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Monthly Archives: January 2012

Greece Plans Orderly Exit of the Eurozone

Greece plans an orderly exit out of the Eurozone according to two sources close to Mr. Papademos, Greek Prime Minister, who spoke on condition of anonymity earlier today.

The sources confirmed that plans are ready to return to a legacy currency given the current circumstances and that such exit would be dealt with, quote “in as orderly a fashion as possible” unquote.

The plan does not come as a surprise but the timing may be surprising to most members and investors while negotiations about a severe haircut with the IIF are still ongoing.

Last year’s announcement by Mr. Papandreou, former Prime Minister, that a referendum would be held to decide whether or not to stay in the Eurozone may have set the precedent for developing a plan that apparently will be set in motion.

The stalemate in negotiations about the depth of the haircut on some of the outstanding Greek sovereign debt, said to be capped at 65-70% while Greece is looking for more concessions, may have set things in motion as the ultimate alternative.

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Newt’s Moon Dream: This Moon Was Made for Mining (Helium-3)

Analysis by Jennifer Ouellette

Fusion Power?

It also bodes ill for the prospect of fusion using helium-3, a rare helium isotope that is missing a neutron. Physicists have yet to achieve pure helium-3 fusion, but if they did, we’d have a clean, virtually infinite power source. Or so the theory goes.

And that’s where the moon comes in. The moon’s lunar soil is chock-full of helium reserves, thanks to the solar wind. In fact, every star emits helium constantly, suggesting that one day, spaceships will carry on a brisk import and export trade to harvest this critical element — assuming we can figure out how to make such a process economically viable.

But helium-3 isn’t the only resource the moon might have to offer. It could also be a source for rare earth elements, such as europium and tantalum, which are in high demand on Earth for electronics and green energy applications (solar panels, hybrid cars), as well as being used in the space and defense industries.

China is the largest exporter of rare earth elements, but there are growing concerns over supply vulnerability as China drastically reduces its rare earth exports. Scientists know that there are pockets or rare earth deposits on the moon, but as yet they don’t have detailed maps of those areas. Potassium, phosphorus and thorium are other elements that lunar rocks have to offer a potential mining venture.

Lunar Prospecting?

And there’s more! In 2009, NASA bombed the moon — part of its Lunar CRater Observation and Sensing Satellite (LCROSS) mission — and observed grains of water ice in the remnants of the resulting plume, as well as light metals such as sodium and mercury, and volatile compounds like methane, ammonia, carbon dioxide, carbon monoxide and hydrogen. This implies that the moon is chemically active — via a process called “cold grain chemistry” — and also has a water cycle. Where you have water ice, you have a potential mother lode for lunar prospecting of hydrogen.

Of course, we’re talking about huge capital expenditures just to set up a mining base camp on the moon, and the economies of scale might not be there. If the benefits don’t outweigh the costs, we might never see bona fide lunar prospecting. But it’s a possibility that the US — not to mention China — is taking very seriously.

Read the rest here.


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How Big-Time Sports Ate College Life

(via NY TIMES)

IT was a great day to be a Buckeye. Josh Samuels, a junior from Cincinnati, dates his decision to attend Ohio State to Nov. 10, 2007, and the chill he felt when the band took the field during a football game against Illinois. “I looked over at my brother and I said, ‘I’m going here. There is nowhere else I’d rather be.’ ” (Even though Illinois won, 28-21.)

Damian Strohmeyer/Sports Illustrated/Getty Images

BUCKEYE NATION Unbridled enthusiasm reigns at Ohio State games.

Sporting News, via Getty Images

K-VILLE This is not Occupy Duke. It’s annual tenting outside Cameron Indoor Stadium for the best seats at a basketball game

Tim Collins, a junior who is president of Block O, the 2,500-member student fan organization, understands the rush. “It’s not something I usually admit to, that I applied to Ohio State 60 percent for the sports. But the more I do tell that to people, they’ll say it’s a big reason why they came, too.”

Ohio State boasts 17 members of the American Academy of Arts and Sciences, three Nobel laureates, eight Pulitzer Prize winners, 35 Guggenheim Fellows and a MacArthur winner. But sports rule.

“It’s not, ‘Oh, yeah, Ohio State, that wonderful physics department.’ It’s football,” said Gordon Aubrecht, an Ohio State physics professor.

Last month, Ohio State hired Urban Meyer to coach football for $4 million a year plus bonuses (playing in the B.C.S. National Championship game nets him an extra $250,000; a graduation rate over 80 percent would be worth $150,000). He has personal use of a private jet.

Dr. Aubrecht says he doesn’t have enough money in his own budget to cover attendance at conferences. “From a business perspective,” he can see why Coach Meyer was hired, but he calls the package just more evidence that the “tail is wagging the dog.”

Dr. Aubrecht is not just another cranky tenured professor. Hand-wringing seems to be universal these days over big-time sports, specifically football and men’s basketball. Sounding much like his colleague, James J. Duderstadt, former president of the University of Michigan and author of “Intercollegiate Athletics and the American University,” said this: “Nine of 10 people don’t understand what you are saying when you talk about research universities. But you say ‘Michigan’ and they understand those striped helmets running under the banner.”

For good or ill, big-time sports has become the public face of the university, the brand that admissions offices sell, a public-relations machine thanks to ESPN exposure. At the same time, it has not been a good year for college athletics. Child abuse charges against a former Penn State assistant football coach brought down the program’s legendary head coach and the university’s president. Not long after, allegations of abuse came to light against an assistant basketball coach at Syracuse University. Combine that with the scandals over boosters showering players with cash and perks at Ohio State and, allegedly, the University of Miami and a glaring power gap becomes apparent between the programs and the institutions that house them.

“There is certainly a national conversation going on now that I can’t ever recall taking place,” said William E. Kirwan, chancellor of the University of Maryland system and co-director of the Knight Commission on Intercollegiate Athletics. “We’ve reached a point where big-time intercollegiate athletics is undermining the integrity of our institutions, diverting presidents and institutions from their main purpose.”

The damage to reputation was clear in a November survey by Widmeyer Communications in which 83 percent of 1,000 respondents blamed the “culture of big money” in college sports for Penn State officials’ failure to report suspected child abuse to local law enforcement; 40 percent said they would discourage their child from choosing a Division I institution “that places a strong emphasis on sports,” and 72 percent said Division I sports has “too much influence over college life.”

Has big-time sports hijacked the American campus? The word today is “balance,” and the worry is how to achieve it.


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Quest for the Golden Cross

By Rodrigo Campos

NEW YORK (Reuters) – January has turned out strong for equities with just two trading days to go. If you’re afraid to miss the ride, there’s still time to jump in. You just might want to wear a neck brace.

The new year lured buyers into growth-related sectors, the ones that were more beaten down last year. The economy is getting better, but not dramatically. Earnings are beating expectations, but at a lower rate than in recent quarters. Nothing too bad is coming out of Europe’s debt crisis – and nothing good, either – at least not yet.

“No one item is a major positive, but collectively, it’s been enough to tilt it towards net buying,” said John Schlitz, chief market technician at Instinet in New York.

Still, relatively weak volume and a six-month high hit this week make some doubt that the gains are sustainable.

But then there’s the golden cross.

Many market skeptics take notice when this technical indicator, a holy grail of sorts for many technicians, shows up on the horizon.

As early as Monday, the rising 50-day moving average of the S&P 500 could tick above its rising 200-day moving average. This occurrence – known as a golden cross – means the medium-term momentum is increasingly bullish. You have a good chance of making money in the next six months if you put it to work in large-cap stocks.

In the last 50 years, according to data compiled by Birinyi Associates, a golden cross on the S&P 500 has augured further gains six months ahead in eight out of 10 times. The average gain has been 6.6 percent.

That means the benchmark is on solid footing to not only hold onto the 14 percent advance over the last nine weeks, but to flirt with 1,400, a level it hasn’t hit since mid-2008.

The gains, as expected, would not be in a straight line. But any weakness could be used by long-term investors as buying opportunities.

“The cross is an intermediate bullish event,” Schlitz said. “You have to interpret it as constructive, but I caution people to take a bullish stance, if they have a short-term horizon .”

Read the rest here.

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LULU: Pants So Tight They Make You Kill Your Co-Worker

ROCKVILLE, Md. (AP) — A woman convicted of killing her co-worker at an upscale yoga clothing shop in the Washington suburbs, then spinning an elaborate lie about being attacked by two masked men, was ordered Friday to spend the rest of her life behind bars.

Brittany Norwood tearfully apologized to the family of her victim in her first public statements since her arrest in March. A jury two months ago convicted Norwood of first-degree murder for bludgeoning and stabbing 30-year-old Jayna Murray, a co-worker at the Lululemon Athletica shop in Bethesda. Murray had more than 330 distinct wounds on her body, and investigators believe she was alive for the duration of the attack.

Read the rest here.

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Can You Sum Up Your Investing Philosophy in 10 Words?

“Fools trade everyday while professionals look for exhaustion or exuberance.” That’s mine, by the way.


By Jason Zweig

In a speech to the Wisconsin State Agricultural Society in Milwaukee on Sept. 30, 1859, Abraham Lincoln told this anecdote:

“It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: ‘And this, too, shall pass away.’ How much it expresses! How chastening in the hour of pride!—how consoling in the depths of affliction! ‘And this, too, shall pass away.’  And yet let us hope it is not quite true.”

I was recently reminded of Lincoln’s wonderful speech when someone asked me if I could summarize my investing beliefs in no more than 10 words. I laughed and said, “Of course not!”

But right afterward, I realized to my surprise that I could. I banged this out almost instantly:

Anything is possible, and the unexpected is inevitable. Proceed accordingly.

I asked some leading investors and financial thinkers for their own contributions.  Here are a few:

Read the rest here.


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Twitter’s New Censorship Plan Rouses Global Furor

AP National Writer

NEW YORK (AP) — Twitter, a tool of choice for dissidents and activists around the world, found itself the target of global outrage Friday after unveiling plans to allow country-specific censorship of tweets that might break local laws.

It was a stunning role reversal for a youthful company that prides itself in promoting unfettered expression, 140 characters at a time. Twitter insisted its commitment to free speech remains firm, and sought to explain the nuances of its policy, while critics – in a barrage of tweets – proposed a Twitter boycott and demanded that the censorship initiative be scrapped.

“This is very bad news,” tweeted Egyptian activist Mahmoud Salem, who operates under the name Sandmonkey. Later, he wrote, “Is it safe to say that (hash)Twitter is selling us out?”

Read the rest here.

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Buffett Rule Would raise $36.7 Billion in First Year, or 3.8% of the Federal Deficit in 2012.

‘Buffett Rule’ Could Create Unintended Consequences

The provision could create unnecessary complexity, raise little revenue

Williams says at a certain point, there are diminishing returns on levying tax increases on the wealthy. Even the rich don’t have unlimited wealth, and Williams adds that, “to close the budget deficit by half, you’d have to raise top rate to about 90 percent from current 35″—a politically untenable rate, to put it mildly.

Read the rest here.

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Vanishing Inflation Bolsters Case for Fed Easing

By Pedro da Costa and Jason Lange

(Reuters) – It has only been a few days since the Federal Reserve adopted a formal goal for inflation, and already policymakers are missing their target.

The U.S. central bank’s preferred measure of inflation sank to its lowest level in more than a year in the fourth quarter, data showed on Friday.

Growth in the government’s personal consumption expenditure index, which the Fed now targets at 2.0 percent, dropped to a 0.7 percent annual rate, about a third of its pace during the previous three months.

Of course, the Fed aims to hit its target over the longer run and will be willing to look through often volatile food and energy prices.

But even stripping those costs out, the inflation rate fell sharply to 1.1 percent over the past three months, a potentially troubling sign that the trend is not the Fed’s friend.

With unemployment still at an elevated 8.5 percent, Friday’s data could buttress the case within the central bank for taking new action to boost the economy.

Read the rest here.

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