Archives for June 2011

June 2011 - Page 6 of 9 - Money Morning - Only the News You Can Profit From

How the U.S. Housing Market Can Save the U.S. Economy

by

Everyone knows that the U.S. housing market caused the current economic funk.

But here's the irony: The American housing market – a principal actor and victim of a bubble that burst, causing the worst recession since the Great Depression – may now be in a position to save the U.S. economy.

In other words, if we fix the housing market, we stand an excellent chance of fixing the economy.

And my housing plan may be the dual fix we've been looking for .

Plan Generates Huge Response

In Money Morning exactly one week ago, I presented a plan to fix the broken U.S. housing market. And while I wanted feedback on the plan, I was stunned to receive hundreds of e-mails, phone calls and comments – underscoring just what an intensely emotional topic housing continues to be in this country.

Many people lauded my plan. But I was somewhat surprised at the number of people who trashed it. For those critics, the main issue was that they didn't feel the plan addressed the real root causes of the current housing crisis.

I got an earful about what the root problems are. Eventually, it struck me. It wasn't my plan that people didn't like, it was that I didn't explain how my housing plan would fix those root problems.

Those root problems are no small thing. They caused the housing crisis in the first place. They're keeping the housing market from recovering now. And they're a major drag on the U.S. recovery – and could end up as a proximate cause, or key catalyst, of the much-feared "double-dip recession."


To continue reading, please click here...

Four Middle East Investments That Come with Little Risk and Big Potential

by

As I mentioned yesterday (Thursday) in Part One of this story about Middle East investments, instability makes investing in this tumultuous region fairly tricky. But that doesn't mean you ought to avoid it entirely.

After all, the International Monetary Fund (IMF) said in its World Economic Outlook that the region's economy would expand at a 5.1% pace in 2011, outpacing the United States and Europe.

And contrary to the perception of many Westerners, that growth projection isn't based primarily on the price outlook for oil, which has trended higher for most of the past year. Rather, it's keyed to everything from construction and new-business development to banking, tourism and even Internet gaming.

Read More…

Money Morning's Shah Gilani Responds to Reader Comments on His Housing Plan

by

Dear Money Morning readers:

To every one of you (and there were more than just a few!) who took the time to comment on my housing-fix plan, thank you. I read every single comment, twice.

Money Morning readers have always impressed me with their insights and activism. That's why I write for Money Morning, I get to have a "conversation" with you, which motivates me, enlightens me and always keeps me looking at every side of all the issues I write about.

Here are some of my thoughts on your comments:

First of all, it's not possible for any comprehensive address of a problem as deep and wide as what our housing market is facing to be perfect. There is no such thing as a simple solution to such a complex set of attendant issues. And, no matter how exhaustively researched and designed a packaged solution is constructed, there will always be unintended consequences and naysayers who would rather complain about the status quo than change it.

Read More…

Financial Reform Follies: By Upstaging Bernanke, JPMorgan's Dimon Shows Us Where Washington Went Wrong

by

By upstaging U.S. Federal Reserve Chairman Ben S. Bernanke at the International Monetary Conference in Atlanta on Tuesday, JPMorgan Chase & Co. (NYSE: JPM) Chief Executive Officer Jamie Dimon drove home a crucial point: The U.S. version of "financial reform" just doesn't work.

The fact that Dimon is one of Wall Street's own – and that he stole the show from Bernanke, who made a speech at the conference – made for high drama. More importantly, though, I believe the incident served as a reminder of why Washington's attempts at financial reform don't work.

In his speech to international bankers, a tired-looking Bernanke conceded that the U.S. economy was functioning "below its potential," something that's become very clear following a spate of recent reports that show weak output and scary job trends.

Dimon – a longtime critic of financial reform (particularly the Dodd-Frank Wall Street Reform and Consumer Protection Act) – said he fears that the attempted fixes are actually stifling the recovery. He even asked Bernanke if people won't come back in 20 years and write a book showing that the Fed and our bailouts were too heavy- handed and have become a hindrance instead of a help.

"Has anyone bothered to study the cumulative effect of all these things?" Dimon asked Bernanke. "Is this holding us back at this point?"


To continue reading, please click here ...

No Change in Fed Monetary Policy Likely, Bernanke Calls For Deficit Reduction

by

Despite the stream of data showing the U.S. economic recovery has yet to gain traction, U.S. Federal Reserve leaders are signaling there will be no change in monetary policy and that serious deficit reduction would be far more beneficial.

In a speech to the International Monetary Conference Tuesday in Atlanta, U.S. Federal Reserve Chairman Ben S. Bernanke acknowledged "some loss of momentum" in the employment numbers – last week's payrolls report showed that companies added just 83,000 workers in May, down from 268,000 in April – but said the Fed can do little to combat the problems now holding the economy back.

"The U.S. economy is recovering from both the worst financial crisis and the most severe housing bust since the Great Depression, and it faces additional headwinds ranging from the effects of the Japanese disaster to global pressures in commodity markets," Bernanke said. "In this context, monetary policy cannot be a panacea."

Read More…

Investing in the Middle East: The Best Plays to Make

by

Periodic eruptions of violence and instability make investing in the Middle East fairly tricky. But that doesn't mean you ought to avoid the region entirely.

Indeed, investing in the Middle East can be extremely profitable, as the region currently is one of the world's bright spots for economic growth.

The International Monetary Fund's (IMF) said in its World Economic Outlook that the region's economy would expand by 5.1% clip in 2011. That's well above the 1.5% pace projected for Europe and Japan and the 2.3% rate forecast for the United States.

And contrary to the perception of many Westerners, that growth projection isn't based primarily on the price outlook for oil, which has trended higher for most of the past year. Rather, it's keyed to everything from construction and new-business development to banking, tourism and even Internet gaming.

So let's take an in-depth look at each sector, as well as some specific companies to invest in.

Read More…

Sorry Mr. Bernanke: There Will be a Double-Dip Recession

by

Despite what U.S. Federal Reserve Chairman Ben S. Bernanke said in his speech at the International Monetary Conference yesterday (Tuesday), it looks very much like we're headed for a double-dip recession.

Indeed, the economic reports of the last week or so demonstrate that the U.S. job machine was never really jump-started after the Great Recession of 2008-09.

The upshot: The U.S. economic recovery is stalling, and we're almost certainly looking at a double-dip downturn.

Recessions are always painful – and double-dip recessions are even more so.

And this second "dip" may be more of the same – a bloody economic downturn that leads into a feeble recovery with unemployment spiking to even higher levels than we're currently seeing.

But there's a slight chance that this double-dip recession could prove quite productive for the U.S economy.

Let me explain.

To continue reading, please click here...

How to Know if it's a Good Time to Buy a Home

by

Home ownership has long been a goal for many Americans, but now more people are worried that the troubled housing market means it's not a good time to buy a home, and they're kissing their plan goodbye.

Since the housing market collapsed in 2008, forcing millions of underwater homeowners out of their houses, real estate has become a scary and unreliable investment option.

"The emotional scars left by the collapse are changing the American psyche," Pete Flint, chief executive of real estate Website Trulia.com, told The New York Times. "There was a time when owning a home was a symbol you had made it. Now it's OK not to own."

Read More…

A Natural Gas Company Floating in Profits

by

Australia, like America, is awash in natural gas. But Australia's gas isn't conveniently located under terra firma, near existing pipelines. We have that luxury and advantage.

Most of the gas Down Under is in giant underwater deposits, located more than 100 miles from Australia's shores. Developing some of its largest fields, far from any landmass, has been a problem without a solution… until now.

This is an interesting opportunity for investors looking to capitalize on innovation in natural gas production outside of the United States.

Read More…

Are We in the Middle of a New Tech Bubble?

by

When career-networking site LinkedIn Corp. (NYSE: LNKD) started its first day of trading May 19, its shares zoomed 109% from its initial public offering (IPO) price of $45 a share to close at $94.25, and reached a market value of $9 billion – fueling rumors that we're in the middle of a new tech bubble.

Groupon Inc. filed for an IPO on June 2 and analysts said it could be valued as high as $30 billion, sparking more talk that sizzling tech IPOs are little more than a repeat of the dot-com bubble that burst in March 2000.

And many investors are eagerly awaiting another batch of Internet IPOs. Social networking sites Facebook Inc. and Twitter Inc. and gaming site Zynga Game Network Inc. are all thought to be hitting the market this year.

Read More…