June 2012 - Money Morning - Only the News You Can Profit From
Eurozone Debt Crisis: EU Reaches Bailout Deal
The recent marathon session in Brussels was the EU Council's 18th meeting on the Eurozone debt crisis. As it is comprised of the heads of government from European Union members, the Council was largely thought of as a grand debating society.
Not this morning.
In what may well be the first glimmer of light at the end of the tunnel, the EU will agree to coordinate bailouts across the continent. The details are still incomplete, and there is always devil in the details.
In addition, EU members must approve the substantive plan, meaning more coming politics in parliaments from London to Warsaw.
So this is not a done deal.
Actually, until there is some flesh on the bones, we are still uncertain what the "deal" really is.
But this much we do know.
Jim Rogers: Market Surge from Eurozone Debt Crisis Deal Won't Last
"This is no more than just another temporary stopgap to make the market feel good for a few hours, days or even weeks," Rogers, Chairman of Rogers Holdings, told CNBC. "Then everybody's going to wake up and say, "This doesn't solve the problem.'"
Meeting in Brussels, European leaders announced a plan early Friday that would provide struggling banks with money directly from the bloc's bailout fund.
The leaders also said bailout funds could be used to stabilize European bond markets. But they did not tie such use to additional austerity measures, which have angered citizens in debt-troubled nations like Greece and Spain.
The summit is just the latest in a series of high-level attempts to resolve the 2-year-old Eurozone debt crisis, which has required bailouts of Greece, Portugal, Ireland, and most recently the Spanish banking system.
Markets around the world surged on the announcement, with some European indexes rising as much as 4%. In the United States, the Dow Jones Industrial Average shot up 200 points at the open. The Standard & Poor's 500 Index was up about 25 points, or just under 2%.
Don't get used to it, Rogers said.
New Touch Technology Paves the Way for a Robotic Jimi Hendrix
Most people could easily tell the difference between an apple and an orange, even if you put a blindfold on them.
No, they wouldn't have to taste or smell either one to be sure. Quite simply, they could pick out each fruit just by feeling it.
Our sense of touch is a key part of the human experience. It's why we prefer to wear shirts or blouses made of silk instead of those made from burlap.
Not only that, touch is the only one of our five senses that covers our entire bodies. And we have lots of nerve endings all over waiting to give us this tactile feedback. Consider that your fingertips alone contain some 1,000 touch receptors – roughly 100 for each tip of each finger.
If you stop and think about it for a moment, you'll realize just how complex the sense of touch really is. It combines the feelings of hot and cold, rough and smooth, wet and dry, soft and hard, as well as pain and pleasure.
Now just imagine trying to put such a complex system into a sensor so small it could fit into the tip of a robot's "finger." No doubt that would a huge breakthrough.
For one thing, it would make robots far more "human"…
It would open up a whole new range of jobs for robots in industry, farming, and mining.
It could even usher in the day when a robot could learn to play the electric guitar in a way that rivals the late rock legend Jimi Hendrix. And it could certainly improve the quality of life for millions of amputees around the world.
Robotic Touch That Rivals the Human Hand
That's why I'm so excited to introduce you to SynTouch LLC, a small San Diego startup focused on making tactile sensors for robots. The firm wants to create the same type of dynamic range as that found in the human hand.
Stock Market Today: Is This the End for RIMM?
Yesterday the markets opened almost 1% in the red and were sent down even further after the Supreme Court's ruling. The ruling was a surprise, but the fact that the markets acted so volatile was certainly not.
The markets did rally at the end of the day on positive news from Europe and that momentum has carried over to today.
The surprising news out of the European Union summit was the announcement yesterday from European Union President Herman Van Rompuy that European leaders have agreed to spend 120 billion euros ($149 billion) to stimulate growth and create jobs.
The plan includes a 10 billion-euro capital increase for the European Investment Bank (EIB) as a centerpiece of the long-term growth plan, which includes infrastructure financing, tax-policy pledges and more focused use of EU funding.
"The growth agenda is a sign of our unrelenting commitment," EU President Herman Van Rompuy said in a press conference in Brussels on the first day of a two-day summit. "It brings together all concrete measures that we will swiftly take."
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Higher Gold Prices Triggered by Europe
In early trading Friday, it was like old times again – gold prices soared and it was well overdue.
The yellow metal glistened in early trading, with gold for August delivery rising 3%, propelled above the key $1,600 level. Fueling the strong gains in gold and other markets were encouraging words out of the European Union summit.
As the pivotal two-day meeting in Brussels wound down, global markets and commodities rallied after EU leaders struck a "breakthrough" deal to ease the recapitalization of banks. The plan was aimed at pulling the Eurozone back from the edge of its debt crisis.
LIBOR Manipulating Banksters Get a Slap on the Wrist
Heaven can wait.
There's a passage in the Bible that says, "The Kingdom of the Father is spread out upon the earth and men do not see it."
Bankers see it.
The whole earth is heaven for the big banks. They rule over it like petty, greedy gods.
And that's not because they're too-big-to-fail; it's because they're too-big-to-control and have it too-good-to-ever-change their sleazy, self-serving, corrupt ways.
The latest proof of big bank's criminal ways, that they've been manipulating Libor – which isn't news, I was writing about this four years ago – isn't an indictment. It's a signed, sealed, and delivered verdict of "guilty."
(Check this out, I get credit from a group of fraud lawyers for being first to call this out right here.)
Barclays, a monster British bank, is under criminal investigation for its role in fraudulently manipulating the London InterBank Offered Rate (Libor). It settled charges late on Tuesday with Britain's Financial Services Authority (FSA), the U.S. Commodity Futures Trading Commission (CFTC), and the U.S. Department of Justice.
Yeah, about that "justice" thing…
Barclays "settled" by paying $92.8 million to the FSA (a record fine), $200 million to the CFTC (another record), and $160 million to the DOJ (a piddling amount).
But, hey, you know, they're sorry and all that. Sorry they got caught, that is. And they're not alone.
There will be a bunch of other big banks paying for this gross game of manipulation. And all of them are household names.
Obamacare Ruling: Key Takeaways for Investors and Taxpayers
It's time to buy some insurance for your portfolio following Thursday's landmark Obamacare ruling.
The Supreme Court voted 5-4 in favor of President Obama's controversial healthcare reform law, formally known as the Patient Protection and Affordable Care Act.
The chief and appellate justices upheld the core of the law which has sweeping political and economic ramifications. Many economists, analysts and healthcare experts warn it's a Pyrrhic victory at best.
President Obama and his supporters cheered the landmark healthcare decision – as Republicans reached for an aspirin, an antacid or an analgesic.
While the GOP vows to throw out the law on day one if Mitt Romney wins Election 2012, the ruling does remove some of the dark clouds that have been looming over healthcare stocks. The uncertainty of the law's passage has had many market participants staying away from the sector.
Obamacare Ruling and the Average Household
What Obamacare means for the average American working family with an annual household income up to approximately $90,000, is that starting in 2014, they will be able to purchase private insurance through new state insurance markets at prices subsidized according to income level.
Mammograms, cancer screenings and other preventative healthcare measures will be available without deductibles or co-pays.
Adult children can remain on parents' health insurance plans until they are 26. Seniors can continue to receive discounts on prescription drugs, and health insurers will continue to pay rebates on premiums not adequately targeted at healthcare services.
In addition, insurers will no longer be able to deny coverage to adults with a pre-existing medical condition and must stop or limit the practice of discriminatory pricing based on gender, age and current health status.
Furthermore, healthcare providers will gravitate away from the conventional fee-for-service approach toward systems that coordinate care.
Don't Expect the Obamacare Ruling to Calm the Markets
Even before the Supreme Court decision on Obamacare was handed down yesterday the markets were selling off hard.
They were tanking on news that the latest European summit was unlikely to be a game-changer, that U.S. gross domestic product was a paltry 1.9% in the first quarter, and a New York Times story that JPMorgan Chase's derivatives loss could top $9 billion.
Then came the long-awaited decision from the country's highest court on the divisive healthcare law, the Patient Protection and Affordable Care Act, which unhinged markets further.
The Court's historic decision shook the markets for several reasons.
But the single overriding effect of the mixed-bag decision will be its impact on markets going forward.
That's because the divided decision further fuels partisan politics going into the November elections and sets the stage for an all-or-nothing battle between Republicans and Democrats.
The chances of there being any compromise anywhere on any divisive issues before the elections is now mathematically zero, where before it was somewhere between slim and none.
The Bigger Issues Behind the Obamacare Ruling
What the markets now face aren't just healthcare, tax and spending issues.
As a result of the Court's stunning decision, we face something much bigger — Constitutional issues of the highest and deepest order.
The High Court, with Chief Justice John Roberts unexpectedly siding with the Court's four liberal justices, rendered a 5-4 victory for President Barack Obama's prized legislation.
The ruling upholds the "individual mandate" that requires citizens to either pay for "minimum essential" health insurance or pay a "penalty" through the IRS as a "tax" towards offsetting the shared costs of national healthcare.
But the Court also struck down the Act's provision allowing the Federal Government to effectively "hold a gun to the head" of states if they failed to increase Medicaid benefits, largely expanded under the new law.
In its original form, states could lose all Federal funding of Medicaid for non-compliance with Federal demands.
By its decision the Court effectively admitted that the Commerce Clause argument underpinning the individual mandate's Constitutionality was null and void.
But while they said that the individual mandate that "forced" citizens to buy health insurance wasn't intended as a "command" that fell under the Commerce Clause, they incongruously flipped the argument on its head and agreed (by a one-vote majority) that the mandate was legal under Congress' authority to "tax" citizens for the benefit of the nation.
Are You Ready for "Taxmageddon"? Six Alarming Tax Increases You Can Expect Next Year
A slow moving train wreck known as "Taxmageddon" is creeping toward U.S. taxpayers.
You see, if Congress doesn't act by year's end, numerous tax breaks will expire — and hit every American taxpayer squarely in the wallet.
It's a fiscal tsunami that will strike as early as December. The damage will be so widespread it could derail the entire U.S. economy.
Nobody in Washington, however, is doing anything about it.
"You just don't get the sense that there's even a secret plan yet," Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, told The Washington Post. "It's scary."
If you're not worried yet, you should be.
Hunting for Safety: What to do Now
Money Morning Chief Investment Strategist Keith Fitz-Gerald joined CNBC Asia to talk about the safest places for investors to put their money ahead of global economic uncertainty in 2012.