John Delavera is going live TODAY with his annual all-out holiday bonanza, and early birds get the best offer by far. If any of you don’t yet know who John Delavera is, it’s time to find out, as he has one of the best reputations in the business. So all webmasters, online marketers, internet business owners… head on over and check out Santa Deal Time 2008 now! Here’s the link:
http://getwise.info/about/SantaDeal
Season’s Greetings!
The Chinese Perspective: What Global Recession?
by Tony Sagami
You’ve probably never heard of the Canton Fair, but it is the largest trade fair in the world, where thousands of manufacturers, businessmen, and merchants gather to conduct business.
The Canton Fair is co-hosted by the Ministry of Commerce of the People’s Republic of China and the People’s Government of Guangdong Province, and organized by the China Foreign Trade Centre.
Also known as the China Import & Export Fair, the Canton Fair has been held in the spring and fall since 1957 and has the largest assortment of products, the highest attendance, and the largest number of business deals made at any trade show on the planet.
22,000 exhibitors and 200,000 buyers from more than 200 countries gather in Guangzhou (formerly known as Canton) to find everything from industrial products, textiles and garments, medicines and health products, gifts, and consumer goods.
At the most recent fair, a total of $38.2 billion worth of goods were ordered, accounting for a whopping 25% of China’s entire annual export total. The Canton Fair is simply the single most important business event of the year.
Hey! Somebody needs to tell the businessmen at the Canton Fair that the world is falling into a deep global recession because the businessmen in attendance are too busy making money to listen to what the “experts” from Wall Street and CNBC keep telling us.
Exports Fuel China’s Unstoppable Economy
Get this: The number of exhibitors at the Canton Fair hit 53,000, 10% more than just six months ago.
The reason is simple - the export business is still booming. According to the Ministry of Commerce, China’s exports rose 22.3% to $1.07 trillion during the first three quarters of this year. In September alone, exports rose by 21.5% a year earlier and China boasted a trade surplus of $29.3 billion.
“Export figures do not seem to be very discouraging now,” confirms Zhang Yansheng, director of the International Economic Research Institute of the National Development and Reform Commission.
“China’s economic fundamentals are still strong, so are exports,” Yao Shenhong, a Ministry of Commerce spokesman concurs.
Example: Haier Group, the largest appliance manufacturer in China, reported a 10% increase in foreign sales in the first nine months of the year.
Of course, the good fortune isn’t universal. What is happening is that Chinese exports to the U.S. and Europe are rapidly slowing, but exports to its Asian neighbors, Russia, Latin American, Africa, and the Middle East are skyrocketing.
It may sound ironic, but exports to developed countries are plummeting but exports to emerging markets are soaring.
The reason for the dichotomy is simple: Developed countries are sitting on billions of quasi-worthless mortgage bonds, while emerging market countries never had enough money to invest in the toxic bonds our Wall Street alchemists created, packed, and peddled.
China, for example, has a closed financial system that severely limited how many Chinese companies, banks, and governmental agencies are allowed to invest in foreign securities. China simply doesn’t own a meaningful amount of our crappy mortgage bonds.
Even Chinese consumers are in solid shape. The total household debt as a percentage of GDP in the U.S. is more than 100%, but is only a meager 13% in China.
The result is that for the first time that I can remember in my 30-year investment career, the risk of investing in the developed countries is higher than investing in emerging markets.
Market moves to make now
China’s good fortune in the midst of economic crisis in the U.S. may not make market conditions in the West more palpable, but it does offer a ray of hope. Here’s what you should do:
Step 1: Use rallies to reduce your U.S. holdings. The market has been very volatile, but volatility can be your friend if you use big dips as buying opportunities and big rallies as selling opportunities. That is exactly what I did last Monday when the Dow Jones soared by 936 points and I trimmed my U.S. holdings.
Step 2: Dump the station wagon for a Ferrari. Given the choice of hitching your investment wagon to a slow jalopy headed for the junk yard or a 200-mph high-performance sports car … I’ll take the faster ride every time. I suggest the same for your portfolio and recommend that you overweigh your portfolio with stocks, funds, and/or ETFs from Asia, Latin America, and the Middle East.
Step 3: Buy yourself some “haywire” insurance. I’ve been saying this for a long time, but I’ll say it again: I expect the U.S. economy and the U.S. stock market to get ugly. If things do get ugly, the best haywire insurance you can buy is gold, gold stocks, or gold funds.
Lastly, the one thing that you should NOT do is do nothing. Don’t let the volatility turn you into a deer-in-the-headlights investor who is too frightened to do anything. Doing nothing has been a very costly strategy in the last month and I expect the cost of inaction to go even higher.
Tony Sagami
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Why Mortgage Rates Are Rising Despite Government Efforts!
by Mike Larson
The government is throwing everything … and I do mean EVERYTHING … at the credit and mortgage markets.
It has taken over Fannie Mae and Freddie Mac.
It has agreed to buy Mortgage Backed Securities (MBS) in the open market.
It has pledged to take hundreds of billions of dollars in crummy assets from the nation’s major financial firms.
And it has promised to infuse the banking system with as much as $250 billion in capital.
The primary goal of all these bailout efforts: To lower the financing costs associated with home purchases.
But the result of all these efforts is that mortgage rates are going up.
Yes, I said UP. Let me explain …
Bond Investors Are Asking: “What Price, Bailouts?”
The 30-year fixed mortgage is America’s bread and butter loan. Long before the industry thought up new and creative ways for borrowers to bury themselves in horrid loans, it’s what home buyers typically used to purchase a home. And it’s what I believe both borrowers and lenders are returning to because of the safety and stability that a long-term, fixed rate mortgage provides.
But rates on 30-year fixed loans aren’t going down. They’re going up.
The average 30-year rate jumped to 6.47% in the week of October 10, according to the Mortgage Bankers Association. That was up from 5.98% a week earlier and just shy of the August high (6.58%), itself the highest in more than a year.
How can rates be going up when the economy is tanking and the government is throwing everything it can at the banking sector and credit markets?
Because bond investors are dumping the heck out of bonds - and when bond PRICES fall, bond YIELDS (interest rates) rise.
Why are investors selling bonds? Well, we just learned that the budget deficit soared to $454.8 billion in fiscal 2008, which ended September 30, 2008. That was more than double the $161.5 billion deficit in 2007 and the highest in the history of the country.
Thanks to all the fresh bailout programs, the deficit will likely surge by a few hundred billion MORE dollars in fiscal 2009 - and it could easily top $1 TRILLION.
But no one in Washington has shown any willingness to raise taxes to pay for all of these bailout programs. And it’s not like there’s a pile of money just sitting around in the U.S. Treasury to fund them, either.
We’re a net debtor nation, and we’re going to have to borrow hundreds of billions of dollars to make good on all of our promises.
That means a flood of Treasury debt the likes of which we’ve never seen is going to wash over the market in the coming year or two.
Bond traders know that will overwhelm bond demand. So they’re not sticking around. They’re selling the heck out of bonds NOW, driving prices down and rates up.
Long bond futures plunged from an intraday high of 124 23/32 in mid-September to around 114 now - a decline of more than ten points in price.
Since bond yields move in the opposite direction of prices, they’re going up. The benchmark 10-year Treasury Note now yields about 4%, up from the 3.4% area in September.
Look, politicians and policymakers would like you to think they can just wave a magic wand, drive mortgage rates down, save the banking sector, and return us to the happy-go-lucky, reckless lending days of 2003 to 2007.
But they can’t. The bond market is pushing back and saying loud and clear: “There is no such thing as a free lunch.”
My bottom line message hasn’t changed, either. I continue to expect any recovery in the housing and credit markets to take a long time. And I continue to believe that while all of these government bailout programs can treat some of the downturn’s symptoms, they can’t cure the underlying disease. The only real cures are time and price changes.
Until next time,
Mike Larson
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Dow Drops 733; Another Reason to Like Gold
by Larry Edelson
The credit collapse is not entirely over. Nor is its impact on Main Street.
And as we saw yesterday, there will be more sell-offs, sharp ones that scare the dickens out of nearly everyone.
That’s why I suggest sticking mainly with natural resource-based companies that operate businesses which deal in assets that have intrinsic value - and that will be the main recipients of the next wave of what I call the “Great Re-inflation.”
At the top of that list is my all-time favorite: Gold.
You know I’m a gold bug. And given everything that’s happening in the world today, I’m more of a gold bug than ever before.
How can you NOT be in gold?
There are dozens of reasons I believe everyone must own some gold. But lately, there’s another one that’s rising to the surface …
China Is Soon Going to Make Some Big Buys In the Gold Market
Just yesterday, China’s central bank announced that its foreign-exchange reserves rose to a record $1.905 trillion.
If China were to lay this nearly $2 trillion in surplus reserves end-to-end using dollar bills, the trail would stretch for 193,813,130 miles. That’s enough to wrap around the widest part of the earth 7,752 times!
Clearly, Beijing’s piggy bank is overflowing with money. In fact, at nearly $2 trillion, China has the largest foreign reserves of any country in the history of the planet.
Compare it to Washington, which now has nearly $11.4 trillion in debts, not counting the contingent liabilities of the real estate crisis, Social Security or Medicare.
Whose paper currency do you think should have more purchasing power? Naturally, the yuan. Yet that’s not the case - the dollar remains stronger.
But not for long.
I warned of this a couple of years ago, but now the signs are even clearer: Over the next few years China is essentially going to corner the world’s gold market.
It’s one of the chief reasons I am now even more bullish on gold, expecting the price of the precious yellow metal to eventually exceed $2,000 an ounce.
Mind you, Beijing won’t intentionally set out to corner the gold market. But, in effect, that will be the end result.
Take it from me. I’ve met with central bankers, regulators, and gold traders in China and Asia. I know Beijing’s views on the yuan and gold.
You see, Beijing knows that the dollar’s status as a reserve currency is soon going to be history. Just like the pound sterling lost its status as the world’s reserve currency in the early 20th century.
And authorities in Beijing also believe that as China rapidly progresses toward superpower economic status, the yuan should be a world-class, stable medium of exchange.
They envision the yuan as a major international currency some day, with as much (or more) status than the U.S. dollar. That’s why they’re going to back the yuan with gold … loads of it.
Plus, there’s another reason for Beijing to buy more gold as part of China’s piggy bank. China has an estimated $1.3 trillion invested in dollar-denominated investments. They can’t get out of the dollar quickly. It would destroy the U.S. economy which would have a direct negative impact on China.
So the smart thing to do: Hedge and diversify existing dollar holdings with gold.
Consider this: Right now, China has a mere 0.9% of its reserves in gold (600 tons). That’s the lowest of any industrialized economy! To put it into perspective …
• The U.S. has 77.3% of its foreign reserves in gold.
• The European Union has 23% of its reserves in gold.
• Lithuania, Mozambique, and even tiny Nepal all have more of their reserves in gold than China.
Just to up its reserves to 5% in gold, Beijing would have to purchase $93 billion worth of bullion. That could easily send the yellow metal skyrocketing to more than $2,000 an ounce.
And if China were to match roughly half of the gold reserves held by the United States, it would have to buy another $636 billion worth. That kind of buying would send gold to well more than $2,000 an ounce. Probably to $3,000, or even higher.
My view: China has already started purchasing small amounts of gold. It’s one of the reasons gold is now holding support at its 1980 high in the mid-$800 level, well above important support levels on the charts from $600 up to $735 an ounce.
This is yet another reason I recommended you substantially increase your gold holdings back in mid-September 2008.
I believe gold is still one of the best bets out there, loaded with huge profit opportunities. No matter what aspect of the market I examine, I see much, much higher prices to come for the precious yellow metal.
Larry Edelson
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Why Financial Collapses Are Unavoidable And Government Actions May Be Backfiring
by Martin D. Weiss, Ph.D. 10-13-08
Open Letter to:
Dominique Strauss-Kahn, Managing Director of The International Monetary Fund (IMF)
From:
Martin D. Weiss, Ph.D., Chairman, Sound Dollar Committee
Dear IMF Managing Director Strauss-Kahn:
This past Saturday, October 11, 2008 at a joint press conference by world economic leaders, you said:
“Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown.â€
Further, in an attempt to prevent that potentially traumatic outcome, some of the world’s largest nations have proposed a series of new steps, including massive direct injections of taxpayer capital into private-sector banks.
This brings us to a crossroads that can determine the fate of six billion people for decades to come, a dire reality that motivates me to write you today.
I am president of Weiss Research, Inc., an independent research corporation, and Chairman of the Sound Dollar Committee, a nonprofit, nonpartisan organization founded by my father in 1959.
The Sound Dollar Committee was instrumental in helping President Dwight D. Eisenhower achieve one of the only truly balanced budgets of the past half century. And in keeping with that tradition, we continue to promote fiscal responsibility, sound business practices, and prudent investing.
Over the years, we have learned how elusive these goals can be. And by the same token, I recognize the unusual difficulty of the current challenges you face.
However, it is undeniable that the new rescue proposals being made today go beyond the already-extreme efforts announced or undertaken previously, such as the $700 billion bailout package signed into law by President Bush ten days ago, the unprecedented $1 trillion in central bank liquidity injections during the prior week, and additional extreme measures by the U.K., Germany and other leading nations.
It is also undeniable that those efforts have not yet been effective, leading us to wonder if new efforts will be any different. Before implementing them, therefore, I believe it behooves us to consider some ominous trends:
1. Government interventions are backfiring.
Since the credit crisis burst onto the global scene approximately 14 months ago, each new government countermeasure seems to have backfired.
Rather than encouraging investors to make the rational choice of shifting assets to stronger hands, governments have inadvertently done precisely the opposite. They have promoted irrational complacency. They have encouraged imprudent inaction. They may have also prompted investors to shift some assets back to weaker hands.
Repeatedly, the authorities pursued a policy that made individual and institutional investors more confident than the circumstances warranted. This policy, in turn, prompted investors to buy more common shares in insolvent banks, more junk bonds in over-rated corporations, and more derivatives contracts based on unrealistic models - all despite abundant evidence that the banks’ balance sheets were continuing to deteriorate.
Earlier, various government measures seeking to reduce the panic - such as coordinated central bank intervention - did buy some time by temporarily reducing investor fears. And during those quieter interludes, policymakers were able to artificially drive down the premiums charged by lenders for higher risk loans.
But this was accomplished despite the deterioration in balance sheets.
In other words, each time governments intervened, the cost charged for risk came down, but the level of risk continued to rise. Instead of bringing stability to the marketplace, the authorities created a dangerous discrepancy between the two - between price and reality.
Result: As soon as the immediate effects of the interventions dissipated, and as soon as symptoms of the true risk levels resurfaced, there were sudden, explosive market adjustments.
Investors seeking to avoid devastating losses dumped their high-risk assets. Other investors, who otherwise might have not been unduly impacted by the turmoil, suffered parallel losses. And the general public, previously less cognizant of the financial turmoil, suffered surging anxiety.
The authorities may have exacerbated the very panic they were seeking to avoid. And now, as the public begins to connect the dots between government actions and market reactions, the quiet time bought with each new intervention has diminished or even vanished.
2. Government actions are too little, too late to stem the debt crisis.
Kindly refer to our white paper submitted to the U.S. Congress on September 25, 2008, titled “Proposed $700 Billion Bailout Is Too Little, Too Late to End the Debt Crisis; Too Much, Too Soon for the U.S. Bond Market.â€
In it, we detail why the U.S. debt crisis alone was far larger than previously believed. As of the first quarter, it encompassed or affected
• 1,479 banks and 158 thrifts at risk of failure with $3.2 trillion in assets, or 41 times the bank assets estimated at risk by the FDIC.
• $14.8 trillion in residential and commercial mortgages, $20.4 trillion in consumer and corporate debt, plus $2.7 trillion in municipal debts outstanding.
• $180.3 trillion in notional value derivatives, of which one single institution - JPMorgan Chase - held $90 trillion, or 49.9% of the total U.S. market share.
• $465 billion in credit exposure to derivatives, up 159% from one year earlier.
Today, less than three weeks later, it appears that many of these debts and bets are falling like a house of cards. Moreover, in retrospect, it appears that many of the efforts to support or sustain them may have been futile, wasteful, or both.
3. Government actions are too much, too soon for the debt markets.
In its Fiscal Year 2009 Mid-Session Review, Budget of the U.S. Government, the Office of Management and Budget (OMB) projected the 2009 U.S. federal deficit will rise to $482 billion, a major burden on U.S. debt markets. However, that OMB projection was made before the recent bailout commitments were known or even imagined.
Since then, the expenditures and liabilities announced or proposed by the U.S. government have easily exceeded $1 trillion.
However, for the world’s debt markets - the primary source of federal government deficit financing - the expectation of exploding federal deficits is damaging confidence. It may even be one of the factors responsible for the global paralysis of short-term credit markets. And it may also be one of the reasons why, this past Friday, October 10, we witnessed the worst-ever collapse of high-yield corporate bonds.
4. Government bailouts could endanger government credit and credibility.
The credit market contagion has spread in phases:
• In the mortgage sector, it was initially confined to subprime mortgages. Then it reached the mid-level Alt-A mortgages. And now it has affected prime mortgages.
• In short-term credit markets, it was first restricted to commercial paper issued by weak financial institutions. Next, it spread to the short-term paper of stronger financial institutions. And now it has hurt nonfinancial paper as well.
• In bonds, it began with the most speculative junk bonds, then reached middle-tier bonds, and now has impacted most corporate bonds of all stripes.
Each time, frightened investors sought the safety of government paper. And each time, this fear factor drove up government bond prices while driving down their interest rates.
This may be giving U.S. Treasury officials the false impression that they enjoy strong investor demand for government securities and easy access to funds for more handouts to near-bankrupt corporations. But this influx of money may also be obscuring a frightening prospect:
Governments could be the next victims.
To the degree that the authorities pursue the purchase of bad bank assets, or to the extent that they go forward with the injection of government capital into a collapsing banking system, they may become subject to the same contagion of mistrust.
I implore you: Please do everything in your power to help prevent that from happening. If the governments’ heretofore stellar credit is sucked into this crisis, it could
• make it much more expensive for governments to roll over their maturing debts;
• make it difficult to raise the cash needed to maintain government operations; and
• ironically, deprive authorities of the last weapon they have to help bring about a subsequent recovery: The credit and credibility of the world’s leading governments.
5. Government actions could aggravate, or even cause, the systemic meltdown they are seeking to prevent.
Reason should dictate that governments should do everything possible to liquidate insolvent institutions, quarantine the weakest institutions, fortify the strongest, and insulate the government’s own credit from the scourge. Instead, it seems that U.S. and European authorities are doing precisely the opposite. They are engineering
• shotgun mergers that sweep bad assets under the carpet of otherwise stronger institutions;
• bailouts that create zombie banks and corporations, weakening the system as a whole; and
• new, bigger and unaffordable FDIC-type guarantees of bank deposits that further obscure the difference between worthy and unworthy banks.
The long-term, fundamental affect of these actions is widely known: They are corrosive. They cause far more losses and pain in the end.
What’s not so widely recognized is that the short-term consequences could be equally catastrophic:
By
• combining bad assets with good assets,
• merging weak banks with strong banks, and
• confusing risk with safety,
the authorities are merely making it more difficult for millions of savers and investors to discriminate between each of the above.
The result: Instead of shifting from riskier banks to safer banks, many people are exiting the banking system entirely.
Inadvertently, the authorities could be transforming what should have been a shift within the system to a run on the system.
Instead of a harsh, but ultimately manageable, collapse of the weakest institutions, they could be leading us toward the systemic meltdown you warned about this weekend.
6. Governments are squandering scarce capital that will be needed for a true recovery after any collapse.
No one wants a collapse.
We all abhor the tremendous hardship it will inevitably cause - not just for the few who have the most to lose, but also for the many who have lost hope of anything to gain.
But a financial collapse, no matter how dramatic, is not the end of the world. We have endured many such collapses before and we survived. We can survive this one as well.
Today, it seems the relevant debate is no longer whether or not a financial collapse is preventable. The collapse is already here.
Rather, the main topics worthy of discussion are how big the collapse will be, how long it will last, and what we can do today to maximize the chances of a healthy recovery in the future. Below, I provide my view on each of these topics separately:
The size of the collapse is not within our power to control. We cannot repeal the law of gravity; we cannot stop investors from selling. Nor can we turn back the clock to reverse the financial sins already committed. One way or another, the bad debts have to be expunged. And the events of recent weeks are telling us that a deflationary debt collapse may be the mechanism.
The duration of the decline depends on its speed. To the degree that we let the debt liquidation process happen naturally and manage it wisely, it should be short, fast and behind us soon; to the degree that we stop it from happening and sweep the debts under the rug, it could be long, slow and more tortuous.
It’s in the nature of the subsequent recovery that I feel you can have the greatest influence today. If you protect the credit of the financially sound institutions, they can be powerful resources to help bring about a recovery. However, if you prematurely squander our precious resources now, then any subsequent recovery is bound to be weakened and delayed.
I have four recommendations, as follows:
First, cut back the bailout and rescue efforts.
Second, protect the credit and credibility of sovereign government debts.
Third, preserve public resources for (a) emergency assistance to those that are rendered ill or destitute during a secular economic decline, and (b) carefully planned economic stimulus after a secular decline.
Fourth, foster an environment of public trust by guiding consumers to research that can help them better distinguish between low- and high-risk banks, insurance companies, and other financial institutions.
I know it will be very difficult. I realize millions of people must make great sacrifices. But with the right guidance and leadership, I am sure we’ll be ready to step up to the challenge.
Sincerely,
Martin D. Weiss, Ph.D.
This financial news report is available courtesy of Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Any internet entrepreneur looking to develop his or her own products with the help of Private Label Rights materials (PLR) should know about this. On July 15, 2008 the granddaddy niche-PLR membership site, Nicheology, is raising its price forever, but there is a way to get the current price locked in PLUS avoid the $97 joining fee (through a backdoor link) PLUS get more bonuses to boot (from QiiCart.com). If you’ve been struggling to figure out what to do and where to start, and can’t afford a 100 bucks per month site, then check this out, before July 15! Here’s the page with the backdoor link and bonus offer:
The turbo internet marketing event of 2008 is about to launch … the forces are warming up. Get in now on the direct announcement list so you don’t miss out - the sign-up form is here:
A new training site is out and (for now) membership is free.
Become a member and you’ll discover everything Jeremy & Simon learned about building online businesses and marketing with membership sites.
It’s called ‘Membership Millionaire’ and right now you can get access at
> > > No Cost! < < <
Find the info here:
John Delavera has just opened the gates of his famous annual “Santa Deal Time”, which is truly phenomenal this year.
You want to check it out early, since the price goes up daily for one week, and then he takes it down forever.
Time is money in this case, so check it out now:
The Viral Marketing Giveaway 7 just launched, and for a limited time you can instantly download over $18,000 Worth of hand picked online money making and Internet marketing tools–software, ebooks, guides–without spending 1 penny! Grab them here: