approaching, we face our first major reporting deadline to send a clear message that the American people want to kick Harry Reid out of power. Will you join us in kicking Harry Reid out of the Senate by making your contribution of $50, $100, $250, $500 or more now, before the end of the quarter on December 31st?

I'm reaching out to you, because it's essential we post the highest possible fundraising numbers. Harry Reid, the media and even the far left will look to our fourth quarter fundraising report to judge the strength of our opposition to Reid and his Democrat majority in Congress.

The government take over of health care is Harry Reid's plan - and he is proud of it. But you and I both know that this radical, big government scheme will have terrible consequences on American families, and I guarantee you this bill will be Harry Reid's "Waterloo."

Thanks to Reid's strong-arming and selling of pork projects, the Democrat majority in Congress is imposing a government take over of health care that will limit our ability to choose our doctors, decimate the quality of our health care, astronomically raise our taxes and force taxpayers to help pay for abortions.

Unseating the liberal Senate Majority Leader will not be easy. Harry Reid has proven time and again that he's not afraid to take and spend liberal special interest money on his campaign. Make no mistake; the radical left will work hard to keep him in power.

We need to send a clear message with our December 31st reporting deadline that we want to kick Harry Reid out of power. Please follow this link immediately to contribute $50, $100, $250, $500 or more before midnight on December 31st.

Americans have had enough of Harry Reid's selfish ways. Times are beyond tough, but Harry Reid has chosen to make passing the Congressional Democrat's radical agenda into law his top priority instead of providing relief to America's families.

We must kick Harry Reid out of the Senate! If I am fortunate enough to be elected to the U.S. Senate, I will proudly work to defend life and prevent taxpayer dollars from being used to fund abortion. I will actively work to protect our 2nd Amendment rights. I will consistently vote against pork spending and will work to roll back the growth of government. I am opposed to any tax increases. Soon after announcing my candidacy I signed the Americans for Tax Reform pledge to not raise taxes.

December 31st marks our first major reporting deadline, and we need your financial support to post the strongest possible numbers. Please follow this link now to make a generous contribution before midnight on Thursday, December 31st.

Thank you in advance for your support, and have a happy New Year.

Sincerely,

Sue Lowden

P.S. As families celebrated the holiday season, Harry Reid and his Congressional Democrats have worked over time to impose their radical, government take over of health care on us. Join me in kicking Harry Reid out of the Senate by following this link now!

Paid for by Sue Lowden for U.S. Senate
www.SueLowden.com

Obama gives foreign cops new police powers in U.S.

noreply@blogger.com (Brad Hunter) — Tue, 29 Dec 2009 15:26:00 +0000

	A Free Press For A Free People

Obama gives foreign cops
new police powers in U.S.

A little-discussed executive order from President Obama giving foreign cops new police powers in the United States by exempting them from such drudgery as compliance with the Freedom of Information Act is raising alarm among commentators who say INTERPOL already had most of the same privileges as diplomats.

Find out the latest right now at WND.com.

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$13 Trillion Missing?

noreply@blogger.com (Brad Hunter) — Tue, 29 Dec 2009 13:34:00 +0000

Dear Glen:

Thank you for your continued support of WorldNetDaily.com. WND
occasionally sends emails like this one to introduce carefully
selected advertisers to our loyal readers and valued customers.
Below you will find a special message from the John F. Tate,
President of Ron Paul's Campaign for Liberty.

Thank you again, from the team at WorldNetDaily.com!

--------------------

Dear Friend of Liberty,

I hope you join me in my firm conviction that now is the time to
fight back against the out of control Federal Reserve and
continued Wall Street plundering of our tax dollars.

The threat isn't hard to see -- just look all around us. Our
constitutional principles and freedoms are being assaulted at
every turn. More bailouts, trillion dollar "stimulus" plans,
huge new debt burdens for our children, simply printing money to
cover our failed policies -- I could go on and on. You and I
both know that President Obama is going to keep going and going
unless someone puts a stop to the madness.

But the good news is there is a way to fight back. And that
fight starts today -- by "Auditing the Fed" and showing the
American people just how the Fed has abused its power, debauched
the dollar, and helped strangle our economy.

Because I know you are a friend in Liberty, I wanted you to be
among the first people contacted by Campaign for Liberty for the
vital fight against the out of control Federal Reserve.

Please read the enclosed letter from my friend and Campaign for
Liberty's President, John Tate. John isn't just a friend of
mine. He's also a patriot with years of experience getting
things done in politics. Now he's agreed to take up the fight in
a way I cannot -- by leading the fight for Liberty on the
outside, while I do battle in the halls of Congress.

I trust you'll find this battle to expose the out of control Fed
worth your support.

For Liberty,
Congressman Ron Paul

---------------------

Dear Friend of Liberty,

Trillions of dollars are being stolen from the U.S. taxpayer.

Right now, you and I are seeing the worst plundering of a
country's wealth in the history of civilization, led by an out of
control Federal Reserve.

But together you and I CAN put a stop to it all.

With your help (including submitting the petition linked below
to your Congressman and Senators) today, Representative Ron Paul,
Senator Jim DeMint and Campaign for Liberty are ready to fight
back, by taking the battle straight to the heart of the problem -
the Federal Reserve itself.

Just think about the scope of the problem for a minute: The
massive, outrageous amount of dollars committed to the economic
bailouts in recent months totals:

More than the socialist New Deal ... More than the entire Iraq
debacle ... More than the 1980's savings and loan mess ... More
than the Korean War ...

COMBINED.

When will it all end?

It's time you and I put a stop to a renegade Federal Reserve by
exposing the Fed's out of control actions to the American people.
And Congressman Ron Paul and Senator Jim DeMint have a bill
before Congress to do just that, known as the "Audit the Fed"
Bill (HR 1207 and S 604).

That's why it's vital you click here to submit your "Audit the
Fed" petition in support of Congressman Paul's bill.

http://email.wnd.com/ct/3761275:5515564156:m:3:140710570:B63D6895145B8F6C99D5D61CB0CBEDAE

You see, Audit the Fed already has almost 300 cosponsors!

Now is the time to make sure your Congressman and Senators feel
the heat to support the Audit the Fed bill!

If you and I don't act today, I'm afraid this crisis will end
with the economic ruin of every man, woman and child in America.

Today, nearly 13 TRILLION in taxpayer dollars in bailouts and
loans has been agreed to by Congress, the Bush and Obama Treasury
Departments, and the out of control Fed.

So is it really any wonder more and more folks are starting to
realize the Washington, D.C. establishment is hurtling us toward
complete economic disaster?

Whether it's watching a phony "stimulus" package get rammed into
law or watching Congress pass a $700 BILLION bank "bailout" under
threat of martial law, the American people are agitated and
increasingly angry.

That means it's a perfect time to unleash the pressure of
MILLIONS of outraged Americans on the out of control Fed!

So please click here to sign the petition linked below urging
your Congressman and Senators to cosponsor and seek roll call
votes to pass the Audit the Fed Bill!

As I know you're aware, the Federal Reserve is shrouded in
secrecy. Their meetings are off-limits to the public. Their
inner workings are off-limits to the public.

And just recently, the Federal Reserve told Congress "NO WAY"
when asked to account for $2 TRILLION in taxpayer-backed loans!

Well, why do you think they refused?

They know coming clean with Congress and the American people on
how they doled out that two TRILLION dollars would result in an
anti-Fed firestorm.

So can you imagine the impact of a full-scale audit? You and I
will finally be able to show the American people that the Federal
Reserve System leads to:

- Constant economic crises -- the housing crisis and the
resulting chaos is just one example of an economic bubble created
by centrally-planned interest rates and money manipulation;

- The destruction of the middle class -- as fuel, food, housing,
medical care and education costs soar, everyone who is NOT on the
government dole is forced to make do with less as the value of
their money slowly decreases;

- Currency destruction -- history shows us that riots, violence
and full-scale police states can result when people finally
realize our money isn't worth the paper it's printed on and
REFUSE to accept it.

And unless you and I do end the madness in Washington, D.C., we
may be closer than we'd like to think to learning that history
lesson firsthand -- right here in our own streets.

That's why your commitment to helping pass the Audit the Fed
Bill -- and helping Campaign for Liberty fight this battle -- is
so vital.

http://email.wnd.com/ct/3761275:5515564156:m:3:140710570:B63D6895145B8F6C99D5D61CB0CBEDAE

Just a few months ago, there was no chance of passing any
legislation like the Audit the Fed Bill. So I guess there has
been one "CHANGE."

You see, with the piling up of trillions of dollars in out of
control "bailouts" of Wall Street and international bankers, even
many politicians in Washington want to show you they're "being
responsible."

What better way for Congress to do this than by auditing the
Federal Reserve to account for the trillions stolen from the U.S.
taxpayers?

More and more Congressmen are already feeling the pressure and
are signing up to support this bill. I've even received word
this bill could move in the next few weeks in the U.S. House.

When that happens, you and I must be ready to fight.

And, it's both a bill we CAN pass, and one that is vital to
exposing the massive corruption and dollar manipulation at the
Federal Reserve.

http://email.wnd.com/ct/3761275:5515564156:m:3:140710570:B63D6895145B8F6C99D5D61CB0CBEDAE

You see, after regulating, taxing, spending, borrowing and
printing us into what looks like the worst recession in decades,
establishment politicians and power brokers are assuring us
they're working hard to "fix" our economic woes. What is their
solution? You guessed it. More of the same!

And even if the Audit the Fed Bill is defeated this time, just
forcing a vote is a win/win situation.

Can you imagine how many politicians will pay the price at the
ballot box in 2010 when you and I tell the American people their
Congressman somehow lost trillions of taxpayer dollars and
refused to even LOOK for it?

Now we just need to show Congress the American people demand
action on the Audit the Fed Bill. Here's how we plan to do that.

First, we're already busy contacting up to five million
activists nationwide through mail, phones and email to generate
petitions to the U.S. Congress demanding action on Ron Paul's
Audit the Fed Bill.

But that's just the beginning. We'll work the talk radio
stations and grant local media interviews to ratchet up the
pressure even further on Congress.

And a few days before the vote, if we have the resources, we'd
also like to run hard-hitting targeted radio, TV and newspaper
ads.

This entire program is designed to send this one, CLEAR message
to Congress: Any politician who votes against the Federal Reserve
Audit should look for another job.

But such a massive effort won't be easy -- or cheap.

So in addition to submitting your petition, I also hope you'll
agree to make a contribution of $1000, $500, $250, or $100 to
Campaign for Liberty.

If $100 is too much to ask right now, please make a contribution
of $50 or even $25 today. Every dollar will help, and every
dollar will go to this vital fight.

I know times are hard, but if we don't take action, the America
we see in just a few years could look far worse than even the one
we see today.

Can I count on you to join the fight to AUDIT THE FED by
clicking here to sign the petition, and by making a generous
contribution of $1000, $500, $250, $100, $50 -- or whatever you
can afford -- to Ron Paul's Campaign for Liberty?

http://email.wnd.com/ct/3761275:5515564156:m:3:140710570:B63D6895145B8F6C99D5D61CB0CBEDAE

Sincerely,
John F. Tate
President

P.S. Please submit the petition urging your Congressman and
Senators to cosponsor and seek roll call votes on Rep. Ron Paul's
Audit the Fed Bill TODAY!

With Congress spending like never before, and TRILLIONS of new
dollars being created out of thin air, it's never been more
important the Federal Reserve's abuses are exposed to the
American people once and for all. And, along with submitting your
petition, please make a contribution of $1000, $500, $250, $100,
or $50 to Campaign for Liberty TODAY!

If you are unable to see images in the the message above, click
here:
http://email.wnd.com/hostedemail/email.htm?h=e3a0e78b26cf3cf325168bd12056cb92&CID=5515564156&ch=B63D6895145B8F6C99D5D61CB0CBEDAE

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"Look Ahead To 2010": Steve McDonald Isnâ€™t Swallowing the Phony Recovery

noreply@blogger.com (Brad Hunter) — Mon, 28 Dec 2009 11:20:00 +0000

Bob Irish Reporting: Delray Beach, FL. Monday December 28, 2009

"We are all interested in the future because that's where we're going to spend the rest of our lives."

This line was delivered by Jeron King Criswell in the 1959 movie Plan 9 From Outer Space. Film critic Michael Medved dubbed director Ed Wood's Plan 9 from Outer Space the "worst movie ever made." Many critics have since agreed.

But there is no denying the brilliance of Criswell's observation. During the '50s and '60s, Criswell was known as the world's most famous predictor. His most famous prediction was made on The Jack Paar Show in 1962. He forecast that President Kennedy would not run for a second term in 1964 because something would happen to him in November 1963. He also predicted the destruction of Denver, the assassination of Castro, and the end of the world.

So it goes with the business of forecasting. One good call can make your reputation.

Joe Granville famously called the top of the market on January 7, 1981. A selling stampede was triggered by the warning. Nearly 93 million shares were traded, making January 7 the busiest day in the Big Board's 188-year history.

Not content to just forecast the market, Granville branched out to earthquake predictions. His overall track record according to Hulbert's Financial Digest is very poor. Over the last 25 years his newsletter produced losses of over 20% per year on an annualized basis.

Granville's fall from grace reminds me of the story of a young investor who went to see the fortune teller about his future.

"Until you are 45 years old, you will be poor and unhappy," she said.

"What will happen then?" The young man asked hopefully.

"By then," she said, "you'll be used to it."

So maybe Granville and his followers just got "used to it."

They say that the secret to keeping your reputation as a forecaster is to give a number and give a date but never give both at the same time.

Over the next several days we're not going to give our IDE analysts that luxury. We're putting their feet to the fire and asking them to forecast 2010. Why bother with these forecasts?

Powerful Long Term Trends Are What Make You Money.

If you can identify those trends, you are halfway there. The other half is taking action.

Imagine in 1996 that you forecast the rising influence of the Internet in American life. How much money could you have made acting on that trend?

Imagine in 2000 you forecast that bonds represented better value than equities. The next three years were glorious.

Imagine in 2005 you saw that the demand for energy was headed skyward. How much fun would that ride have been?

Imagine in 2001 you forecasted the rising price of gold. (I'm sure many of you did, and have profited handsomely.)

I think you get the picture. These powerful long-term trends are what we've asked our analysts to consider as they offer you their predictions over the next few days. Pay attention. The health of your portfolio depends on it.

We'll start with Steve McDonald's insights...

Predict What the Markets Will Do in 2010? Really?

By Steve McDonald, Editor of The Bond Trader

My predictions for 2009 were pretty much right on the money. 10,000 to 11,000 on the DOW… Ford won the auto race… large cap, dividend-paying stocks recovered and did very well… and Obama was not up to the task.

Bingo!

In 2010, here's what I see happening:

5% to 6% inflation.

We have already seen the tip of this iceberg. While there is a lot of slack in the economy, when the banks start easing up on lending – which should happen in '10 – much of the money pumped into the system will actually hit.

Right now, half the money in the system is socked away in bank vaults. When it comes out, we will have the beginning of a long-term problem with inflation.

Unemployment, real unemployment, will be unchanged until late in the year, maybe 2011.

Real unemployment – unemployment the way it used to be measured – is around 17% to 22%, not the 10% Washington is trying to sell. That's a lot of unemployed people, and it's making it even harder for this recovery to shift into high gear. Many people are not spending by choice. But many have no choice, because they don't have money to spend.

The next stimulus package may actually focus on job creation and not on bailing out the states. If it does, we have a shot at getting the unemployment number cut in half by end of 2010.

The DOW will be as low as 8,700, and as high as 12,500.

The psychological 10,000 ceiling on the DOW and 1,200 on the S&P will not be broken with the wishy-washy numbers we saw in 2009. It will take a big shift in sentiment, spending, and year-over-year earnings.

It will be much easier to break through on the downside. Volume has been very light, reflecting the unease most investors feel with the current run-up. Most are renting stocks, not owning them. Dumping is so very easy to do when you don't own.

Expect a challenging ride.

Interest rates will have to be raised at some point.
Look for ¼ point adjustments.

We can't stay at 0%, but don't expect any big jumps in controlled interest rates. The Fed did the last series of rate hikes perfectly – ¼ point at a time. Small incremental changes have little or no effect on the market and are absorbed easily by the economy.

The 10-year and 30-year bond rates are another story. Look for 4.5%+ on the 10-year and a comparable percentage jump on the 30-year. It will make for a steep yield curve, but we can survive that more easily than a ½ or ¾ point jump in the short rates.

Housing prices will flatten nationwide.

Housing prices will level off in all areas except Nevada and Florida. And there will be small increases in the usual hot markets: LA, DC, Boston, San Fran, NYC, and resort areas.

Food and fertilizer stocks will be big.

The so-so to negative feel in the market will drive more people to the all-weather stocks that lagged in 2009: food and fertilizer. Look, too, for a bigger move to dividend stocks as more and more people realize we're in for a longer haul than the 2009 market led them to believe.

Some Quickie Predictions

* Commodities (copper, lithium) have only begun to run.

* The Democrats will lose control of one, maybe two houses.

* Look for a "dump incumbents" movement.

* Oil will kiss $100.

* Increased terrorist activity here at home.

* Serious debt problems for the EU. (Short the euro; own the dollar.)

* Be ready to jump on a China correction – a temporary buying opportunity.

* Gold will dip to about $1,000 on the way to $1,750.

* Orioles pitching will stink again.

* Ravens will discover their defense was actually on vacation for the entire season.

Happy Holidays,

Steve

FINANCIAL ADVISORY BOARD
Bob Irish - Investment Director Andy Gordon - Editor Jon Herring - Editorial Contributor Ted Peroulakis - Editorial Contributor	Christian Hill - Managing Editor Dr. Russell McDougal - Editorial Contributor Steve McDonald - Editorial Contributor Michael Masterson - Consulting Editor

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China or Bust

noreply@blogger.com (Brad Hunter) — Sat, 19 Dec 2009 19:39:00 +0000

The Daily Reckoning Weekend Edition
Saturday, December 19, 2009
Taipei, Taiwan

---------------------------------------------------------------

What if China goes pop? Cracks appear in the Great Eastern Hope,

Could equity and property markets there "do a Dubai?"

Plus, the word on nuclear and geothermal energy and those violent golden dips...

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Joel Bowman, entertaining Black Swans in Taipei, Taiwan...

When Dubai's debt bubble burst a few weeks ago, few expected that it would precipitate, by itself, a complete collapse of the global economy. Even those who foresaw the mounting and crippling debt loads there weren't that imaginative. After all, the Swarovski-clad emirate's portfolio, packed with high-end New York retailers and Las Vegas casino projects, represented, in many ways, more super speculative hedge fund than measured, robust investment stratagem.

Likewise, when Greece, laboring under a deficit not dissimilar to that in the United States, fell prey to the ratings agencies' wrath, few investors conjured up apocalyptic scenarios of mile-long soup lines around the world. The government there had a "poor history" of debt management, the agencies observed. What did we expect?

These two debt-addled sovereigns are far from out of the woods, of course. Abu Dhabi might have thrown its meretricious cousin a $10 billion lifeline, for instance, but the emirate's leader must still find a way to meet up to $80 billion in additional debts and liabilities. With soaring interest rates on bonds issued by the emirate and shattered investor confidence, that won't be easy. The Greeks face similar problems, and already their fate weighs heavily on both the Eurozone and its currency.

But in any high stakes game, it is always the weakest hands that fold first. That is to be expected.

The same casual indifference cannot, however, be indulged when one considers the possibility of a China bust-up. And with investors like Jim Chanos employing – possibly hyperbolic – descriptions like "Dubai times a thousand" to describe the Middle Kingdom's economy, the possibility that we may see a spectacular collapse there is worth, at the very least, a moment of contemplation.

Prima facie, China appears to be nursing along the world's nascent recovery rather well. Forecasts of GDP growth around 10-10.5% for 2010 are not infrequent and, judging by the inflow of liquidity into the Asian region as a whole, most investors expect nothing less.

According to Nomura Holdings Inc., persistently low interest rates in the US, coupled with the perception that Asian economic growth is a one-way bet, is driving a "tsunami" of capital into the region. Data compiled by the Japan-based financial group show a half-trillion dollar reversal in foreign cash flows over the past year alone as investors pile their bets on a China-led economic resurgence. In the three quarters leading up to March of 2009, widespread economic meltdowns in the west saw some $262 billion vacuumed out of Asia's red hot "tiger" economies as beleaguered funds in The City, Wall Street and elsewhere repatriated capital to meet crushing margin calls closer to home. However, over the past six months, almost all of that cash ($241 billion) has found its way back to Asian shores.

Even in a region as populous as this one, that kind of cash does not stay inconspicuous for long. Coupled with ample stimulus spending by local governments, those funds have helped inflate prices from equities through to the local property markets.

The MSCI Asia-Pacific index (which excludes Japan) is up 62% for the year, en route to its best twelve-month performance in over a decade and a half. China's own Shanghai CSI 300 measure is higher by more than 65% for the same period. Again, such a strong market performance one year does by no means guarantee a retracement the next, much less a total collapse. But in and of itself, a past rally does not support unbridled optimism for future rallies.

Indeed, some fissures are already starting to appear. The same Shanghai index that boasts such impressive year to date numbers slid over 4% last week, and several components of the China Stocks and ADRs Index have slipped by 10% over the same period.

Real estate prices in China are also looking rather frothy. A recent editorial that appeared in China Daily ought to inspire at least some skepticism amongst once-bitten investors:

"If there is anything more spectacular than the amazing V-shaped recovery of the Chinese economy this year," the paper reads, "it must be the jump in its housing prices which, after dipping for a while, are breaking records in many cities."

Statistics cited by the paper indicate prices in 70 major cities (yes, they have 70 major cities) are rising at an incredible pace, outstripping even their parabolic climb in 2008, before the last "dip."

"It has been reported that prices for commercially built new residential units in Beijing, Shanghai and Shenzhen have jumped above 50 percent so far this year, outpacing the growth of local economies by more than 5 times," the paper continues.

On Friday, Zhang Xin, chief executive officer of property developer SOHO China Ltd, warned that prices in the red hot real estate market may already be overheated.

"The government needs to realize how serious the asset bubble is," Zhang told newswire, Reuters. "It cannot control the asset bubble by just saying a few words. The most fundamental solution is to tighten credit."

"There is a bubble in every city," Zhang added.

That's the problem with central governments' stimulus spending, of course: one never knows when enough is enough.

According to Forbes, "More than 1.6 trillion yuan, or about one-sixth of China's new loans, went to the property sector in the first 11 months, including mortgage loans to home buyers and lending to developers."

All this is not to say that China will implode, of course, only that it might. Any recovery the world may or may not be experiencing is, at best, embryonic and, therefore, extremely fragile. In an era where Nassim Taleb-style Black Swans darken the skies and "six-sigma" events seem to defy conventional mathematics, it would be foolish to expect only the expected.

Join us next week when we'll take a look at a few of the possible geopolitical fractures a China bust up might inspire. In the meantime, this week's regular DR reading is archived for your perusal below.

Please enjoy and, as always, feel free to fling any comments or thoughts you have to your managing editor at joel@dailyreckoning.com

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That is, doing this is a "backdoor" way to own as much of a position in gold as you like... for the equivalent of paying a single cent per ounce.

---------------------------------------------------------------

ALSO THIS WEEK in The Daily Reckoning...

The Yellowstone Syndrome
By Chris Mayer
Gaithersburg, Maryland

Most people in finance operate under a giant self-deception: they think future economic trends are much more knowable than they actually are. The economy is like a complex ecosystem. You cannot alter one piece of it without causing effects elsewhere in the system. Investors who understand this reality can also understand (and avoid) the hazards of over-confident investing.

Financially Befuddled
By Bill Bonner
London, England

Poor Silvio Berlusconi. He was hit in the face with a heavy statuette of the Duomo – Milan's famous cathedral. To our knowledge, this is the first time the image of a major religious building has been used to try to assassinate a head-of-state.

China as a Nuclear Power Play
By Romeo Dator
San Antonio, Texas

China is aggressively preparing for its energy future in order to accommodate rapid economic growth for decades to come. The foundation of the nation's electricity generation plan is coal, but with loud calls coming from around the world for China to cut its output of greenhouse gases, a significant portion of new power will be nuclear.

A Hot Future for Geothermal
By Marin Katusa
Vancouver, British Columbia

Capturing energy from the earth's heat is pretty easy pickin's for geologically-active areas of the world like Iceland, Indonesia, and Chile. In some locations, hot fluids are so near the earth's surface that naturally occurring hot fluids can be directly circulated through buildings for heating. Iceland, in particular, takes advantage of this low-hanging energy fruit.

Depression on Wheels
By Bill Bonner
Paris, France

When the price of oil hit $150 a barrel, the first major alarm sounded. Something was wrong. Now we have a clearer idea of what it was. To make a long story short, leading economists have a one-stop solution for just about everything: stimulate consumer spending. But $150 oil warned us: continue down that road and you will run out of gas. There isn't enough oil in the world to allow US-style consumption for everyone.

---------------------------------------------------------------

The Weekly Endnote: As always, please feel free to email us any thoughts you have regarding this week's topics.

We can't possibly reply to each and every email, nor can we directly answer financial questions regarding specific stocks or recommendations, but we do enjoy your thoughts and insights all the same.

Until next time...

Cheers,

Joel Bowman
Managing Editor for The Daily Reckoning

The Daily Reckoning - Special Reports:

The US Trade Deficit: Fort Sumter...And The U.S. Trade Deficit

US Recession: By far the Weakest Recovery

"THE GREAT AMERICAN RECOVERY RP-OFF" Brace yourself for what's about to go down as the BIGGEST FINANCIAL SWINDLE in world history.

AGORA Financial Resources:	The Daily Reckoning Is:
Economics & Politics Crisis & Opportunity Gold, Oil & Energy Growth, Tech & Medical Options Investing	Founder: Bill Bonner Editorial Dir: Addison Wiggin Publisher: Eric Fry Managing Ed.: Joel Bowman Web Ed.: Greg Kadajski
About The Daily Reckoning: Now in its 10th anniversary year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists.

Dow 15,000 is Closer Than You Think

noreply@blogger.com (Brad Hunter) — Sat, 19 Dec 2009 14:14:00 +0000

Washington's #1 Financial Insider has another major prediction:

DOW 10,000 IS JUST
THE BEGINNING...

The stock market is STILL screaming “BUY”! After my prediction back in May that the Dow would hit 10,000 this year, I'm now predicting Dow 15,000 is closer than you think!

And... I've just identified 7 Investments set to double during the most historic market of our lifetime!

Fellow Investor,

It was one of my most memorable moments. And it drove the investment conference I was speaking at into a frenzy...

This past May, as I stood in a large conference room, in front of a standing-room only crowd, I made one of the boldest predictions of my lifetime.

Willing to stake my reputation on my prediction, I proclaimed that the Dow would hit 10,000 by December 31, 2009.

A hush fell over the crowd as everyone in attendance stood dazed and confused. After all, the idea of the Dow advancing double-digit percentage points by the end of the year was preposterous.

Or was it?

Today, I'm having the last laugh. You see, not only is Dow 10,000 now locked in, it is just the beginning. And I'm convinced that the stock market is headed higher -- a lot higher!

In fact, in a moment I'll walk you through an irrefutable, but mostly-ignored argument as to why the stock market's recovery is just beginning and why a continued market surge is not only possible, but very likely.

And I've just issued an urgent buy alert for 7 Recovery Giants that are set to double during the most historic market of our lifetime. I urge you to pick them up right away to position yourself to take full advantage.

Click here for the full details...

Gold is Not Going Up - Paper Money is Going Down

noreply@blogger.com (Brad Hunter) — Sat, 19 Dec 2009 09:54:00 +0000

by Egon von Greyerz – Matterhorn Asset Management

This month we will discuss the illusion of gold going up. We will examine the destiny of the dollar and why it will reach its intrinsic value of zero. We will also demonstrate why money printing will accelerate rapidly in the next 12-24 months.

Paper Money Collapsing against Gold

The problem with paper money is that governments can create unlimited amounts. This is what they have done throughout history and especially in the last 100 years and which has led to the total destruction of most currencies. Most people don’t even understand that their government makes their money worthless. Money printing gives them the illusion of being richer whilst all they have are pieces of paper with more zeros on them. But there is one currency that governments can’t print which is gold. Gold has been real money for almost 5,000 years and it is the only currency that has survived throughout history. Gold can’t be printed and no government controls it. Therefore gold will, over time, always reveal governments’ fraudulent actions in creating money out of thin air. And this is what we are experiencing currently. Gold is not going up. Instead gold is doing what it has always done, namely maintaining its value and purchasing power.

What we are seeing currently is the total annihilation of paper money whether it is Dollars, Pounds or Euros etc. The chart below shows the US dollar against gold. In the last 10 years the dollar has declined by 79% against gold. Most currencies have declined by similar percentages. So it is an illusion to believe that gold is going up when it is the value of paper money that is going down. All gold is doing is to reflect the virtually limitless printing of paper currencies. Since gold can’t be printed, it is the only honest currency that exists. This is why many governments don’t like gold increasing in value against their paper money since it exposes their total incompetence in running their country’s economy.

The chart above shows how the purchasing power of the dollar has declined in real money – gold – in the last 10 years. And if we take the period from 1909 to 2009 it shows the total destruction of paper money. In 1909, $1,000 bought 50 ounces of gold. Today it buys 0.83 ounces. This means that in the last 100 years the dollar has declined by 98.3% against gold. So in real money terms the dollar is now only worth 1.7% of what it was worth a century ago. Thus, the US government (as well as most other governments) has totally destroyed the value of real money by issuing unlimited amounts of paper money and in the next few years they will also kill off the remaining 1.7% of value to make the paper dollar reach its intrinsic value of zero. The chart below reflects various currencies fall against the dollar since from 1900 to 2004.

To talk about gold being over-extended at these levels is in our view absolute nonsense. As we will discuss later, money printing can only accelerate in the coming months and years. And when worthless pieces of paper are printed, gold will always reveal such a fraud by maintaining its value against the ever increasing supply of paper called “money”.

The Real Move in Gold is Still to Come

In our view we have not seen the real move in gold yet although we have gone from $250 to $1,226. The reasons are many:

Money printing will accelerate as government deficits increase and problems in the financial system re-emerge.
There is a high risk of default of major financial institutions or sovereign states with unpredictable consequences for the world economy.
The fourfold increase in gold since 1999 has taken place without the participation of most investors. It has so far been a stealth market. But this will soon change and there is likely to be a major “gold rush” in the next couple of years.
The average fund manager, pension fund manager, asset manager or individual investor has virtually no exposure to gold today but in the next couple of years they will all invest in gold.
The gold market will soon become primarily a physical market because no one will trust paper gold or quasi physical gold such as Comex, ETF’s or unallocated gold. Nor will the market trust governments many of which might have lent out most of their gold. The last audit of the gold in Fort Knox was in 1953!
Gold production is going down every year and is currently only $90 billion p.a. There will not be sufficient physical gold at current prices to satisfy increased demand.
There is only $900 billion of physical gold held privately for investment purposes. This is circa 0.7% of world financial assets. A mere doubling of the allocation to gold, which is likely, would make the gold price surge. See chart below.
Central banks are now net buyers of gold. Many countries which are underweight in gold such as China, India, Russia, Japan, Singapore Brazil, Korea and many more are major buyers of gold. This means that gold will be underwritten by several sovereign countries for many years to come. Central banks are not fickle investors and a policy decision to increase their gold holdings is unlikely to be reversed for a very long time.
Although difficult to predict, the geopolitical risk in the next few years is substantial. Pakistan, Iran, Afghanistan, Al Qaeda, Middle East, Israel, acts of terrorism in the West etc. The preceding list is potentially explosive and the likelihood that something will happen in one these areas is very high. This would have a major effect on the gold price.

Gold has outperformed most stockmarkets

In the last ten years the Dow Jones has declined against gold by 80%. The graph below shows gold expressed in local currencies against the Nikkei, Dax, FTSE and S&P in the last 10 years (Nov 1999 – Nov 2009). For example gold in yen has appreciated by 233% whilst the Nikkei has fallen by 46%. The graph shows how badly most stockmarkets have performed measured in “real money” i.e. gold.

The Precious Metals market is minuscule

The graph below shows how small the gold and silver industries and markets are in relation to major US corporations and to total world financial assets. The market capitalisation of the silver industry is only $ 9 billion and of the gold industry $ 200 B whilst Microsoft is valued at $250 B and Exxon 350 B.

Both the silver and gold industries as well as the physical markets are so small that any increase in demand is likely to drive prices very substantially higher.

Quantitative Incr-easing

Governments and especially the US are making noises that money printing will soon cease. This statement is as credible as their statement about “a strong dollar policy”. Let us be very clear; just as there is no chance whatsoever that they actually want a stronger dollar or that the dollar can go up. There is even less of a chance that money printing or Quantitative Easing will be withdrawn. Instead we will have what we call QI – Quantitative Incr-easing. The Fed will in the next couple of years do what Helicopter Bernanke always promised; i.e. print unlimited amounts of worthless paper which will complete the move of the dollar to its intrinsic value of zero. This will totally destroy the US economy, thereby creating a frightening political and social climate.

The reasons for an acceleration of money printing are manifold:

1. Unemployment increasing

US unemployment adjusted for short- and long-term discouraged workers is now 22% as shown in the chart below. This is an absolute disaster and will have very severe ramifications for the US economy. And it is likely to get a lot worse. During the 1930s depression non-farm unemployment reached 35%. Since the real problems in the economy have not started we would expect the US unemployment to reach at least 35% in the next 2-3 years and possibly a lot higher. With over 30 million people unemployed, this will put enormous strain on the US economy with a major reduction in GDP and tax revenues and a major increase in social payments. A country that is already bankrupt today is unlikely to cope with this additional burden. Currently 36 million Americans receive food stamps, an increase of almost 3 million in the last 6 months.

2. Financial system still very vulnerable

The $12 trillion which the US government has injected to stave off an implosion of the financial system and economy has only benefited the financial sector. Banks that have received these funds have not lent them on to the real economy.

All they have done is to prop up their balance sheets and pay out record bonuses. But even with this massive injection of funds into the banking system virtually all banks are still bankrupt if their assets are taken at market value:

With the blessing of the government, banks have been allowed to value their toxic assets at totally phoney amounts. Instead of valuing these assets at market value they can be valued at expected maturity value which of course banks assume is 100%. This is just another fraudulent collusion between government and banks.
Mortgage loans are deteriorating at a rapid rate. In October 2009 another 330,000 properties went into foreclosure. There are 7 million US homes waiting to be repossessed. Resets of interest rates on Option ARM and ALT A mortgages in 2011-12 will lead to a massive increase in foreclosures and mortgage lender losses.
Commercial property values are declining fast and vacancy rates and defaults are surging. Values have declined by 35-50% but banks are so far not recognising the full reduction in values. For smaller banks, which make up 90% all US banks, 74% of loans are in commercial real estate. There is $1.4 trillion to be refinanced in the next four years much of which is property which is in negative equity or empty. It will be virtually impossible to refinance this amount.
More derivatives are being issued by the banks. The top four US banks now have $200 trillion outstanding. A big percentage of this could not be sold at anywhere near market value.
Over 130 US banks have failed so far in 2009. Values realised when the assets are sold are substantially below the stated values, making a mockery of the current valuation rules. Not to value at market is a crime and against all sound accounting principles. But this is of course done with the total blessing of the government since, if assets were valued at market, there would be no banking system.

3. Government Deficits will escalate

The increase in unemployment and the continued problems in the financial system are two of the major contributing factors that will make government deficits surge. But there are many other problem areas that will necessitate acceleration in money printing:

Tax revenues are falling rapidly
Many states in the US are already bankrupt and most others will follow.
Cash for clunkers and tax credits to new housing buyers are just two of many schemes that the government will launch to support failing industries.
Pension fund deficits will escalate rapidly and the government will need to subsidise pensioners.
Insurance companies will fail and the government will need to step in.

The list of areas which will need government support is endless and the US government will inevitably print money to “save” the economy.

Zero percent interest rates and unlimited money-printing = Lunacy

To artificially set interest rates at zero and to print whatever money is needed goes against every single principle of sound money and a sound economy. Interest should be set by the market in order not to violate the laws of supply and demand. And money printing should be totally illegal. So why is it done? For governments to stay in power and bankers to prosper! Nobody else is prospering. Normal people are being conned into taking enormous debts that they will never be able to repay. And the value of their paper money is being totally destroyed as we have demonstrated above.

We have in the last few years made clear to our investors and readers that there will be very seriousconsequences arising from the actions of the government:

Government deficit will surge. The current borrowings of $12 trillion are likely to increase to over $30 trillion as we have discussed in previous reports. Interest rates could then be 20% or more and the US government would have absolutely no possibility to finance the interest on this debt.
The dollar will collapse. It is only due to the fact the dollar is the reserve currency of the world that the US has been able to dupe the rest of the world into accepting its worthless currency and financing its enormous debts. But this will not last much longer.
There will be hyperinflation. A deflationary implosion of credit and assets financed by a credit bubble is the necessary precondition to hyperinflation. In order to counteract these deflationary factors, the government will be printing unlimited amounts of money. It is the fall of the currency that causes hyperinflation and the US will be no exception. The fall of the dollar will lead to a hyperinflationary depression in the US.
There will be major social and political consequences. The economic devastation caused by the mismanagement of the economy will not only create poverty and famine but also social unrest. There will be major changes in the political system and leadership.

Protection

This report has mainly discussed the United States since what happens there has major consequences for the rest of the world. But what is likely to happen in the US is just as likely to happen in the UK and many other countries.

Many investors now feel that the worst is over with stockmarkets recovering. In our January 2009 Newsletter we forecast that the stockmarket could have a 50% recovery. We have now had that recovery, mainly fuelled by massive liquidity injection by the government and cost savings in corporations. In our view the resumption of the downtrend could start at any time.

It is not our purpose to frighten investors or to be sensational in our views and reports. Our purpose is to warn investors of the major dangers which make asset protection absolutely vital for financial survival in the next few years.

“THERE IS NO MEANS OF AVOIDING THE FINAL COLLAPSE OF A BOOM BROUGHT ABOUT BY CREDIT EXPANSION. THE ALTERNATIVE IS ONLY WHETHER THE CRISIS SHOULD COME SOONER AS THE RESULT OF A VOLUNTARY ABANDONMENT OF FURTHER CREDIT EXPANSION OR LATER AS A FINAL AND TOTAL CATASTROPHE OF THE CURRENCY SYSTEM INVOLVED.”

Ludwig von Mises – Austrian Economist (1881- 1973)

7th December

Egon von Greyerz
matterhornassetmanagement.com
goldswitzerland.com

Brad
:-)

Is Money Destroying The World…?

noreply@blogger.com (Brad Hunter) — Sat, 19 Dec 2009 09:36:00 +0000

I am fascinated by the world we live in today, America in particular…

What was once the shining beacon of hope, leadership, and freedom around the world, is fast becoming a wasteland divided - with looters on one side, and the sheeple who willingly trade-in their pride, their dreams, and their honor as men - in exchange for hand-outs like social security, unemployment, and food stamps, referred to as "benefits" by the looters.

The Land of the Free, and the Home of The Brave, has become the "Land of the Slaves and Home of The Victims".

I see this every day, as pleads for deals and freebies flood my inbox from moochers who name every excuse under the sun, as to why I should give my knowledge and my expertise to them from free, because "I owe them", just like the government owes them, their boss owes them, and their spouse owes them.

They blame money, and those who have it, for the problems of the world. They call money the root of all evil.

Is that the case?

Well today I'd like to share with you some of the most profound words I've ever experienced, which will stay with me for the rest of my life. If we're to hold onto the freedom, the ideas, and values they stand for, they represent the last great hope for our country, and our shrinking world…

And as for you… How you feel about the following story will determine your financial fate, and your life.

=============================
Page 410 - "Atlas Shrugged"
=============================

"Standing unnoticed on the edge of a group, Rearden heard a woman, who had large diamond earrings and a flabby, nervous face, ask tensely, "Senior d'Anconia, what do you think is going to happen to the world?"

"Just exactly what it deserves."

"Oh how cruel!"

Don't you believe in the operation of moral law, madame?" Francisco asked gravely.

"I do."

Rearden heard Bertram Scudder, outside the group, say to a girl who made some sound of indignation, "Don't let him distrub you. You know, money is the root of all evil - and he's the typical product of money."

Rearden did not think that Francisco could have heard it, but he saw Francisco turning to them with a gravely courteous smile.

“So you think that money is the root of all evil? Said Francisco d’ Anconia.

Have you ever asked what is the root of money? Money is a tool of exchange, which can’t exist unless there are goods produced and men able to produce them.

Money is the material shape of the principle that men who wish to deal with one another must deal by trade, and give value for value.

Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is that what you consider evil?

When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into bread you will need to survive tomorrow.

Those pieces of paper, which should have been gold, are a token of honor – your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is that what you consider evil?

Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time.

Try to obtain your food by means of nothing but physical motions and you’ll learn that man’s mind is the root of all the goods produced and of all the wealth that has ever existed on earth.

But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of a man’s capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it?

Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is made – before it can be looted or mooched – made by the effort of every honest man, each to the extent of his ability.

An honest man is the one who knows that he can’t consume more than he has produced.

To trade by means of money is the code of men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except the voluntary choice of the man who is willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them, but no more.

Money permits no deals except those to mutual benefit by the unforced judgment of the traders. Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss – the recognition that they are not beats of burden, born to carry the weight of your misery - that you must offer them values, not wounds - that the common bond among men is not the exchange of suffering, but the exchange of goods.

Money demands that you sell, not your weakness to men’s stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they offer, but the best that your money can find.

And when men live by trade - with reason, not force, as their final arbiter- it is the best product that wins, the best performance, the man of best judgment and highest ability – and the degree of a man’s productiveness is the degree of his reward.

This is the code of existence whose tool and symbol is money. Is that what you consider evil? But money is only a tool. It will take you wherever you wish, but it will not replace you as the driver.

It will give you the means for satisfaction of your desires, but it will not provide you with desires. Money is the scourge of men who attempt to reverse the law of causality – the men who seek to replace the mind by seizing the products of the mind.

Money will not purchase happiness for the man who has no concept of what he wants: money will not give him a code of values, if he’s evaded the knowledge of what to value, and it will not provide him with a purpose, if he’s evaded the choice of what to seek. Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent.

The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors.

The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money. Is this the reason why you call it evil?

Only the man who does not need it, is fit to inherit wealth – the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him.

Did it?

Or did he corrupt his money?

Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one, would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve the mind that cannot match it. Is this the reason you call it evil?

Money is your means of survival. The verdict you pronounce upon the source of your livelihood is the verdict you pronounce upon your life.

If the source is corrupt, you have damned your own existence. Did you get your money by fraud? By pandering to men’s vices or men’s stupidity? By catering to fools, in the hope of getting more than your ability deserves? By lowering your standards? By doing work you despise for purchasers you scorn? If so, then your money will not give you a moment’s or a penny’s worth of joy.

Then all the things you buy will become, not a tribute to you, but a reproach; not an achievement, but a reminder of shame. Then you’ll scream that money is evil. Evil, because it would not pinch-hit for your self-respect? Evil, because it would not let you enjoy your depravity? Is this the root of your hatred of money?

Money will always remain an effect and refuse to replace you as the cause. Money is the product of virtue, but it will not give you virtue and it will not redeem your vices. Money will not give you the unearned, neither in matter nor in spirit. Is this the root of your hatred of money?

Or did you say that it’s the love of money that’s the root of all evil?

To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It’s the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money – and he has good reason to hate it.

The lovers of money are willing to work for it. They know they are able to deserve it.

Let me give you a tip on a clue to men’s characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it. Run for your life from any man who tells you that money is evil.

That sentence is the leper’s bell of an approaching looter. So long as men live together on earth and need means to deal with one another – their only substitute, if they abandon money, is the muzzle of a gun.

But money demands of you the highest virtues, if you wish to make it or keep it. Men who have no courage, pride, or self-esteem, men who have no moral sense of their right to their money and are not willing to defend it as they defend their life, men who apologize for being rich – will not remain rich for long.

They are the natural bait for the swarms of looters that stay under rocks for centuries, but come crawling out at the first smell of a man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of the guilt – and his life, as he deserves.

Then you will see the rise of the men of the double standard – the men who live by force, yet count on those who live by trade to create the value of their looted money – the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statues are written to protect you against them.

But when a society establishes criminals-by-right and looters-by-law – men who use force to seize the wealth of disarmed victims – then money becomes its creator’ avenger. Such looters believe it safe to rob defenseless men, once they’ve passed a law to disarm them.

But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter.

Do you wish to know whether that day is coming? Watch money.

Money is the barometer of a society’s virtue. When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.

Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half loot.

Whenever destroyers appear among men, they start by destroying money, for money is men’s protection and the base of a moral existence. Destroyers seize gold and leave it to its owners in a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values.

Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it.

Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: Account overdrawn.

When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, ‘who is destroying the world?’ You are.

You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it’s crumbling around you, while you’re damning its life-blood – money.

You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men’s history, money was always seized by looters of one brand or another, whose names changed, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor.

That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves – slaves who repeated the motions once discovered by somebody’s mind and left unimproved for centuries.

So long as production was ruled by force, and wealth was obtained by conquest, there was little con conquer. Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers – as industrialists.

To the glory of mankind, there was, for the first and only time in history, a country of money – and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement.

For the first time, man’s mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being – the self-made man – the American Industrialist.

Until you discover that money is the root of all good, you ask for your own destruction.

When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips, and guns – or dollars.

Take your choice – there is no other – and your time is running out."

===========================
Ayn Rand - "Atlas Shrugged" : Pg 410 –>
===========================

My fellow entrepreneurs…

We are the producers.

We are the blood of our nation.

We are the noblest representation of man-kind in the world.

This is the value I offer to you and the world, which you will buy not because you must - but because it will improve your life.

To our future…

Mike Dillard

Brad
:-)

Should You Worry About a Bad 2010?

noreply@blogger.com (Brad Hunter) — Fri, 18 Dec 2009 20:54:00 +0000

Bob Irish Reporting: Delray Beach, FL. Friday December 18, 2009

Al was more excited than usual last night when I met him and his wife for dinner at a local pizza place in Delray Beach.

"I can't wait for tomorrow," he said.

"Why is that?"

"I'm buying a multi-family apartment building."

"Cool. What made you pull the trigger?"

"It's time, that's all."

"You think, the market has bottomed?"

"Oh, I don't know about that. I simply look for properties that can wash their own face."

"Say what?"

"A property can wash its own face if the rental income covers the mortgage, taxes and insurance."

"Okay. I get it. And if real estate dives again?"

"No sweat, I'll be holding onto this property for 2-3 years at least. And, as I said before, it can wash its own face. So I'm not worried about that."

Should You Worry About a Bad 2010?

Al isn't impulsive and he's not a big risk-taker. I'd call him a non-adventurous opportunist. He has a good head on his shoulders. And a nose for opportunities that make him money in the long term.

I wish more investors were like Al, taking the long view.

Most don't, because they have trouble separating their emotions from their investing decisions.

This past year, fear dominated. Even as the markets trended up, there was no mad rush into stocks. Apparently, many investors don't know what if feels like to buy low.

They've been gun-shy and willing to invest only selectively and only in the safest securities.

Here at IDE, we think that's a good thing. The overall market is no longer a bargain. However, some stocks are still priced to buy.

Mr. Market can act in mysterious ways. Over the last half year, it's rewarded speculative small companies much more than the bigger and deep-pocketed companies. As a result, many blue chippers are relative bargains.

As scared investors gradually gain more confidence in the stock market, these companies should attract the lion's share of investment dollars. Even if 2010 turns out to be an economic bummer, blue chips should still do well because of...

The "$10 trillion riptide" of boomer money looking to repair their nest egg.
The low yield in many money market funds. A portion of that $3 trillion will be looking for a new home.
Attractive dividends. In the absence of an appreciating market, dividends are the only way investors make money.

China's Appetite for Commodities Will Send Prices Soaring

Gold. Silver, Uranium, they will all rise in prices as China hoards supplies. This is great news for you if you are a member of Resource Windfall Speculator. The portfolio is built for opportunities like this. Click here to learn how you can involved in the bull market coming in 2010.

Do You Believe in China?

All you need to know is that BHP Billiton believes in China. That's better than getting two dozen so-called "official" numbers from the government indicating that China's robust growth is continuing.

BHP is the giant mining company hailing from Australia. Its in-house knowledge of China is better than the CIA's. I'm serious. BHP has more people in China than the CIA. And it has far more people following China.

BHP has good reason to keep close tabs on China. It sells them more than $10 billion worth of rocks (from coal to diamonds). How China goes, so goes BHP.

BHP recently reported that it expects global steel demand – led by China – to double in the next 15 years. That's a long-term trend that even "Man of the Year" Bernanke can't sabotage. If steel is going up, so are the other industrial metals (like iron ore, copper, and nickel) in the long run.

So what if China's recovery is coming from all the "lending and spending" its government is doing. China can afford it. Look at it this way. They're spending the hundreds of billions of dollars we pay them for their products to prop up their economy. Nice arrangement there.

Other Long-Term Trends

Apart from China, here are two other long-term trends to keep an eye on...

Agriculture. IDE's Steve McDonald says "Farmers worldwide have had a double-whammy from a drop in food prices. It has reduced the incentive to plant as much as they had been planting during the boom years. Plus, framers have not been able to borrow money to finance their operations. The result is that most farms have had to cut back on just about every aspect of production." Steve, who edits The Bond Trader, says to expect shortages – and that will lead to plenty of investing opportunities.

Health Care. Globally, per-capita spending on health care has increased by more than 80% in the last 25 years – way more than the 37% increase in GDP. Look for that trend to continue.

IDE's Ted Peroulakis took a hard look at Washington's latest spending package... its trillion-dollar-plus new health care plan. And he says it'll be a boon for hospital operators. "Additional revenues will come from an extra 30 million Americans getting health insurance coverage. Currently, hospitals take billions in losses every year due to uninsured patients not paying their bills after they receive care. Hospitals will get a significant boost in revenue if millions more Americans are insured."

By the way, Ted made a 38% gain in less than a week with an option on a health care stock. If you're interested in Ted's Options Power Trader, click here.

Invest Safely,

Bob Irish
Investment Director
Investor's Daily Edge

We want your feedback! Let us know your thoughts on this article. Email us at: feedback@investorsdailyedge.com

Market Window

FINANCIAL ADVISORY BOARD
Bob Irish - Investment Director Andy Gordon - Editor Jon Herring - Editorial Contributor Ted Peroulakis - Editorial Contributor	Christian Hill - Managing Editor Dr. Russell McDougal - Editorial Contributor Steve McDonald - Editorial Contributor Michael Masterson - Consulting Editor