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8:30 AM EST Monday, July 28, 2008: Nice weekend. Played tennis. Went to a local charity's Blueberry Pancake Festival. Watched movies and read. Stayed away from thinking about Gloom and Doom.

Two books that will change your life. You must read these two this summer. They both celebrate the fact that one person can make a difference. Three Cups of Tea is the story of Greg Mortenson, mountaineer, who built 53 schools for girls in the remotest parts of Northern Pakistan. Mountains Beyond Mountains is the story of Dr. Paul Farmer who built a health clinics in remotest Haiti and has since built them in some of the world's poorest countries. Both are gripping stories.

Obesity is prevalent: There's nothing like a Blueberry Pancake Festival to bring out fat people. And boy, there are a lot of them. What I didn't see were any fat old people.

Bernanke's portfolio includes Canadian treasury bonds. He's right. The U.S. dollar is not the place to be. We don't know how much he has in Canadian treasuries, since that isn't disclosed. Does it seem right to you that the guy in charge of the U.S. dollar believes so little in the U.S. dollar that he personally invests elsewhere? I don't make this stuff up.

The worst brokerage firms. I also run AuctionRatePreferreds.org. I get a lot of mail bitching about brokerage firms. In order of bitchiness (i.e. highest number of complaints): UBS, Wachovia, Allianz, Oppenheimer, Merrill Lynch, PIMCO and Citigroup (via Smith Barney). Try not to deal with these firms. They all did horrible and nasty things to their customers.

Weekend reading statistics:

+ Iraq costs us $10 billion a month.

+ The national debt, usually viewed as the $5 trillion held by the public, is really twice that now-- at $10.4 trillion -- once we add in the Fannie and Freddie obligations and the mortgage-backed securities they guarantee. This $10.4 trillion works out to $33,333 for every man, woman and child living in the U.S.

+ Oil prices was $147 on July 11. It's now around $124, a barrel.

Shares are cheap -- Part 1? A VIX buying signal. From The FreeDictionary.

VIX shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk.

The first VIX, introduced by the CBOE in 1993, was a weighted measure of the implied volatility of eight S&P 100 at-the-money put and call options. Ten years later, it expanded to use options based on a broader index, the S&P 500, which allows for a more accurate view of investors' expectations on future market volatility. VIX values greater than 30 are generally associated with a large amount of volatility as a result of investor fear or uncertainty, while values below 20 generally correspond to less stressful, even complacent, times in the markets. The index is often referred to as the "investor fear gauge".

The VIX has yet to reach heights seen in 1998 or 2002 when it rose above 40. Both times proved to be good to buy stocks. At present, the "buy" signal looks very muted. Because so many people talked about the VIX index, I figured it was an interesting exercise this morning to chart the VIX and the three main indexes over the same time frames. See if you can figure the tea leaves.

Shares are cheap -- Part 2? Corporate profits peaked in spring 2007 and have fallen sharply since. So have analysts' estimates for 2008 earnings.

Chart from John Mauldin's newsletter

CDARS insurance will get you $50 million insurance on your bank deposits. That compares with $100,000 from the FDIC. Some (typically smaller) banks offer CDARS. For more, go to CDARS web site. I just discovered CDARS when I opened an account at Modern Bank. They have it.

Some states face huge problems: From today's New York Post.

ALBANY - Gov. Paterson, convinced the state faces its worst fiscal crisis since the mid-1970s, will deliver the grim news in an unprecedented special address to New Yorkers as soon as tomorrow night, The Post has learned.

The governor's address - which his aides hope will be televised by public and cable news stations - will say that plunging state revenues will force painful cuts in state services, necessitate a reduction in the state work force, possibly through layoffs, and require other difficult economic measures, source said.

Paterson is also expected to announce that he's ordered state agencies to slash spending beyond the relatively modest 3.3 percent cuts he ordered in late spring.

How to get 8% on your money in Australia: I moved $1 million to a big bank in Australia called Westpac. I am now earning 8% on it. On Friday I wrote, you need to find a banker in Australia. That's not difficult if you have a friend there. If you know me (and send me an email) I can introduce you. Several readers did. I haven't forgotten you. Just remember, I'm not a banker. I'm not a financial adviser. I'm not making a nickel on this. There is a form to fill out. It's called "Reference by An Acceptable Referee." It's a Commonwealth Government Requirement. That's what the form says.

For information on Australian taxes, go to the Australian Taxation Office. That's where you'll see the 10% which is the tax the Australian Government withholds on the interest paid.

Worried Banks Sharply Reduce Business Loans. That's the headline on a front page piece on today's gloomy New York Times. Excerpts:

+ “The second half of the year is shot,” said Michael T. Darda, chief economist at the trading firm MKM Partners in Greenwich, Conn., who was until recently optimistic that the economy would continue expanding. “Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit.”

+ Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work.

But when Mr. Greenblatt called the local branch of Wachovia — the same bank that had been aggressively marketing loans to him for years — he was distressed by the response.

“The exact words were, ‘We’re saying no to almost everybody,’ ” Mr. Greenblatt recalled. “This is why God made banks, for this kind of transaction. This is going to slow down the American economy.”

+ Earlier this year, credit extended by banks to companies and consumers was still growing at double-digit rates compared with three months earlier, according to an analysis of Federal Reserve data by Goldman Sachs. By mid-June, bank credit was declining at an annualized pace of more than 6 percent.

That is a drop of nearly $150 billion, an amount much larger than the value of the tax rebates the government has sent to households this year in an effort to spur economic activity.

+ “There’s been a lot of disruption in the credit market, and a lot of traditional lenders have really tightened up,” said Gregory Goldstein, president of Macquarie Equipment Finance, which leases computer gear and other technology to companies. “Before, some of the standards they lent on were weak, but we think they have overshot and gone too far on the other end.”

Such was Mr. Greenblatt’s reaction, as he learned that an infusion of credit for his Baltimore factory would not come easily. His company has been enjoying double-digit sales growth. This month, it received the two largest orders in its history, he said.

“It was jubilation,” he said. “I was doing the Funky Chicken.”

The initial call to Wachovia left him dismayed.

“I’m stunned,” Mr. Greenblatt said. “God is smiling on this factory. We’re at such an exciting inflection point, and this is what a bank is supposed to do. There’s sand in the gears.”

No loan meant one fewer order for the factory in Chicago that makes the robot Mr. Greenblatt wants to buy, and fewer hours for workers there. It meant less business for the truck driver who would have hauled the robot to Baltimore, and no help-wanted ads for Marlin Steel Wire Products.

Mr. Greenblatt eventually got oral approval for the loan, though after more than a week. He was still waiting for the money at the end of last week.

You can read the full New York Times piece.

Last request
Mary Clancy goes up to Father O'Grady after his Sunday morning service, and she's in tears.

Father O'Grady says, "So what's bothering you, Mary my dear?"

She says, "Oh, Father, I've got terrible news. My husband passed away last night."

The priest says, "Oh, Mary, that's terrible. Tell me, Mary, did he have any last requests?"

She says, "That he did, Father."

The priest says, "What did he ask, Mary?"

"She says, "He said, 'Please Mary, put down the gun...' "

The drunk confesses
A drunk staggers into a Catholic Church, enters a confessional booth, sits down, but says nothing. The Priest coughs a few times to get his attention, but the drunk continues to sit there. Finally, the Priest pounds three times on the wall.

The drunk mumbles, "Ain't no use knockin, there's no paper on this side either."

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 is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads on this site. Thus I cannot endorse, though some look interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Michael's business school tuition. Read more about Google AdSense, click here and here.
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