Nigel Farage Nails the Eurocrats for the Disaster They Have Caused. He is the Ron Paul of Europe.

The Eurozone will breakup peacefully or there will be massive strife.  Neither outcome is good for the people who live in the USA, Europe, or Asia.  Nigel Farage is the Ron Paul of Europe.  He has been warning the Eurocrats for years about the disaster they are causing just like Ron Paul has in the USA.

There will be opportunities to buy high dividend stocks with safety of principal near the bear market lows.  The Euro will implode and take markets much lower than they are today.  Don’t believe the hype coming from the Eurocrat’s press releases and summits.  Don’t risk your savings on the ex-communist and present socialist pipedreams of a politically and fiscally unified Europe.

http://www.garynorth.com/public/8789.cfm

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Published in: on November 30, 2011 at 1:30 pm  Leave a Comment  

62 Million Reasons Why Mortgage REIT Investors Should Be Scared

There are actually 62,000,001 reasons not to invest in mortgage REITs like American Capital Agency Corp. (AGNC) and Annaly Capital Management (NLY).  The first reason is that the USA and the world are slipping back into recession.  This will increase the speed of prepayments of mortgages.  Increase prepayment speeds destroys leveraged earnings in mortgage REITs.  Need proof, then check this out.  The ECRI has an amazing track record.  Ignore them at your financial peril.

http://www.advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index.php

Secondly, this article from Minneapolis attorney Bill Butler on LewRockwell.com should bring fear into the hearts of all mortgage REIT investors worldwide.  Here are the other 62 million reasons not to invest in mortgage REITs.  This is a long article, but it shows how nefarious Fannie Mae and Freddie Mac really are.  Mortgage REITs buy their agency securities from these crooks.

http://lewrockwell.com/butler-b/butler-b14.1.html

DISCLOSURE – I don’t own AGNC or NLY.

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Published in: on November 29, 2011 at 1:02 pm  Leave a Comment  

Yet Another Reason Not to Buy Amazon.com (AMZN) Stock

More proof that Amazon.com (AMZN) needs beta-testers more than it needs to pay a dividend.

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Amazon Foul-Ups: Google Access

Gary North
Printer-Friendly Format

Nov. 26, 2011

To give you an example of why Amazon needs more full-time beta-testers to search the site daily, consider this.

Someone searches Google for Amazon. He gets this:


   

He then wants to find out about Amazon Instant Video. He clicks the link. He gets this:


   

This can't be right. So, he clicks again. The same. And again. He gets this:


   

Enough said.

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Click here to read my other articles on why not to buy Amazon.com (AMZN) stock:

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Published in: on November 27, 2011 at 1:18 pm  Leave a Comment  

Another Reason Not to Buy Amazon.com (AMZN) Stock

Here is another reason not to buy overpriced Amazon.com (AMZN) stock that is trading at over 120 times it five year average adjusted earnings per share.

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Amazon: "We Don't Make No Stinking Mistakes!"

Gary North

Nov. 26, 2011

I ordered an Amazon Kindle touch. I am planning to convert several dozen of my books into Kindle-readable format, so that I can sell them on-line. I want to see how the touch screen works.

I ordered the $99 version. But I changed my mind within five minutes. So, I canceled the order. Because I was given the option of explaining why, I told them it was because I was upgrading to a more expensive model: $149.

It was told on-screen that the order was canceled.

On Friday, November 25, I received two Kindles. They had no instruction manuals. They came with no packing slips/receipts. There was a card in each of them: getting to know your Kindle. The card is the size of a playing card. It tells how to charge the unit's battery. The card is model-unspecific.

I could not tell which was which. The only way that I finally found out was that I charged their batteries. At that point, one of them did reveal on its screen that it was the 3G unit. Otherwise, there was no way to tell.

To send it back, the return policy screen said to include the packing slip. There was no packing slip.


   

I am writing this article as a warning. Amazon's cancellation software doesn't always work. So, take care when you order something and then cancel within the allotted 30 minutes. You may not get 30 minutes.

The software should work. This is not just the cancellation software. For more evidence that Amazon needs full-time site beta-testers, click here: http://www.garynorth.com/public/8785.cfm

I joined Amazon Prime to save money on shipping. That's good. I applaud. But I received no welcome note telling me how I can view the free streaming movies or where the titles are listed. I have tried to find the list of free rental books. No success.

I am in the on-line order business. When a new member subscribes, my system sends him a detailed Welcome letter showing how things work and what the benefits are. Amazon should do the same. There should be a Welcome Prime Members page. There should be a link to this in the Welcome letter. It should be easily found by searching the site. If it's there, I could not find it. I was sold services that I cannot figure out how to access.

Then there are the various Kindle models. There should be a page of YouTube embedded videos on all aspects of using each of the various Kindle models. This is what generates business: users who use the service. Nothing digital is ever intuitive. This is obvious. Videos are the best way to teach new users. Amazon sells video storage space to users (S3). It lets sellers embed short videos on its sales pages. Yet the company is lackadaisical about using easily accessed how-to videos to make every aspect of its services clear to new users.

These are basic rules of business success. Amazon a big company. It needs beta-testers to keep reviewing all aspects of the site systematically all the time.

Entropy is forever. Things fall apart. It takes time and money to hold them together. There are parts of Amazon that are visibly falling apart.

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Link to original article: http://www.garynorth.com/public/8778.cfm

Click here to read my previous article on Amazon: http://www.myhighdividendstocks.com/no-dividend-stocks/retailers-day-three-amazon-com-amzn

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Published in: on November 27, 2011 at 1:00 pm  Leave a Comment  

Sarkozy’s Influential Half Brother Counts the European Beans and it’s Not Good News ((State of the Economy, Federal Reserve Policy))

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Published in: on November 27, 2011 at 12:26 pm  Leave a Comment  

But Is Everything Gonna Be All Right?

But Is Everything Gonna Be All Right?

by Ron Holland
The Daily Bell

Previously by Ron Holland: The European Union Uber Alles

 

   

"How much pain have cost us the evils that have never happened." ~ Thomas Jefferson

Worrying about the many economic threats in the news today really is a waste of time. So many people come up to me depressed, concerned and frozen into a total inaction and paralysis about domestic politics, foreign affairs, the dollar and the debt saying what are we going to do?

My answer is to quit worrying, take sound preparations and then get on with your life. Every generation and nation have had their trials and tribulations, success and failures and although today looks eerily like the 1930’s, this too will pass.

Although I’ve been retired from individual consulting for some time (still work with corporate clients) I receive a large number of inquiries from readers and former clients as well as current conferences attendees and they all ask what is going to happen? Will the dollar and US sovereign debt crash, what about the European Union and their problems, gold, oil and the scary situation in the Middle East?

They never ask whether congress or the US political system will get their act together "they know the answer" and except for the Ron Paul campaign everyone has basically given up on government solutions to the threats facing us today. The real underlying question from everyone is simply "Is everything going to be all right?"

A simple answer is despite positive assurances from Wall Street, Washington and the EU or the negative forecasts from doomsday prophets, no one really knows. While all the experts have opinions, as this is what experts are paid to do, the western world is dealing with such a complex series of problems now all at once, we really are in uncharted territory.

Read the rest of the article here: http://lewrockwell.com/holland/holland54.1.html

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Published in: on November 27, 2011 at 11:51 am  Leave a Comment  

Successful investor decimates socialist BBC interviewer

Kyle Bass defends the free market against a hostile BBC interviewer who throws the Keynesian playbook at him.  They debate Europe's soverign debt crisis, Germany's predicament, the role of speculation, Japan's coming crisis, and gold.

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Published in: on November 27, 2011 at 10:52 am  Leave a Comment  

Thanksgiving and Marginal Utility by Gary North

Thanksgiving and Marginal Utility

by Gary North
by Gary North

O give thanks unto the LORD; for he is good: for his mercy endureth for ever. O give thanks unto the God of gods: for his mercy endureth for ever. O give thanks to the Lord of lords: for his mercy endureth for ever (Psalm 136:1—3)

This phrase appears in many of the psalms, but when you find the same phrase three times in a row, you can safely conclude that the writer was trying to make a point, and he thought the point was important. I know of no passage in the Bible where any other phrase appears three times in succession.

Thanksgiving Day is an old tradition in the United States. Although it was not the first such thanksgiving feast, the holiday had its origins in Plymouth Colony, in the fall of 1621, when the Pilgrims who had survived the first year invited Chief Massasoit to a feast, and he showed up with 90 braves and five deer. The feast lasted three days.

There had been a thanksgiving day of prayer and a feast in Maine in 1607. The tiny colony was abandoned a year later. There had also been a thanksgiving service inJamestown in 1610, but it did not involve a feast.

The first official Thanksgiving Day was celebrated on June 29, 1676 in Charlestown, Massachusetts, across the Charles River from Boston. But Gov. Jonathan Belcher had issued similar proclamations in Massachusetts in 1730 and in New Jersey in 1749. George Washington proclaimed a day of thanksgiving on October 23, 1789, to be celebrated on Thursday, November 27. In 1863, Abraham Lincoln officially restored it as a wartime measure. The holiday then became an American tradition. It became law in1941.

Lincoln was a strange contradiction religiously. He was a religious skeptic, yet he invoked the rhetoric of the King James Bible — accurately — on many occasions. His political rhetoric, which had been deeply influenced by his reading of the King James, was often masterful. For example, when he spoke of the cemetery of the Gettysburg battlefield as "this hallowed ground," using the King James word for holy, as in "hallowed be thy name," he was seeking to infuse the battle of Gettysburg with sacred meaning — a use of religious terminology that was as morally abhorrent as it was rhetorically successful. It is the sacraments that are sacred, not monuments to man's bloody destructiveness. In that same year, 1863, he used biblical themes in his October 3 Thanksgiving Day proclamation.

It is the duty of nations as well as of men to own their dependence upon the overruling power of God; to confess their sins and transgressions in humble sorrow, yet with assured hope that genuine repentance will lead to mercy and pardon; and to recognize the sublime truth, announced in the Holy Scriptures and proven by all history, that those nations are blessed whose God is the Lord.

He went on, in the tradition of a Puritan Jeremiad sermon, to attribute the calamity of the Civil War to the nation's sins, conveniently ignoring the biggest contributing sin of all in the coming of that war: his own steadfast determination to collect the national tariff in Southern ports.

In his proclamation, he made an important and accurate theological point.

We have been the recipients of the choisest bounties of heaven; we have been preserved these many years in peace and prosperity; we have grown in numbers, wealth and power as no other nation has ever grown.

But we have forgotten God. We have forgotten the gracious hand which preserved us in peace and multiplied and enriched and strengthened us, and we have vainly imagined, in the deceitfulness of our hearts, that all these blessings were produced by some superior wisdom and virtue of our own. Intoxicated with unbroken success, we have become too self-sufficient to feel the necessity of redeeming and preserving grace, too proud to pray to the God that made us.

This observation leads to the same question that Moses raised long before Lincoln's proclamation: Why is it that men become less thankful as their blessings increase?

Less than a decade after Lincoln's proclamation, three economists came up with the theoretical insight that provides an answer.

Marginal Utility Theory

In the early 1870s, Carl Menger, William Stanley Jevons, and Leon Walras simultaneously and independently discovered the principle of marginal utility. Their discovery transformed economic analysis.

They observed that value, like beauty, is subjectively determined. Value is imputed — a familiar Calvinist theological concept — to scarce resources by the acting individual. Other things remaining equal, including tastes, the individual imputes less value to each additional unit of any good that he receives as income. This is the principle of marginal utility.

This can be put another way. We can say that each additional unit of any resource that a person receives as income satisfies a value that is lower on that individual's subjective scale of value. He satisfied the next-higher value with the previous unit of income.

This provides a preliminary solution to the original question. I call this solution the declining marginal utility of thankfulness. People look at the value of what they have just received as income, and they are less impressed than they were with the previous unit of income. They focus on the immediate — "What have you done for me lately?" — rather than the aggregate level of their existing capital. They conclude, "What's past is past; what matters most is whatever comes next."

Modern economic theory discounts the past to zero. The past is gone; it is not a matter of human action. Whatever you spent to achieve your present condition in life is no longer a matter of human action. The economist calls this lost world "sunk costs."

There is a major problem in thinking this way. It is the problem of saying "thank you." The child is taught to say "thank you." He is not told to do this because, by saying "thank you," he is more likely to get another gift in the future. He is taught to say "thank you" as a matter of politeness.

I am sure that there is some University of Chicago-trained economist out there who is ready to explain etiquette as a matter of self-interest: "getting more in the future for a minimal expenditure of scarce economic resources." And, I must admit, people who never say "thank you" do tend to receive fewer gifts. Or, as Moses put it, "And thou say in thine heart, My power and the might of mine hand hath gotten me this wealth. But thou shalt remember the LORD thy God: for it is he that giveth thee power to get wealth, that he may establish his covenant which he sware unto thy fathers, as it is this day" (Deuteronomy 8:17—18). But Moses added an "or else" clause: "And it shall be, if thou do at all forget the LORD thy God, and walk after other gods, and serve them, and worship them, I testify against you this day that ye shall surely perish" (verse 19). Gary Becker would no doubt put it differently, but the point regarding reduced future income is the same: lower. Maybe way, way lower.

The problem is, we look to the present, not to the past. We look at the marginal unit — the unit of economic decision-making — and not at the aggregate that we have accumulated. We assume that whatever we already possess is well-deserved — merited, we might say — and then we focus our attention on that next, hoped-for "util" of income.

As economic actors, we should recognize that the reason why we are allocating our latest unit of income to a satisfaction that is lower on our value scale is because we already possess so much. We are awash in wealth. We are the beneficiaries of a social order based on private ownership and free exchange, a social order that has made middle-class people rich beyond the wildest dreams of kings a century and a half ago. Or, as P. J. O'Rourke has observed, "When you think of the good old days, think one word: dentistry."

About half of the Pilgrims who arrived in Plymouth in 1620 were dead a year later. The Indians really did save the colony by showing the first winter's survivors what to plant and how to plant it in the spring of 1621. The Pilgrims really did rejoice at that festival. They were lucky — graced, they would have said — to be alive.

So are we. Ludwig von Mises wrote in Human Action (VIII:8) that social Darwinism was wrong. The principle of the survival of the fittest does not apply to the free market social order. The free market's division of labor has enabled millions of people to survive — today, billions — who would otherwise have perished.

So, give thanks to God today, even if your only god is the free market. You did not obtain all that you possess all by yourself. The might of your hands did not secure it for you. A little humility is in order on this one day of the year. Yes, even if you earned a Ph.D. at the University of Chicago.

November 24, 2005

Gary North [send him mail] is the author of Mises on Money. Visit http://www.freebooks.com.

Copyright © 2005 by LewRockwell.com. Permission to reprint in whole or in part is gladly granted, provided full credit is given.

Link to the original article: http://www.lewrockwell.com/north/north22.html

Published in: on November 27, 2011 at 9:32 am  Leave a Comment  

MF Global Heist by Cathy Cuthbert

To: James W. Giddens, Trustee, SIPA Liquidation of MF Global, Inc. and Martin Glenn, United States Bankruptcy Judge

From: Cathy Cuthbert

RE: MF Global Heist

I am a lucky, former MF Global client. Unfortunately, I'm not a multi-billionaire who got the memo. I had a modest account that was supplying me with a modest livelihood, when suddenly one Monday afternoon, my account was frozen, my livelihood was essentially gone, and four years worth of trading profits vanished into cyber space. You might be interested to know that sitting on my desk as I write is an application for a part-time, seasonal position stocking shelves at the local Rite-Aid. Then again, maybe not…

Let's try a thought experiment. Suppose I worked at a little bank in Anywhere, USA and it just so happened that I had a few peccadilloes I needed to clean up. So I borrowed just a tad of money from a few clients' accounts without it showing on their statements or anything — don't want to alarm the little tykes — intending all along to of course return the money 'cause ya know, I'm good for it, but somehow I just couldn't come up with the bucks fast enough and somebody found out. Do you suppose I could just resign, go home and suck a sore paw while someone else looked high and low, under my desk, in my filing cabinet, maybe pieced together my shredded docs hoping to find out where, oh where the money went?

Don't be ridiculous. Not only would I immediately be tased, hand cuffed and thrown into the slammer, hard evidence or no, but the money would be very quickly found since there is not one thin dime that passes between accounts in all of the entire USA that isn't thoroughly and incessantly tracked anywhere and everywhere it goes. Not one thin dime. You fellas know it, I know it, but worse for you, the whole world knows it and I don't have to tell you they are all watching.

Should I remind you that the key factor in any financial market is the belief of all the participants that the market is mostly fair? Oh, please, don't call me naïve. I am well aware that futures trading is a negative sum game, and that there are plenty of shenanigans going on with bad fills, running stops and the like. That's ok, though, since it is petty theft and we can figure out ways to stay in the game regardless. But what everybody needs to know is that nobody is going to clean out our accounts. We need to be assured that flagrant grand theft is simply out of the question. If the idea were to become credible that anyone's account — or, as in this case, everyone's accounts — can be stolen with impunity and with no recourse for the aggrieved, nobody in his right mind would be in the futures market.

You can obfuscate with legal mumbo jumbo about how depositing money into a futures account makes me an unsecured creditor, but I can assure you that you don't want to go in that direction. Here's why. If you use that excuse to pay off the Big Boys by letting them cut ahead of us clients in bankruptcy due to our status as unsecured creditors, what does that mean for my account at the friendly, neighborhood Bank of America? Steal from us MF Global clients, and the hoi polloi, who are already slowly but surely waking up to the banking scam, just might figure out that they, too, are unsecured creditors every time they deposit their paychecks.

Yes, Jimmy and Marty, you are staring in the face of not just a run on the futures markets, but a run on the banks.

Let's stop pretending that you don't know where the money is. Corzine got a margin call from the Big Boys and paid it. So claw it back. Yes, it's that simple. A mere $600 million is not going to solve their multi-billion dollar problems, anyway. While you're waiting for the clawback, you can make all the clients' accounts whole with funds from SIPC if you have to. Forget this pathetic 60% recovery of collateral. Nothing less than 100% will do. And don't forget to order Corzine his orange jump suit. Either he bunks with Madoff or no one will believe that this can't happen again.

So here's the deal. You can be the heroes or you can be the goats. You can take the high ground, convince the Big Boys that they have gone too far for their own good and return the futures markets to some semblance of reliability, or you could be the ones to kick the last prop out from under the vestiges of capitalism and send the world spiraling at an ever accelerating pace into a fascist future.

Sounds like a no-brainer to me.
 
 
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Published in: on November 23, 2011 at 10:39 pm  Leave a Comment  

Retailers day three: Amazon.com (AMZN)

EARNING POWER – $1.55 per share @ 454.75 million shares

(earnings adjusted for changes in capitalization – Amazon has slowly added a few million shares over the years)

                        EPS       Net inc.             Shares               Adj. EPS

2006                 $0.45    $190 M              424 M                $0.42

2007                 $1.12    $476 M              424 M                $1.05

2008                 $1.49    $645 M              432 M                $1.42

2009                 $2.04    $902 M              442 M                $1.98

2010                 $2.53    $1,152 M           456 M                $2.53

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2011Q1             $0.44    $201 M              454.75 M           $0.44

2011Q2             $0.41    $191 M              454.75 M           $0.41

2011Q3             $0.14    $93 M                454.75 M           $0.14

2011Q4 (est)      http://www.forbes.com/sites/josephhargett/2011/10/26/amazon-com-plunges-after-forecasting-potential-4q-loss/

Five year average adjusted earnings (2006-2010) was $1.48 per share.  This will be slightly lower with a 2011 reduction in EPS.

Consider contrarian buying below $11.84 (8 times avg. adjusted EPS)

Consider value buying below $17.76 (12 times avg. adjusted EPS)

Consider speculative selling above $29.60 (20 time avg. adjusted EPS)

Amazon.com is trading at 128 times average adjusted earnings.  This is insanely SPECULATIVELY priced.  A 4th quarter 2011 loss will devastate the stock price.

BALANCE SHEET – Shareholder equity has started to stagnate.  Amazon.com shares are speculatively overpriced for the equity they actually possess.  New Amazon investors are paying over 11 times the total equity per share.  The price to book value ratio should by down around 1 or 2 for something resembling value investing.

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Book value per share: $17.08

Price to book value: 11.26 (this is very bad)

Current ratio: 1.33 (Okay, over 2.0 is good)

Quick ratio: 0.70 (Okay, over 1.0 is good)

CONCLUSION – Amazon.com is speculatively priced at over 128 time average adjusted earnings.  The company pays no dividend and has never paid a dividend.  It has an average adjusted earning power of $1.48 per share.  I wouldn’t even consider this stock until it drops to below $17.76 which is 12 times average adjusted earnings.  The balance sheet is okay, but the stock is way overpriced.  This company might be a good stock to short in this declining market (especially if it loses money in the 4th quarter of 2011).  Wal-Mart and Target both provide superior rewards with less risk of principal going forward.  People that are going long on Amazon.com right now are insane.

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DISCLOSURE – I don’t own Amazon.com (AMZN) stock.

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Published in: on November 23, 2011 at 2:06 pm  Leave a Comment