U.S. Government

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    The Growing Threat to Capitalism

    By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

    American exceptionalism, the country's qualitatively demonstrable advantage over other nations, used to be characterized by individualism.

    Not to mention egalitarianism, republicanism, and populism.

    All of this was supported by the government's laissez-faire approach to America's capitalist economic system.

    That's all changed. And not for the better.

    Now, top-down technocratic government manipulation of civil liberties, and the American economy, is pushing the nation towards the pernicious charms of socialism.

    And America, investors and non-investors alike, will suffer from its impact...

Article Index

The Growing Threat to Capitalism

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

American exceptionalism, the country's qualitatively demonstrable advantage over other nations, used to be characterized by individualism.

Not to mention egalitarianism, republicanism, and populism.

All of this was supported by the government's laissez-faire approach to America's capitalist economic system.

That's all changed. And not for the better.

Now, top-down technocratic government manipulation of civil liberties, and the American economy, is pushing the nation towards the pernicious charms of socialism.

And America, investors and non-investors alike, will suffer from its impact...

I Can't Believe the U.S. Government Wants to Unleash This on the Public

By , Chief Investment Strategist, Money Morning • @ShahGilani_TW -

You've no doubt seen their commercials. They used to be all over the tube hawking their high-yielding certificates of deposit. Now they're all over the tube with their "no hidden fees" campaign.

Ally FinancialI like the one where the woman is afraid to try new things because she's had bad experiences before. Her mechanical dog sparks a fire when he drinks water and her trainer hooks her up to electrodes that zap her. I like these commercials; they're funny.

all the more outrageous...

Government S&P Lawsuit: Who's Next?

By , Contributing Writer, Money Morning -

A massive U.S. government S&P lawsuit has no doubt hurt the fortunes of Standard & Poor's parent company The McGraw-Hill Companies Inc. (NYSE: MHP), whose shares have dropped 25% since it was filed.

But the collateral damage could spell bad news for a number of parties and has implications even for the overall health of the U.S. economy.

The Justice Dept., joined by attorneys general from 16 states, unveiled a case accusing S&P of fudging its ratings of subprime mortgages to make the toxic securities appear better than they were.

The federal government is seeking $5 billion in penalties -- more than five times what S&P made in 2011 -- to cover losses to investors in federally insured banks and credit unions. Separate suits filed by individual states could more than double that figure.

It's the first time the government has taken action against a credit rating agency over illegal behavior tied to the recent financial crisis.

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How the U.S. Government Put This Critical Resource at Risk

By , Associate Editor, Money Morning • @DavidGZeiler -

The United States is on the verge of a crisis over a key strategic resource it once almost completely controlled.

It's a resource that's invisible, but critical to science and industry. MRI machines can't function without it.

Large research labs use it to conduct cutting-edge studies in areas such as particle accelerators and research magnets. It's also essential to scientists conducting research in a wide range of fields, including chemistry, biology, biophysics, nanotechnology, and astrophysics.

It is used in the production of everything from LCD screens to fiber-optic cables to the silicon chips used in PCs, cars, smartphones, and scores of other gadgets.

And all this just scratches the surface.

Trouble is, we're now experiencing a shortage and steadily increasing consumption means the world could completely run out of it in as little as 25 years.

That's a problem because in most cases there is no adequate substitute for it.

What is this critical strategic resource?...

Believe it or not, it's helium. And in this case it about quite a bit more than party balloons.



As I'll explain later, there is even a silver lining for investors.

Election 2012: Is Mitt Romney a John Kerry Impersonator?

By , Money Morning -

Be wary of the rich, slick politician from Massachusetts, he might seem eerily familiar.

He flip-flops. He's super-rich. And he has nice hair.

Only this time it's not Sen. John Kerry, D-MA. It's Republican candidate Mitt Romney, the former Governor of Massachusetts.

The comparisons are so similar Election 2012 pundits now compare it to the 2004 election which pitted Kerry against the incumbent George W. Bush.

Here's another similarity: Neither one comes off as likable-- not even to their supporters.

Even still, like Kerry, Romney has been heralded as the candidate most likely to defeat the incumbent even though he hasn't inspired or energized voters.

That may be why Republicans went through candidates earlier this year like they were Baskin-Robbins flavors of the month.

In the end, voters finally chose Romney over Rick Santorum, favoring the uncharismatic yet stable candidate over the exciting but controversial one.

But will Romney and Kerry also share an election loss?

Read More…

The Hunt for Higher Yield: Investors Pour into Emerging Market Debt

By , Contributing Writer, Money Morning -

The never-ending hunt for higher yield is leading investors to bet record amounts on emerging market debt.

In just the first two weeks of 2012, governments of undeveloped economies from Asia to Africa sold more than $30.6 billion in dollar-denominated bonds according to Bloomberg News.

That's up from roughly $19.9 billion in the same period last year and the most since 1999, when Bloomberg began collecting data.

Typically, investors shun emerging market bonds during times of uncertainty in favor of "safer" assets like gold and U.S. Treasuries.

But that has started to change.

The Big Move Into Emerging Market Debt

In fact, investor demand is overwhelming supplies as orders have outstripped the amount of bonds being sold.

During a recent auction, the Philippines received $12.5 billion of orders for $1.5 billion of 25-year bonds, pushing the yield down to a record-low 5%. Indonesia sold 30-year bonds at a record-low yield of 5.375% and Colombia sold $1.5 billion of 29-year bonds at 4.964%.

Analysts say the debt crisis in Europe, along with record low yields on U.S Treasuries, has investors on the hunt.

They are now buying the debt of undeveloped nations like Indonesia, Mexico and Brazil, even though credit-rating firms rank them as more risky than their European counterparts

"What we're seeing is a re-evaluation of sovereign-credit risk, increasingly being driven more by fundamentals than by classifications," Eric Stein, a portfolio manager at Eaton Vance Corp. (NYSE: EV) told The Wall Street Journal.

According to the J.P. Morgan Emerging Markets Bond Index, investment-grade sovereign emerging-market bonds are yielding an average of 4.7%.

By contrast, Italian 30-year debt yields 7%, while Spanish 30-year debt yields 6.1%.

One reason emerging market bonds are attracting interest is...



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The U.S. Government Could Take 14% of Your Wealth… Overnight

By , Forex Strategist, Money Morning -

Imagine losing 14% of your wealth overnight - doing absolutely nothing at all.

You didn't invest in the wrong stock. Buy the wrong piece of real estate. Or gamble on the wrong outcome.

You just went to sleep...

And now your $300,000 bank account is worth $258,000 (and there's nothing the FDIC can do to help you). Your small business you grew from nothing to a million dollars is worth $860,000.

In fact, everything you own is worth 14% less. And everything you buy from now on - including food, clothes, or anything else - costs 14% more.

Sound impossible? It's not. It already happened - in the United Kingdom.

It was 1967, and the U.K. was facing the same pressures that the United States faces now. I'm sure if you told the Brits of that time that they could lose wealth like that - they wouldn't have believed you either.

But then it happened...

No One Likes to Talk about Dying Empires

No one really called the United Kingdom a dying empire at the time. But it was. The U.K. started losing its imperial status in the 1940s.

The British pound officially lost its status as the world's reserve currency just after World War II.

Before that, the pound had served as the world's reserve currency for 150 years! But after battling two world wars, the Brits lost that privilege to the United States.

It took a little over 20 years, but the British pound finally hit rock bottom.

So the British government decided to "help" the locals by devaluing the British pound 14%. Overnight, the Brits lost 14% of their wealth, with no way to get it back.

That's eerily similar to what the U.S. Federal Reserve is doing to us right now, by keeping the dollar's value depressed with 0% interest rates and quantitative easing.

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