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These U.S. Companies Made Billions in Profits – And Received a Federal Tax Refund!
If you weren't already irritated by the exorbitant paychecks U.S. CEOs routinely pull down, or the fact that U.S. corporations aren't bearing their share of the tax burden, wait until you get a load of this fun fact when those two issues are combined: D espite earning billions in profits, no less than 25 major U.S. firms paid less in federal income taxes last year than they paid their CEO.
And get this – most of those companies actually received tax refunds!
What makes this revelation particularly painful is that so many U.S. companies are minimizing their tax payouts just as this country more than ever needs to boost its revenue, nearly 97% of which comes from taxes of all types. It needs the revenue because of spiraling deficits, and a debt burden so large that it contributed to the United States losing its pristine AAA credit rating for the first time in more than 50 years.
Pink Sheets Basics: How To Profit From Pink Sheet Stocks – Without Getting Fleeced
Most investors have heard the term "pink sheets" as a reference to stocks. But how many know what they are?
Pink sheets are companies that are traded over-the-counter and that aren't part of any major stock exchange. But that doesn't mean they are any less valuable than traditional stocks, exchange-traded funds (ETFs) or mutual funds.
In fact, expanding your portfolio with pink sheets can be extremely lucrative, but you have to make the right moves to rake in the big profits.
Let me explain…
Get Ready Now for Dismal September Market Performance
Investors beware – the dismal days of September market performance are here.
September notoriously often leaves markets in negative territory. Since the start of the Dow Jones Industrial Average in 1896, the index has lost an average of 1.07% in September, with a 0.71% average gain for all other months.
That's a 1.78-point spread – enough to be "statistically significant at the 95% confidence level," and be considered a genuine pattern by statisticians.
More discouraging, the market has performed especially poorly in past Septembers when the preceding months were weak.
And that's where we are today.
August took markets on a wild ride. The Standard & Poor's 500 Index fell 5.7% and the Dow 4.4%. The month included two of the top ten worst-performing Dow days ever – a 635-point drop on Aug. 8 and a 513-point drop on Aug. 4.
Now with investors digesting a slew of disappointing economic reports, and the U.S. Federal Reserve unlikely to announce any stimulus measures until the end of the month at the earliest, it doesn't look like this September will buck the trend.
In fact, it could easily be worse.
30 Dismal Days Hath September
Investors tend to misidentify October as the worst month for stocks, but September has had its share of dismal days.
The Only Way to Solve the European Sovereign Debt Crisis
It's often difficult to comprehend – much less internalize – the risks posed by the European sovereign debt crisis.
But understand this: If Europe's problems aren't resolved in an orderly fashion, the stock market drops we saw last month will be small potatoes compared to the steep declines that lie ahead.
So here's the solution: Let the Eurozone break up right now on its own terms. And let a new, stronger euro currency come as a result.
At this point, that is the only viable solution to the problems Europe faces.
So far, everything the European Union (EU) has done to try to subdue this outbreak has come up short. In spite of all the group's efforts, the European sovereign debt crisis continues to snowball, drawing more and more countries into the fold as it gathers momentum.
The trendy solution is to simply expel the weaker members of the Eurozone. That would work if Greece was the only problem, but it's not.
That's why a better solution would actually be the opposite – for the stronger countries to abandon the euro and create their own currency.
European countries with strong economies – Germany, the Netherlands, Finland and Sweden – should simply walk out.
I'd like to take credit for breaking new ground with this idea, but I can't. Former head of the Federation of German Industries, Hans-Olaf Henkel, writing in the Financial Times recently proposed this alternative solution as well.
Still, it's worth subscribing to for a number of reasons.
To begin with, it would absolve the strong countries of their liability to prop up their weak Mediterranean sisters.
It was one thing when only small countries, such as Greece, Ireland and Portugal needed propping up. But now Spain, with a collapsed housing bubble and eight years of bad management, and Italy, with the most debt of any country in the EU, are at risk. Both of those countries' economies are large enough to put a sizeable dent in even Germany's vast wealth.
Even more ominous, storm clouds have started swirling around France, which is still rated AAA but does not deserve to be. The country has not balanced its budget since the early 1970s, and public spending has soared on the back of hopelessly uneconomic schemes such as the 35-hour workweek.
Now the French government has come up with a supposed solution – one that consists entirely of tax increases.
So it's clear now that something must be done. And the solution I support has benefits for both strong and weak Eurozone countries.
The Benefits of Breaking Up
For the stronger countries, leaving the Eurozone voluntarily and forming a new, stronger euro currency would…To continue reading, please click here…
Why the Weak Economy Will Lead to More Fed Intervention
Despite evidence that its previous actions have done little to revive the U.S. economy, the U.S. Federal Reserve is likely to take more action before the end of the year barring a swift turnaround in such indicators as unemployment, consumer spending, and housing.
The Federal Open Market Committee (FOMC) minutes from its Aug. 9 meeting, released on Tuesday, indicated that several members already favor more Fed intervention.
The FOMC discussed virtually every policy tool available to it, including a third round of bond-buying known as quantitative easing (QE3), an "Operation Twist" that involves selling shorter-term notes and using the proceeds to buy longer-term notes, and setting numerical targets for unemployment and inflation.
Some members pushed for immediate action based on worsening economic news such as a second-quarter gross domestic product (GDP) of just 1%, but others doubted that more Fed intervention would help.
"Some participants judged that none of the tools available to the committee would likely do much to promote a faster economic recovery," said the Fed. "Those critics believe that current economic headwinds can lessen only gradually over time, or that recent events had lowered the impact such moves might have."
Critics of the Fed's interventionist policies, engineered by Chairman Ben S. Bernanke, maintain that the previous rounds of quantitative easing, as well as holding interest rates at between 0% and 0.25% have been ineffective, if not harmful.
"Bernanke's first two rounds of quantitative easing had three major consequences: higher inflation, higher unemployment, and higher borrowing costs for average Americans," said Money Morning Global Investing Strategist Martin Hutchinson.
The Future of the European Union May Be Decided in Less than a Week
The clock may be ticking on the future of the European Union (EU).
After being shaken to its core by the sovereign debt crisis, the entire Eurozone now runs the risk of blowing up within a week.
Germany's highest court, the German Federal Constitutional Court, on Sept. 7 rules on the legality of German participation in the euro rescue fund that was established to bail out Greece.
If the court rules that Berlin's commitment to the European Financial Stability Facility (EFSF) goes against EU law, or worse, against the German constitution, the entire Eurozone could collapse.
Think of the Eurozone as a minefield full of bombs that have long lay dormant, but are all still very active. Now, Germany's court ruling – itself a single bomb timed to go off next Wednesday – could ignite a massive chain reaction.
Germany: The Eurozone's Bomb Squad
Peripheral Eurozone countries like Portugal, Ireland, Greece, Spain, and Italy (the PIIGS) are in serious trouble and European banks face monumental liquidity and balance sheet issues.
So far, only Germany's singular fiscal conservativism and economic strength have kept the EU from self-destructing. But now the Eurozone's only legitimate bomb squad may be hanging up its lead-suits, pliers, and contagion containers.
What's at issue for the Constitutional Court is whether Berlin broke the EU's Maastricht Treaty, which unequivocally stipulates that member states cannot assume each other's debts. And, more germane to German citizens and the center-right coalition government, will be the Court's ruling on whether German Chancellor Angela Merkel's decision to fund the bailout facility circumvented constitutional requirements to put such fiscal matters before the German parliament.
And while the court isn't ruling directly on the EU's currency – or Merkel's support of it – the decisions rendered will have consequences for the euro's future and by extension, the EU as a whole.
A Currency Markets Primer with Four Ways to Pocket a Profit
If you haven't traded in the currency markets, you're missing out on the largest financial market in the world.
Average daily trading volume in the global foreign-exchange markets (forex or FX markets) was $3.98 trillion in 2010, according to the Swiss-based Bank for International Settlements, and estimates put current totals well above $4 trillion.
Daily forex trading dwarfs volumes for all other leading investment vehicles – by a huge margin. Bloomberg estimates average daily trading volume for all U.S. Treasury securities at roughly $300 billion. Stocks barely register at all in comparison; average daily volume on the New York Stock Exchange (NYSE) is just around $25 billion.
Even if you combined the volume of all the world's stock exchanges, it still wouldn't equal the value of daily forex trades.
One reason the forex market can be so huge is that it isn't confined to a physical location, nor does it have a central exchange. Unlike the NYSE, which has a trading floor for stocks and bonds as well as a computerized trading network, the forex market is strictly an "interbank" or "over-the-counter" enterprise.
That means banks and other large currency traders can either deal directly with one another, or they can match their foreign-exchange needs via one of several Electronic Brokering Services (EBS) such as the Society for World-Wide Interbank Financial Telecommunication (SWIFT).
The forex markets also operate 24 hours a day, five and a half days a week – shutting down only on Saturday and early Sunday.
Given the huge volumes, the bulk of currency trading is conducted by banks, Wall Street-type institutions, governments and other truly major players. However, forex markets are structured to allow fairly easy access for individual traders.
This means there are trillions of dollars trading each day that you should be a part of – and here's how.
Russian Arctic Oil to Give Exxon Mobil Leg Up on Rivals
With fresh sources of oil becoming increasingly scarce, Exxon Mobil Corp. (NYSE: XOM) scored a major coup on Tuesday by making a deal for access to the vast reserves of Russian Arctic oil.
Many companies were in the hunt for the Russian Arctic oil, including BP PLC (NYSE ADR: BP), Royal Dutch Shell PLC (NYSE ADR: RDS.A), Chevron Corp. (NYSE: CVX), Total SA (NYSE ADR: TOT) and Statoil ASA (NYSE ADR: STO), but it was Exxon that walked away with the prize.
The arrangement with state-controlled Rosneft (PINK: RNFTF) gives Exxon a significant advantage over its major rivals — all of which have struggled in recent years to replace the oil they're extracting with new sources.
Rosneft, in which the Russian government has a 75% stake, estimates the three Kara Sea blocks where Exxon will be exploring contain about 36 billion barrels of recoverable oil.
"If that figure is correct and Exxon is able to produce the fields, we are talking about one of the world's largest oil discoveries in the last 50 years," Fadel Gheit, an energy analyst at Oppenheimer & Co., told MarketWatch. "But it remains to be seen how much of that oil is economically recoverable."
Rosneft estimates total reserves in the area at about 110 billion barrels of oil equivalent – an amount four times the size of Exxon's proven global reserves.
Quid Pro Quo
Having access to reserves of that size will help Exxon rectify its replacement ratio for oil. Earlier this year Exxon reported that for every 100 barrels of oil it produced, it found just 95 barrels of new oil.
Exxon has been more successful in replacing natural gas resources – it finds 158 cubic feet of gas for every 100 it extracts. But with natural gas prices slumping, the company would much rather find more oil.