Wednesday, May 12, 2010

Jay Taylor: Turning Hard Times Into Good Times

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Biggs Says U.S. Stocks May Rise 20% as Crisis Eases

U.S. stocks could jump as much as 20 percent, led by technology companies, as the global economy rebounds from Europe’s debt crisis, said Barton Biggs.

“I’m betting the next move in the U.S. market is going to be up 15 to 20 percent,” Biggs, who runs New York-based hedge fund Traxis Partners LP and whose flagship fund returned three times the industry average last year, said in a Bloomberg Television interview. “I would just point out that the world is having a strong economic recovery, and so is Europe.”

Biggs recommended buying U.S. stocks last year when benchmark indexes sank to the lowest levels since the 1990s. He didn’t give a timeframe or refer to a specific measure. The Standard & Poor’s 500 Index rose 0.3 percent to 1,163.02 at 12:06 p.m. in New York, rebounding from a 1 percent loss. (more)


Gregg: U.S. May Follow Greece Into a Debt Crisis

Sen. Judd Gregg, R-N.H., says the United States is in danger of being in the same dire situation as Greece in seven years if the nation doesn't slash its debt and control spending.

“We are on a path which will go to where Greece is, there's no question about that, if we don't adjust our present financial house,” Gregg says.

“If we continue to spend much more than we take in," he says. "We'll double our debt in five years and triple it in 10 years and essentially be where Greece is in about seven years,” he said Monday night on the Fox Business Network. (more)

Senate Backs One-Time Audit of Fed's Bailout Role

The Senate voted unanimously Tuesday to authorize an examination of the Federal Reserve's closely guarded emergency lending to financial institutions in the months surrounding the 2008 financial crisis.

The measure passed 96-0 as an amendment to a comprehensive financial regulation bill before the Senate. The vote came as the Fed ramped up its emergency program to keep a European debt crisis from spreading further.

The Senate proposal would require a one-time audit by Congress' investigative arm, the Government Accountability Office, and cover a period beginning in December 2007. The GAO was specifically directed to examine potential conflicts of interest between the Fed and the banks receiving assistance. (more)

Just Saying No to Social Security ...

Lancaster — known throughout the U.S. as Pennsylvania Dutch Country — is about 40 minutes away from my house. And whenever I pass through the area, I'm reminded of what it means to be truly self-sufficient.

The region's many Amish inhabitants grow their own food ... help each other build their houses ... and use horse and buggies instead of gas-addicted cars. Heck, they were "green" before the term became fashionable.

I frequently interact with Amish famers at our local markets, and they are always happy and courteous. Plus, their products are top-notch. My own house was built by Amish craftsman in the 1980s from a reclaimed barn and the workmanship is impeccable. (more)

Porter Stansberry: The U.S. dollar is about to implode

Dear subscribers... we hope you pay special attention to today's Digest. The world has officially entered what we believe will be the final chapter of the U.S. dollar's reign as the world's reserve currency. The dollars in your wallet now not only back bankrupt U.S. money center banks and subprime home "owners"... they are also officially backing all of the economies of Europe. The world's monetary system has evolved into a new kind of global socialism. We don't think that can be bullish for long. (more)

Is The Greek Debt Crisis Being Purposely Hyped And Manipulated?

Everywhere you turn in the financial media right now you see some "expert" declaring that the Greek debt crisis has become a "contagion" which is going to spread all over the globe and which could potentially bring down the entire world economy. Now certainly Greece has badly mismanaged their finances for decades, and without a doubt they have gotten themselves into a huge mess. But could Greece bring down the entire world economy? Hardly. The truth is that you could remove Greece from the world economy tomorrow and most people would hardly notice. The economy of Greece is only about 2% the size of the United States economy, and it takes in less than 0.1% of U.S. exports. But we are being led to believe that Greece has suddenly become the epicenter of a financial crisis which is going to bring down everything. Could it be that this Greek debt crisis is purposely being hyped and manipulated? Could it be that this Greek debt crisis is yet another example of the "problem, reaction, solution" paradigm that the global elite have employed so many times before?

Economist Tim Madden: The PIIGS Brief: understanding how oligarchs rig, loot our economies. 2 of 4

Interest Front-loading = Leverage, Leverage, Leverage.
A single critical factor lies at the heart of the global financial crisis, and that is the ability of financial institutions to conceal or otherwise misrepresent interest, unlawfully capitalized-in-advance, as principal on the face of a financial instrument or “valuable security” as called under the Criminal Code of Canada. The process is called front-loading and its actual and legal significance is that it is mala in se or evil/wrongful of itself, and has both judicial and common law recognition as such in many countries, and especially and repeatedly in Canada. (more)

SEC eyes 'circuit breakers' to stop repeat of Dow plunge

The Securities and Exchange Commission (SEC) is examining ways of regulating US stock exchanges to prevent a repeat performance of the dramatic drop, which saw the Dow Jones Industrial Average fall by almost 1,000 points in less than 30 minutes on May 6.

The root cause of the fall has yet to be established, and the regulator is scrabbling to put some form of system in order to maintain an orderly market in the future.

Creating a circuit breaker was understood to be the subject of yesterday's meeting in Washington of Mary Schapiro, SEC chairman, and the heads of the major US exchanges, including the New York Stock Exchange and the Nasdaq. The heads of electronic exchanges BATS Exchange and Direct Edge also attended. (more)

Who Is Next?

“Every heavily indebted sovereign borrower in the world is starting to wonder if they might be next,” forecasts Eric Fry in the Daily Reckoning. “This situation is very serious, very pervasive and very unlikely to be cured by any sort of ’rescue plan.’

“The chart above places the Greek crisis in a global context. As expected, countries like Italy and Greece are high on the list. But surprisingly, the US is on par with Spain and Portugal. America's three-year funding requirement seems much more ominous when viewed in absolute dollars.

“Most central bankers of the world realize this fact. That's why they all wish to support Greece -- not because they care about Greece, but because they care about avoiding close scrutiny of their own finances.

“Runaway government borrowing creates a frightening context for any would-be buyer of government bonds. That's why long-dated bonds may be some of the riskiest assets on the planet at the moment.”

That would be a core component of our new “Trade of the Decade”: Buy Japan, Short U.S. debt.

Chart of the Day