The $634 million website...

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Why Porter doesn't believe in 'peak' anything...

We constantly hear arguments that the world is running out of resources. But Porter doesn't believe it for a second. In today's Digest Premium, he explains why...

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The $634 million website... An honest GM executive expresses concern...

It's a website that cost $634,320,919 to build...

We're in the midst of a government shutdown and awaiting the October 17 deadline for raising the debt ceiling (which is currently capped at $16.7 trillion). So a measly $634 million of our tax dollars might not sound like much. But consider how these funds were used...

As part of the Affordable Care Act (aka Obamacare), U.S. citizens can shop around for health insurance via a government website, www.healthcare.gov. At least, that was the plan... until overwhelming traffic crashed the site.

Glitches abound – from user logins being rejected to menus failing to open. According to an article from the Washington Post last week, 4.7 million users visited the site in the first 24 hours... and fewer than 10 actually succeeded in buying insurance. The culprit? Poorly written HTML code.

In 2011, information technology consultant CGI Federal won the contract to build Healthcare.gov. It estimated costs could run up to $93.7 million. So the site ran 577% over budget.

In case you're curious how the final tab compares with other heavily trafficked websites, tech-publishing website Digital Trends says...

A handful of websites that essentially created the world of online social networking cost a fraction of what Healthcare.gov cost... And they actually work. The beauty of a free market...

In the September 27 Digest, Porter wrote the latest installment of his "Letters from the Chairman of General Motors." The piece was meant to be a satire... exploring what the chairman of the troubled carmaker would say if he was being completely honest.

We never thought a GM executive would actually come forward and support our reasoning in the piece... But General Motors Canada President Kevin Williams did just that...

As Porter outlined in his piece, GM can't compete on brand or price... And all of the money the company makes is siphoned to the unions or pension fund. So GM is forced to compete on credit. As he wrote...

It seems Williams agrees...

The car executive told Canadian newspaper Globe and Mail that we're seeing record Canadian auto sales because of cheap credit...

GM Financial, the automaker's financing arm, has the riskiest lending portfolio of any car company... 96% of its customers have credit scores below 660. And last year, 8.5% of GM's loans were in delinquency. That's the highest rate since 2010 and a higher delinquency rate than Ford, Toyota, and Honda combined, according to nonprofit newspaper Washington Free Beacon.

Williams said he'd like to pursue other avenues to increase market share... Unfortunately, we don't know what those would be.

New 52-week highs (as of 10/9/13): Sturm, Ruger (RGR).

In today's mailbag, one subscriber pitches his idea for fixing the banking industry. Send your e-mails to feedback@stansberryresearch.com.

"I have spent 43 years in small banks in Florida and also spent about one year as a trainee with the FDIC back in the late fifties. I have bought control of banks, sold control of banks and originated banks from the ground up. Also, formed groups of local investors to provide the money for these activities since I had the banking knowledge and training to operate banks but never had the money to do it by myself.

"The point here is that I do know somewhat about small bank operations and the economic impact they can have in a community. Seems to me that the banking industry should be divided into two groups, the majors (over $3 billion in assets) and the community banks with up to 3 billion in assets. Make the majors play by stringent rules, be subject to site visit regulations, Dodd-Frank type stuff, etc.

"Community banks should be exempted from all of that, including site visits by regulators. Capital requirements and other necessary matters could be handled by email oversight by regulators but basically the small banks should be left alone to sink or swim by themselves. If they sink, let them go through bankruptcy and let the FDIC handle paying off insured deposits and liquidation of the assets as now.

"This plan would allow the FDIC to act as a regular insurer and would save all the money now wasted by maintaining a traveling audit force; the money could be better used by increasing the FDIC insurance fund.

"Also, the premiums paid by the banks for deposit insurance could be increased to make the fund more reliable. It would also put locally important decisions in the hands of local owners who would have a financial stake in keeping the banks reasonably healthy; decentralizing control of banks would make them more responsive to local needs rather than national 'one size fits all' regulation.

"People wonder what has happened to the economy; excess regulation is what happened. Banking regulators do not like being criticized so they go to extremes just when the opposite position is called for. Sorry about the length of this memo but hope you will consider this." – Paid-up subscriber Morris A. Rowe

"As a surfer many of life's greatest lessons were learned surfing. Porter's story struck so true. All energy travels in waves, surf the financial one. Thank you, Porter." – Anonymous

"Loved [Tuesday's] S&A Digest. But what I find terrifying is the fact that during the 2011 debt ceiling showdown, gold and silver jumped up to all-time highs. This time around we're lucky if they move so much as a few cents a day.

"If default of the U.S. means so damn little to everyone in the world, why is gold so expensive? Conversely, if the U.S. defaulting is such a huge deal, why isn't gold increasing with even the RUMOR of its possibility? I don't get it." – Paid-up subscriber Barry

Regards,

Why Porter doesn't believe in 'peak' anything...

As I (Porter) pointed out in the October 3 Digest Premium, if you divide the $25 trillion in foreign-owned assets by the U.S. total assets of $75 trillion, foreigners now own one-third of the U.S. And a major buyer of those assets has been China.

China is buying up raw materials all over the world – from gold to steel to oil. But it has also been buying arable land to feed its growing population.

I'm not worried about the food shortage we often hear about...

For a good outline of the "pro food shortage" argument, I'd encourage you to read GMO's Jeremy Grantham... You'll get a much better summary than what I can give you. He's very smart... And he seems worried about this issue. (In short, he believes resources will become more expensive, and he is concerned about climate damage.)

In general, I don't believe in "peak" anything... The price mechanism works, and humans are endlessly creative.

I don't even think there's a remote chance that the earth's population grows to an extent that we outstrip our ability to harvest resources, to create energy, or to grow food.

To me, it's just another form of Neo-Malthusian thinking. There is no shortage of arable land at all. There is no shortage of know-how or capital to make more food. Food prices have been extremely low for a very long time, and I would not be surprised if they go substantially higher. But I do not believe that the earth is going to run out of food... not for one second.

Companies like Monsanto, that make farming more efficient and fertilizer companies, are good investments because the world's population is growing... and creating more farmland is expensive.

That said, with the inflation I've been predicting, I do believe farming is a good investment. In fact, I just bought a farm. And I think farming stocks will do well over the next 25 years. But I don't think we'll ever see a crisis because we run out of food.

– Porter Stansberry with Sean Goldsmith

Why Porter doesn't believe in 'peak' anything...

We constantly hear arguments that the world is running out of resources. But Porter doesn't believe it for a second. In today's Digest Premium, he explains why...

To continue reading, scroll down or click here.

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