August 2012 - Money Morning - Only the News You Can Profit From
- Economist Warns Decades Of Zero Growth Inevitable For U.S.
- Are You Ready for Obamatirement?
One of the Decade's Biggest Examples of Wasteful Government Spending
In February we told you that despite nearing $15 trillion in debt – now close to $16 trillion – the U.S. government decided to spend $592,000 last year to figure out why chimpanzees throw poop.
Now we've discovered yet another example of wasteful government spending that has burned up more than $1.5 billion of your tax dollars – with nothing to show for it.
We're talking about the fruitless pursuit of a biofuel known as cellulosic ethanol, surely one of the greatest government boondoggles of the past decade.
Cellulosic Ethanol Production: What You're Paying For
Both Republican and Democratic administrations have showered companies with grants and loan subsidies with the goal of turning materials like wood chips and switch grass into an ethanol fuel that could be used in automobiles.
QE3 Still on Table, Bernanke Says in Jackson Hole Speech
The Federal Reserve is looking at more action to prop up the lagging U.S. economy, including a third round of quantitative easing (QE3), Fed Chairman Ben Bernanke said in a speech today (Friday).
Much of the speech, delivered at the Fed's annual retreat at Jackson Hole, WY, made a case for the effectiveness of the central bank's easy-money policies since 2007, including "nontraditional" actions such as QE1, QE2, and Operation Twist.
The Fed chairman said that the stimulus purchases "have provided meaningful support to the economic recovery while mitigating deflationary risks."
And in a hint to expect more of the same — namely, QE3 — Bernanke said that the costs of such policies, "appear manageable, implying that we should not rule out the further use of such policies if economic conditions warrant."
Bernanke also voiced concern over the sluggish economic recovery, and in particular the "painfully slow" improvement of the U.S. unemployment rate, which has changed little in 2012.
That's the sort of bad economic news that has pushed the Fed to take action in the past.
Fiscal Cliff 2013: All Talk, No Answers
The blame game regarding fiscal cliff 2013 is heating up as Republicans and Democrats rally against their opposing parties – while the country inches closer to higher taxes.
At the Republican National Convention Wednesday night vice presidential candidate Rep. Paul Ryan, R-WI, rallied the crowd, saying presidential hopeful Mitt Romney "will not duck the tough issues" if elected. He added that a Republican administration will move forcefully to address the fiscal cliff and signal such a move to the markets.
That statement followed similar words Tuesday from New Jersey's outspoken Gov. Chris Christie who suggested Team Obama and the Democratic Party are at ease to "whistle a happy tune while driving us off the fiscal cliff, as long as they are behind the wheel."
In a poignant keynote speech at the RNC in Tampa Bay, Christie vowed that the Republican Romney/Ryan ticket would herald in "a second American century" well-defined by leaders prepared to tackle the challenging issues.
But the challenging issue of the fiscal cliff remains unresolved. While political rhetoric can bring a crowd to its feet, U.S. taxpayers still want to know what they're in for.
Congrats on One Billion Facebook Users… Who Buy Nothing
Facebook (Nasdaq: FB) is on the cusp of amassing one billion users, unarguably a milestone.
The last official tally of Facebook users was 955 million. Employees have become giddy in expectation of reaching the one billion mark any day now.
But, they might want to hold off tossing confetti, because the momentous occasion will also shine a bright light on the social network's shortcoming.
No matter how many users Facebook acquires, if it can't sell anything, the landmark number is useless.
As Owen Thomas of Business Insider wrote, "Bottom line: One billion users isn't cool. You know what's cool? Two billion."
Facebook Sales Estimates Slashed
The failure to monetize that many subscribers is a shame because Facebook's massive user base is an advertiser's dream if effective – but there have been no signs of future revenue growth.
That's why market research firm EMarketer Inc. recently slashed its projections for the Menlo Park, CA-based company from $6.1 billion in annual sales to $5.04 billion. Facebook continues to struggle for advertising growth, in particular the fast growing mobile market.
That’s why Facebook stock should really be trading for this amount.
An increasing number of Facebook users are now accessing their accounts via smartphones and other mobile devices, an area where Facebook collects a great deal less in ad revenue than it does on desktop access.
Facebook enjoyed an 88% revenue increase in 2011. EMarketer estimates Facebook revenue will rise only 36% this year and 31% in 2013.
- Stock Market Today: Markets See-Saw on Bernanke Speech
Ahead of Wall Street – August 31, 2012 – Ahead of Wall Street
Friday, August 31, 2012 Bernanke’s much-anticipated Jackson Hole speech will determine the outcome of today’s trading action. But with trading volumes expected to remain thin ahead of the long Labor Day weekend, it will probably be appropriate to not draw any firm conclusions whichever way the market closes today. Along those same lines, I am […]
WPPGY's 1H12 Interim Results – Analyst Blog
Ireland-based advertising titan WPP Group plc (WPPGY) reported its interim results for the first half of 2012, (ended June 30, 2012) on August 30. Diluted pro forma earnings per share in the reported period were £0.258 ($2.03 per ADR), up 13.2% (18.6% in constant currency) from £0.228 ($1.84 per ADR) in the year-ago period. Revenue […]
Portfolio Recovery, Inc. (PRAA) – Bull of the Day
We are upgrading our recommendation on Portfolio Recovery, Inc. (PRAA) to Outperform from Neutral based on its strong cash collections and strategic acquisitions. The company's second quarter earnings surpassed the Zacks Consensus Estimate and the year-ago earnings on account of strong top-line growth attributable to continuous improvement in cash collections. Call center, legal and purchased […]