Archives for July 2013

July 2013 - Page 13 of 18 - Money Morning - Only the News You Can Profit From

Hedge Fund Sues Government Over Seizing Fannie Mae, Freddie Mac Profits

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A hedge fund hoping to capitalize on the comeback of Fannie Mae and Freddie Mac claims in a lawsuit the government illegally seized the profits of the two mortgage finance giants.

The suit, filed Sunday by Perry Capital LLC, says the government violated a 2008 law that put Fannie and Freddie into conservatorship, through an amendment changing the terms of the government's bailout.

Under original terms, Fannie and Freddie paid fixed quarterly dividends equal to 10% of the government's stake.

But in 2012, the U.S. Treasury Department amended the terms of the bailout and began taking all Fannie and Freddie's quarterly profits.

Theodore Olson, an attorney representing Perry Capital, said in a news release the 2008 law "established very specific rules about the government's limits and obligations under conservatorship. Investors had every right to expect these rules to be followed.

"If the government wanted to assume the powers of receivership, it could have chosen that course," Olson said. "Instead, it chose conservatorship, and with the [amendment] it overreached, exceeding the legal boundaries of the statute and failing to meet obligations of conservatorship mandated by Congress" under the 2008 law.

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New Basel Banking Regulations Mean Every Bank is its Own Cop

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The Basel Committee on Banking Supervision, a global group made up of central banks, just came out with its new bank capital standards, the Third Basel Accord (Basel III), to address some of the problems and weaknesses in global financial regulation.

These problems were seen to have been a partial cause of the global financial crisis.

When banking systems adopt the regulations, which are completely voluntary, it's seen as a step towards greater transparency, a more robust system. It's seen as regulators finally getting tough. This is all part of the mad, frantic scramble for… credibility among regulators.

Sounds Good In Theory

The latest round of Basel III regulations, which were approved and adopted by the Fed just last week, call for banks to begin strengthening and improving the quality of their capital reserves. Quantity and quality of capital are absolutely vital to a healthy banking system.

It was the paradigm of the "honest-to-god, AAA mortgage-backed security," with all of its rubbish quality, willfully overstated and overestimated by U.S. ratings agencies, which helped lead us down the path to collapse just five years ago.

So why not have the banks shore up their defenses, take on more capital of good quality?

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If You Own Gold, You Must See This Chart…

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What I'm about to say will challenge even the most steadfast gold bears – or anyone for that matter right now who thinks that gold has seen its better days.

The chart below tells a story – a big story. In fact, I encourage you to forward this email to anyone you know who serious about his money.

Latest Obama Outrage: More People on Food Stamps Than Are Working Full Time

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This Obama economy has soup lines as far as the eye can see. It also appears that many could easily be standing in two, three or even four lines simultaneously!

There are 103.4 million people currently enrolled in any one of
15 subsidized federal food assistance programs. The most people in our nation's history.

Due to the governments sloppy management of resources it's anybody's guess how many people are standing in how many lines, at the same time.

One thing we do know for sure is one third of our nation is now receiving Subsidized Food Assistance.

These programs are extremely expensive and the cost is increasing daily. In 2012 the bill to taxpayers paid was a staggering $114 billion. 

But sit down if you're standing, because it gets worse!

Even more shocking: The Bureau of Labor Statistics (BLS) reports there are 97,180,000 full time workers in the private sector.

This means: The number of people receiving food stamps is greater than the number of people in America working full time.

Never in our nation's history has this been the case. This is a historical first.

These Charts Show Why QE3 Hasn’t Triggered Inflation – So Far

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When you pump massive amounts of money into an economy, as the U.S. Federal Reserve has done with QE1 through QE3, you're supposed to get some measure of inflation.

And yet despite some $2.3 trillion of quantitative easing since 2008, the core inflation rate has actually fallen over the past year from about 2.25% to 1.7% as of May.

It defies both common sense and monetary theory – or at least until you find out where all that QE3 money ended up.

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George Lucas and Steven Spielberg Show Us the Future of Entertainment

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I grew up in East Baltimore in the 1980s and 1990s, the twenty-year nightmare of peace, growth, and prosperity that we all endured before the New Normal debuted in 2001.

In those days, my Dad would lay $8 or $10 on my kid brother and me, and tell us to go up to the movies, to stay out for the afternoon. Why Dad wanted us out of the house, or what he and Mom got up to in those hours we were gone, I'll never know…

But maybe we'd get some friends and head up to the Patterson Theater, or the Grand Theater. These were East Baltimore's hallowed old dollar movies, the second run theaters. With a veritable king's ransom at hand, we'd spend 99 cents for a ticket and blow the rest on popcorn, drinks, and extremely sugary snacks.

We'd see movies like RoboCop, Ghostbusters II, The Hunt for Red October, Die Hard II, even Weekend At Bernie's or Look Who's Talking. Whatever your fancy, it was an afternoon at the movies for less than $10.

Just like the East Baltimore I knew, those days are long gone. And just like East Baltimore, the movies have changed forever.

Two Giants Give Us a Glimpse of Things To Come

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How the CFPB is Targeting Americans for Personal Financial Data

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Three cheers for privacy rights under the Obama Administration…

And if the sarcasm doesn’t leak from those words, it’s time for me to start designing coloring books.

Last week, the newest Washington agency designed to protect us from ourselves, the Consumer Financial Protection Bureau, was caught collecting data on more than 10 million ordinary Americans without their knowledge or permission.

Not only does the law that created the CFPB, the Dodd-Frank Act, prohibit this sort of data collection, but it is just another example of how government is using poorly designed laws to intervene in the lives of everyone.

The government is once again targeting ordinary Americans while letting the real financial criminals preying on Americans walk away Scott free.

Another “Data Project” Means More Spying on Americans

According to reports, the CFPB has allocated more than $20 million in its budget to collect and track the spending habits of more than 10 million Americans. Despite this new government initiative, Sen. Mike Crapo (R-Ida.) has suggested that the data collection project could become much more widespread than expected.

The agency is in the process of building a database of personal customer information, including monthly credit card, mortgage, car and other financial payments. Private contractors (crony friends of Washington) will store the data and share it with other federal agencies and Congressional staffs whenever it is ever needed – without really explaining why it is needed.

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Natural Gas Companies: LNG Export Boom Still on the Launchpad

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Anyone investing in natural gas companies is eagerly awaiting news that the liquefied natural gas (LNG) export boom is officially underway…

While we still have to wait, the good news is that last week Department of Energy Secretary Ernest Moniz told Reuters his department will go through the applications as quickly as possible. He added that he expects the Energy Department to conduct a “fair amount of action” regarding the applications this year.

This falls in step with the Obama Administration’s energy initiatives, which include a push for the development of “a global market for natural gas.”

This global natgas market will replace the current regional gas markets only if there are large exports of cheap natural gas from the U.S.

Such exports are one main reason Money Morning Global Energy Strategist Dr. Kent Moors is bullish on natural gas prices in the years ahead.

He’s also bullish about the prospects for investors in certain natural gas companies – especially ones positioning to profit from Asia’s need for LNG…

The Sea Route to Asia Paved With Riches

As pointed out by Money Morning Resource Specialist Peter Krauth, selling LNG to Asian countries such as Japan, South Korea and increasingly China will be a lucrative business in the years ahead.

Japan and South Korea are the biggest importers of LNG. Japan, in the year ending in March, imported a record 87 million tons of LNG after shutting down 48 of the country’s 50 nuclear reactors.

That is more than one-third of the world's LNG exports of 240 million tons in 2011.