The U.S. will print, print, print... Geithner cheerleads the IMF... EU considers Greek writedowns... The next gold trade... The Solyndra scandal continues... Porter's Belize presentation... Is English your first language?...
From the moment the European crisis started, we knew the financial burden would ultimately fall on the U.S. As the largest contributor to the International Monetary Fund (IMF), the U.S. would also contribute to the bailout. But we knew the government wouldn't stop there. In his August issue of Stansberry's Investment Advisory, Porter wrote…
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But the next major step in this crisis is for the Fed to announce, in partnership with other major central banks, a huge campaign to buy European sovereign debt and bank debt. If UniCredit fails, Italy will fail. If Italy fails, the euro will collapse. If the euro collapses, the entire Western financial system will fall – GE, for example, would be left insolvent, along with dozens of other major international financial companies. The world's central bankers and governments can't allow that to happen in an uncontrolled way. So they will print, print, print... |
U.S. Treasury Secretary Tim Geithner appeared on CNBC this morning to confirm our beliefs. Geithner was cheerleading IMF efforts, saying he expects a bailout on par with the Troubled Asset Relief Program (TARP) – the bailout orchestrated to save the U.S. in 2008.
"Through the IMF, of course, we're already playing a very major role," he said in a live interview in Paris. "We're happy to see the IMF continue to play that role in support of a more forceful, comprehensive strategy where Europe's own resources – very ample resources – are deployed on a much more substantial scale."
Geithner wouldn't give a specific number for what would be required to save Europe (probably for the best, as every government projection for bailout funds is woefully low)... Though some estimate the number could be $2 trillion.
Speaking like a true bureaucrat – a central banker even – Geithner continued, "A basic rule of financial crises management is you want to make sure you have a level of resources that are larger than the potential need you face," he said. "If markets see that, they'll have the incentive to continue to lend, invest, to get more exposure to those countries."
Today, Bloomberg reported the European Union is considering a one-time, 50% writedown on all Greek debt (a number we still believe is too low). They're also considering a backstop for banks and continued bond buying by the central bank.
You can be certain the European bailout efforts will cost trillions of dollars. And like in the U.S., it will only be a temporary fix. The flood of money on the horizon, combined with the recent pullback in gold and gold stocks makes a perfect entry point.
As you know, Jeff Clark has successfully traded gold several times this year in his S&A Short Report advisory. And yesterday, he recommended another gold trade in Advanced Income, his less-expensive covered call trading service. Jeff recommended a trade on one of his favorite, cheap gold stocks. "Buying this gold stock today is like buying gold bullion for 20 cents on the dollar," he says.
In his latest letter, Jeff recommends two trades around this gold stock... He expects readers to make up to 50% in three months. To learn more about Advanced Income – and access Jeff's latest gold trade – click here...
We dedicated the September 19 Digest to the story of Solyndra, the government-funded solar boondoggle. I recommend you reread that Digest. In short, Obama granted Solyndra $535 million in low-cost government loan guarantees (the most any solar company has ever received). Obama said it would create jobs. It did... for a few years. Then, Solyndra went bankrupt, leaving 1,000 folks out of work. And details surfaced that a major Obama supporter owned nearly 40% of the company.
Today, the Wall Street Journal released details about another political scandal surrounding Solyndra. A clean-energy venture capital firm, RockPort Capital, promoted Solyndra to the Navy for a government contract. RockPort, one of Solyndra's largest investors and board members, also has a seat on a Pentagon panel that helps the government find emerging technologies.
RockPort recommended Solyndra and four other companies to the military. But negotiations fell apart when the Navy learned about the company's pending bankruptcy (which RockPort didn't disclose). The saga continues...
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New 52-week highs (as of 10/13/11): None.
You don't want to miss Porter's venom in today's mailbag. Dare you face the wrath? Send your comments to feedback@stansberryresearch.com.
"I have been a subscriber to Stansberry's Investment Advisory since February this year and along the way have added three more of your newsletters. In the short amount of time, I have not only learned a lot, but also found Porter Stansberry to a reputable individual with a great deal of pride and most importantly character. I believe ability can get you to the top, but it takes character to keep you there, and Porter will never compromise that.
"In life, we are not always lucky enough to have someone help us with important decisions. In fact, most of the time it can be confusing and difficult, when you are trying to figure out things for yourself. I can't think anyone better than someone like Porter to have by my side, no matter what it is, and I always look forward to reading Friday's S&A Digests. Thank you for the work you do!" – Paid-up subscriber Sergio Nolte
"Quite Frankly I don't understand your services. What I see is the continuing onslaugth of Digests written by other members of the Stanbury Team trying to get you to sign up for all the services and letters your offer. Yet I have not seen the benefit yet of what I signed up for." – Paid-up subscriber M
Porter comment: Here's an idea: Try reading our newsletters, such as the one you paid for. What did you subscribe to? Visit our website. Find the most recent issue. Tell me what you think.
"Responding on behalf of Michael Klimkewicz, in case he doesn't: In today's Digest you disputed his claim ‘Now your(sic) saying get ready to get back into the stock market.'
"Well, in the Oct. 7 Digest, at the end of the 2nd paragraph of the 6th bullet point, you wrote: ‘And as a result, it's time for us to begin thinking seriously about what kind of stocks we should buy for the long haul over the next several weeks or months.'" – Paid-up subscriber Jon Seiz
Porter comment: So... at some point... perhaps months from now... it will be a good time to buy stocks.
But that's not at all what Michael Klimkewicz was alleging I'd written. Not to mention the fact that, in several other places in that same essay I specifically warned that I wasn't telling you to buy stocks now and that the time to buy them could still be a long way off.
Is English your first language? I'm asking because it seems like you can't read.
Regards,
Sean Goldsmith
New York, New York
October 14, 2011