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Why Warren Buffett Doesn't Fear the Fiscal Cliff, and How He'd Fix it
However, Buffett expects a deal to be reached shortly after that deadline, and he is not concerned with going over the infamous fiscal cliff.
"The fiscal cliff does not enter into my long-term investment decisions… and it wouldn't surprise me if we go past January 1," Buffett said on CNBC's Squawk box Wednesday morning. "[If that happens] I don't think the world will come to an end."
Buffett is in the minority with that sentiment, as investors have been fretting over the fiscal cliff since the election and will continue to do so until Washington finalizes a deal.
Just 2% of U.S. Geothermal Power Could Supply 2,500 Times Our Energy Needs
There's a story about a king in India.
He asks the royal leather worker to cover his kingdom in leather, so wherever he walks, he will never stub his toes.
The leather worker pauses and then suggests to the king that if he covered his feet in leather he could walk wherever he chose, anywhere in the world.
This is the story about the first pair of shoes.
It's emblematic of the way many people look at renewable energy. Right now we are trying to cover the world with solar panels or wind turbines.
But what if we decided to look at the world as its own solar panel?
I'm talking about geothermal power and the good news is we already have the technology to tap into it.
So how big is U.S. geothermal power?…
MIT estimates that just 2% of the heat below the United States at depths of 3-10 kilometers would be enough to supply 2,500 times the nation's current energy needs.
The compelling part about geothermal energy is that it isn't as cost-intensive as solar or wind. It's also far more reliable – available 24 hours a day, 7 days a week at consistent, predictable levels.
That means more geothermal energy can be uploaded to the grid far more efficiently and on a larger scale than either solar or wind.
This technology is also proven and is already in commercial and industrial use west of the Mississippi and for residential applications around the globe.
And now, there are two factors that have the potential to put this clean energy resource on a level far beyond its previously limited scope.
Geothermal Power for Your Home
There are two types of geothermal that work off the same underlying principle.
Residential geothermal – the kind you would run a house on, uses the "earth-as-solar panel" concept.
In this case, geothermal heat pumps take advantage of the solar energy stored just below the surface of the ground.
If you're a solar power fan, then consider this a passive solar unit because the earth is a highly efficient photovoltaic panel: 40% – 60% of the Sun's energy is directly absorbed into the ground.
In cold months the pump pulls the heat from the earth and heats your house. Residual heat is used to heat your water.
Conversely, in the summer months the heat is pulled from the house and pumped into the earth loop where it dissipates into the earth and the cool solution in the pipes acts as a refrigerant.
This video from GeoSystems does a good job of giving you an overview of the process.
Believe it or not, with geothermal energy, you can cut your heating and cooling bills by 70% and have virtually free hot water whether you live in southern Florida or northern Minnesota.
In fact, its potential for residential use is so strong both the Department of Energy and the Environmental Protection Agency have dubbed individual geothermal as "the heating system of the 21st Century."
Industrial Scale Geothermal Power
Industrial geothermal is a slightly different animal.
Why to Keep Betting on Higher Silver Prices
As November comes to an end, silver prices continue to hold their luster even in this down week.
On Tuesday, spot silver increased to $34.26 an ounce, its greatest level since the middle of October, before it dropped to $33.76.
Silver traders have hit the sidelines as economic news such as fiscal cliff discussions, the Greek bailout and an appreciating U.S. dollar have been a drag on the white metal.
James Steel, HSBC metal analyst said to Reuters of the current prices, "We believe gold and silver prices will tend towards consolidation, as investors await further developments on the U.S. fiscal cliff negotiations."
But don't worry silver bulls, there's still enough good news to keep you happy.
Fiscal Cliff Meeting: Here's What U.S. CEOs Expect from Obama
In what looks like a "Who's Who Among America's Corporate Leaders," some of the biggest and best U.S. CEOs are meeting with U.S. President Barack Obama today (Wednesday) in Washington to discuss the fiscal cliff.
With just 35 days left for congressional lawmakers to hammer out a deal before Americans face the largest tax increase in history, the pace has quickened in the race to avert falling off the cliff.
Those present at White House meeting included business leaders in healthcare, finance, commodities, entertainment, construction and consumer products.
Among the attendees: Lloyd Blankfein, Goldman Sachs Group Inc. (NYSE: GS); Muhtar Kent, The Coca-Cola Co. (NYSE: KO); Marissa Mayer, Yahoo! Inc. (Nasdaq: YHOO); Doug Oberhelman, Caterpillar Inc. (NYSE: CAT); Ian Read, Pfizer Inc. (NYSE: PFE); and Patricia Woertz, Archer Daniels Midland Co. (NYSE: ADM).
U.S. companies want Washington to act now as many are already feeling the pre-effects of the fiscal cliff. None want to experience the full impact, which the Congressional Budget Office warns will thrust the U.S. economy back into recession next year.
In anticipation, scores of businesses have laid off workers and shelved expansion projects. The uncertainty, Bank of America Corp. (NYSE: BAC) CEO Brain Moynihan recently explained, is holding back the nation's recovery from the Great Recession.
Putnam Investment CEO Robert Reynolds recently told The Wall Street Journal, "The greatest stimulus is certainty. You don't know what your tax rate is next year, you don't necessarily know what you're going to be paying in health care, capital gains, dividends. They all have a tremendous impact on the way people act."
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In Search of the Next Bakken Shale Oil Field
Fracking technology has reshaped the U.S. energy industry by opening up vast shale oil and gas fields that were previously uneconomical to exploit.
Now, following half a decade of rapid growth, so-called unconventional oil accounts for about 2 million barrels per day of production in 2012.
So much oil is being produced domestically, in fact, that six companies including the world's largest oil trader Vitol and Royal Dutch Shell PLC (NYSE ADR: RDS.A) have applied to the U.S. government for energy export licenses. If approved, it will be the first such exports to occur in decades.
It is expected that, by 2020, unconventional oil production will be at the 4.5 million barrel per day level.
This is a familiar story to energy investors. The names of the best known shale oil fields such as Bakken, Eagle Ford and Utica are very recognizable to these investors.
But some other names are less well-known and are worth investigating.
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OECD Sees These Threats Beyond Fiscal Cliff 2013
At a press conference announcing the release of its new Economic Outlook report, the Organization for Economic Cooperation and Development (OECD) issued a stern warning to the U.S. to resolve the impasse over fiscal cliff 2013 or risk falling into recession, possibly dragging the rest of the world economy down with it.
"The US "fiscal cliff,' if it materializes, could tip an already weak economy into recession, while failure to solve the euro area crisis could lead to a major financial shock and global downturn," said OECD Secretary-General Angel Gurría. "Governments must act decisively, using all the tools at their disposal to turn confidence around and boost growth and jobs, in the United States, in Europe, and elsewhere."
The OECD expects growth in the U.S. to decline from 2.2% in 2012 to 2.0% in 2013 "provided the "fiscal cliff' is avoided," then increasing to 2.8% in 2014. U.S. unemployment is expected to decline from 8.1% in 2012 to 7.5% in 2014, using a harmonized measure of unemployment that allows comparisons between countries.
Although the consequences of failing to resolve fiscal cliff 2013 loom large, the European debt crisis was cited as the main risk to global economic growth. Gross domestic product (GDP) growth in the Eurozone is expected to improve from -0.4% in 2012 to -0.1% in 2013 and a positive 1.3% in 2014.
Stock Market Today: Fiscal Cliff Fears Can’t Stop This 160% Gainer
The stock market today opened flat before turning negative as negotiations on the fiscal cliff have not progressed, outweighing Greece's new deal concerning its debt.
- Greece Close to Massive Bailout- Late Monday the International Monetary Fund, Eurozone finance ministers, and Greece came to an agreement that drastically eases the terms regarding Greece's repayment of debt and sets the stage for a third bailout. The deal lowers interest rates for bailout loans, suspends interest payments for a decade, pushes the deadline back for final repayments until the 2040s, and initiates a bond buyback program. Greece is also now on the brink of receiving a $44.7 billion loan beginning Dec. 13. "The big challenge now is to implement the decisions," Greek Finance Minister Yannis Stournaras said. "Greece has huge potential." The agreed upon measures aim to bring Greece's debt-to-GDP ratio down to 124% by 2020 from the projected level of 190% in 2014. The deal was accomplished by installing unprecedented measures such as carefully monitoring how Greece spends the debt, keeping an account strictly for debt servicing, and insisting that Greece completes the bond buyback before receiving more aid. "Euro-zone countries have put their money where their mouth is," Carsten Brzeski, an economist at ING Group NV in Brussels told Bloomberg News. "However, it is clearly not a carte blanche for Greece but rather a very tight leash."
- Fiscal Cliff Talks Resume- Congress returned from its Thanksgiving recess and the fiscal cliff will be at the forefront of discussions this week. After last week's short burst of optimism there has not been any further progress on a deficit reduction deal. But for now consumers seem unfazed by the whole debacle, as today the consumer confidence index reached levels not seen since February 2008. The onset of higher taxes coupled with deep spending cuts was thought to lower consumer confidence, but instead consumers spent a record amount of money through Black Friday and Cyber Monday. The consumer confidence gauge interestingly showed expectations for six months from now, when we could be off the fiscal cliff, unexpectedly rose. The percentage of respondents expecting more jobs to be available in six months rose to its highest level since February 2011, and the percentage expecting to buy a home in the next six months hit a new all-time high. "The consumer is in a better place than several years ago," Michael Gapen, a New York-based senior U.S. economist at Barclays PLC (NYSE ADR: BCS), told Bloomberg. "A lot of the numbers are improving, whether it is household balance sheets or the state of the housing market or employment."
While the market is trying to turn positive, here is one stock surging on a medical breakthrough, another soaring on a settlement with Google Inc. (Nasdaq: GOOG), and a third that is up after announcing a special dividend.
How to Prepare for Recession 2013
U.S. President Barack Obama recently met with congressional leaders in attempts to carve out a way to avoid falling off the quickly approaching fiscal cliff.
If no deal is reached, President Obama and scores of economists warn, the U.S. is destined to plummet into a recession in 2013.
Money Morning Global Investing Strategist Martin Hutchinson cautions that even if lawmakers avoid the fiscal cliff by the most likely scenario of raising taxes on wealthy Americans while leaving the majority of the budget deficit status quo, the short-term outlook for the health of the U.S. economy is far from rosy.
"U.S. economic growth has been held back in the last few years by the blizzard of regulations coming out of Washington, and there's reason to believe there is an especially heavy storm of them in the next few months, having been held up before the election," said Hutchinson.
And despite the easy monetary policies of Fed Chief Ben Bernanke, and the latest round of QE3 (dubbed QE Forever), "the U.S. economy is not going back to robust growth in 2013," Hutchinson added. Creating more money, he said, will just increase inflation.
"In the long run, a recession is coming," Hutchinson warns.
Hewlett-Packard (NYSE: HPQ) is a Lawyer's Dream
After alleging last Tuesday that it had been defrauded by the management of takeover target Autonomy, resulting in a $8.8 billion write down, Hewlett-Packard Company (NYSE: HPQ) itself came under scrutiny by the Federal Bureau of Investigation.
According to Businessweek, "The FBI, responding to an inquiry by the U.S. Securities and Exchange Commission, is looking into Hewlett-Packard Co.'s allegations of accounting improprieties at its Autonomy Corp. unit, a person familiar with the matter said."
Autonomy founder and former CEO, Mike Lynch has angrily denied HP's allegations.
"HP came in with about 300 people, crawled over everything and you know what? They found nothing. And you know why? There was nothing to find," Lynch said in a television interview with The Telegraph. "What actually happened is that they mismanaged Autonomy and in doing that have destroyed a lot of shareholder value.'"
In the meantime, Hewlett-Packard CEO Meg Whitman and the rest of the board are trying to distance themselves from the decision to acquire Autonomy. Instead they're blaming former CEO Leo Apotheker and his strategy of moving HP toward becoming less dependent upon hardware and more dependent upon software for its revenue.
HP's advisors in the deal, notably auditing firm Deloitte, are scrambling to shed any responsibility for the alleged fraudulent accounts.
Deloitte, which had audited Autonomy's books for most of a decade issued a statement Wednesday saying, "Deloitte categorically denies that it had any knowledge of any accounting misrepresentations in Autonomy's financial statements."
The Deloitte statement continued, "Deloitte was not engaged by HP, or by Autonomy, to provide any due diligence in relation to the acquisition of Autonomy."