BCE has announced it struck a final deal for takeover by a buyout group, and that the price will remain at $42.75 a share.

Globe & Mail: "The company said the buyers and the lenders have delivered “fully negotiated and executed credit documents” related to the financing. “The final agreement, with definitive financing now in place, preserves the $42.75 per common share price announced last June, which the board believes is very much in the best interest of shareholders, the company and Bell Canada,

Patience pays off. Although it seemed in danger, in the end it was an easy 20% for those who bought. Stock is rocketing higher today.

“The financial crisis has shown that markets are bubble-prone and that laissez-faire regulation doesn't work. The authorities need to get a grip if we are to avoid a mega-bubble. But we may need an even deeper crisis for that to happen.” That is the conclusion of a fascinating round-table discussion just published by Prospect magazine.

Here is the link: http://tinyurl.com/5rqfts

Bill:

I have been reading your posts for several months now and want to thank you for them. They have helped me understand some things that are going on in the investment world. I do have a question. If a brokerage (Schwab, Merill, etc.) goes under what happens to the individual trading accounts in that brokerage? What, if anything can be done to protect ourselves? Keep up the great work.

[Bill Cara note: Clients of US brokers and banks are covered by insurance up to certain levels, and not more, within each financial services company. The minimum is an industry or government guarantee. Occasionally a financial services company will insure accounts to much higher levels. If their website acknowledges this, and you are concerned, write a letter and ask them to specify what the assurances are for your account(s).

If there is a bankruptcy or takeover by another company, the accounts could be frozen for many months and the losses that could be taken over this period could be substantial. It will be a judgment call for each of you as to (i) likelihood of failure by your service provider, and (ii) your ability to withstand such potential losses in your accounts.]

The driving forces behind consumption are dropping
precipitously.
This will lead to further earnings deterioration
and the one catalyst for optimism-a drop in commodity prices- will contribute to further stock market erosion.
See
http://wrahal.blogspot.com/2008/07/wages-not-looking-good.html

Congratulations!

To you, Bill, upon the SC approval.
To you Jim, upon your sale.

To you both, upon attaining a significant measure of that illusive commodity, independence.

Jack

NOT halted reporting new results and talking about the possibility of shipping unprocessed ore to a southern based concentrator/smelter complex and "early production dates".

"The identification of significant high grade massive and disseminated sulphide resources at Eagle One clearly demonstrate that systematic exploration of other targets in the Ring of Fire area will be the most significant creator of value for Noront. Given Eagle One's close proximity to the newly discovered Eagle Two occurrence and the nearby potentially large Chromite deposit, it is clear that this area will continue to be the centre of a highly focused exploration program.

The realization of very high Ni grades (6.5% to 7.0%) in the massive sulphide zone allows Noront to consider the possibility of first shipping unprocessed ore to a southern based concentrator/smelter complex. The construction of an on site concentrator for the disseminated mineralization would be accomplished out of operating cash flow under this scenario. This concept would be considered in an early preliminary economic assessment with minimal capital costs and an early production date, subject to all necessary consents, approvals, permits and land use requirements. While Noront would need to complete a feasibility study, prior to undertaking this direct shipping approach, management of Noront anticipates there would likely be potentially minimal impact to the environment and the mine development would provide road access to several local native communities currently with air access only. "

FNC up 14% on the news.

SiO2, NOSOF is my biggest loser right now, but I've held on. What's your sense as to how significant this announcement is? We've just seen NOT.V steadily drop over the past two months. Is this going to reverse it, or are the cash flows too far in the future to have an impact given the general sentiment for the explorers?

Bill:

A Person is only a slave when giving up action to another.

The tricky issue is leaning truly what action means and how to live to ones personal action rather than being shaped by outside forms.

[Bill Cara note: Yes, Casey, I refer to the word 'slave' in a figurative sense that with respect to our jobs, our children and govt, there are people who are dependent on us, and we must serve them. In that sense, freedom is unattainable.]

wrt: Margin changes - Unless I missed something, there were no margin increases on Crude Oil, Gasoline, nor Heating Oil. Wonder why? One might think that there might also be a credible reason to want to bring those prices back to a reasonable level - eh?

Not that Congress hasn’t already heard some possible solutions to the Oil Price robbery situation(and what about Gasoline?).

In a recent article (at link), testimony to Congress was made by -

Analysts: Fadel Gheit, Oppenheimer &
Co. -- Roger Diwan, PFC Energy -- Michael Masters, Masters Capital Management -- Dr. Edward Kropels, Energy Security Analysis

and all testified to Congress that the problem would be solved by:

*** increasing margin on oil futures to match that required of stock equities (50%)
*** make actual delivery capability a requirement for the futures contract sale
*** full transparency of oil contract positions

more at link:
http://tinyurl.com/5tufe5

Such novel ideas - especially the last two recommendations. Oh, and just one further comment from me: NEVAGONNAHAPN !!

[Bill Cara note: There were in fact changes to the margins on heating oil and gasoline this week. I thought I had posted the link. Sorry.
http://nymex.mediaroom.com/index.php?s=43 ]

Blog improvements?:

Have the 'Home" link sticky to the bottom of the blog. This would allow navigating to the next blog roll easier after the finish of the previous day. Other sticky links at the bottom of the blog roll might also be appreciated.

Some method of tagging posts that would be useful for future reference, ie 'gold purchase', 'brokers', 'investment wisdom', 'shark bites ;-))', etc. Alternatively or in addition to, a global search ability of all archived posts.

It is probably just me, but I usually click on the link to the new post prior to reading the first paragraph on the home page and then have to scroll to the top of the page once the new post appears. Is this desired ? I'd rather it start at the top of the page after the link.

While there may be demand destruction for oil in the US economy, how about worldwide? It seems there will be continued or increasing demand worldwide, in support of current oil prices.

Isn't it interesting how the Saudi's (OPEC) believe there is no need to increase production and that all their customers are happy with market prices?

I think this doesn't bode well for the US equities market. Any opposing ideas on how to interpret the effect?

Congrats Bill. Looking forward to hearing about your services.

I'm in Canada - should I set up an account with IB now in preparation to be able to work with you? I believe you mentioned that approach in the past.

Thanks.

Stv

[Bill Cara note: Yes, we will be dealing with IB wherever they are registered to accept accounts. More later.]

I've been thinking more about the strategy for a bear market like this. I liked gO34's post yesterday on selecting stocks for a new bull. I don't make money speculating on the daily price trend of either the broad market or an individual stock, so I need to work on medium and longer term investment plans.

Obviously, everyone and their dog is trying to find the exact bottom of the market for each of their favorite sectors. I suspect that trying to pick bottoms for financials and housing has resulted in significant negative alpha for a lot of people who have been playing this game for the past 6 months.

At this point, I believe we will continue a net decline in global equity markets as the global asset bubble unwinds, so my strategy is to be net short until I think we have what you guys call "capitulation." (I've never known how to identify it, but I do recognize when we get hysterical selling and dramatic, repeated price drops. But at that point, there is often a real risk of bankruptcy, which sometimes happens. Note that I made a tiny investment in Interstate Bakeries after it declared bankruptcy, and sustained my biggest loss ever, about 97%. Good lesson, although it was less than $1000.)

So I'm at the same place as g034: how to pick a number of positions for the upturn, track them and finally take positions in them for a couple of years.

I've noted in previous periods of "capitulation" the recovery of a security can be very volitile, with sharp downturns accompaning a general upturn. An undiciplined or risk tolerant investor will panic and sell during sharp downturns, move to another security, and miss the normal upswing that so often follows a downswing at the beginning of a bull.

So what g034 talked about is the bull half of my planning now. The bear half is how to keep a net short position, while managing the risk of a short position (like DUG, TBT, FXP or EEV). The bull half is to figure out my screening criteria.

The one thing that I would add to g034 (for my personal purposes...I'm not suggesting that the method he proposed is deficient) is looking for (1) well managed, reasonably capitalized companies that have had unusually large price declines because they are associated with a deeply troubled company in that sector (like AES was when Enron went down), and (2) companies that have had unusually large price declines due to some special events, like Tyco, Royal Ahold, or FNM after their various scandals. These are special situations that can give an especially low P/E and often an unusual dip in earnings that can indicate an additional upside potential.

There will be some exceptional candidates in the financials, monoline insurers, homebuilders, but I can't figure out an economical way of starting to sort these and track the best prospects. I'm definitely not going to try to play the game of trying to hit the exact bottom for any of the sectors mentioned just above. Any comments on finding these somewhat more risky "special situations?"

Chickenpookie, although I haven't examined the effect of the declining USD on energy prices in other countries, I am seeing very dramatic, huge increases passed on to consumers in all the countries where I work. These include, for example, Kazakhstan, India, Ukraine, Egypt, Jordan, Pakistan, and about 30 other developing countries. Many of these countries have temporarily shielded energy consumers from the recent rises in oil, gas and coal, but they are almost all adopting policies of passing on the increases through a series of rapid retail price increases. Those that are trying to maintain price stability are finding the budgetary stresses unbearable. So even the chronic subsidizers, like Egypt, Indonesia and India, are increasing prices dramatically. Although they may increase prices by less than the total global price changes, the impact of these price increases on your average Indian or Pakistani consumer is bigger because the costs are a bigger share of consumer income.

The price adjustments are just beginning. This means that the demand responses will be trickling in over this next 6 months. My own sense is that this is an argument for a bigger short position in my own portfolio for energy. I can't see demand reductions in such a broad range of countries, from the US thru Ukraine, Russia, Indonesia, India, and so on, not to reach that marvelous inflection point at some point soon. I don't believe in the idea that supply will be constrained enough to keep real prices at these levels for long. My instincts say that if we hit $155 for oil, my short position to oil goes to 5% of my trading portfolio.

Casey:

Perhaps Bill means more the interdependencies (your "connections" maybe?) as reflected in chapter 7? Everybody has a boss, or bosses (commitments).

So it seems NYMEX moves to take a larger slice of the gold market? Wonder if this is to dampen margin investment, or increase gains in anticipation of some big moves?

Nemo: This is actually a very important distinction and also why most people are not free.

Let me give an example: Lets use Bill mentioning the connection to children.

People can seemingly give up their freedom in order to support their children.

For instance a person in a bad marriage will give up their personal freedom, not leave the marriage, in order to "protect" their children.

So in this instance the person is not free, they gave up their action, and also hurt themselves and in reflection the children get hurt.

Now lets flip that around

You can take personal action in this case: The personal action to leave the bad marriage for oneself, to help oneself grow and still in the process move along to support the children.

The trick is to take personal action but don't forget kindness in connective actions to others. To not confuse personal action with connective supportive actions.

In my example here, you don't have to give up your personal action and you can still work towards kind actions for your children.

People often give up their "personal" action for others, for society, for following trends... Thinking they have no choice in their personal action within the larger actions.

That is a simple example of the trap and how many people lose freedom in our culture.

That is the lose of freedom.

Thats why I said what I mention earlier

A person is only a slave when giving up "personal" action to others. It's a very fine line of understanding, but it makes all the difference for having freedom.

In your example it's a matter how one rationalizes the actions and their concomitant consequences.

We're always free to make choices as long as we're willing to pay the price.

It comes down to your definition of Humanity and Justice.

in the US there is more freedom of choice than, say, in china...but there are so many constraints and responsibilities inherent in living a productive life i hesitate to say any of us are free in the sense the sixties idealized it...free love-> that was a joke...changing partners at the drop of a (false philosophical) hat may have been culturally correct for a time, but at what expense-> i remember abandoned families, devastated boy-/girlfriends, unwanted pregnancies, abortions...freedom from responsibility is not really freedom, it's the extension of self-centered childhood...even if one walks away from a job or a relationship, there are still many constraints-> are we free, for instance, to eat/ingest whatever we want, forego exercise, treat others rudely and still expect physical and mental well-being? no, freedom usually refers to the freedom to do what's right, what one is best at, what one is passionate about-> which then all lead to happiness...

It has been my observation that couples with children divorcing or splitting up are usually totally self absorbed and haven't truly considered how their actions (before and after) are going to affect the primary job they signed onto when having children. This is usually because they have children for all the wrong reasons without thinking about what the job is really about...raising fully functioning healthy individuals that will in turn make healthy choices. (see 2nd's 60's "freedom" take).

In those cases it isn't so much the adults that pay the price or make sacrifice, it is the children, both short and long term, both physically (lack of proper resources) and mentally (poor examples of how to make good choices, rage syndromes/poor choices in relationships passed on, grown adults acting like adolescents).

It's nice to think that the children might benefit from a less contestive environment, but it would be better if those who had the power to make the commitment would grow up, realize their responsibility, and put themselves aside to do their primary job.....raising children.

This also might entail a bit of outside relationship building for the individuals/couple, which might not be all that bad in light of the fact they screwed up to begin with. Thus (in my typical pollyannish view) it can be win/win....as long as everyone maintains a mature approach and some semblance of healthy independence. For instance, how many women get caught in the above and totally sacrifice for the children until they realize the nest is empty and the mid-forties life crisis/empty nest syndrome sets in, then suddenly decide to have a life? How many of those same women would have done far better setting an example of a self assured person that realizes there is a degree of self maintenance that is not only healthy for the individual but also a good example for the children?

How many men are already in outside relationships (Elliot) and if mature and ***discrete***, still maintain the home and have good relationships with their kids and the child raising partner? How many societies is this more the norm than in our society? Example: The Kennedy men are all known as one time "womanizers", yet who would argue their commitment to large Catholic families, family unity and family gatherings and activities? Can we see where their actions negatively affected their children as productive and healthy individuals? I'm not saying we know for sure,(not being a fly on the wall) but the kids seemed to have a grown into very productive and responsible people with good relationships of their own and a sense of public service.

ALOHA !!

ON PERCEPTIONS
Perception is key ... You can watch TV and listen to the CNBC talking heads or you can read FOMC meeting minutes and view CPI and BLS data until you are blue in the face but what do you "FEEL"? Your eyes are open to your environment, where you live and where you work ... What the US government wants us to believe is "their" VERSION of the "T-R-U-T-H" not your own or Bill Cara's or Mish or VonMises. Then I have to go back to my past experience with "salesmen" and I have to ask myself "What's their agenda?" After all the US government is really just a "salesman" ... selling you "reasons" at the REASONS-R-US store they own ... Reasons why they need more tax money!

I myself look around the internet, because I have no TV, and for the life of me I cannot find a single news story about a major financial institution that is hiring! I see tons of news on firing ... not hiring! So I assume job losses in the financial sector. I also don't see any homebuilders hiring, so I assume job losses there. I also do not see much hiring action in retail so I assume more job losses. I talk to friends and some own businesses and none of them are hiring, they're trimming the fat! I have other friends who work for big corporations like Bank America and two of them were handed severance packages within the past year and neither have found work since then.

Who's TRUTH do we believe then? I like Steven Colbert's idea of "truthiness"! The US government and US FED(one in the same)from my perspective has a very LOW score in terms of "truthiness"! I do not trust them at all! Yet, many in Wall Street, who control vast sums of OPM will quote CPI and BLS data 25/8 and then place bets on behalf of their clients(OPM) based on that false data, then rely on FED intervention to prop up the markets to allow for that false data to exist. False data eventually equals losses. US taxpayer always pick up those losses in the end! Now since the US government has never worked to earn a single dime in its entire existence and is immune from prosecution and can hide behind NATIONAL SECURITY via EXECUTIVE ORDERS losses to them mean nothing. Even if the US government went BK tomorrow, what do they care? All the politicians on Capital Hill just go home or fly off to a non-extradition country and live out their lives. If the US went bankrupt tomorrow the Sun will still rise in East and set in the West and we will still breath air and eat food. Could we survive without the US government taxing us to death? The US government and all its politicians talk endlessly of reasons why we are in perpetual need for higher and higher taxes ... ever notice that? Yet the higher the taxes rise the more poverty rises! What's wrong with that picture? Why do we continually reward failure in America? The reasons are endless as to why the US government needs more tax money and I'd say 99% of those reasons were created by the US government through failed policies ... repeatedly failed! FAILURE-R-US!!

Here is the difference between US government data and your own perceptions! Go to this link and examine the spreads between US government data that drives Wall Street investments of OPM and the REAL WORLD where you and I live ...

Link: http://tinyurl.com/6zcalv

Some of the Kennedy kids did, some didn't. Of course, that also comes down to personal responsibility. One can argue public service is a wonderful thing. I've also seen where public service attracts the worst vermin. People that want to be in power always worry me.

Allen,
A short position is a reasonable idea, I suppose, if it's kept reasonably small. Judging by my observations, there are too few indicators to suggest an appreciable reduction in energy commodities through year end. I'm thinking more in terms of a decade here.

When I first came to Bill's blog I was a bit surprised to discover a Bear mindset on Oil commodities, which has really held for much longer than I anticipated. This encouraged me to concentrate on identifying bargain non-commodities for long opportunities.

Now I'm wondering if the seemingly oil-bear mentality here is a holdover from the previous decade, or a response to the current bull.

Oil commodities have remained in a strong Bull much longer than most analysts seem to have expected, after a very long bearish decade.

In retrospect, I feel like I should have invested in energy commodities in contrast with most traders here, but still am confident non-commodities will recover nicely, just that it's going to take much longer (on the order of at least years)than folks here seem to be thinking.

To take the Navy line, children are not a job, they are an adventure. I've been through one divorce with one child and boy did I have to swallow my ego to make that as smooth a transition as possible. It was worse than death. Meanwhile, an acquaintance was going through the same thing, and he was taking his kid to be checked by therapists constantly because the divorce conditions were so antagonistic. I would give up all future gains in the stock market to simply see parents act civilly to one another during breakups. Yep, for the kids' sake. If you can't stay together, at least don't tear your children apart.
But on a positive note, if one is able to help create a stable family that is loving toward each other, that can set a child on the right path and will be a foundation for their life. I've experienced that part, too.

Allen, I am no expert but the good news is everywhere on the NOT PR. Total resource net smelter value, indicated and inferred =~ $1.6B (of profit).

Perhaps the biggest is that that Noront is considering doing the mining of Eagle One themselves. The halt has lasted unusually long, perhaps more news to come.

The 43-101 is published using a bare minimum of drill data (29 holes) which seems to indicate that there is still much work to be done on Eagle one and resources will actually be much higher.

The PR mentions "Production" 4 times: "indicate excellent potential for production revenues in the not too distant future. The main advantage of our current exploration effort is the minimal capital expenditures required, and possible early lead time, to begin obtaining production revenue from these resources."

Total indicated 1,834,000 tonnes at 1.96% Nickel, 1.18% Copper, 0.15 g/t Gold, 1.12 g/t platinum, 3.91 g/t palladium, and 3.81 g/t Silver. Net Smelter Royalty of CDN $515 per tonne

Total inferred 1,087,000 tonnes at 2.39% Nickel, 1.27% Copper, 0.13 g/t Gold, 1.37 g/t platinum, 4.50 g/t palladium, and 4.21 g/t Silver. Net Smelter Royalty of CDN $614 per tonne

Total resource net smelter value, indicated and inferred = $1.6B (of profit)

We may be looking at a double digit stock in the future. Thanks to Bill for this one - again.

Meanwhile, a customer of mine, a wealthy two-mansion owning doctor told me today my services are getting too expensive. I've only been raising my prices because my costs have been going up. I'm not getting anything extra. But if HE"s complaining, I'm really starting to worry about the economy.

Crude oil fell from near a record after indicated it's willing to discuss an incentives package from world powers intended to persuade the Persian Gulf nation to suspend uranium enrichment.

http://tinyurl.com/5blv9l

Norm: I wasn't referring necessarily to elected office, but John was involved in heating oil charity, Robert Jr. is in volved in envornmental causes, Caroline is on the VP committee for Obama, etc. There was/is no real power in these positions, excepting the VP committee, but that is mainly about one judgement call on her part, not so powerful in the long haul.

I think the *power* notion is overblown...and largely a judgement through our own individual eyes/morals.
As someone that has served organizations that involve politics in the past I have been subjected to that type of accusation, and as such I have seen it for what it is, mainly BS.
when those making the accusations came into power, guess what they did?

Exactly what they accused others of doing...perhaps worse.

Example: look at the republicans that went after Clinton on Lewinski. Remember "rule of law"?
whatever happened to rule of law? That was Bush's campaign...rule of law and confidence in government. HA,HA,HA,HA,HA!
Where are the rule of law republicans now?
Why did't they just tell the truth and say they were about the rules THEY wanted and mainly about their own power? THAT is how it works.

Then they paint even the honest with THEIR moral brush.

Joe is involved in the heating oil charity, "Joe for Oil" He gets discounted oil from Venezuela that his Uncle Ted organized for him. He pays himself over 500k a year to do it. He and his relatives use the non-profit through which the oil is funneled for other ventures. As you may know, a non-profit is anything but. (BC/BS of Mass was/is a non-profit. I remember one year in the mid 90s they had to hurriedly arrange bonuses so they didn't show a profit.) You just can't have any retained earnings at the end of the year. The Boston Globe did a big expose on his organization about 10 years ago.

CP, good comments. I think the ST/LT distinction is important. I see a ST (in this case, within 6 months) price decline in oil because of a combination of the dramatic rise in wholesale prices in the past 6 months, and because countries that subsidize oil/energy are finally taking real action to pas wholesale costs to consumers, because they can't bear the subsidy costs anymore. Some countries just see the opportunity cost of underpricing at the wholesale and retail levels (Russia, for eg) and they are pushing hard to get both wholesale and retail prices to "world market levels." This means consumers and industries across the globe are facing a combination of prevaling market prices (instead of getting big subsidies as they have over the past several decades) and cuts in demand because of these prices. A standout is Venezuela, but even countries like Indonesia and India, which have traditionally heavily subsidized energy at retail, are allowing prices to go much closer to market levels. I work with a number of these countries on energy policy issues, and I can see strong resolve to stop the hemmoraging due to energy subsidies.

But over the next 10 years, I could see prevailing prices sticking (after a few corrections), and strong and continuing real increases in wholesale prices due to a number of factors, such as declining production of the big fields, increasing cost of exploitation, transition toward LNG in the gas market, adoption of higher cost renewables, and so forth.

So my bet is a short term (but not day trade) bet.

Sometimes waiting is a good strategy. For example, if one had shorted homebuilders or finance in 2006, when the bubble was clearly evident, one would have lost money. The question is what oil price causes a short term sharp downturn in price? I'm not an oil market trader or specialist, so I can only have educated guesses. As I said, I'll consider increasing a short oil position when we pass $150, and will increase the position somewhere between $155 and $160. But I"ll keep it small enough that if I'm wrong, no major damage is done.

Si02, thanks for your informative email. I bought NOSOF at something like $5, and so am sitting on significant losses. It's good to hear that their business is finally showing some possibility of production, with good resource levels. I also own Geologix, and am even with that.

allen makes a good point. shorting the NASDAQ was a painful bet before it paid off...shorting homebuilders and financials was painful before it paid off...going long oil was painful before it paid off...going long gold exposed one to stomach-churning corrections the entire way...shorting oil/going long financials now? well, in a few months the right trade will be obvious...it isn't right now, which is why we call it a trade; it would o/w be synonymous with printing money, right...

to put what allen is saying in antoher way: define your time horizon, define your tolerance for volatility (how much churning can you handle, how much pain can you take if the positions go against you)-> choose your position sizes accordingly, tune out the noise, and manage the trade (stay with it, cut your losses, trade around it, whatever)-> it's your trade, and yours alone; take responsibility for it, and you should be fine...

2nd, I sold 50% of my securities in 1998 (2.5 years yearly) and another 50% in 2000 because I thought we were in a bubble. With the first 50%, I bought farm land. With the second 50%, I sat out of the market for a year, and then bought small caps and Russian shares, plus some distressed shares, like AES.

I had good instincts. And some luck. But you don't need luck to buy farm land during the late stage of the tech bubble.

The big question is what to do now. I am hunkered down, and trust Bill's judgement on the situation. I have 20% in TBT because inflation will take its toll on bonds soon. I have about 15% in gold explorers because I like the big picture story. The rest is in cash. That's 65% in cash, which seems appropriate to this unstable market.

IMHO, the trick now is to understand when this market bottoms, to minimize risk during the bottoming period (and a lot of our neighbors will loose a lot), and figuring out where to position ourselves for the recovery. Frankly, being short and out is the right position now, but the issue of where to be in 6 months is something that I am pondering. I would appreciate your thoughts on that.... I am not a day trader, and don't think this is really profitable except for the person who has lots of time.

Joseph P. Kennedy II, Robert Kennedy's eldest son, founded Citizens Energy in 1979. Traditionally, Citizens Energy operated by a form of arbitrage - buying low in one market and selling high in another. Greed informs ordinary arbitrage, but Citizens Energy has mostly used its profits to reduce the cost of heating oil to low-income New Englanders.

For 27 years, Kennedy's scheme has worked to perform a modest service to needy consumers, while, of course, providing useful favorable publicity to Kennedy. In 1986, he turned over the company's management to his late brother, Michael, to run for and serve in Congress for six terms. During his congressional career, Joseph Kennedy was quadrennially rumored to be a candidate for governor of Massachusetts, but after leaving Congress in 1999 he seemed relieved to become a somewhat private person, after years of Kennedy political celebrity. In 1998, after Michael Kennedy's death in a skiing accident, Kennedy resumed his active management of Citizens Energy, serving (at a salary of about $60,000 a year for a 10-hour week) as chairman and president.

What a bummer, $60,000 for 10 hours a week?

I will set up another non-profit for Hugo and run it for $60,000 no problemo.
Boy, $60,000, the man's a Saint compared to (insert any US bank president/oil company COE/politician here). Don't make me laugh.

I set up a 501c3 non-profit to rescue Australian Cattle Dogs in perpetuity.
The accusations you make would have Citizen's Energy non-profit status revoked in one fiscal year by the IRS. There are more than a few legal safeguards preventing what you say from happening including articles of incorporation and by-laws set up in the State of Incorporation.

I doubt you can provide a reliable source beside Cavuto on FOX, who never has an axe to grind...right? It's not like Chavez doesn't fill their empty airtime....a constant.

Wonderful demonstration of the tactics I mentioned above.

allen- placed my bets early, or so it seems right now...went from 70% cash to 35% cash over the course of last week...long a mix of financials, air transport, china, ESLR, a couple of beaten down industrials (eg, GE), and/or mutual funds in same...i like the short bond trade also, but not currently holding anything...

so obviously i think there will be a near-term bottom of sorts soon...and i may well be wrong...

longer-term, i think either a wash-out low (where the capitulation is obvious) or an extended stretch of a narrow trading range will be needed to set the stage for recovery...but to be honest, i don't think anyone has a clue how long the bear will last, which is why trading (ST or medium term) remains the only reasonable approach for me right now...i'm also looking into real estate in the irvine area, basically b/c we will soon have two kids going to school in the area...

ALOHA !!

allen ... You and I have a similar past except that I bought a producing farm in 1998 and I bought gold and silver in 2001, so none of my cash was sitting idle. In 2000 all anyone had to do is look at a long term chart of gold and silver and you would have seen super basing ready for blast off Captain!! That's all hindsight now though isn't it? Or is it?

I always have to wonder what people mean by "The rest is in cash."? When people tell me they are in cash they need to define that! These days cash is not a safe harbor ... Debt is even less safe and I always wonder about those who have more cash than debt. If you have debt pay it off!

Cash to me means something totally different than most people and I don't like idle cash, especially of the US Peso variety. If you have "65% cash" sitting in a US Bank I think you're living in a fantasy world in terms of safety. Some day that will be hindsight but I see one area where you are totally vulnerable. You have no "monetary insurance" at all. To me you are not diversified enough. You may have gold miners but you have no gold! My "cash" is defined as "gold and silver" first, Swiss Francs, AUD and CDN ... The rest is either private business investments, real estate, art, royalties or stocks(oil, gold, silver and base metals). You'll notice I am heavily biased toward hard assets and "real wealth"! I do not own paper wealth vehicles like bank stocks, bonds or consumer dependent stocks(which a lot of techs are).

Just remember ... there are no safe public US Banks so you have no safe cash! The FDIC and SIPC are safety nets woven out of spaghetti since it is all US Peso denominated and politically determined. You are depending on the benevolence and charity of the US Congress and I can tell you that in times of dire straights the US Congress has never been anyone's pal! Just ask someone who was alive in 1933! All I can say is "BEWARE OF WEEKENDS"! Any of the BSC employees now know why! If you think the FDIC and SIPC will always be there ... think again!

As Bill has pointed out the US FED "intervenes" ... Thats all they know how to do. Their intervention track record is not very good otherwise Bear Stearns would still be viable! Who's next is what you should ask not "where's the bottom"? If your cash is in the next victim then you are really "cashless"! Look to what Bill wrote about litigation and freezing assets and that includes cash as well as stocks. Examine closely where your "investments" are parked and don't always just study performance. With a fiat monetary system you can never be 100% comfortable or 100% safe. That's what fiat is all about ... this is what it feels like to have "NO STORE OF VALUE" left in the World any more. We have all been lured into this false sense of security that the US government will always be there to rescue us. Ask BSC employees and Katrina people how safe the World is! Look being born in America is no guarantee of anything ... there are no guarantees ... this is life!!

IT'S 10PM ... DO YOU KNOW WHERE YOUR CASH IS?

left out my long-suffering refiners, which are my version of the short oil trade...i can't even recall when i entered the positions, probably mid-june...i've been trading around SUN, but TSO/VLO have both been on a long road down...

ALOHA !!

Happy 4th of July !!!!

We won our independence from England and the King's oppressive taxes or did we?

allen- your 65% cash position looks good to me...even legendary value investors like buffet have had a bad year...BRK-A is down 24% from its high last fall...

kaimu,

Speaking of taxation, a British friend is fond of asking, "How do you like it WITH representation, mate?"

Regards

For me it's actual cash and gold and silver.
I took the cash out of the banks a while ago.

That's why I got that nice missive/threat from Jim Kelly at ING!

Happy Independence Day everyone!
Let's commit to SEIZING more liberty and less government. Kaimu will keep us on the straight and narrow! Aloha!

One more good wish for a Happy Independence Day and a corrupted thought from The Who:
Meet the new George, same as the old George.

"In terms of denting the tech-is-immune psychology, I think the damage produced by RIMM's misstep is an important event. Mountains of hot money have been hiding out in tech, as demonstrated by the conclusions of various opinion polls: that the Goldilocks contingent has been betting on a second-half rebound and that tech would be the place to be.

It's going to be the place to be, all right, but only for those seeking major pain."

QID holders can seek comfort in Bill Fleckenstein's latest column:

http://tinyurl.com/6cksp7

Happy Holidays.

In a recession you can only sell so many expensive gadgets to so many downsized gadget-freaks, and I feel that the market for hand held wireless microwave generating expensives is probably fairly saturated by now.

The Fed & Gold:

This weekend I enjoyed hearing my Father, a life-time blue collar worker, talk about his first boss and that boss's experience with gold, gold certificates, and "safe" deposit boxes in the 1930's.

The thought immediately came to me that, back then, the Fed was attempting to rid themselves of Gold obligations by the US Govt.

Today, we have no Gold Certificates and no corresponding gold obligation by the US Govt. to average citizens.

What will the Fed do in tomorrow's environment to try to pull the rug out from under gold-holders? Make gold illegal again? Price control?

I own physical gold and silver bullion, but these things still keep me up at times . . . Thanks in advance.

ALOHA !!

Bull Hunter ... I'd have to argue that we DO NOT have proper US Constitutional "representation" ... not since 1913!

I always loved the joke about Brits I first heard back in the 1970s when I was going to UNI in Western Australia ...

Q: How do you know when a plane from London has landed at the airport?

A: When the engines shut down the plane still whines! HA!!

No offense to the Brits since I can tell plenty of SEPO jokes the Aussies have! I guess that all started way ... way back! At some time or another practically the whole World was once "POMES"(Prisoners Of Mother England) ... That was back when England's jails were overcrowded and the Brits sailed around the World looking for places to dump the human refuse of England. They found Australia and the Americas and there much of the rabble of the Crown was disposed of either that or they were pressed into service aboard one of her Majesty's Man-O-War ... Pretty much thats how things are here in the USA ... go to jail or go to the military! Our US government certainly has been working overtime warehousing humans in bulk!

I fear we here in America escaped the British Crown but not the Bank Of England!

ALOHA !!

I did a search on YOUTUBE for "POME" and came up with this new definition of POME ...

POME = Product Of My Environment

It is still all about the lifestyle of crime ...

The less a US Peso is worth the higher the crime rate! Can I buy a call option on crime?

Link: http://tinyurl.com/6pa4ky

ALOHA !!

POME - Product Of My Environment

So exactly what kind of environment produces this lifestyle ... this belief system?

ALOHA !!

Talking some truths ... This is the other side of the American Dream! Listen, because these guys are talking about hard work and dedication. Hard work and dedication is just about as American as Apple pie! Its that same "hard work and dedication" that got Mozillo where he is today! There's all sorts of ways to collect US Pesos! This is economics here as much as shorting oil or selling CDOs! In another clip this guy spends some $1650USD on some clothes and complains that these same clothes were much cheaper last year! He's definitely out pumping up the velocity of money! Spending like there's no tomorrow! The way the US government does ...

Link: http://tinyurl.com/6jplrw

Obviously there are some distasteful moments here but how can you study this side of our monetary culture without suffering through some crassness?

Where do we file these guys in the realm of CAPITAL MARKETS and SOCIAL EQUITY?

Kaimu the reason why the Aussies referred to the whingeing Poms was this, They were called the £10 pound POMS by paying £10 they invited to come and live in Australia. Unfortunately some people who could not resist the cheap travel invitation did not realise what they were letting themselves in for ,they probably had not left England before and were suddenly in Australia down under and where whingeing about wanting to go home to England, many did return to England. Two of my uncles went out there who went in to serve in the Army there post 1945, they are in there late 70s now and have never returned to England, I have never met them or my cousins.

It’s 4th July, And Americans Are More Dependent Than Ever.

http://tinyurl.com/57ou2u
Alas, the Brits found that bossing others around was an expensive enterprise. The British Empire provided order all over the world – which was a boon to commerce. But under the protective wing of the empire, other economies – without the expense of such a huge military establishment – proliferated like lice. By the beginning of the 20th century, both the American and German economies were bigger than Britain, and growing faster.

Now, America bears the expense of policing the world. And its rivals take advantage of Pax Americana to pile up dollars and steal market share.

Taxes in merry ole England - The thought always brings back to mind a point in time in England when ”they taxed the very air that we breathe”. Officially, it was said to be a form of property tax, but the “window tax” was close enough to being the very air that we breath to cause some unrest among the taxed.
http://en.wikipedia.org/wiki/Window_Tax

Every time I look at our (US,State,County,City, etc, etc, etc list of taxes, assessments, surcharges, fees, etc, etc, etc, I wonder when they will start to tax the very air that I breathe (and call it a “window tax”).

http://tinyurl.com/68hrnh

Enjoy the weekend. Yeah, TODAY is Saturday.

Hey Craig,

I told you the Boston Globe did the expose. I think the WSJ did also regarding Joe For Oil. Look, more power to him. He uses his 501c3 to its fullest advantage.

2nd, I'm interested in seeing how your long positions play out. I find the macro picture too negative to want to try that myself. I see an accelerating downward trend in the global economy over the next year, and think it will affect China like any other country.

I invested actively in the Asian markets and Russia during their boom periods, and recall that everyone thinks they will decouple and that their P/Es will remain permanently higher than the US, but in fact due to the political risks, the rule of law issues and lack of transparency in accounting and financial management, the emerging markets over correct more than we do. So I'm still willing to short China and emerging markets generally (but am not now).

BTW, I used to work with a number of Asian banks (in Indonesia, Philippines and Thailand) on their credit procedures, and frankly, I would add a significant risk premium to investment in many of the companies if I were going to price their shares for purchase. As a lender, we had 100% to 140% collateral, so we didn't care much about the financial shinanagans.

Russia is a special case, because they are now growing on energy sales, and they are, in my opinion, executing their national strategy to be a dominant energy player. They will probably weather the global market decline well. I would buy Russian funds after a correction.

Must read: Bringing Down Bear Stearns

URL for Bringing Down Bear Stearns: http://tinyurl.com/43c3gm

2nd - "it's your trade, and yours alone; take responsibility for it, and you should be fine..."

I apologize for a poor choice of words, "encouraged". This was meant in a positive tone.

I detect this as a sensitive subject so I must clarify; all of my actions are a result of my own decisions.

Kaimu -

You believe in holding PM's, instead of US PESOS, and I think that's a smart long approach.

There's two sides to every coin and since I began watching the markets on a daily basis this year, I've discovered that short term, PM's are quite subject to governmental manipulation. My observation: The manipulation is biased in favor of fiat currencies. I have witnessed some large changes in magnitude (corrections?), but the general trend remains flat to positive.

So, then, it seems to me that market timing is crutially important in terms of PM's. In my basic knowledge of investing, a trader advances his/her gains through active trading, but I don't have a perspective on your activities pertaining to this aspect.

Do you actively trade the PM's in attempt to improve your basis, or does your strategy primarily focus on collecting dips?

Bill: In that sense, freedom is unattainable.

I agree about the figurative use, however, I would like to add

I teach and help people on a daily basis sort exactly these type of issues out.

Freedom is an inner truth: we each define it for ourselves in life.

I also teach a "middle path" where we are a balance between personal actions, and our connections in life.

If we only define ourselves to our connections then we lose personal freedom. if we only run away to be our personal actions then we also hurt ourselves and all we love in our connections (which isn't being free).

In the various posts afterward people talked about these combination relative to the bad marriage and children example.

The real point is:

We need both personal actions, and Kindness in our connections to fully reach out and be "free"

I mention this distinction since: its a very fine line in perceptions to lose ones "freedom". All it takes is to embrace the word slave or "must do" in ones action to become the slave in ones life.

In the end it even "slave" is a personal choice... But the personal choices are often more open than people believe.

CP- my post was entirely a response to/an extension of allen's earlier comments, all which i agreed with...i am (usually) able to read comments in the context of what i know about the poster, so it was unnecessary to clarify your tone..but thanks for taking the time to make sure the bases are covered..;)

Spot -

Interesting thought. In a sense, the air that you breath (and water you drink) is taxed, and the scope of those taxes will be increasing to account for your carbon effluent. This is called an environmental impact tax, which covers your impact on environmental resources. Environmental taxes are collected through various means, and a portion of the proceeds are distributed to the EPA among others, mostly pork-barrel.

There are efforts to create tax incentives for exhalation of improved air. In fact, my father owns a timber farming business that receives tax incentives for positive environmental impact.

With time, other opportunities for investment in this arena are likely to emerge in the form of ETFs, etc.

Casey:

I think it was you who introduced the "marriage" example.

"If we only define ourselves to our connections then we lose personal freedom. if we only run away to be our personal actions then we also hurt ourselves and all we love in our connections (which isn't being free)."

Therefore, Bill, by aligning or partially defining himself according to "social equity," has lost personal freedom?

If you want to get really esoterically philosophical then our soul is enslaved (at least partially) for this lifetime to the requirements of the physical body.

So, even though I may have multiple choices, there may be a "must do" that limits those choices. I might not want to perform bodily excretory functions, but sometimes, I must be a slave to them.

Allen,

Totally agree with you about value in Russia. Once things calm down a bit in global markets, the Russian market should snap back nicely. It always has this decade, and especially since late 2004.

As a result of the recent correction, Russia's oil & gas majors are all showing huge upsides to fair value. Gazprom in particular is a screaming buy at these levels, even as the share price has been declining along with the market. That company is making a MINT this year with oil & gas prices at current levels - and it has yet to be priced in by the market. Rosneft and LUKoil are also showing big upside, with tax relief in the pipeline. Mobile operator VimpelCom - a Cara 100 component - was down 10% last week - a big sell-off that was totally unjustified. And that company is 100% exposed to domestic, ruble-based revenues, as is MTS the other big mobile provider. I also think NLMK and Sberbank are great value buys, especially the longer your investment horizon becomes. NLMK is the country's most profitable specialty and long steel producer, and is poised to capitalize on the country's enormous infrastructure build-out in the coming years. Sberbank is showing value due to its massive market share and the fact that it has NO exposure to the toxic waste that taints the balance sheets of global banks. It has been punished simply because ALL financial stocks have taken a hit globally.

Russia is leading all emerging markets by a wide margin in terms of equity portfolio fund flows this year, and much of this money is still sitting on account with fund managers waiting to be put into the market. Russia is also still trading at a big discount to EMs on both P/E and EV/EBITDA. And I totally agree that the government has their ducks in a row with their strategic development plans. Granted inflation at 15% is a concern...but where isn't it?

Russia was the world's third-best performing equity market in the second quarter, behind Jordan and Brazil, and I think this is still fresh in the minds of global and EM investors.

Nemo:

I think social equity is about "kindness" as its about approaching equity in a equal social responsible manner rather than exploitation of a few over others.

We are not a slave to bodily actions, it's part of our very definition. However, you can become a slave to "anything" if that's what you spend all of your time, perception and actions dealing with in terms of "chains" and "Obligations" rather than wonder and possibility.

As stated earlier freedom is an inner truth... it's up to each of us to define it in the end. I can never define your freedom. To do so limits what you can explore and your own possibilities.

At this point it's possible to spin in endless circles of debate due to the nature of inner truth and perception. That's not an answer, it's just talk. In the end we each must take our own "actions" in our hands and accept them as they unfold. How one views and accepts that action defines freedom or slavery in the end.

Have a great weekend! time to enjoy the sun

nemo- interesting point...the closest one comes to freedom in his lifetime as a physical being is freedom of thought- we can take our thoughts anywhere at any time at the speed of thought, and mightily influence our physical perceptions and mental state by doing so...once freed from the physical state (which is yet another level of freedom), we may (depending on one's beliefs) then have an eternity of time to reconnect with old relationships and pursue new ones as spiritual beings...

ALOHA!!

This is my vote for BEST IPO FOR BIOFUEL ...

Of course I am not sure when this will IPO but if you look at the venture capital firms that are backing this energy company then you'd see why. One of the venture capital firms backed Apple Computers!

What is this biofuel? ALGAE ... I have posted here about algae fuel last year. Why do we have ethanol then? POLITICAL BRIBES ... like any Third World country thats what greases the American political machinery!

Please go to this link and make note of this future IPO.

SAPPHIRE ENERGY

Link: http://tinyurl.com/5swqw7

Casey: If that is the definition you wish to enslave yourself to?

I disagree-You either have to perform an excretory function or not. Try drinking a gallon of water and not perform an excretory function. Therefore we are, at a minimum, beholden to our bodily functions in this physical form.

Freedom is an inner truth...which brings us back to the pig of Chuang...

I think your last sentence is what I said in an original reply to your first "marriage" post.

2nd: That is the blessing and the curse. Thoughts can take us anywhere-to fantasy or reality. The trick is to know which is which within the limitations of this existence.

(Kaimu must get a kick out of this...:))

Kaimu:

Yeah, no kiddin' We'll probably start seeing the anti-ethanol push after the elections. Gotta' get that farm belt vote.

Dapoopa:

My only concern with the Russian market: when do the oligarchs and Putin, who have taken over the energy and minerals market, decide to take over the rest of it?

Regarding the dialogs "slave" versus "freedom" I agree with Casey's comment, "At this point it's possible to spin in endless circles of debate due to the nature of inner truth and perception. That's not an answer, it's just talk."

Language is an inherently imprecise concoction of literal, metaphorical and analogical statements. Taking metaphor literally, analogy as fact, and other pointless ploys of dormitory bull sessions does little to further any issues of markets or social equity, save those of gaseous ego inflation.

Johojo:

That's why I used the real-world example of excretory functions. To move from the theoretical to the practical.

The past 2 days demonstrate eloquently why this discussion can never be corralled into predefined subject categories.

Especially on weekends and holidays...

Mmmmmh...excretory functions have a gaseous component...

RE: Canadian miners/explorers

Has anyone here tried to estimate a fair stock price of PNP.TO and AZM.V? PNP.TO is now 5 times lower than its peak a year ago and AZM.V is 3 times lower. I am currently long both of them and I thought that they have been oversold until I looked at a 5 year chart and saw that they have both appreciated by about 1000% over the past 5 years. I don’t know how much, on average, their exploration/production costs have risen relative to the price of commodities they (can) sell. Does anyone have a feel for that? Are these stocks still overhyped since 5 years ago or are they oversold?

Thanks,

DavidV

Funny you'd mention it..But since we're getting as scatalogical as a Finley/Mapplethorpe joint exhibit, allow me to observe that the "air" has been coming out of a lot of these gas producers in the past week, the ones that went from a dollar to 50 bucks for absolutely no reason
(MXC, PDO, FPP, NOG, CFW, FTK and GW.) I've been playing these baby's on the short side to good effect.

all:

http://tinyurl.com/5po5v8

interesting chart on trade in Africa

nemo: definition? A start of poem for you

People insist on definitions
tell Me what it Is!
What's the Color? What's the Taste? What's the ...
All this adds up and up and up
to being a box,
within which a person is buried.
The box decays into the Tao.

if you want I am happy to take the chat offline
personaltao @ gmail.com

I spend my professional career helping people unwind the traps they make for themselves. That freedom is personal and in the definition of our life people almost always trap themselves.

I might have circle about in the answer, Taoism tends to do that as we spin in our exploration of definition.

2nd
Good article in Barron this week about CALM the one we did traded before
Barron expects stock to double?

Kaimu:

Thanks for the info on Sapphire Energy. I had seen some of the work being done with algae on a science show. That was a year ago and have not seen or heard anything since.

Kaimu and Rookie,

Here's some information about another "renewable gasoline" initiative similar to Sapphire Energy: http://www.technologyreview.com/Biztech/18827/?a=f

"The Bear's Back"(No #&*% Dick Tracy)

Barrons Cover Story (free):

http://tinyurl.com/5n74l6

Green gas and diesel from algea,

This has gone way past "scientific theory" and is actually in production.

I met with a company doing this last year interested in working with my employer. Here is an article on a full scale actually algea plant using electrical power plant (gas fired cogen plant) flue gas to frow algea. The algea is then turned into diesel.

http://tinyurl.com/6lyrrg

Sounds like Sarkosy's hoppin' mad about the ECB rate hike...

Casey:

Yes, it's sad...all we have are words and their definitions through which to communicate. Depends on what your definition of "is" is?

On a market note:

Sandisk is in the Cara 100,no? Their products seem to becoming a commodity? What makes them worthy of Bill's designation?

http://tinyurl.com/6kbmbs

Sunday Morning Coffee: 11?

With the big slide in the USD then recent stability, good opportunities for foreign takeovers are presenting themselves. Wonder if more bids for US companies sre in the works?

Now considering which are most attractive:
- US exporters?
- US companies with foreign operations?
- US financials?

Good Sunday Morning Very interesting article linked on Leisa's page (link http://tiny.cc/emXDS)
by Henry C.K. Liu . Link;
http://tiny.cc/Ld1FJ
One of many sentences jumped out at me as if written by Bill or Kaimu
"The rise in oil price is the direct result of a debasement of money coordinated by the world’s central banks led by the Fed."
Many thanks to Bill for this blog. Congratulations Bill on your business milestones but more gratitude from this blog
Peace from North Puget Sound

Photogray:

Liu has extensive writings on his website regarding US economic hegemony throughout the 20th century and the sins of central banking.

From Liu:

"Fact 1: Oil-related transactions involving the same material quantity involve greater cash flow, with each barrel of oil generating $100 instead of $25. The United States consumed in 2007 about 22 million barrels of oil each day, about 25% of world consumption of 87 million barrels. China consumes 7.3 million barrels per day. Yet daily world production is only about 85 million barrels, leaving a deficit of 2 million barrels which are being made up from inventory. This fact is the fundamental reason why oil prices have risen. It can be expected that production will increase as a result of high prices to remove the supply deficit."

This has been my belief. No doubt dollar debasement plays a roll, but once the consumer gets into the "fear" response to supply limitations, what price is a fair price? It would seem rational that for oil prices to drop there would have to be belief in a sustainable supply cushion, regardless of what happens to the $.

Liu again:

"About 50% of US consumption is imported at a cost of $1 billion a day, or $365 billion a year. Oil and gas import is the single largest component in the US trade deficit, not imports from Japan or China."

This was also a specific point I held for those who don't want to drill. What do you do about the CA deficit if you don't produce more energy domestically? Is the US in between the proverbial "rock and a hard place?" Does it have the time, fiscally speaking, to not drill?

"Slave"

Casey - I agree with your statements.

I would like to add this thought. ...

I wouldn't go on to say we are a slave to our jobs, wives, children or family.

I believe that we have made a choice to make a "sacrifice" and that is why it is a beautiful concept. So I would disagree that we are slaves as in most situations we have to make a decision to give up some of our freedoms to get married, have kids or work a job.

If you don't want any of the above - don't get married, "safe sex" and work a job that you enjoy or that the offsetting sacrifices are what you can cope with.

As far as Government, money and sacrifices....
As bad as some may see it. We dealt a hand of cards, play the game with your hand or change the rules. For many it is a sacrifice that we had no real choice to make, it essentially is forced on us. You/we/me could make the choice to move out or make a difference. Either way, we will have another government that will ultimately be run by crooks.

The only unique part of our government is that we are govern by laws, not rules made by individual man as a monarchy.

It's not perfect but what and where is better?

Happy Independence day!

Thanks to the brave men and women who are serving around the globe.

At least they find ways to have fun.

four minute video below.

http://tinyurl.com/oeok5

nemo: "Does it have the time, fiscally speaking, to not drill?"
Consuming less will work far faster than anything else. Demand destruction is coming, driven by high prices. Its going to be chic to be green, even though motivation is the folding green. Increased supply doesn't have to be from environmentally sensitive areas, as we've seen from a few posts these last weeks, but we do need to kill that ethanol subsidy. Got your Zenn car yet?

Cyderman:

I'm not sure I buy the environmentally sensitive propaganda, as well as I don't necessarily buy oil industry propaganda.

I'm trying to remember the last time I heard of a major drilling accident. Again, tanker captains having too many drinks seem to be the biggest problem.

Demand destruction would have to be world wide. If there isn't, then there would be no downward pressure on oil prices. Given our energy profligacy, it would make sense for it to occur here. Therefore, if you don't get a decrease oil prices, you have a constant drag on the CA deficit. Further domestic production would reduce CA. Wouldn't that reduce the need to finance deficits? Given the future spending demands to which the government is currently committed, and perhaps another one in the pension short-falls throughout the economy (somewhat exacerbated by the recent debt collapse)such production would be a net fiscal gain.

Now, it may be the world has to find a way to keep the US afloat, but my crystal ball is a bit cloudy on the ramifications.

http://www.youtube.com/watch?v=-OfQ0NE4yNo

On George Stephanopolous' program, Ted Koppel made the comment that American troops will be required in the Middle East for years to come.

That strongly suggests that the only way the U.S. can quench its thirst for oil is at the end of a gun. It further emphasizes the abject failure of U.S. automakers for the last forty years, as they fulfilled their gluttonous appetite for obscene profits rather than make the smaller, fuel-efficient cars that have long been needed.

I have to wonder how the U.S. will maintain that precarious balance, on the one hand bearing the immense financial burden of extensive troop deployments while simultaneously paying through the nose for oil even as its own economy suffers irreversible injury, all the while confronted by what promises to be an increasingly hostile world which comes to realize what American high-living has wrought for them. It would also appear that any improvement in domestic programs such as national healthcare are destined for the ashcan of history.

This scenario arouses in my distrustful mind (so conditioned by four decades of greedy and uncaring capitalism) that the "economic elite" have made a conscious decision to abandon the long-term effort of bringing virtually everyone into the middle class in favor of a more cannibalistic form of "laissez faire capitalism" dedicated to taking us back to Grover Norquist and Karl Rove's favorite historical period....the Gilded Age". Wouldn't it be fun if it turns our to be the "GELDED Age of Capitalism"!!!

Dangers of "paper gold" - from SeekingAlpha comments on a new gold-futures-based ETN, explanation of what I think Kaimu and Bill are getting at:

"Paper Gold" is a conflict of terms, like "political leadership" or "Federal Reserve". There already exists paper gold many times in excess of the total value of real gold that exists on the planet. When market failures begin in the paper markets, will you be able to say "I've got mine!", or will you be left holding a worthless piece of paper, an unfulfilled promise to deliver?

Real physical gold is the only investment that carries no counterparty risk. It fulfills its own promise. No lawyers or regulators required.

In an environment where no one knows who is really bankrupt, and where regulators aren't forcing banks, IB's and brokers to reveal their true financial condition, counterparty risk is the phrase that ALL investors need to be concerned about nowadays.

Always there is the siren song: "It's easy to invest in gold. Just buy this paper! It's just like gold!"

No, it's not.

BTW, the full SeekingAlpha post:

http://tinyurl.com/5dp2qr

To my mind, the concern applies to futures and options-based products. A share in a gold producer or explorer does not involve counter-party risk, and involves leverage on the value of ounces in the ground as the gold price rises. Reactions?

Final thought: Why is the huge amount of "paper gold" vs. physical gold different from (for example) stocks with large open interest in their options?

Because gold is such a small market. With Donald Coxe's "3 functions of gold" all powerful (counters dollar decline; hedges against inflation; provides a refuge from banking system failures) gold demand may surge. If significant amounts of capital suddenly pursue gold, "failure to deliver" could become a big issue very quickly with ETF's, ETN's, etc. Reactions?

UOY/DOY - Reviewing these from last week indicates a direction opposite from what I would have anticipated. Perhaps ETF investors were betting crude would fall? Anyone care to venture a guess?

ALOHA !!

Jock ... You just defined why I believe the ETF models(GLD & SLV)are flawed. NO SUPPLY = NO ETF!!! Its just that simple ...

I would rather align my future with a mint who has access to one of the richest goldfields the World has ever seen and is backed by a 100% pro-gold government who is already minting gold and silver currency.

ANYTHING bank owned or sponsored is just a game of musical chairs and all those who own them are just hoping the music never ends! If you don't believe me then try to locate where your money(gold)is at GLD ro your money(silver) at SLV !!!

Jock,
Assuming markets completely crumble, paperholders will be left holding the bag, so to speak. Paper holders have the advantage of being able to trade their paper, though. This is one reason I believe investors have chosen to speculate in oil.

PM Miners could be risky for many reasons:
- Inability to navigate geo-political hurdles (holds true even with mega-buck financing).
- Leverage from hedge funds (is said to be current cause of Jr miner performance issue).
- Overstating of in-ground resources (same as HB&B hiding bad paper).

jock

“If significant amounts of capital suddenly pursue gold,
This is wishful thinking. This has not happen in 200 years of us financial system
But are moving away from gold
And

"Failure to deliver" could become a big issue very quickly with ETF's, ETN's, etc.

Yes, it may become big issue for those who may be holding these ETF’s and ETN’s
Nothing more

Iraq & Iran - On whether to go to war or attack based on weapons of mass destruction (chemical & "nucular" type), I don't recall ever actually seeing any compelling evidence made public of the existance of WMD's.

With all the spy satellites in orbit and other mechanisms taxpayers are asked/required to support for gathering intelligence, one would think these covert activities would be exposed publically prior to any military action.

It's possible the tragic results of military action might even be averted simply by making the information public.

"Military intelligence" always seems to confirm the terminology as an oxymoron.

Looking at recent equities and housing market performance, it suddenly came to me what the Bush administration meant by "Shock and Awe"!!!

I wonder how many paper gold traders cashed out July 3rd, and are buying back at today's price...

Re GLD:
It's my understanding that Barclays publishes a list of the bar identifiers (I think this was in response to earlier doubt by one of the goldbug newsletter publishers as to whether they were actually holding physical gold). I don't know where to find it or how often it's published. I don't know if they do it for SLV.

In a similar vein (accidental pun), if you buy shares of a nice strong miner, GG or ABX say, that were sold naked short, don't you still have a counterparty risk?

Confirming perhaps Bill's RSI numbers for the major averages looking ready for a bounce, Wordens T2108 (% of stocks above 40 day MA) is down to 9.26, lowest value in since August 15th 2007 when it was 7.74

Cyderman - A bounce here sure would be appreciated by many, wouldn't it???

ALOHA !!

This "stick your head in the sand" ostrich routine is just going to kill 401ks and pensions! Who will these people beg to help them when they retire and have no funds in their 401ks? Hummmmm ... could it be "S-A-T-A-N"? The same HB&B who keep dumping OPM down the sewer to save their own skin!

I'd like to see some research on how many people are cashing in their 401ks to pay their mortgages and eat!

Once the credit cards are tapped out all thats left is retirement funds, if there are any!

READ ON:
Investors' anxiety builds as retirement nest eggs show cracks
Globe Staff / July 6, 2008

The bad news is in the mail.

In the coming week, millions of ordinary investors will rip open envelopes holding their retirement account statements for the second quarter and cringe. Most will find their stock and bond funds in 401(k) and individual retirement accounts sank between April and June as soaring fuel prices and woes in the financial sector dragged down markets.

While the first quarter also brought some steep declines, the second quarter could feel more painful to the majority of investors who track market activity casually, financial advisers say. That's because markets climbed through April and early May, before tumbling late in the quarter, dashing hopes of a recovery.

"I open it when I get the statement and weep," said Joyce Kauffman, 58, a lawyer from Roslindale. "I keep putting money in, and I'm not getting anywhere. I look at it, I grimace, and I file it away."

Lillian Gonzalez, 51, an accountant from Stoughton, said she gets "sweaty palms" when statements arrive. "The closer you are to retirement, the more anxiety it's going to provoke," she said.

That kind of reaction does not surprise Michael A. Cirillo, a psychologist in Worcester with an interest in the ups and downs of investor behavior.

"Anxiety and avoidance go hand in hand," he said. "It's probably a coping mechanism, though not necessarily a sound one." Some people become so anxious that they make the critical mistake of thinking they can "time" the market," Cirillo said - they pull money out of stocks that are on their way down and miss the subsequent rally.

Investor dread in this slowdown has been compounded by a slump in housing values and increases in gas and food prices. Then there's the Dow Jones Industrial Average, which closed in bear market territory last week, meaning it's down 20 percent from October's peak.

"I'll take a quick look at it and put it right down," Chris Neri, 57, a Plymouth realtor, said of his quarterly statement. "Right now I'm just treading water. I try to think long term. I've probably got another eight to 10 years before retirement, so hopefully I'll catch an upswing and get out alive."

Such long-range thinking has been ingrained in investors who have experienced the ups and downs of past economic cycles. Some said they try to boost contributions to retirement funds when the market retreats to buy shares at a discount, but others said escalating costs have left them no choice but to scale back. Most have kept their contributions steady, as financial planners advise, while looking to rebalance their portfolios between stocks, bonds, and cash.

"My portfolio lost $18,000 in the first quarter, and I just shrugged," Gonzalez said. "I don't fret about it. If it doesn't come back, then everyone's going to have some real problems."Continued...

http://mrmortgage.ml-implode.com/

If the rumor IMB just went under is true I doubt there will be much of a bounce. If there is it probably won't be led by financials. Note: this is just a rumor at this time.

Nikkie down again but just barely.

An $18k portfolio loss? You ain't seen nuthen' yet!!!

Prediction from Harry Schultz - comments please,
Bill Cara comments please:

http://www.marketwatch.com/news/story/schultz-settles-apocalyptic-mode/story.aspx?guid={CE9F808B-C32A-485E-BC35-E538C2F010CB}

ALOHA !!

My kind of people!!

I urge everyone here to go to this website and look at these photos of protesters in front of the US Federal Reserve Bank! Read some of the placards then scroll down to the very bottom of all the photos. I predict the policemen arresting these people will be joining them soon!

READ ON:
Monday, July 07, 2008

Ben's Noisy Lunch Hour

On March 26, after a crowd took over the lobby of the Bear Stearns building to protest the Fed's involvement in the deal with JP Morgan, I wrote: "Eventually those protesters might wonder why they're picketing in the lobbies of investment banks instead of outside Federal Reserve buildings."

This past weekend, a reader emailed me some photos of a protest at the Federal Reserve on June 27 (sample below, the rest here). If the Fed continues on its present course and/or more people start to associate the rising cost of living with monetary policy, the next real estate bubble will be in free space on that sidewalk.END

Link: