“Portugal’s town halls face default amid 9 billion euros ($12 billion) of debt unless the government provides aid soon, said Fernando Ruas, president of the nation’s association of municipalities.

“At a company we call it insolvency,” Ruas said in a telephone interview from Lisbon on March 21. “It could happen that some town halls could have to restructure their debt if the government doesn’t intervene.”

Ruas blamed a decline in money transfers from the government in Lisbon to municipalities for their growing financial woes. Portugal last year became the third euro-area country to request external aid, following Greece and Ireland. Prime Minister Pedro Passos Coelho is cutting spending and raising taxes to meet the terms of the 78 billion-euro rescue.

“A sharp decrease in money transfers has made it harder for many town halls to comply with their ongoing commitments,” said Ruas. His association estimates town halls face about 9 billion euros in liabilities. About 1.5 billion euros of the total is in bills to suppliers overdue by more than 90 days while the remainder is mostly made up of debt to banks, he said….”

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Deleveraging  seems to be a thing of the past….

A chart to put things into perspective…

We need more time… Saint Patrick’s Day has not quite ended yet…..

Don’t forget Spain and Portugal….

Arends: The little-known fund manager with eye-popping returns has 50% of his portfolio in one stock. Will it pay off?

Should you invest half your money in the same stock?

Most financial planners would tell you that’s a crazy idea, that you need to be more “diversified.” But that’s what Allan Mecham at Arlington Value — aka the 400% Man — has just done.

Mecham, whose stellar returns were highlighted in the March edition of Smart Money, tells his investors that last year he levered up the fund and has invested half the money in Warren Buffett’s Berkshire Hathaway.

“Able to borrow at around 1.5%, we levered (Berkshire) into a 50%+ position,” he wrote in his annual letter to shareholders. “Though not advocates of leverage, we believe the low cost and modest amount, combined with [Berkshire’s] iron-clad safety and cheap price, makes our action sensible.”

There is some method to the madness. Mecham, a long-term Buffett disciple, argues that Berkshire Hathaway stock, on its own, “provides ample diversity, with exposure to disparate businesses (more than 70), sectors, and asset allocations.” Berkshire’s assets include a ton of cash-generative businesses, a book of blue-chip public stocks valued at more than $75 billion, and nearly $40 billion in cash, he says.

Short-term gains are irrelevant, but Mecham built up the huge Berkshire Hathaway position before the announcement, last September, that Berkshire would start buying back stock.

Since then stock has zoomed about 16%, from around $105,000 to $122,000.

No one is suggesting you should follow suit — even if you could borrow at 1.5%. But Mecham’s track record makes his moves worth noting. He’s trounced the market since launching Arlington in 1999, posting gains of more than 400% after costs. Arlington’s five-year return through 2011 averages 18.7% net of fees, while the Standard & Poor’s 500 has lost ground.

Read the rest here.

The toilet tax being proposed in Nassau County NY is certainly and idea from the cesspool… 

HAHAHAHAHA

Source

“WASHINGTON – Federal Reserve Chairman Ben Bernanke says the threats from Europe’s debt crisis have eased, but U.S. money market funds remain exposed to risky European assets.

In testimony prepared for a congressional hearing Wednesday, Bernanke noted developments that have minimized the danger. He pointed to bailout support that European leaders provided in exchange for deep budget cuts by the Greek government and he highlighted the agreement by private creditors to reduce Greece’s debt.

But he said Europe must take further steps, including strengthening its banking system even more and making “a significant expansion of financial backstops” to guard against troubles in one country spilling over to other nations.

“Europe’s financial and economic situation remains difficult, and it is critical that the European leaders follow through on their policy commitments to ensure a lasting stabilization,” Bernanke said in remarks prepared for the House Committee on Oversight and Government Reform.

While U.S. financial institutions have reduced their exposure to Europe, Bernanke said roughly 35% of assets in U.S. prime money market funds are in European holdings.

“U.S. financial firms and money market funds have had time to adjust their exposures and hedge their risks to some degree … but the risks of contagion remain a concern both for these institutions and their supervisors and regulators,” Bernanke said.

Bernanke said if Europe took a severe turn for the worse, the U.S. financial sector would have to contend not only with problems stemming from its direct exposure to European loans and investments but also with broader market movements, including declines in global stock prices, increased credit costs and reduced availability of funding….”

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The Fed’s behavior has always spelled to get out of bonds, but now they are telling you that bonds are still not cheap….

Interesting how Iceland is back to normalized rates after default….

The plus was for effort…..

Taxpayer dollars made profits possible…no ? So should the Fed handover some of its profits to America ?

Source 

“Despite a record breaking run Credit Suisse is sticking to their guns on higher equity prices.  They are now calling for a year end target of 1470 on the S&P 500 and offer 9 reasons to stay bullish:

“(1) Bond yields could rise further… this might help equities
(2) The macro environment is supportive:
-Economic momentum indicators suggests global and US growth is still well above consensus
-The breadth of the US recovery is now impressive: investment; housing; employment; the
process of consumer deleveraging in the US is quite advanced; inventories are low and bank
loan growth has returned
-China easing: half of GDP is coming from emerging markets
-Europe: muddling along but mutualisation is advancing
(3) The dovishnessof central banks and the synchronised QE as the end game
(4) Rising global excess liquidity is consistent with c10% re-rating
(6) Valuations relative to bonds are still attractive
(7) Equities remain the hedge if , as we expect, long term inflation expectations continue to rise.
(8) Positioning still cautious relative to optimistic sentiment
(9) Earnings: upgrades continue, global revisions just turned positive”

Good for them. The bankers no doubt gave up commissions to entice more money to flow under management… 

“House Republicans, searching for an election-year message amid a muddled political and economic landscape, will introduce a 2013 budget Tuesday that cuts tax rates and provides for just two individual brackets of 10% and 25%.

The budget would end the Alternative Minimum Tax, which originally was aimed at the wealthy but ensnares a growing number of middle-class taxpayers each year. The plan would nearly eliminate U.S. taxes on American corporations’ earnings from overseas operations.

The proposal, to be offered by Rep. Paul Ryan (R., Wis.), who has become the Republicans’ leading figure on budget issues, has little chance of becoming law soon. It is likely to be welcomed by House and Senate Republicans, and rejected by the Democratic-controlled Senate.

But with Republicans struggling to agree on a presidential nominee and a campaign theme, party leaders hope the easy-to-understand tax-cut proposal will give Republican candidates a clear and popular message….”

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They bargained an investment banking fee of just 1.1% for its ipo filing. A typical fee is around 3-5%.

WASHINGTON (Reuters) – The Treasury Department said on Monday it made a $25 billion profit on sales of mortgage-backed securities acquired during the financial crisis, part of its ongoing efforts to wind down taxpayer-financed bailout programs.

The sales were the latest indication the multiple programs the government and Federal Reserve initiated to bail out the financial sector may turn out to be less costly than originally feared.

The Treasury bought $225 billion of MBS in 2008 and 2009 in an effort to keep the mortgage market from freezing up as private investors fled. The $250 billion it reaped from the investment reflected both principal and interest.

“The successful sale of these securities marks another important milestone in the wind-down of the government’s emergency financial crisis response efforts,” Treasury Assistant Secretary Mary Miller said.

The government purchased the mortgage debt as part of a bid to stabilize the housing industry, using funds authorized by the Housing and Recovery Act of 2008. It was one of several programs running in parallel with the Troubled Asset Relief Program, or TARP, which was set up during the administration of President George W. Bush to buy toxic assets from banks, but that ended up largely as a mechanism to inject capital into financial institutions.

By C. Thomas Howard, Ph.D.
March 13, 2012

Investors who avoid concentrated equity miss out on the triple benefits of excess returns, lower risk, and lower correlations. A portfolio concentrated in best-idea stocks has an excellent chance of generating excess returns. In turn, the cumulative excess return to investors lowers the risk of underperformance over time. Finally, a portfolio comprised of a small number of stocks is characterized by a low stock-market correlation. Thus the concentrated equity triple play: higher returns, lower risk, and lower correlations.

I will discuss each of these benefits separately. But first, let me address the widespread misconception that an investor can only properly diversify a portfolio by including a large number of stocks.

The diversification-volatility myth

Many believe that concentrated portfolios are much more volatile than are broadly diversified index portfolios. It turns out the diversification benefit of adding additional stocks to a one-stock portfolio is largely captured within the first few additions, as shown in Figure 1 below.

Read the rest of the article and the explanation, here.

“A heavily subsidized solar company received a U.S. taxpayer loan guarantee to sell solar panels to itself.

First Solar is the company. The subsidy came from the Export-Import Bank, which President Obama and Harry Reid are currently fighting to extend and expand. The underlying issue is how Obama’s insistence on green-energy subsidies and export subsidies manifests itself as rank corporate welfare.

Here’s the road of subsidies these solar panels followed from Perrysburg, Ohio, to St. Clair, Ontario.

First Solar is an Arizona-based manufacturer of solar panels. In 2010, the Obama administration awarded the company $16.3 million to expand its factory in Ohio — a subsidy Democratic Gov. Ted Strickland touted in his failed re-election bid that year.

Five weeks before the 2010 election, Strickland announced more than a million dollars in job training grants to First Solar. The Ohio Department of Development also lent First Solar $5 million, and the state’s Air Quality Development Authority gave the company an additional $10 million loan.

After First Solar pocketed this $17.3 million in government grants and $15 million in government loans, Ex-Im entered the scene.

In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two wind farms in Canada. That means if the wind farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid.

But the buyer, in this case, was First Solar….”

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Full article