Editor's note: We've received several feedback e-mails regarding the "End of America" special reports you receive with a subscription to Stansberry's Investment Advisory. To be clear, you receive instant access to the below reports with your subscription. If you're a subscriber click here to access these reports. Or visit the S&A homepage, log in, and click on "Stansberry's Investment Advisory" on the left side of the page. Then click on "Special Reports." All five reports are available:
- Research Report No. 1: The Four Investment Assets You Do NOT Have to Report to the U.S. Government
- Research Report No. 2: The Gold Investor's Bible
- Research Report No. 3: Secrets of the Silver Market
- Research Report No. 4: The Stock Quitter's Secret
- Research Report No. 5: The World's Most Valuable Asset in a Time of Crises
If you haven't subscribed to Stansberry's Investment Advisory and want to learn more about what Porter's calling the "End of America," click here.
The Federal Reserve System earned $80.9 billion last year… a new record.
There are competitive advantages like owning a certain ubiquitous personal computer operating system (Windows)… or offering 150,000 products at generally lower prices than anyone else (Wal-Mart)… or offering maybe 4,000 products in large quantities cheaper than anyone (Costco)…
And then there are monopolies. The post office is a monopoly. If you try to compete with it directly, the government can throw you in jail. The Federal Reserve System has a monopoly on printing money. If you print money, you'll go to prison. But the Fed can print as much as it likes. It printed more than $1 trillion in late 2008. The Fed's balance sheet reported less than $900 billion in bank credit available during the week of September 3, 2008. By the week of December 31, 2008, the Fed's net assets totaled more than $2 trillion. So it either won some intergalactic lottery or printed up more than $1 trillion.
The Fed printed up a bunch of money, bought a bunch of mortgage securities, and now it's earning interest payments. It pays its own expenses and gives the excess (more than $78 billion last year) to the Treasury. Don't get too excited about taxpayers getting any benefit from this… $78 billion is a mere rounding error on the national debt.
Officially, about 14.5 million people are out of work right now, and those who are still working or have returned to work are making less money… even as the Fed rakes in record profits.
This morning, the Wall Street Journal reported on what it calls "long-tenured displaced workers." You're in the group if you had more than three years on a job you lost between January 2007 and December 2009. Roughly 55% of these workers are making less now than they were before the crisis. One guy the paper interviewed was a money manager making $150,000 a year. Now, he's working 38 hours a week at a Starbucks, making $8.85 an hour.
One day, the unemployed are going to get wise, stop looking for work in a country where you're penalized at every turn for your success… and start printing money.
"Portugal has the means to finance itself in the market and is determined to continue reducing its budget deficit. Portugal won't ask for any financial help because it's not necessary," says Portuguese Prime Minister José Sócrates.
This statement has a familiar ring to it, doesn't it? It's just like when they say, "We will not debase the currency." You know as soon as you hear it, the opposite is true. The politicians wouldn't deny it if it weren't true.
So naturally, inconvenient questions arise… For example, if Portugal has "the means to finance itself," why is the European Central Bank (ECB) buying European sovereign debt? It was buying yesterday, and it's buying again today. And why is the European Union considering boosting its nearly $600 billion euro-zone bailout fund?
The code phrase above is that Portugal "won't ask" for a bailout. It won't need to. The EU knows Portugal is toast, and it's likely preparing a bailout for the country as we speak. The stronger European countries – Germany and France – will "force" Portugal to take the estimated 80 billion euros it needs for a bailout.
In addition to the ECB's purchase of sovereign debt, Japan also said it will buy euro-zone debt today. Despite the support, Portugal's bonds are still above an unsustainable 7%. We'll see how Portugal fares in tomorrow's debt auction.
John Donne had your number back in 1642, Señor Sócrates…
No man is an island, entire of itself; every man is a piece of the continent, a part of the main. If a clod be washed away by the sea, Europe is the less… any man's death diminishes me… never send to know for whom the bells tolls; it tolls for thee.
– John Donne, Devotions upon Emergent Occasions, no. 17 (Meditation), 1624
Portugal is not an island, entire of itself. It's a piece of the euro, a part of the European Union. As its economy gets washed into the sea, the euro will be the less. Don't send to know for whom the bell tolls, Señor Sócrates. It tolls for thee.
When Portugal crasheth, the euro goeth with it. Get thee short the euro, pilgrim.
Last week, we doubted the social networking market frenzy would turn out well for investors. In the U.S., we're not allowed to debate anything without the input of someone who's famous for being famous, like rap star Curtis Jackson (aka 50 Cent)…
Jackson says Facebook is worth at least $50 billion because "it's difficult to get that many people in one place and comfortable with the functions of that network. So I think it is worth that kind of money, maybe more, because everyone is aware of how to utilize it."
Did he just say Facebook is worth 50 times sales because it's on the Internet?
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New highs: Keyera Facilities Income Trust (KEY-UN.TO), Automatic Data Processing (ADP), Dun & Bradstreet (DNB), Calpine (CPN), EV Energy Partners (EVEP).
In today's mailbag, two supporters and one defector. At least we're up on the day. Send us your feedback to feedback@stansberryresearch.com.
"The e-mail you received calling you frauds was absolutely preposterous! All one has to do is look at the records of your advice for us. Not one person on this earth can pick 100% winners in the stock market, but S&A have gotten closer than any other firm. Keep doing what you are doing, and I know exactly how corrupt the whole Federal government is, so I am with you Mr. Stansberry!" – Paid-up subscriber Scott J.
"No one but the insane expects any group of advisers to be 100% right on the stock market all the time. I'm a new paid subscriber and see that sometimes retractions happen. So what? Unlike the mega-monied family monopolies, who can know what the next day of the stock market will be?
"Compared to all the fluff I find elsewhere, though, I find your reports and releases helpful in two ways: choosing good or promising investments, and the reports are written in a way that helps train the eye of the subscriber to understand the nature of the stock exchange and where opportunities are to be found.
"The SEC issue on Porter, lemme say: thank goodness there is enough money to fight state-sponsored civil intimidation! From what I read on the NWO, the doublespeak 'outright lies' slander approach is perennially shown in corrupt governments. America is the land of the free as long as the Fed parasites don't have a say. Police Porter? Why not police the crooks who by lack of oversight (known as turning a blind eye to them) have tanked many promising, homegrown opportunities by drying up money lendable, in fear and restriction?
I have given my money to your research group for honest reporting, up-to-the-date analysis and perspective on the jimmying in the NYSX. Thanks for knowing reasonable people exist and know how to take a retraction! Keep up the good work." – Paid-up subscriber Stephen
"I am a fairly new subscriber and not in the big leagues as far as investing is concerned. I subscribed to your various publications with the thought that I would gain some investing information that I could then consider as far as investing is concerned.
"As I read through the S&A Digest each day, you mention various ideas but you do not help us small investors out. For instance in the January 10 newsletter you talk about investing in natural gas. But you do not mention any companies to invest in, only to 'click here' to learn more. I do not have time to listen to a lengthy discussion that ends up with asking for more money to buy another product. If this is the way you run your business, I will give serious consideration to asking for a refund of my investment in your newsletters." – Paid-up subscriber Paul Schoessler
Goldsmith comment: Paul, I see you're a subscriber to Matt Badiali's S&A Resource Report and Stansberry's Investment Advisory. In those two advisories, which you can access through the S&A homepage, you'll find the recommendations you paid for. Coincidentally, Matt recommended the natural gas company I discussed in yesterday's Digest in his Resource Report.
The Digest is a free service we provide for our paid subscribers. We do, at times, discuss investments we believe have the potential to profit, in hopes of acquiring new subscribers. You see… we only make money from selling subscriptions. We have to advertise. That's how we keep the lights on. I hope you'll understand and decide to stay with us as a subscriber.
Regards,
Sean Goldsmith
Baltimore, Maryland
January 11, 2011