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Our Venture Capital "Experiment" Is Already Putting Profits in Your Pocket

The tech sector is enduring one of its periodic corrections. But the venture-capital fund we told you about back in April continues to make new investments and has seen its net asset value (NAV) surge more than 18% in that short stretch.

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    Don't Fear China and Japan Owning More U.S. Debt

    Alibaba buys Yahoo

    The U.S. Treasury Department said today (Thursday) that total foreign holdings of U.S. debt rose 1.1% in November to $5.72 trillion, putting foreign holdings 0.1% below the all-time high of $5.76 trillion it reached in March 2013.

    In particular, China's holdings reached record levels, increasing 0.9% to $1.32 billion, and so did Japan, which boosted its holdings by 1% to $1.19 trillion. The two countries are the largest and second-largest foreign buyers of Treasury debt, respectively.


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  • U.S. Debt

  • Will United States Debt Holders Bail on Treasuries? afraid looking businessman

    Since the mid-1990s, China and a host of other foreign governments have quietly acquired one-third of all United States public debt. Foreign holders of United States debt held more than $5.6 trillion in Treasury securities as of August 2013.

    But continued debt-ceiling drama in the United States is starting to change that.

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  • Four Things the Debt Ceiling Deal Doesn't Fix Time Bomb Everyone in the Capitol is patting themselves on the back and glad-handing for the news media, rattling on about “fighting the good fight.” Sure, we’ve avoided default… for just 112 more days. Most of us won’t even pay four phone bills by the time the “crisis” gets brewing again. As ridiculous as that fact is, it gets worse. You see, the “Great Band-Aid Treaty” doesn’t actually do anything to address the fundamental challenges facing our economy right now. Here are the four biggest issues that Congress ducked out on...
  • Should We Be Worried About a U.S. Debt Default? Why You Have to Be Investing in the Stock Market Now

    While the stock markets so far have reacted mildly to the government shutdown, the looming Washington fight over the need to raise the federal debt ceiling could lead to a U.S. debt default.

    And that, everyone agrees, would trigger a much more pronounced reaction from Wall Street.

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  • Dire Consequences Await as U.S. Debt Nears a Tipping Point Fiscal cliff stack of quarters left

    As U.S. debt as a percentage of GDP hovers at levels not seen since World War II, concerns are growing that the American economy is susceptible to a debt crisis in the near future.

    Here's why people are worried: If interest rates return to normal levels of around 5% as the U.S debt approaches $20 trillion, then servicing that debt each year will cost taxpayers $1 trillion.

    Does anyone think that the Federal Reserve, as the enabler of all this debt, will be in any rush to raise interest rates?

    Following Europe's example, the U.S. debt-to-GDP ratio hit 105.6% in 2013, a perilous level that has long-term repercussions for the world's largest economy, according to Standard & Poor's. By 2016, right around the time that Hillary Clinton will be running in earnest to be president, the ratio will likely hit a staggering 111%.

    But how much debt is too much debt? And what are the pitfalls facing the United States in the future? Both questions remain hotly contested among economists, despite a wide acceptance of a "tipping point" theory both by politicians and ordinary Americans.

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  • DON’T BE SO ARROGANT, MR. PRESIDENT Empires have come and gone. Some lasted a blink of an eye and some millennia.
    The question is, after 9/11, the rise of China and a great financial crisis, where does the U.S. empire stack up to its predecessors?
    Well, it seems the one commonality they all have is the point when their might was undermined by sloth and greed. And entitlements: free bread and circuses. For some it took years, others centuries.
    Here, in a compelling and unique address, is what Romulus Augustus, the last emperor of the Roman Empire, might say to President Obama now about how to keep America great.
    Read on and share with family and friends...
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  • The Latest Obama Outrage: the Family's $100 Million Vacation Flip flops Q

    How much do you spend on your summer vacation? American households usually spend about $1,200 per person on summer vacations, according to a recent American Express survey.

    Presidents spend more on their vacations than you or I. They have to. Air Force One and security does cost more than loading the Honda and heading to the beach.

    Here's how much some recent presidents spent our tax dollars on vacation.

    Ronald Reagan spent most of his free time at his California ranch. Taxpayers covered the cost of approximately $8 million for presidential travel during Reagan's first six years in office, according to the Los Angeles Times. That amounts to $1.3 million a year.

    For George Bush the cost of flying Air Force One to his Texas ranch was approximately $56,800 per trip, for each of the 180 trips according to Media Matters. President Bush spent Christmas during his two terms at the White House so his staff and secret service could spend the holiday with their family, according to Conservative Byte.

    Now Obama plans to blow away all previous presidents' leisure travel costs on our dime with a better than Disney World extravaganza trip to Africa.

    However Obama had to cancel the safari because of the need to fill the surrounding jungle with snipers to guard the president from wild animals!

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  • U.S. Economy to Get Jolt from 1.2 Million Homebuilding Jobs Hardhat tools copy

    An accelerating rebound in new home construction over the next two years should finally give the U.S. economy the jump-start it needs to progress toward a truly robust recovery.

    New home construction continues to bounce back from the lows of 2009, after the housing bubble burst, but still has a long way to go.

    With housing one of the prime drivers of the U.S. economy - historically construction accounts for 5% of the U.S. gross domestic product (GDP) and related economic activity another 13% - a spike of activity in this area could drive the growth that's long been lacking from the recovery.

    "A revival in new home construction will have a huge stimulative effect on the larger economy," Brad Hunter, chief economist for housing research firm Metrostudy, told Bloomberg News. "When home construction goes up, so does demand for furniture, tile, lumber, concrete, draperies, paint and appliances of all sorts."

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  • Paul Krugman May Be the World's Last Flat Earth Economist Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman is at it again. He claimed earlier this week that fixing the deficit is important, but added that "doing it now would be disastrous." He also observed that the 10-year U.S. debt situation isn't really all that bad.
    I don’t know how he can make that argument with a straight face.
    For five years now, Dr. Krugman has argued that increasing U.S. government spending is vital to our nation's recovery. And for five years he's been dead wrong.
    Dr. Krugman claims that "we" just haven't spent enough money... yet.
    Here's why that makes him very dangerous... Read More...
  • The Trillion Dollar Trick Trillion dollar coin Minting a trillion-dollar platinum coin to pay our debts may seem ridiculous. But in fact, our government has done the same thing for the past five years, creating more than $1 trillion out of thin air each year. Read More...
  • Why The Fiscal Cliff "Deal" is Spelled P-O-R-K Savings piggy bank

    Behind the scenes of the Fiscal Cliff debate, there was plenty of f-bombing, poison pilling, and grandstanding leading up to the deal - and that was before the members of Congress and the Senate actually got serious with their usual ultimatums, followed by earnest- looking sound bites and posturing. But what gets me really riled up is the amount of "pork" contained in the bill...

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  • Why Japan's "Lost Decades" Are Headed to America in 2016 It's only been a little more than a week since Shinzo Abe won election as Japan's latest Prime Minister in a landslide-election victory and the pundits are already lining up telling investors to "buy Japan" because it's "dirt cheap."

    The hope is that Abe's promises of fresh stimulus, unlimited spending and placing a priority on domestic infrastructure will be the elixir that restores Japan's global muscle.

    As a veteran global trader who actually lives in Japan part time each year, and who has for the last 20+ years, let me make a counterpoint with particular force - don't fall for it.

    I've heard this mantra eight times since Japan's market collapsed in 1990 - each time a new stimulus plan was launched - and six times since 2006 as each of the six former "newly elected" Prime Ministers came to power.

    The bottom line: The Nikkei is still down 73.89% from its December 29, 1989 peak. That means it's going to have to rebound a staggering 283% just to break even.

    Now here's the thing. What's happening in Japan is not "someone else's" problem. Nor is it something you should gloss over.

    In fact, the pain Japan continues to suffer should scare the hell out of you.

    And here's why ...

    The so-called "Lost Decade" that's now more than 20 years long in Japan is a portrait of precisely what's to come for us here in the United States.

    Perhaps not for a few years yet, but it will happen just as we have already followed in Japan's footsteps with a "lost decade" of our own.

    The parallels are staggering.

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  • What the Last Roman Emperor Would Tell President Obama Today Over the course of 700 years, the ancient Roman Empire grew from a small republic to one that stretched from London to Baghdad at its peak.

    As one of the world's first true superpowers, the Empire's achievements included the world's first standing professional army, economic prowess, intellectual growth and governance principles that are commonly regarded as the basis for modern society.

    But it is also remembered for its spectacular collapse in less than a century under the weight of bad debt, an overextension of the Empire, a collapse of morals that led to a deluded and self-absorbed political elite and reckless public spending that far outweighed collections.

    Given the parallels to our situation, I can only imagine what Romulus Augustus, widely considered to be the last of the Roman Emperors, would tell President Barack Obama today about how to prevent the wholesale destruction of our own "Empire."

    But it would probably go like this...

    Cara praeses Obama, (Dear President Obama)

    Like mine, your world is changing fast. No doubt it's very different from the one you thought you'd inherited. Your success will depend on new thinking and an eye to the future taken from lessons of the past.

    I wouldn't be offended if you have never heard of me.

    I oversaw the dying days of what you know as the Classic Western Roman Empire. My fall in September 476 marked the end of centuries of greatness and the fall of ancient Rome.

    Some historians consider my departure as the beginning of the Middle Ages. I understand the nature of collapse: how it begins, how it progresses, and where it all ends.

    As a historical footnote to a once great empire, here's my advice to you, Mr. President.

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  • Obamanomics: What You Can Expect if President Obama Wins the Election Now that we are left with a two-horse race for president, the markets are going to begin to handicap the November results.

    However, when the markets begin to handicap the race it will be about a lot more than just picking the eventual winner.

    Instead, everything will revolve around the policies and consequences that come along with the winner.

    The difference in approach promises to be stark with "Obamanomics" on the left and "Romneynomics" on the right.

    Each one comes with its own set of consequences, though.

    Today I'm going to look at "Obamanomics II," or the policies we will get if President Obama is re-elected.

    But those on the left shouldn't despair...In my next piece, it's Romney's turn.

    As for the horserace itself, it's too close to call, with neither side having much chance of winning a big victory.

    President Obama Has the Edge

    Even still at the moment, President Obama appears to be ahead. Apart from his modest lead in the polls, my former home state of Virginia appears to be swinging definitively toward the Democrats.

    Yes, Republican Bob McDonnell did win the Virginia governorship handily in 2009, but he was a very good candidate. Moreover, turnout in gubernatorial elections is normally low. Thus I believe the latest polls showing Obama with a 7% lead in Virginia are accurate, and without Virginia Romney has a very difficult path to the presidency.

    If we believe the presidential election will be close, then it follows that Congress and the Senate elections must be close, too.

    If Obama wins in November, the most likely outcome must be that the Democrats will hang on to the Senate, while the Republican House majority survives, albeit much smaller than at present.

    With this combination, the president's more extreme wishes (or those of his team) will be restrained. But as a newly re-elected figure he will nevertheless have more power to get what he wants than he does currently.

    Whatever the congressional numbers may be, the president's first task will be to face the "fiscal cliff" of January 2013, when the Bush tax cuts and temporary payroll tax cuts expire and automatic spending "sequestration" comes into effect.

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  • Will Gold be Paulson's Next "Greatest Trade Ever"?
    When famed hedge-fund manager John Paulson speaks, people listen.

    And it's no wonder.

    Paulson made his way into the financial history books thanks to what many now call the "greatest trade ever".

    Paulson & Co. shorted the subprime mortgage market before the collapse banking a $15 billion gain.

    So when Paulson went big again by buying gold in 2009 and 2010, investors took notice.

    At the time he said, "As an investor, I became very concerned about having my assets denominated in U.S. dollars," Paulson told his audience. "So I looked for another currency in which to denominate my assets in. I feel that gold is the best currency."

    In fact, Paulson's holdings in the SPDR Gold Trust (NYSE: GLD) make his firm the biggest stakeholder in this ETF, with a position currently valued at $2.9 billion.

    So that begs the question....

    Is Paulson still a gold bull?

    In a recent letter to investors he wrote, "By the time inflation becomes evident, gold will probably have moved, which implies that now is the time to build a position in gold."

    And he's not alone.

    Recent filings showed that another legendary hedge-fund investor, George Soros, has nearly doubled his stake in GLD to 85,450 shares.

    But "Bond King" Bill Gross's latest words and actions may well be the most significant of all.

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  • Iran is Now a Full-Blown Crisis, Stage Set for $200 Oil Just when it looked like we could take a breather from the Strait of Hormuz, all attention is back on Iran.

    There are three reasons for this - all happening within the last week:

    1. First was Tehran's successful launch of a satellite, viewed by all in the region as being for military intelligence.
    2. Second, in his toughest talk to date, Iranian Supreme Leader Ayatollah Ali Khamenei voiced defiance to Western sanctions and pledged open retaliation if they are instituted.
    3. Finally, last Thursday, U.S. Secretary of Defense Leon Panetta expressed concern that, if matters continue, Israel could attempt an air-strike takeout of Iranian nuclear facilities within a month. Iran has been frantically moving essential components of its nuclear program underground to withstand such an attack.
    All of this is, once again, leading to a rise in crude oil prices.

    What's more, the EU decision to stop importing Iranian crude starting July 1 will cripple any chance Tehran has to combat escalating economic and political turmoil at home.

    Yet Khamenei's defiant tone during his Friday prayer meeting speech indicates that Iran's religious leadership will not wait for the system to unravel.

    And that is what makes this both a full-blown and an intensifying crisis.

    Brinksmanship in the Straits of Hormuz

    So what's being done?

    Washington has little - leverage, save its ability to temper an immediate escalation by Israel (leverage the U.S. can still apply, at least for the moment). It also has some indirect influence on what the E.U. does.

    Meanwhile, Saudi Arabia also is a wild card. It will not tolerate a nuclear Iran.

    And yes, there are ample indications that American and Israeli intelligence have concluded Iran will achieve the ability to develop nuclear weapons in the next 18 to 24 months.

    Some elements of that process will be available earlier, but remember: A weapon is of little value unless it can be controlled and delivered. The logistical and infrastructure considerations need to be in place first.

    Yet with such an inevitable conclusion staring them in the face, the West has decided to embark on a risky path...

    The target here is not the nuclear project at all (over which there is less and less outside control). Instead, it has become about creating massive domestic instability to bring down a regime.

    Now, this is not about ending the theocracy. With or without Mahmoud Ahmadinejad as president or Ali Khamenei as supreme leader, Iran will remain a Shiite-dominated country. Religion decisively controls politics, and the clergy oversees the society.

    The West is seeking a more moderate application of what will remain the Iranian cultural reality.

    However, as the brinksmanship intensifies, so will the price of crude oil. Tehran, in this dangerous game of international chicken, really only has one card to play - the Strait of Hormuz.

    There has been much misinformation circulated about the strait. Here are the facts.

    On any given day, 18% to 20% of the world's crude oil passes through it.

    According to the Energy Information Administration, the Strait's narrowest point is 21 miles wide; however, the width of the shipping lane in either direction is just two miles, cushioned by another two-mile buffer zone.

    Of greater significance, though, is the fact that most of the world's current excess capacity is Saudi. (This is the oil that can be brought to market quickly to offset unusual demand spikes or cuts in supply elsewhere.) And, unfortunately, Saudi volume must find its way through the same little strait.

    If we're unable to access the Saudi excess, that loss guarantees the global market will be out of balance. That will intensify the price upsurge - an upsurge that is already happening.

    Now for the question I'm being asked several times a day in media interviews...

    Just how bad can it get?

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