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Harry Newton's In Search of The Perfect Investment Technology Investor.

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9:00 AM EST, Wednesday, November 26, 2008: As our economy switches from credit based to a prepaid, cash only, we're looking at likely major disruptions to supply -- supermarkets without food because the supermarket couldn't pre-pay its delivery bills, supplier and customer firms suddenly closing down because their banks refused to extend working credit, and deals falling apart because the buyer was denied access to credit by his bank. This is not Harry's Mad Doomsday Scenario. This is the likelihood based on what I'm hearing and seeing in recent days.

If you're running a business, you need to plan for disruptions. You need to keep major cash at hand. Our banks are acting increasingly irresponsible. They are denying business loans -- loans that would previously have gone through without a murmur. They are calling loans to be repaid that previously they would have routinely rolled over. Paulson has bungled the bailout by doling out money without conditions, such as "You banks should lend this money. You should change the incompetent management that got you into today's mess, etc."

Yesterday, China cut its key lending rate by the most in 11 years -- less than three weeks after unveiling a $586 billion stimulus plan and cutting taxes for exporters. . Lending rate in the U.S. is already effectively zero and our government is printing dollar bills like there was no tomorrow.

Governments worldwide are trying to avoid the calamity of the Great Depression. I'm not forecasting that disaster. I do believe that things will get a lot worse before they get any better. And that we all should be prepared with cash and reduced expenses. It's sad to note that what cured the Great Depression was not government bailouts, huge infrastructure construction or tax reductions, but the Second World War.

Watch this interview with Jeremy Grantham. He's one of our most successful investors. For years, Jeremy Grantham, pre-eminent value investor, has been the Cassandra of the investment community with warnings of financial and market disaster. Grantham still sees danger in the global economy, but he has turned a little bullish on the U.S. blue chips. In this, his first television interview, Grantham tells Consuelo Mack why he is buying some stocks, what types and what he sees ahead for the global financial system. As you listen to the interview (done on November 21) you will find some interesting statements:

+ Two to one the stockmarket will be down quite a lot next year. The S&P 500 could hit 600 some time next year. (It closed last night at 857.)

+ Earnings globally will be crushed in the next year or two.

+ This is going to be much worse than what I ever thought.

+ Most interesting stocks are U.S. blue chips. But don't rush in. You need a seven year investing horizon.

+ Greenspan was the major culprit. Putting an Ayn Rand liberal in charge of regulating the U.S. financial system made no sense.

+ Being prepared for the unexpected is where we should all be. The unintended consequences could be severe.

+ Our economic history is dominated by great bubbles.

Click on the image for the video. Turn up the volume.

The wholesale destruction of wealth continues. Debt and falling asset prices lie at the root of our present wealth destruction. As the value of assets decline, so the equity in the asset is squeezed. As the values decline further, the equity is quickly wiped out. And as the value declines further, so the borrower now owes money to the lender. This has happened in recent weeks with margin calls from brokers. It's led to selling of good and bad stocks -- anything to raise the money owed the brokers. But it's also happening with companies which borrowed with covenants -- rules the borrower must follow, or the lender gets his money back instantly, if not sooner.

Item 1 is a company called LandAmerica Financial Group (LFG). This is its chart.

Yes, you read right. A little over a year ago this NYSE listed company was selling for over $108 a share. Last night it closed at 91 cents. That's 99% down. That means this company has gone from a market cap of $1.7 billion at its peak to last night's $14.1 million.

What does it do? According to Wall Street Journal online, "The Company's products and services facilitate the purchase, sale, transfer, and financing of residential and commercial real estate. These products and services are provided to a broad-based customer group, including residential and commercial property buyers and sellers, real estate agents and brokers, developers, attorneys, mortgage brokers and lenders and title insurance agents."

One of the things LandAmerica does is to facilitate 1031 exchanges. Under our insane tax code, you don't have to pay taxes on real estate you sold at a profit if you buy another property quickly. You defer your taxes. You can defer them forever if you keeping buying property. There are rules. One of them is that you must deposit your proceeds with an authorized company like LandAmerica. And at December 31, 2007 LandAmerica had "escrow and 1031 exchange money of more than $3.2 billion." According to LandAmerica's web site:

+ LandAmerica has earned a Financial Strength rating of A- from both Standard & Poors and Fitch.

+ LandAmerica maintains an Investment Grade debt rating from S&P and Fitch.

+ LandAmerica is the sole owner of an industrial bank which is used for many 1031 Exchange transactions. This wholly owned bank holds a four star rating from for one-, two-, and three-year CD deposits. All deposits are FDIC- insured.

This week LandAmerica's "valued" customers received a letter saying effective November 24, it "is accepting no new customers and is terminating its operations." It seems all the $3.2 billion is, well, sort of gone.

What happened? From the letter, "...portions of the 1031 funds are invested in illiquid auction rate securities. Our inability to sell or borrow against these securities has precipitated our decision to terminate operations. ... The auction rate securities..., which were sold to us by certain financial institutions, were highly liquid for many years. ...The auction rate securities market froze earlier this year, and that extenuating circumstance prevents us from liquidating claims..."

Yes, dear "valued" customers you haven't lost your money. It's just locked up in securities we can't sell. And we're not standing behind our wholly-owned 1031 exchange subsidiary that took your money. We're letting it go. Tough luck "valued" customers.

I also got stuck in auction rate securities but New York Attorney General Andrew Cuomo forced my brokerage firm to pay me out in full at par. I'm not too sure what happened at LandAmerica. I'm guessing they got stuck in student loan auction rate securities, the most toxic kind. LandAmerica's VP in charge of LandAmerica 1031 Exchange Services, William Gessner seems to have disappeared.

William J. Gessner, esq. His LandAmerica phone number is 202-312-5126. Good luck.

I don't have to reiterate my warnings: Watch where you put your money. Don't believe the ratings agencies. The agencies get paid by the people they rate. What do you expect? Realistic ratings?

Another reason to support Innocence Project.

UTICA, N.Y.—After more than 19 years in prison for a murder prosecutors now agree he didn't commit, Steve Barnes has rejoined his family just in time for Thanksgiving. Barnes walked out of Oneida County Court a free man Tuesday after a judge ruled that advanced DNA testing cleared him of raping and killing 16-year-old Kimberly Simon in 1985.

Simon's nude and bruised body was discovered along the Mohawk River in Whitestown in September 1985. More than two years would pass before Barnes was charged with raping and killing Simon, an acquaintance who was a few years behind him at Whitesboro High School.

Tried in 1989, Barnes was convicted of rape, sodomy, depraved indifference murder and two counts of murder related to the underlying sexual crimes.

Witnesses claimed they saw Barnes with Simon near the crime scene. Police said they found an imprint of Simon's jeans on dirt covering Barnes' pickup truck. And a jail inmate testified that Barnes had discussed the girl's death.

Although DNA from semen was recovered, the samples were too small to provide conclusive evidence, prosecutors said. DNA testing technology was only a few years old in the 1980s and quite limited.

The Innocence Project—a national organization that takes up cases of wrongful conviction—took up Barnes' case in 1996 and twice persuaded authorities to re-examine the DNA evidence. The first results were inconclusive, but the latest tests used a procedure more advanced in dealing with deteriorated or limited genetic material.

"If this technology had existed in 1985, Steve Barnes would never have even been arrested," said District Attorney Scott McNamara. He said the new tests "definitively excluded" Barnes as a suspect and made his case "totally unprosecutable."

Barnes said he was not angry at anyone for 20 years of lost freedom. "They say life begins at 40," Barnes said, drawing cheers from crowd of family and friends who pressed around him.

The Innocence Project, a nonprofit group founded in 1992 to exonerate innocent prisoners, has helped free more than 200 people.

Australian poetry shines.
The Australian Poetry Competition had come down to two finalists, a university graduate and an old aboriginal. They were given a word, then allowed two minutes to study the word and come up with a poem that contained the word. The word they were given was ' TIMBUKTU .'

First to recite his poem was the university graduate. He stepped up to the microphone and said:

Slowly across the desert sand
Trekked a lonely caravan
Men on camels two by two
Destination - Timbuktu .

The crowd went crazy! No way could the old aboriginal top that, they thought. The old aboriginal calmly made his way to the microphone and recited:

Me and Tim a huntin' went
Met three whores in a pop up tent
They were three, and we was two
So I bucked one, and Timbuktu .

The aboriginal won.

Favorite recent New Yorker cartoon.

Thanksgiving joy. The family will be there. Kiss and hug them. I'll see you again on Friday.

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.