Harry Newton's In Search of The Perfect Investment
Technology Investor. Harry Newton
9:00 AM EST, Wednesday, March 25, 2009. Many
of you have not read yesterday's long piece from Rolling Stone on how a Mr.
Joseph Cassano singlehandledly brought down the entire world's financial system
and how Goldman Sachs alumni rode gallantly in to the rescue, enriching themselves
and their firm beyond anyone's wildest imagination. For
your second assignment, you need to watch this Glenn Beck video
clip from Fox. It shows how much money the United States is printing and printing
and printing. The chart will blow you away. If this printing doesn't cause
runaway inflation and destroy the dollar, it will be nothing short of a miracle.
will all this happen? I don't know. But, just as the tech bubble burst and
the housing bubble burst, the printing money bubble will also burst.
must each of us do to protect ourselves? The obvious solution includes gold,
precious metals, diamonds, and hard assets (like real estate). What else?
I'm not sure. Watch
this clip. If that doesn't work, paste this into your browser. http://www.youtube.com/watch?v=YDEe0Ai6lTM.
Don't get too paranoid. Then send me an email with your thoughts -- .
Beck followed that clip up with another -- called The Incredible Shrinking
Dollar -- that's also worth watching. Click
Europeans, who have had many more bouts with hyperinflation than we have,
are resisting the printing press. Excerpts from from today's New York Times:
Bank Resists Printing Money
FRANKFURT At the European Central Bank, being a maverick means
holding steady as others bow to the prevailing winds.
As its peers
in the United States, Britain and Japan crank up monetary printing presses
in a bid to prop up their economies, the European bank is resisting the
rush to adopt those banking policies.
approach, to many outsiders and even some politicians like Nicolas Sarkozy,
the president of France, is hopelessly myopic and likely to leave Europe
struggling long after others have resumed growth. But it has become the
signature approach of the European Central Bank since credit markets first
tightened in August 2007 to consider, before tearing up the rule book, not
only the crisis of the moment but what comes later.
swings without perspective, the central bank president, Jean-Claude
Trichet, said recently, would delay the return of sustainable prosperity
because they would undermine confidence, which is the most precious ingredient
in the current circumstances.
sharply cut interest rates, the European bank was slower to act. When others
stepped in to bail out financial institutions, the European bank, constitutionally
limited in its powers, left that to national governments.
with other central banks acting to create money out of thin air because
they cannot prime the lending pumps by lowering short-term interest rates
any further, the European bank remains wary of the specter of inflation.
all is an aversion to anything that smacks of printing money,
a phrase that evokes Europes worst economic nightmares, everything
from kings debasing their currencies to fight endless wars to the hyperinflation
and currency collapses in Germany after it lost two wars in the 20th century.
But in the
view of its critics, the European bank is underestimating the dangerous
and unpredictable dynamics of the recession. With the risk of being caught
in a downward spiral, they say, the European bank should be actively pushing
cash into the economy now, as the Federal Reserve, the Bank of England and
the Bank of Japan are all doing.
they are doing is simply not enough, and this is not one of those downturns
that you simply work your way through, said Kenneth Wattret, chief
euro zone economist at BNP Paribas in London.
for the European bank, economists said, is that policies in Washington and
London put pressure on the euro by means of the exchange rate.
has climbed about 10 percent against the dollar since the Fed policy was
announced, the logical consequence of a decision to increase the supply
of dollars. It is also up sharply against the pound.
strengthening of the euro would price more European exports out of world
markets as they recover, giving the American economy a significant leg up
without any overt decision to devalue the dollar.
cant suddenly start engaging in competitive devaluations of your currency,
said Erik Nielsen, chief Europe economist at Goldman Sachs. But you
can loosen monetary policy domestically, which has the same effect.
With the European
banks benchmark interest rate at 1.5 percent, and probably headed
lower, the overarching economic policy question in Europe has been whether
the central bank in Frankfurt will join the worldwide move to buy financial
assets whether private bonds or government debt as interest
rates near zero. This policy is known as quantitative easing. ...
be fatal for the euros credibility to have the E.C.B. simply start
printing money, said Julian Callow, chief Europe economist at Barclays
Capital in London. Its too much to ask of a currency that is
not even a teenager yet.
Russell, respected publisher of the Dow
Theory Letters writes today:
A few fundamentals
The world is up to its neck in debt. Most of the debt is denominated
in dollars. Consequently, there now exists a world dollar shortage. The
world debt acts as a short position against the dollar, since only dollars
can relieve this debt. The Fed is attempting to relieve the situation by
manufacturing dollars by the trillions. This increased printing will put
downward pressure on the dollar. Meanwhile, other nations will do the same
thing, since every country wants to export, and a cheap currency is a big
aid to exports. The net result of all this fiat money creation will be increasing
suspicion regarding paper money. The rising world amount of fiat currency
will tend to swamp deflation, and ultimately there will be distrust and
a move out of paper money into gold.
dollar question is "Will all this currency creation lead to credit
creation?" Personally, I don't think it will -- in fact, I think the
nation would be better off if the government had stayed out of the situation
and the natural processes of a bear market had been allowed to occur. Every
bear market in history has come to an end, and this one would too if the
government allowed it to. But the government must from a political standpoint
be seen as "doing something," even if that something prolongs
the recession and wreaks further havoc on the markets.
So what are
we to do? I think the best thing we can do is protect ourselves the way
I've been suggesting for months on end. By paying off as much debt as possible,
while accumulating dollars and gold. A position in dollars and gold, so
far, has served us very well over the 18 months of this brutal bear market.
My own instinct
is to sit with dollars and gold, and wait as patiently as I can. If there
was something brilliant that I could suggest to my subscribers, believe
me, I would do it. But there isn't. There's an old Wall Street axiom --
"When in doubt, stay out." There's an old Chinese saying that
fits all occasions -- "This too shall pass." That saying served
me well during World War II. And indeed, that damnable war did end.
enough gloom and doom for today.
things lawyers say in court.
These are from a book called Disorder
in the Court, and are things people actually said in court:
was the first thing your husband said to you that morning?
WITNESS: He said, 'Where am I, Cathy?'
ATTORNEY: And why did that upset you?
WITNESS: My name is Susan!
myasthenia gravis, does it affect your memory at all?
ATTORNEY: And in what ways does it affect your memory?
WITNESS: I forget.
ATTORNEY: You forget? Can you give us an example of something you forgot?
doctor, isn't it true that when a person dies in his sleep, he doesn't know
about it until the next morning?
WITNESS: Did you actually pass the bar exam?
the date of conception (of the baby) was August 8th?
ATTORNEY: And what were you doing at that time?
WITNESS: Getting laid
had three children, right?
ATTORNEY: How many were boys?
ATTORNEY: Were there any girls?
WITNESS: Your Honor, I think I need a different attorney.
was your first marriage terminated?
WITNESS: By death.
ATTORNEY: And by whose death was it terminated?
WITNESS: Take a guess.
you describe the individual?
WITNESS: He was about medium height and had a beard.
ATTORNEY: Was this a male or a female?
WITNESS: Unless the circus was in town, I'm going with male.
how many of your autopsies have you performed on dead people?
WITNESS: All of them. The live ones put up too much of a fight.
you qualified to give a urine sample?
WITNESS: Are you qualified to ask that question?
before you performed the autopsy, did you check for a pulse?
ATTORNEY: Did you check for blood pressure?
ATTORNEY: Did you check for breathing?
ATTORNEY: So, then it is possible that the patient was alive when you began
ATTORNEY: How can you be so sure, Doctor?
WITNESS: Because his brain was sitting on my desk in a jar.
ATTORNEY: I see, but could the patient have still been alive, nevertheless?
WITNESS: Yes, it is possible that he could have been alive and practicing
This column is about my personal search for the perfect
investment. I don't give investment advice. For that you have to be registered
with regulatory authorities, which I am not. I am a reporter and an investor.
I make my daily column -- Monday through Friday -- freely available for three
reasons: Writing is good for sorting things out in my brain. Second, the column
is research for a book I'm writing called "In Search of the Perfect
Investment." Third, I encourage my readers to send me their ideas,
concerns and experiences. That way we can all learn together. My email address
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