Archives for July 2013

July 2013 - Page 7 of 18 - Money Morning - Only the News You Can Profit From


Editor's Note: Romulus Augustus, the last emperor of Rome, had a lot of time to think about what went wrong to cause the fall of the greatest empire in history. Here, for the first time, in this exclusive essay he tells the full story of the fall and gives Obama sage advice to our Chief Investment Strategist, Keith Fitz-Gerald on how to avoid the same fate in the US. Please forward this to interested friends or family members.

My name is Romulus Augustus. I was the last Roman Emperor. Though I only ruled a few years before giving up my throne on 4 September 476, I lived for at least another 25 years according to the tax records. I drew a pension until at least 507 according to Cassiodorus. And, in doing so, had plenty of time to think about what went wrong.

I have made the journey through time to offer my counsel and perspective lest your country repeat the same damning mistakes that ended centuries of Rome's greatness.

Let's begin at the top.

When I took the throne, the puppet masters held sway over the citizens. Theoretically, the citizens ruled Rome but sadly, true power was held by those who served as their representatives. The concentration of power is very real when it is the diffusion of power that best serves liberty.

Do not let your representatives take this for granted.

America, like Rome, will cross the most dangerous lines once voters figure out that they can entitle themselves. You will go from a nation of makers to a nation of takers.

We learned the hard way as our treasury became a proxy for a handout. Our citizenship changed radically and so did our elections. Towards the end, our political process was not about who would build a better future for the Empire, but who would be least likely to take away the handouts.

We tried giving the people free wheat as the progressive minds of our time thought that would change things. In reality, it made them worse.

Glass-Steagall Act 2013: When Financial Regulation is the Best Thing Ever

Unlikely political bedfellows Senators Elizabeth Warren (D-MA) and John McCain (R-AZ) have put their voices together to call for a 21st century version of the Glass-Steagall Act, also known as the Banking Act of 1933.

This proposed regulation will rebuild the "wall" between investment banking and commercial banking, and prohibit large banks from taking speculative steps – bets, really – with depositors' assets.

There will still be a place for the big bad boys of banking to bet, to make the moves that make big money, but it will not be your money – or mortgage, or 401(k), or IRA – that they will play with.

According to Senator Warren, until Glass-Steagall was passed in 1933, American banks reeled drunkenly through cycles of rapid expansion and collapse about every 15 years since the late 18th century.

Glass-Steagall, though, threw up a brick wall around investment banking and commercial banking. Among other things, it prevented banks from making big bets with customer deposits.

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Banks Caught Manipulating Electricity Trading Now Face Billions in Fines

Are you FERC-ing kidding me? That's "FERC," as in Federal Energy Regulatory Commission. And they FERC-ing rock! The ostensibly obscure regulator of electricity transmission lines, natural-gas pipelines, and electricity and power trading just shocked some dirty banks into coming clean about their manipulation of the nation's electricity markets. Electricity markets? Who knew? You may remember […]

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Why Ford (NYSE: F) Stock is On a Roll

For three decades now, I've trusted Fords.

I got my first used Ford Escort as a college kid, drove it for years, then passed it down to my younger brother.

I bought a brand-new red Mustang in the late 1980s – and still regret ever having sold it.

I've since had an Escort wagon, which died only because the guy who changed the oil didn't put the cap back on the oil pan when he was done.

And I just bought my latest Escort – a 2001 model with more than 95,000 miles on it. I have every reason to believe that with proper TLC, it'll go to at least 200,000.

How I went from a new Mustang in the late '80's to a 12-year-old Escort – a car Ford doesn't even make anymore – that's another story.

But you get the picture. I believe in the Ford brand.

And I'm not alone.

Indeed, Ford leads the auto industry in brand loyalty, with a rate of 65.1%, the automotive analyst Polk reports.

Wishing I had Bought Ford Stock

If only I had bought Ford Motor Co. (NSFE: F) stock back when I bought my first Escort.

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Why China’s Bernie Madoff Should Give Pause to Americans Doing Business in China

Zeng Chengjie, a real estate developer who has been likened to "China's Bernie Madoff," was executed by the government last week for fraud and illegal fundraising.

The businessman allegedly defrauded more than 57,000 investors out of approximately RMB2.8 billion (US $460 million), of which RMB1.7 billion has been returned.

Zeng used the money to fund his company for urban development projects, including public facilities and local landmarks.

He has been described as a self-made businessman – the type who pulled himself up by the bootstraps at a young age. In 2006, his hometown published a profile on Zeng filled with accolades, referring to him as a "diligent, wise, and conscientious man."

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The Best Biotech Stocks for 2013 Are Now Within Your Reach

Biotech stocks are soaring in 2013 as major innovations in healthcare have offered enormous breakthroughs on once-untreatable diseases and conditions.

But for years, it was tricky to invest in some of today's best biotech companies given their volatility and uncertainty in the industry. For the better part of five years, some of today's leading biotech stocks remained essentially flat.

For some time, it was best to stick to large-scale pharmaceutical companies with a strong yield and avoid mass speculation in hit-or-miss penny stocks.

Well, not any more. Shares of the iShares NASDAQ Biotechnology Index (ETF) (NASDAQ:IBB) – which tracks industry returns – are up a staggering 42% since the beginning of the year, and the health/biotech industry has the highest returns of any sector for the year.

And you haven't seen anything yet…

With one of the most exciting biotech companies now joining the NYSE and another setting its focus on an uplisting, we're seeing major changes in the biotech industry and investment. And there are companies poised to become the best biotech stocks you can find right now.

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He Said What?: Highlights from the Bernanke Testimony to Congress

If you wanted a clear picture of Federal Reserve strategy from the Ben Bernanke testimony to Congress this week, you were disappointed.

This week's Bernanke testimony highlighted the mixed signals Bernanke has been sending to markets – part of the reason Money Morning Chief Investment Strategist Keith Fitz-Gerald has said Bernanke is engaging in "monetary drunk driving" and is "jerking the wheel back and forth all over the road."

That's why two Bens showed up at his final Humphrey-Hawkins appearance before Congress: Accommodative Ben and Tightening Ben.

Bernanke said the $85 billion a month bond purchase plan would be slowed later this year if the U.S. economy stayed on its present course.

But he also told Congress the Fed was not backing away from its very easy monetary policy. He said "a highly accommodative monetary policy will remain appropriate for the foreseeable future."

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Washington's New Jobs Strategy: Hire All the Lawyers

It's the old saw that Washington seems to have down to an art: The road to Hell is paved with good intentions.

And once again, in an effort to help get the wheels of the US economy turning more briskly, the government has managed to grease the axle and flatten the tires at the same time.

Thanks to the JOBS Act (Jumpstart Our Business Start-Ups), issuers pushing things like start-ups, established companies, and more importantly venture funds, private equity investments and hedge funds can advertise for investors if they want.

Yes, by altering restrictions in existing rules and regulations, the Securities and Exchange Commission is going to allow hedge funds and the like to advertise their wares.

The grand intent is that more small businesses will get funded, and more struggling companies will be able to raise capital to keep their doors open.

Unfortunately, it's likely that the jobs the JOBS Act is most likely to create will be for lawyers; lawyers to protect investors, lawyers to sue issuers, lawyers to keep issuers from regulatory shackles and for lawyers to fight the lawyers with new jobs.