Stock Picks for Obama’s New Energy Policy

President Obama made a speech where he announced a goal of cutting oil imports by a third over the next decade. He included a pledge to have federal agencies buy only alt-fuel vehicles by 2015 and a promise to expand U.S. oil exploration and production.

Transitioning half the cars and trucks in the U.S. to natural gas transportation over the next 5 to 10 years could reduce foreign oil imports by 5 million barrels every day.

So natural gas is an obvious play. Renewable/alternative fuels are other good choices.

Here are my four best picks that could make investors a bundle from  the President’s new policy:

Pick #1—
Clean Energy Fuels (CLNE)

The company owns and/or supplies more than 200 natural gas fueling stations across the U.S. and Canada. It serves over 320 fleet customers operating over 20,000 natural gas vehicles. The customers can use Clean Energy’s fuel stations to tank up their vehicles with compressed natural gas (CNG) or liquefied natural gas (LNG).

Clean Energy Fuels also provides natural gas vehicle systems and conversions for taxis, limousines, vans, pick-up trucks, and shuttle buses through its BAF subsidiary in Texas. Clean Energy helps customers buy and finance natural gas vehicles and obtain government incentives.

The company buys CNG from local utilities and produces LNG at its two plants (in California and Texas) with a combined capacity of 260,000 gallons per day.

Clean Energy owns and operates an LNG liquefaction plant near Houston, Texas, which it calls the Pickens Plant, capable of producing up to 35 million gallons of LNG per year.

And investors who buy CLNE won’t be alone …

Founder and billionaire oilman T. Boone Pickens owns a sizeable chunk of Clean Energy.

Pick #2—
Westport Innovations (WPRT)

This company makes natural gas engines for forklifts, oilfield services engines, trucks and buses and automobiles. Its 50-50 joint venture Cummins Westport project builds natural gas vehicle engines for trucks and buses that could refill at the clean energy stations built by Clean Energy.

It made revenues of $154 million in the last year and isn’t close to profitability yet. But a concerted push toward natural-gas powered vehicles could change that.

WPRT is at the top of its 52-week range. So I’d wait for a pullback.

Advertisement

Pick #3—
Talisman Energy (TLM)

Talisman had 1.4 billion barrels of oil equivalent in reserves last year. It has material positions in three world-class, liquids-heavy shale plays in North America: The Marcellus shale (Pennsylvania), Montney shale (British Columbia) and Utica shale (Quebec). It is also expanding its Eagle Ford shale properties, in a 50-50 joint venture with Statoil.

The company also signed two $1.05 billion deals with Sasol of South Africa. This partnership is sketching out plans for a new multibillion-dollar facility near Edmonton that could process as much as a billion cubic feet of natural gas a day into 96,000 barrels of refined products through the Fischer-Tropsch process.

Fischer-Tropsch works by using heat and chemical catalysts to break down a substance like natural gas into its molecular basics and then rebuild those molecules into something else — such as diesel.

Why do that?

A barrel of oil contains roughly six times the energy content of a thousand cubic feet of gas. Since 6 thousand cubic feet of gas is worth about $24 (U.S.), and one barrel of oil is worth about $100, there is a tremendous profit margin if you can convert one to the other cost-effectively.

Pick #4—
PowerShares Wilderhill
Clean Energy Fund (PBW)

This is one of the largest alternative energy ETFs with over $500 million in assets. Large holdings include GT Solar, Yingli Green Energy, SunPower Corp., Trina Solar and more.

Sean Brodrick is a natural resources expert and editor of Crisis Profit Hunter, a monthly newsletter with a primary mission to help you profit from crisis situations and other dynamic forces affecting the global economy. Commodities and dividend-paying stocks are central to his approach, and he also delivers practical advice for uncertain economic times. For more information on Crisis Profit Hunter, click here.

Sean is also the editor of Red-Hot Global Resources, a weekly newsletter that aims to help you rack up profits with commodity-focused exchange-traded funds (ETFs) and natural resource-sensitive stocks that operate around the world. For more information on Red-Hot Global Resources, click here.

View the original article here

Stock Picks for Obama’s New Energy Policy

President Obama made a speech where he announced a goal of cutting oil imports by a third over the next decade. He included a pledge to have federal agencies buy only alt-fuel vehicles by 2015 and a promise to expand U.S. oil exploration and production.

Transitioning half the cars and trucks in the U.S. to natural gas transportation over the next 5 to 10 years could reduce foreign oil imports by 5 million barrels every day.

So natural gas is an obvious play. Renewable/alternative fuels are other good choices.

Here are my four best picks that could make investors a bundle from  the President’s new policy:

Pick #1—
Clean Energy Fuels (CLNE)

The company owns and/or supplies more than 200 natural gas fueling stations across the U.S. and Canada. It serves over 320 fleet customers operating over 20,000 natural gas vehicles. The customers can use Clean Energy’s fuel stations to tank up their vehicles with compressed natural gas (CNG) or liquefied natural gas (LNG).

Clean Energy Fuels also provides natural gas vehicle systems and conversions for taxis, limousines, vans, pick-up trucks, and shuttle buses through its BAF subsidiary in Texas. Clean Energy helps customers buy and finance natural gas vehicles and obtain government incentives.

The company buys CNG from local utilities and produces LNG at its two plants (in California and Texas) with a combined capacity of 260,000 gallons per day.

Clean Energy owns and operates an LNG liquefaction plant near Houston, Texas, which it calls the Pickens Plant, capable of producing up to 35 million gallons of LNG per year.

And investors who buy CLNE won’t be alone …

Founder and billionaire oilman T. Boone Pickens owns a sizeable chunk of Clean Energy.

Pick #2—
Westport Innovations (WPRT)

This company makes natural gas engines for forklifts, oilfield services engines, trucks and buses and automobiles. Its 50-50 joint venture Cummins Westport project builds natural gas vehicle engines for trucks and buses that could refill at the clean energy stations built by Clean Energy.

It made revenues of $154 million in the last year and isn’t close to profitability yet. But a concerted push toward natural-gas powered vehicles could change that.

WPRT is at the top of its 52-week range. So I’d wait for a pullback.

Advertisement

Pick #3—
Talisman Energy (TLM)

Talisman had 1.4 billion barrels of oil equivalent in reserves last year. It has material positions in three world-class, liquids-heavy shale plays in North America: The Marcellus shale (Pennsylvania), Montney shale (British Columbia) and Utica shale (Quebec). It is also expanding its Eagle Ford shale properties, in a 50-50 joint venture with Statoil.

The company also signed two $1.05 billion deals with Sasol of South Africa. This partnership is sketching out plans for a new multibillion-dollar facility near Edmonton that could process as much as a billion cubic feet of natural gas a day into 96,000 barrels of refined products through the Fischer-Tropsch process.

Fischer-Tropsch works by using heat and chemical catalysts to break down a substance like natural gas into its molecular basics and then rebuild those molecules into something else — such as diesel.

Why do that?

A barrel of oil contains roughly six times the energy content of a thousand cubic feet of gas. Since 6 thousand cubic feet of gas is worth about $24 (U.S.), and one barrel of oil is worth about $100, there is a tremendous profit margin if you can convert one to the other cost-effectively.

Pick #4—
PowerShares Wilderhill
Clean Energy Fund (PBW)

This is one of the largest alternative energy ETFs with over $500 million in assets. Large holdings include GT Solar, Yingli Green Energy, SunPower Corp., Trina Solar and more.

Sean Brodrick is a natural resources expert and editor of Crisis Profit Hunter, a monthly newsletter with a primary mission to help you profit from crisis situations and other dynamic forces affecting the global economy. Commodities and dividend-paying stocks are central to his approach, and he also delivers practical advice for uncertain economic times. For more information on Crisis Profit Hunter, click here.

Sean is also the editor of Red-Hot Global Resources, a weekly newsletter that aims to help you rack up profits with commodity-focused exchange-traded funds (ETFs) and natural resource-sensitive stocks that operate around the world. For more information on Red-Hot Global Resources, click here.

View the original article here

The Real Victims of Fed Monetary Policy

03/31/11 Los Angeles, California – The Dow went up more than 70 points yesterday. The higher it goes, the more dangerous it becomes.

What’s the matter with this downturn? Shouldn’t it lower stock prices? Shouldn’t it empty tables at fancy restaurants? Shouldn’t it close down some of these luxury shops and make it easy to upgrade to business class?

Nah… The Great Correction is a failure. At least so far. It’s correcting only the people at the bottom.

Last week, we went shopping for a birthday present. We went around Bethesda, to Bloomingdales…to Saks…even to Tiffany’s. In one shoe store there were five middle-aged clerks, ready to help us. How could there be enough profit in a pair of shoes to support so many clerks? Then we found out…when Elizabeth bought a pair. Leaving the store, she picked up the wrong bag… The clerk called her. He offered to meet her to exchange bags. “Just look for me. I’ll be in my black Mercedes,” he said.

What? How can shoe clerks afford Mercedes?

Then, we went to Tiffany’s, where there were so many Asian customers, the clerks barely gave us the time of day.

Everywhere we went we found shockingly high prices – and people paying them.

Here in LA too…the numbers show typical families are poorer – thanks largely to falling house prices. But there are still many people at the top…with expensive cars…expensive habits…and the money to keep at it. And despite all the talk of downsizing chic – we don’t see much evidence of it.

At the upper income levels, there doesn’t seem to be much correction happening. And why should there be? The feds give them money.

Stocks have recovered most of their losses. Bonds – which should be worthless by now – still trade hands at par. Corporate profits are at record levels.

Where’s all this money coming from? You guessed it, the feds.

But pity the poor lumps at the bottom. The official unemployment rate has gone down…but most of the improvement in the numbers comes from dropping people off the list of those who are looking for work.

So, what happened to those who didn’t find jobs? They’re getting food-stamps (42 million of them at last count). Or, they’re living hand to mouth.

Many of them have now been out of work for so long they’ll probably never work seriously again.

In this case, the leftists are right. The feds have re-flated the rich folks’ bubble…largely at the expense of the poor. Even Fed governor Thomas Hoenig says so. From Bloomberg:

The Federal Reserve’s “highly accommodative” monetary policy is partly to blame for rapidly increasing global commodity prices, said Kansas City Fed President Thomas Hoenig, who called on colleagues to raise the benchmark interest rate toward 1 percent soon.

“Once again, there are signs that the world is building new economic imbalances and inflationary impulses,” Hoenig, the central bank’s longest-serving policy maker and lone dissenter at meetings last year, said in a speech today in London. “The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.”

Those “inflationary impulses” are making it hard for the middle classes to make ends meet.

Hershey’s is raising prices 10%. At least it’s being honest about it. A New York Times article tells us that many consumer brands are passing along “stealth inflation” by reducing sizes or lowering quality.

You go to the grocery story. You’re given opportunities to buy new “healthy” items – smaller, and more expensive. Or they are “green” – which makes you think that maybe they are better for the environment in some way. What they are for sure is more expensive.

Not that we blame the companies. They’re caught in a squeeze too. The Fed has driven up prices for their raw materials. Sugar, wheat, cotton, oil – almost all their costs are higher.

The big exception is labor. The cost of employing people has barely budged. Too bad. Because customers are also employees. If they don’t earn more in wages, how can they keep up with the inflationary cost increases?

Bill Bonner
for The Daily Reckoning

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning . 

View articles by Bill Bonner

The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.

Sign Up for The Daily Reckoning e-letter and receive a copy of our newest report How to Survive the Fall of Social Security… at NO CHARGE.

We Will Not Share Your Email.
We Value Your Privacy.

View the original article here

The Real Victims of Fed Monetary Policy

03/31/11 Los Angeles, California – The Dow went up more than 70 points yesterday. The higher it goes, the more dangerous it becomes.

What’s the matter with this downturn? Shouldn’t it lower stock prices? Shouldn’t it empty tables at fancy restaurants? Shouldn’t it close down some of these luxury shops and make it easy to upgrade to business class?

Nah… The Great Correction is a failure. At least so far. It’s correcting only the people at the bottom.

Last week, we went shopping for a birthday present. We went around Bethesda, to Bloomingdales…to Saks…even to Tiffany’s. In one shoe store there were five middle-aged clerks, ready to help us. How could there be enough profit in a pair of shoes to support so many clerks? Then we found out…when Elizabeth bought a pair. Leaving the store, she picked up the wrong bag… The clerk called her. He offered to meet her to exchange bags. “Just look for me. I’ll be in my black Mercedes,” he said.

What? How can shoe clerks afford Mercedes?

Then, we went to Tiffany’s, where there were so many Asian customers, the clerks barely gave us the time of day.

Everywhere we went we found shockingly high prices – and people paying them.

Here in LA too…the numbers show typical families are poorer – thanks largely to falling house prices. But there are still many people at the top…with expensive cars…expensive habits…and the money to keep at it. And despite all the talk of downsizing chic – we don’t see much evidence of it.

At the upper income levels, there doesn’t seem to be much correction happening. And why should there be? The feds give them money.

Stocks have recovered most of their losses. Bonds – which should be worthless by now – still trade hands at par. Corporate profits are at record levels.

Where’s all this money coming from? You guessed it, the feds.

But pity the poor lumps at the bottom. The official unemployment rate has gone down…but most of the improvement in the numbers comes from dropping people off the list of those who are looking for work.

So, what happened to those who didn’t find jobs? They’re getting food-stamps (42 million of them at last count). Or, they’re living hand to mouth.

Many of them have now been out of work for so long they’ll probably never work seriously again.

In this case, the leftists are right. The feds have re-flated the rich folks’ bubble…largely at the expense of the poor. Even Fed governor Thomas Hoenig says so. From Bloomberg:

The Federal Reserve’s “highly accommodative” monetary policy is partly to blame for rapidly increasing global commodity prices, said Kansas City Fed President Thomas Hoenig, who called on colleagues to raise the benchmark interest rate toward 1 percent soon.

“Once again, there are signs that the world is building new economic imbalances and inflationary impulses,” Hoenig, the central bank’s longest-serving policy maker and lone dissenter at meetings last year, said in a speech today in London. “The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.”

Those “inflationary impulses” are making it hard for the middle classes to make ends meet.

Hershey’s is raising prices 10%. At least it’s being honest about it. A New York Times article tells us that many consumer brands are passing along “stealth inflation” by reducing sizes or lowering quality.

You go to the grocery story. You’re given opportunities to buy new “healthy” items – smaller, and more expensive. Or they are “green” – which makes you think that maybe they are better for the environment in some way. What they are for sure is more expensive.

Not that we blame the companies. They’re caught in a squeeze too. The Fed has driven up prices for their raw materials. Sugar, wheat, cotton, oil – almost all their costs are higher.

The big exception is labor. The cost of employing people has barely budged. Too bad. Because customers are also employees. If they don’t earn more in wages, how can they keep up with the inflationary cost increases?

Bill Bonner
for The Daily Reckoning

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning . 

View articles by Bill Bonner

The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.

Sign Up for The Daily Reckoning e-letter and receive a copy of our newest report How to Survive the Fall of Social Security… at NO CHARGE.

We Will Not Share Your Email.
We Value Your Privacy.

View the original article here

The Real Victims of Fed Monetary Policy

03/31/11 Los Angeles, California – The Dow went up more than 70 points yesterday. The higher it goes, the more dangerous it becomes.

What’s the matter with this downturn? Shouldn’t it lower stock prices? Shouldn’t it empty tables at fancy restaurants? Shouldn’t it close down some of these luxury shops and make it easy to upgrade to business class?

Nah… The Great Correction is a failure. At least so far. It’s correcting only the people at the bottom.

Last week, we went shopping for a birthday present. We went around Bethesda, to Bloomingdales…to Saks…even to Tiffany’s. In one shoe store there were five middle-aged clerks, ready to help us. How could there be enough profit in a pair of shoes to support so many clerks? Then we found out…when Elizabeth bought a pair. Leaving the store, she picked up the wrong bag… The clerk called her. He offered to meet her to exchange bags. “Just look for me. I’ll be in my black Mercedes,” he said.

What? How can shoe clerks afford Mercedes?

Then, we went to Tiffany’s, where there were so many Asian customers, the clerks barely gave us the time of day.

Everywhere we went we found shockingly high prices – and people paying them.

Here in LA too…the numbers show typical families are poorer – thanks largely to falling house prices. But there are still many people at the top…with expensive cars…expensive habits…and the money to keep at it. And despite all the talk of downsizing chic – we don’t see much evidence of it.

At the upper income levels, there doesn’t seem to be much correction happening. And why should there be? The feds give them money.

Stocks have recovered most of their losses. Bonds – which should be worthless by now – still trade hands at par. Corporate profits are at record levels.

Where’s all this money coming from? You guessed it, the feds.

But pity the poor lumps at the bottom. The official unemployment rate has gone down…but most of the improvement in the numbers comes from dropping people off the list of those who are looking for work.

So, what happened to those who didn’t find jobs? They’re getting food-stamps (42 million of them at last count). Or, they’re living hand to mouth.

Many of them have now been out of work for so long they’ll probably never work seriously again.

In this case, the leftists are right. The feds have re-flated the rich folks’ bubble…largely at the expense of the poor. Even Fed governor Thomas Hoenig says so. From Bloomberg:

The Federal Reserve’s “highly accommodative” monetary policy is partly to blame for rapidly increasing global commodity prices, said Kansas City Fed President Thomas Hoenig, who called on colleagues to raise the benchmark interest rate toward 1 percent soon.

“Once again, there are signs that the world is building new economic imbalances and inflationary impulses,” Hoenig, the central bank’s longest-serving policy maker and lone dissenter at meetings last year, said in a speech today in London. “The longer policy remains as it is, the greater the likelihood these pressures will build and ultimately undermine world growth.”

Those “inflationary impulses” are making it hard for the middle classes to make ends meet.

Hershey’s is raising prices 10%. At least it’s being honest about it. A New York Times article tells us that many consumer brands are passing along “stealth inflation” by reducing sizes or lowering quality.

You go to the grocery story. You’re given opportunities to buy new “healthy” items – smaller, and more expensive. Or they are “green” – which makes you think that maybe they are better for the environment in some way. What they are for sure is more expensive.

Not that we blame the companies. They’re caught in a squeeze too. The Fed has driven up prices for their raw materials. Sugar, wheat, cotton, oil – almost all their costs are higher.

The big exception is labor. The cost of employing people has barely budged. Too bad. Because customers are also employees. If they don’t earn more in wages, how can they keep up with the inflationary cost increases?

Bill Bonner
for The Daily Reckoning

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning . 

View articles by Bill Bonner

The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.

Sign Up for The Daily Reckoning e-letter and receive a copy of our newest report How to Survive the Fall of Social Security… at NO CHARGE.

We Will Not Share Your Email.
We Value Your Privacy.

View the original article here

Budget Deficits and Foreign Policy

03/21/11 Baltimore, Maryland – There are things that are “seen”… and those that are “not seen.”

Seen:

Saturday, on the eighth anniversary of the invasion of Iraq, the United States opened up a third front in the “Forever War.” US, British and French warplanes carried out air strikes to enforce a “no-fly zone” over Libya.

When George H.W. Bush established a no-fly zone over parts of Iraq after the 1991 Gulf War, it was enforced with routine bombing for 12 years until his son ‘W’ sent in ground forces.

What, we ask with all the feigned interest we can muster, is the endgame in Libya? A cease-fire in their nascent civil war? “Regime change”? Oil exports diverted from their destinations in Europe and China…?

Does it matter?

“Circumstances will drive where this goes,” says Adm. Mike Mullen, chairman of the Joint Chiefs of Staff. And because “circumstances” have a funny way of getting out of hand, oil is again within a couple bucks of the high it set two weeks ago.

Precious metals are reacting too. Gold is up to $1,431. Silver is a nickel away from $36.

Not seen: “With whopping budget deficits of more than $1 trillion per year, a national debt of more than $14 trillion, and the US military already overstretched by two drawn-out occupations,” muses foreign policy analyst Ivan Eland, “one would think some sort of ‘Vietnam Syndrome’ would have set in.”

Not so.

“Traditionally, the foreign policy elites of declining empires have never accepted the need to retrench overseas before it was too late.”

And so it goes.

Addison Wiggin
for The Daily Reckoning

Addison Wiggin is the editorial director of The Daily Reckoning, and executive publisher of Agora Financial, an independent financial research firm based in Baltimore, Maryland. His second editions of international best-sellers Financial Reckoning Day Fallout and The New Empire of Debt, which he co-authored with Bill Bonner, were updated in 2009. His third book, The Demise of the Dollar… and Why it’s Even Better for Your Investments was updated in 2008, the same year he wrote I.O.U.S.A.  ??

Wiggin is the executive producer and co-writer of I.O.U.S.A. an acclaimed documentary nominated for the Grand Jury prize at the 2008 Sundance Film Festival and the 2009 Critics Choice Award and shortlisted for a 2009 Academy Award. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. 

View articles by Addison Wiggin

The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.

Sign Up for The Daily Reckoning e-letter and receive a copy of our newest report How to Survive the Fall of Social Security… at NO CHARGE.

We Will Not Share Your Email.
We Value Your Privacy.

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A Monetary Policy that Encourages Malinvestment

03/17/11 Tampa, Florida – Thorsten Polleit, of the Frankfurt School of Finance & Management, penned an article in The Free Market newsletter of the Ludwig von Mises Institute titled “The Many Names for Money Creation.”

It starts off almost humorous, reading more like an interesting, mood-lightening sidebar to a banner article titled “We’re Freaking Doomed (WFD)!” as he notes that the dire economic conditions are such that “euphemisms have risen to great prominence. This holds true in particular for monetary policy experts, who are at great pains to advertise a variety of policy measures as being in the interest of the greater good, because they are supposed to ‘fight’ the credit crisis.”

He then illustrates how the term “unconventional monetary policy” is meant to convey the happy virtues of “courageous and innovative”, as opposed to the bad old “conventional” monetary policy, which is now “outdated.”

In a similar vein, he notes that “Aggressive monetary policy” is meant to signify “bold and daring action for the greater good,” and “quantitative easing” is just a confusing term used to make it difficult for people to see “what such a monetary policy really is – namely, a policy of increasing the money supply (out of thin air), which, in turn, is equal to a monetary policy of inflation.”

A policy of inflation! Yikes! What was in that article “We’re Freaking Doomed (WFD)!”?

From the perspective of the Austrian school of economics (the only true economic theory!), this is not going to be the ordinary kind of inflation, either, but the really nasty, evil kind, where “monetary policy pushes the market rate of interest below the natural rate of interest (the societal time-preference rate), thereby necessarily causing malinvestment rather than ushering in an economic recovery.”

In other words, the Fed and the government are making it worse.

And if you want to know about malinvestment, then ask my boss, who never tires of telling me that I am the only employee, alone, apparently in the whole freaking history of employees, that has a consistent negative value to the company, meaning that the bottom-line of the company would be immediately improved if I was, to coin a rhyme, removed.

So I asked her, “What’s with that ‘improved if I was removed’ stuff?” to which she asked, “What are you talking about? You are the one that said that in the previous paragraph, you moron!” to which I asked, “What?” and then she asked, “What?” and then we just looked at each other, confused as hell.

There was an awkward silence, as I struggled as if I was in some weird parallel universe, since her point was that she is, only now, realizing that I am, as an employee, a huge mal-investment, but I can’t be fired since I am too old and too savvy not to sue the hell out of all of them for my termination, even though their case is air-tight and I should have been fired long ago.

And, as I never cease saying, some other, much worse mal-investments, such as the stock market bubbles, and the bond market bubbles, and the derivatives bubbles, and the debt bubbles, and the housing bubbles, and the bubbles in the sheer, staggering size of governments, were NOT my fault, but are all the fault of the Federal Reserve creating the money that made it all possible

Now, as if playing right into my hands, Mr. Polleit writes, “Sooner or later the dependence of the people on government handouts reaches, and then surpasses, a critical level,” which I assume we have reached.

The worse news is that he figures that “People will then view a monetary policy of ever-greater increases in the money supply as being more favorable than government defaulting on its debt, which would wipe out any hope of receiving benefits from government in the future.”

The terrifying point of all of this is when he writes, ominously, “In other words, a policy of inflation, even hyperinflation, will be seen as the policy of lesser evil.” Hyperinflation! Gaaahhh!

Hyperinflation! Immediately, I go into We’re Freaking Doomed (WFD) mode, which usually involves a lot of hyperventilating and a feeling of panic until I realize that all I have to do is buy gold and silver to keep what is going to happen to everyone else from happening to me, and make a lot of dollars in the process, which always makes me feel better, leading to euphoria, as in, “Whee! This investing stuff is easy!”

The Mogambo Guru
for The Daily Reckoning

Richard Daughty (Mogambo Guru) is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise to better heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning , and other fine publications.

View articles by The Mogambo Guru

The articles and commentary featured on the Daily Reckoning are presented by Agora Financial.

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Worth The Candle? The Economic Impact of Renewable Energy Policy in Scotland and the UK

"The report’s key finding is that for every job created in the UK in renewable

energy, 3.7 jobs are lost. In Scotland there is no net benefit from government
support for the sector, and probably a small net loss of jobs."

Downloadable from here

"Labour's manifesto promises to create at least 100,000 new high skilled jobs in Scotland by 2015 - up to half of which are expected to be green collar jobs. Labour's manifesto also contains the promise of a Green Investment Bank that would provide £2 billion for green projects, many of which would be in Scotland."

So they are promising the net deliberate destruction of 270,000 jobs

"SNP First Minister Alex Salmond, had today announced that the party would aim to create 60,000 new jobs in the green energy sector over the next decade, particularly in tidal power and off shore wind farms."

Promising to destroy 160,000 productive jobs

Pseudoliberal promise: Chris Huhne promises to create 250,000 'green' jobs

Promising to destroy 650,000 jobs

Conservatives: "we will unleash the power of green enterprise and promote resource efficiency to generate thousands of green jobs."

It's fighting talk from the Green Party today as they promise a “green” recovery with a guarantee of 100,000 jobs over the next 10 years if the party is returned to Government.

The Greens, which published its jobs strategy today, say their policies implemented since 2007 have delivered more than 20,000 positions.

Promising to destroy 270,000 jobs and claiming credit for having already destroyed 54,000

  That subsidising jobs that cannot exist without subsidy with money which must ultimately be taken from the productive part of the economy, with all the inherent added inefficiencies of having tax collectors to collect it and "environmental specialists" to hand it out, must automatically have a net cost and reduce jobs is about as basic in economics as you can get.

   Therefore all leaders of all of these parties who have enough brains to know that water flows downwards know that when they promise "green jobs" they are lying. They are specifically and deliberately actually promising to destroy large numbers of jobs to provide taxpayers money to their friends, donor and cronies.

   If any representative of these parties were remotely honest they could obviously never make the claims above. If they were remotely interested in improving the standard of living of the people they could never do it. If they were not lying thieves they could never take our money for this.

   I don't think it can be factually denied that Labour, the SNP, Pseudoliberals, Conservatives and Greens are, one and all, proven to by wholly corrupt, lying thieves with no remote trace of concern for the country. Nor that the nominal 5 separate parties are, in the essentials, a coalition to help the same cronies.

   Checking out UKIP and the BNP I find no such promises. QED

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ECB's "One Size Fits Germany" Policy; Portugal 10-Yr Debt at Record Yield; Greece, Ireland Near Highs; 3 Hikes by Year End? Rate Hikes to Stress PIIGS

ECB president Jean-Claude Trichet uses the word "vigilance" as a market signal he is going to hike. Trichet has used that word a couple of times recently.

Today, outgoing German Central Bank president Axel Weber expressed agreement with Trichet regarding "vigilance", going so far as to say he would not correct the market's expectation of 3 hikes by year-end.

Please consider Axel Weber: Markets have understood ECB correctly

Markets have understood the European Central Bank's policy signals, ECB policymaker Axel Weber said on Tuesday, adding he did not want to correct expectations for rates to be at 1.75 percent by year's end.

"I think President Trichet said the right thing: it's possible but not on auto-pilot," Weber told reporters when asked if a rate hike should be expected in April or May.

"I think markets have understood this kind of language, which is a bit stylized, in the past very well. And I think they've got it this time."

Asked if he was comfortable with market expectations that ECB rates will rise from their current record low of 1 percent to 1.75 percent by year's end, Weber replied: "I wouldn't do anything to try to correct market expectations at this point."

One Size Does Not Fit All

Pray tell what inflation is the ECB worried about?

One cannot find it in Greece, Spain, Ireland, or Portugal, where various austerity measures have reduced both jobs and wages.

Here's a better question: Where was the ECB when credit was exploding in Spain and Ireland, fueling enormous property bubbles?

Nowhere is where. Inflation in Germany was close to 0%.

One Size Fits Germany

It was in the best interest of Germany to ignore reckless credit expansion elsewhere. Now, because gasoline prices are soaring in the wake of a crisis in Libya and the Mid-East, Trichet wants to be vigilant.

Here's the deal. This has nothing to do with the price of oil or the price of anything else. Trichet is using the price of oil as an excuse to do what he wants to do, and that is hike.

Why does he want to hike? Because recent wage negotiations in Germany have headed much higher as noted by Factbox.

Public Sector 3 PercentChemical Industry 7 PercentGerman Construction Unions 5.9 Percent
Wages have collapsed in Ireland and Greece, and are lower in Spain and Portugal. However, Germany and France call the shots because they have the largest economies.

Those rate hikes will increase the already significant stress in the rest of the Eurozone.

10-Year Yield Greece: 12.331%

10-Year Yield Ireland: 9.416%

10-Year Yield Portugal: 7.558%

10-Year Yield Spain: 5.381%

10-Year Yield Italy: 4.893%

10-Year Yield Belgium: 4.279%

10-Year Yield France: 3.623%

10-Year Yield Germany: 3.273%

Sovereign Debt Spread to Germany Jan 2010-Mar 8 2011
CountryJan 01May 07Dec 30Mar 08
Portuguese, Irish, and Greek sovereign debt yields are at or near record highs as are yields relative to Germany. Moreover, the ECB's "One Size Fits Germany" policy is not going to help those countries any.

The ECB ignored rampant inflation in Spain and Ireland, and other problems elsewhere because it suited the interests of Germany and France at the time. Now the ECB is ignoring rampant deflation in those same countries because it suits the interest of Germany and France.

The ECB is not concerned with such matters or what countries it wrecks. It is just concerned that Ireland, Greece, and Spain pay back debt owed to German and French banks.

Here is the key question: How long can the other countries survive in a one size fits Germany setup?

For more on the mess in Europe including a look at gasoline prices please see

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

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U.K., other countries showing the courage to get policy right!

Here in the U.S., we have a problem: A lack of courage in Washington. Specifically, the courage among policymakers to make the difficult decisions — and take the difficult actions — to deal with our financial problems.

For one thing, our politicians are preaching budget restraint, but pursuing the greatest budget-busting tactics of all time. The National Commission on Fiscal Responsibility and Reform’s report, released December 1, 2010, has been all but forgotten.

President Obama’s budget, released just over 10 weeks later, proves it. It projects a massive $1.65 trillion deficit for fiscal 2011 … and more than $7.2 trillion in additional deficits in the decade thereafter!

On Capitol Hill this week, Bernanke didn’t rule out expanding the so-called quantitative easing program.

For another thing, our central bankers say their mission is to fight inflation. But they’re pooh-poohing surging prices, refusing to slow down the printing press, and pegging interest rates near zero percent. Fed Chairman Ben Bernanke made it crystal clear in Congressional testimony this week that he has no plans to change tacks.

As a result, our currency is tumbling against virtually every form of money on the planet — especially gold, which set a nominal new record of $1,437 an ounce this week. Meanwhile, other agricultural and energy commodities are going ballistic!

But there are many countries that appear to be taking a different approach. And there’s one nation in particular whose fiscal and monetary policies appear to be taking a turn for the better. That country?

The U.K.!

U.K. Trying to Right the Ship, Deal
with Financial Threats Head On

Like the U.S., the U.K. has spent several years overpromising, over borrowing, and overspending. That has left the U.K. with a debt load equal to roughly 61 percent of GDP — the highest since 1970. Its budget deficit surged to 11.4 percent of GDP in 2010, one of the worst among developed economies.

But unlike the U.S., fiscal and monetary policymakers are taking steps to right the ship. It’s a titanic battle between reckless, Keynesian policy in the U.S. and painful, but necessary, austerity in the U.K. And I believe it’s one the U.K. will win.

Will it be easy? Not at all. Prime Minister David Cameron is jacking up taxes and slashing spending in several arenas …

* In national defense, Britain is cutting its 37-billion-pound ($60 billion) annual military budget by 7.5 percent. The country plans to scrap or sell its 70-strong fleet of Harrier jets and mothball its flagship Ark Royal carrier.

* In public services, Cameron is proposing that volunteers or charities take over the operation of many schools and hospitals to reduce government costs.

* In retail, the country’s Value Added Tax just rose to 20 percent from 17.5 percent. And in education, the cost of attending university will double at many schools in 2012. Some students will pay three times the tuition they had to pay in 2011.

“The duty of this government is to deal with the economic mess that’s been left. We have got to deal with that deficit, we have got to make these cuts, we have got to put up these taxes.” — British PM David Cameron

Over on the monetary policy side of the ledger, the hawks are starting to spread their wings as I alluded to recently. We now have three Bank of England policymakers explicitly voting for interest rate hikes, much more dissent than we have here in the U.S.

I’m not going to suggest these moves are without consequences. Short-term growth is suffering, with British GDP slipping by 0.6 percent in the fourth quarter. But I believe the short-term pain will be offset by long-term economic gains.

The Lesson:
Invest in Disciplined Countries,
and Avoid the Rest!

You can already see the process starting, with money flowing away from the U.S. and toward the U.K. in the currency markets. The Dollar Index is at multi-month lows and threatening to break down from a three-year uptrend, while the pound is just shy of a 14-month high.

This underscores the message I’ve been preaching for some time: You want to invest in the countries with disciplined, prudent fiscal and monetary policies … and avoid the rest.

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Some countries that make the cut, in my book, include the U.K., Brazil, Singapore, New Zealand, Australia, Switzerland, and Canada.

You can invest in their short-term government debt securities … companies based in those countries with U.S.-listed shares … or ETFs that offer you diversified national exposure. Think the iShares MSCI Canada Index Fund (EWC) or CurrencyShares Swiss Franc Trust (FXF) here.

Until next time,

Mike

P.S. You don’t have to watch helplessly as Washington avoids doing what’s needed to dig the U.S. out of the mess we’re in. Click here to learn how my Safe Money Report can help you profit from countries that have the courage to take a prudent fiscal and monetary policy stance.

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money, Interest Rates Profits and LEAPS Options Alert. He is often quoted by the New York Sun, Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

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