21 DEC 2008 Happy Winter Solstice

The Outlook is essentially unchanged at bad (and getting worse).


Interest rates (Fed Fund) now (12/16/08) zero to 0.25%. Rates cannot go lower unless the Fed pays us to borrow money. (Maybe?)

What does this mean? It means we can borrow money at no cost. It means that money is free. Usually, free things have little or no value.

What does this mean? It means we should GET OUT OF THE US $$$.

*The US dollar has recently reversed trend and is beginning to fall against most currencies. (What to do?)

Obama to the rescue:
Obama’s plans, when he takes over, are to borrow, print and give away even more money. His recent plan, when he takes office, is to give $850 billion (Maybe $850 trillion?) for “shovel ready” projects. “Shovel ready?” It may mean the recipients will use a shovel to load the money into their car trunks, pockets and freezers.

The Madoff Ponzi Scheme may cost a lot more than 50 billion. Obviously, the SEC has been rendered useless and incompetent. Cox, the head of the SEC, admits they (the SEC) failed. The CTFC, Congress and all regulatory have failed to protect the consumer/investor.

CHANGE!
12/17/2008: Mary Schapiro was named to head the SEC and Gary Gensler to head the CTFC. Wall Street, Bankers and politicians are happy. The same people who helped caused the economic disaster are still in control. But, you can’t please everybody. Why did Obama pick these people? (Check Schapiro and Gensler on Google)

What does it mean? Don’t look for any major reforms that will help the public. Look for those in power (Wall Street, Banks, Brokers, etc.) to do more of the same with greater impunity. It means business as “usual”. It means more of the same and maybe worse. Not good!

Ticking time-bombs:

Annuities: It is becoming apparent that the investments made by insurance companies (with annuity money) are not in US Treasury or FDIC or truly AAA securities. Instead they are in mortgage backed securities, real estate loans, sub-prime loans and other "toxic waste". Eventually, there will be a problem. When the news comes out, run for cover. What does this mean? It means GET OUT OF ANNUITIES. Be first! If Annuities crash, be safe. If Annuities don't crash, no great loss. Be safe, not sorry.

Ticking time-bombs cont'd:

SIPC. A Federal judge said SIPC will cover the Madoff investors. SEC, Treasury, Politicians, etc. say OK (so far). What does this mean? It means more claims on SIPC to come and another potential $ trillion "bailout". It means more to come.

And ... Investment firms, brokers, etc. have separate insurance for accounts above the SIPC limit. The Insurance Companies that issue the insurance are questionable at best. What does this mean? Do you have an idea? Help!


January Effect Ideas: go to ... http://seekingalpha.com/article/110970-how-to-play-the-january-effect-with-cefs?source=email

Briefing Outlook: Briefing (15 DEC 08) Economic conditions continue to worsen. Our forecast for fourth quarter real GDP has been lowered to an annual rate of -4.5%. Consumer spending and Business investment is dropping sharply. Nonresidential construction is collapsing and could turn into a rout.
Macro-economic trends are being significantly worsened by the negativity in the Media and scare tactics associated with the various bailout and stimulus proposals.
Any economic optimism is based on the idea that 535 elected congressmen will get together and make efficient decisions on where to invest in infrastructure instead of looking out for (their) political interest, count us as skeptical. Hah!

Bottom line: Outlook is BAD and getting WORSE!

Ideas:

L.M. and D.R.: Believe $$$ is worthless. Idea: Buy foreign oils and assets REP, TOT, PBR, BP, BHP, RTP, RIO, GLD, SLV, etc.

J.G.: Is there opportunity after deals go kaput? Look at HUN and BCE. Take advantage of “Busted” deals, takeovers, mergers, etc. (Watch List)
(BCE, CES, MIR, NWE, HUN, NRG, IRF, etc.) They drop far below asset value when the deal “busts” or is put on “hold”. Some offer good dividends, share “buybacks” and the deals are frequently resuscitated within one year.

R.V: Global Perspective and Outlook. go to .. https://www.mfs.com/wps/portal/!ut/p/c0/04_SB8K8xLLM9MSSzPy8xBz9CP0os3j_QKNAf3MPIwN342BnAyMXE39j01BjQ5cQY_2CbEdFABE9QaM!/?contentAreaId=1209&contentId=templatedata%2Finternet%2Farticle%2Fdata%2Fnews%2Fglobal_perspective

Site: Seeking Alpha has a lot of ideas and insights. http://seekingalpha.com
You can sign up (free) and choose what you want.

Site: Frontline offers market perspective and insights. Sometimes good and sometimes not. It is free and worth every penny. http://www.2000wave.com/gateway.asp

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