This could be a no brainer investment. Actually you might already own stock in it, but with the quad-annual meeting coming up next month, this is your opportunity to really cash in before it is too late... or did I mean cash out...?
MM

I want to tell you about a company I've recently come across that is shaping up to be one hell of an investment opportunity. Today is the first day of their new fiscal year, and it's obvious they're poised for massive growth and huge upside potential.

To start off, it's an absolutely giant company. The biggest in the world, in fact. Maybe the biggest in the history of the world. And year after year, it gets even bigger. They hire more employees and embark on larger, more ambitious investment projects.

Now, in all candor, most of those investment projects don't really work out very well for the company's bottom line. In fact, the company has actually lost money nearly every single year for the past five decades.

I should also point out, in fairness, that the company's balance sheet is pretty dismal. Its net book value is negative. Big time. The company's debt load is worth far more than all of its assets put together, and then some.

They also have a small problem with future pension liabilities (which could actually dwarf the existing debt burden). It's difficult to ascertain the true nature of this pension issue, though, because I believe management is using a few accounting tricks to cover up the problem.

Oh, and speaking of management team, the company has a real cracker jack squad running the show.

They've got an enormous board of directors to oversee things on behalf of shareholders. Most of the directors are trained attorneys, so they really know their stuff when it comes to managing finance.

Curiously, many have been on the board for decades, so as individuals they are not necessarily held accountable for corporate performance. It seems, however, that the shareholders really prefer this system and find it to be the best form of corporate governance in the world.

On that note, shareholders also directly choose the company CEO. This is typically a very charismatic fellow with great hair and a winning smile who excels at giving speeches. They even bought him an expensive jet to fly around the world and represent the company.

CEOs are changed out every few years. Before the transition, the new guy usually talks a lot about all the positive changes he wants to make... though over the next few years he usually comes up short. Shareholders don't seem to mind very much, though, because this cycle seems to repeat itself endlessly every few years.

Anyhow, let me tell you about the three key assets that make this as worthwhile investment:

The first is goodwill. The company's brand and trademark are loved around the world, even more than Coca Cola. There's barely a soul alive that hasn't heard of the company. OK, in truth, popular opinion may be waning in recent years... but most people still seem to view the company as it was 50+ years ago. This is a major benefit and will obviously last forever.

The second is its vast debt facility. Despite already being in so much debt, the company has access to nearly infinite lines of credit... so it can continue to further indebt itself in order to finance operations. Clearly this will continue forever, unabated, so no reason to worry.

The last key asset is the company's share structure. While every shareholder has a single share, large consortiums often band together to influence management in their own favor at the expense of other shareholders.

Moreover, management has the authority to issue a mandatory rights offering... essentially compelling shareholders to pay up more money into the company. As a matter of fact, if the shareholders don't pay, they can go to jail and the company can seize their assets. It's a beautiful system.

(curiously, shareholders never actually signed up for this obligation... but somehow it's still enforceable...)

Anyhow, here's the investment I want to tell you about-- the company wants to borrow a bit more money, structured as a 10-year note. They're offering an interest rate of 1.62% for that ten-year period. I don't know about you, but this seems like a no brainer to me. Even the rating agencies agree, it's practically risk free!

If you want to do your own research, check out the company yourself. It's called the United States of America.

from http://www.sovereignman.com/expat/do-not-miss-out-on-this-no-brainer-investment-8919/

This entry was posted on October 4, 2012 at 8:30 PM and has received 634 views. There are currently 0 comments. Print this entry.

Nice future story of how the American Empire ended

The narrative takes place at some unspecified point in the next two decades; it’s probably necessary to say outright that is not how I think the end of America’s empire will happen, simply one way that it could happen—and thus a model that may help expose some of the vulnerabilities of the self-proclaimed hyperpower currently tottering toward history’s compost bin.

...

“Dammit, we need that oil.”  The president turned and walked over to the window.

 

 

He was right, of course, and “we” didn’t just refer to the United States. Jameson Weed won the White House the previous November with a campaign focused with laser intensity on getting the US out of its long and worsening economic slump.  Winning the country a bigger share of imported oil was the key to making good on that promise, but that was easier said than done; behind what was left of the polite fiction of a free market in petroleum, most oil that crossed national borders did so according to political deals between producer countries and those consuming countries strong and wealthy enough to compete.  These days, more often than not, the US lost out—and the impact of that reality on Weed’s upcoming reelection campaign was very much on the minds of everyone in the room.

 

 

“There’s one option,” said the president’s national security adviser.  “Regime change.”

 

 

President Weed turned back from the window to face the others. The Secretary of Defense cleared his throat. “Sooner or later,” he said, “the Chinese are going to stand and fight.”

...

more at http://thearchdruidreport.blogspot.com/2012/10/how-it-could-happen-part-one-hubris.html

This entry was posted on October 4, 2012 at 7:40 PM and has received 618 views. There are currently 0 comments. Print this entry.

Interesting article on when (not if) the stock market will crash, probably due to derivative and banking storm that will make 2008 look like a mild April shower by comparison.

In the financial world, the month of October is synonymous with stock market crashes.  So will a massive stock market crash happen this year?  You never know. The truth is that our financial system is even more vulnerable than it was back in 2008, and financial experts such as Doug Short, Peter Schiff, Robert Wiedemer and Harry Dent are all warning that the next crash is rapidly approaching.  We are living in the greatest debt bubble in the history of the world and Wall Street has been transformed into a giant casino that is based on a massive web of debt, risk and leverage.  When that web breaks we are going to see a stock market crash that is going to make 2008 look like a Sunday picnic.  Yes, the Federal Reserve has tried to prevent any problems from erupting in the financial markets by initiating another round of quantitative easing, but 40 billion dollars a month will not be nearly enough to stop the massive collapse that is coming.  This will be explained in detail toward the end of the article.  Hopefully we will get through October (and the rest of this year) without seeing a stock market collapse, but without a doubt one is coming at some point.  Those on the wrong end of the coming crash are going to be absolutely wiped out.

....

According to Doug Short, the vice president of research at Advisor Perspectives, the stock market is somewhere between 33% and 51% overvalued at this point.  In a recent article he offered the following evidence to support his position....

? The Crestmont Research P/E Ratio (more)

? The cyclical P/E ratio using the trailing 10-year earnings as the divisor (more)

? The Q Ratio, which is the total price of the market divided by its replacement cost (more)

? The relationship of the S&P Composite price to a regression trendline (more)

If a stock market crash does not happen this month or by the end of this year, that does not mean that the experts that are predicting a stock market crash are wrong. It just means that they were early.

...
[What about QE3 you ask?] The first two rounds of quantitative easing did indeed drive up stock prices.  The same thing will happen under QE3, unless the effects of QE3 are overwhelmed by a major crisis. For example, if we were to see a total collapse of the derivatives market it would render QE3 totally meaningless.

Estimates of the notional value of the worldwide derivatives market range from 600 trillion dollars all the way up to 1.5 quadrillion dollars.  Nobody knows for sure how large the market for derivatives is, but everyone agrees that it is absolutely massive. When we are talking about amounts that large, the $40 billion being pumped into the financial system each month by the Federal Reserve during QE3 would essentially be the equivalent of spitting into Niagara Falls.  It would make no difference at all.

 

Most Americans do not understand what "derivatives" are, so they kind of tune out when people start talking about them. But they are very important to understand. Essentially, derivatives are "side bets".  When you buy a derivative, you are not investing in anything.  You are just gambling that something will or will not happen. I explained this more completely in a previous article entitled "The Coming Derivatives Crisis That Could Destroy The Entire Global Financial System"....

A derivative has no underlying value of its own.  A derivative is essentially a side bet.  Usually these side bets are highly leveraged. At this point, making side bets has totally gotten out of control in the financial world.  Side bets are being made on just about anything you can possibly imagine, and the major Wall Street banks are making a ton of money from it.  This system is almost entirely unregulated and it is totally dominated by the big international banks. Over the past couple of decades, the derivatives market has multiplied in size.  Everything is going to be fine as long as the system stays in balance.  But once it gets out of balance we could witness a string of financial crashes that no government on earth will be able to fix.

 

Five very large U.S. banks (including Goldman Sachs, JP Morgan and Bank of America) have combined exposure to derivatives in excess of 250 trillion dollars. Keep in mind that U.S. GDP for 2011 was only about 15 trillion dollars. So we are talking about an amount of money that is almost inconceivable. That is why I cannot talk about derivatives enough.  In fact, I apologize to my readers for not writing about them more. If you want to understand the coming financial collapse, one of the keys is to understand derivatives.  Our entire financial system has been transformed into a giant casino, and at some point all of this gambling is going to cause a horrible crash.

 

Do you remember the billions of dollars that JP Morgan announced that they lost a while back?  Well, that was caused by derivatives trades gone bad.  In fact, they are still not totally out of those trades and they are going to end up losing a whole lot more money than they originally anticipated. Sadly, that was just the tip of the iceberg.  Much, much worse is coming.  When you hear of a major "derivatives crisis" in the news, you better run for cover because it is likely that the entire house of cards is about to start falling.

 

And don't get too caught up in the exact timing of predictions. If a stock market crash does not happen this month, don't think that the storm has passed. A major financial crisis is coming.  It might not happen this week, this month or even this year, but without a doubt it is approaching. And when it arrives it is going to be immensely painful and it is going to change all of our lives. I hope you are ready for that.

More at http://theeconomiccollapseblog.com/archives/warnings-that-a-massive-stock-market-crash-is-imminent

This entry was posted on October 4, 2012 at 4:11 PM and has received 858 views. There are currently 0 comments. Print this entry.