Where have our leaders gone?
Released on: January 21, 2009, 4:25 am
Press Release Author: Anonymous-received as a forwarded email
Industry: Media
Press Release Summary: Where have our leaders gone? The only person I know who may be able to police and oversee the gigantic amounts of tax payer dollars being wasted and put into a defunct auto manufacturing industry is Iacocca and they are afraid to ask his opinion - they already know his answer!
Press Release Body: Remember Lee Iacocca, the man who rescued Chrysler Corporation from its death throes? He's now 82 years old and has a new book, 'Where Have All The Leaders Gone?'.Lee Iacocca Says: 'Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder! We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, 'Stay the course.'Stay the course? You've got to be kidding. This is America, not the damned, 'Titanic'. I'll give you a sound bite: 'Throw all the bums out!' You might think I'm getting senile, that I've gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore.The most famous business leaders are not the innovators but the guys in handcuffs. While we're fiddling in Iraq , the Middle East is burning and nobody seems to know what to do. And the press is waving 'pom-poms' instead of asking hard questions. That's not the promise of the 'America' my parents and yours traveled across the ocean for. I've had enough. How about you? I'll go a step further. You can't call yourself a patriot if you're not outraged. This is a fight I'm ready and willing to have. The Biggest 'C' is Crisis! (Iacocca elaborates on nine C's of leadership, with crisis being the first.) Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself. It's another thing to lead when your world comes tumbling down.On September 11, 2001, we needed a strong leader more than any other time in our history. We needed a steady hand to guide us out of the ashes. A hell of a mess, so here's where we stand.We're immersed in a bloody war with no plan for winning and no plan for leaving. We're running the biggest deficit in the history of the country. We're losing the manufacturing edge to Asia, while our once-great companies are getting slaughtered by health care costs. Gas prices are skyrocketing, and nobody in power has a coherent energy policy. Our schools are in trouble. Our borders are like sieves. The middle class is being squeezed every which way. These are times that cry out for leadership.But when you look around, you've got to ask: 'Where have all the leaders gone?' Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense? I may be a sucker for alliteration, but I think you get the point.Name me a leader who has a better idea for homeland security than making us take off our shoes in airports and throw away our shampoo? We've spent billions of dollars building a huge new bureaucracy, and all we know how to do is react to things that have already happened.Name me one leader who emerged from the crisis of Hurricane Katrina. Congress has yet to spend a single day evaluating the response to the hurricane or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time.Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. Who would have believed that there could ever be a time when 'The Big Three' referred to Japanese car companies? How did this happen, and more important, what are we going to do about it? Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening. But these are the crises that are eating away at our country and milking the middle class dry. I have news for the gang in Congress. We didn't elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness is being replaced with mediocrity. What is everybody so afraid of? That some bonehead on Fox News will call them a name? Give me a break. Why don't you guys show some spine for a change?Had Enough? Hey, I'm not trying to be the voice of gloom and doom here. I'm trying to light a fire. I'm speaking out because I have hope - I believe in America. In my lifetime, I've had the privilege of living through some of America 's greatest moments. I've also experienced some of our worst crises: The 'Great Depression,' 'World War II,' the 'Korean War,' the 'Kennedy Assassination,' the 'Vietnam War,' the 1970's oil crisis, and the struggles of recent years culminating with 9/11.If I've learned one thing, it's this: 'You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play. That's the challenge I'm raising in this book. It's a "Call to Action" for people who, like me, believe in America'. It's not too late, but it's getting pretty close. So let's shake off the crap and go to work. Let's tell 'em all we've had 'enough.'Make your own contribution by sending this to everyone you know and care about. It's our country, folks, and it's our future. Our future is at stake!!
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Showing posts with label Bailout. Show all posts
Showing posts with label Bailout. Show all posts
Thursday, January 22, 2009
Monday, August 25, 2008
The Greatest Bailout of All Time
The Greatest Bailout of All Time by Martin D. Weiss, Ph.D.
We are now witnessing a rapid-fire 1-2-3 chain reaction of events that's leading to the greatest government bailout of all time ...
Event #1. In the mortgage market, where this crisis first erupted, nearly half of all subprime loans issued in 2006 are now delinquent ... late payments on mid-quality "Alt-A" mortgages have soared 41.5% ... and delinquencies on prime jumbo mortgages are up a staggering 55.2% in the past 6 months.
Event #2. At Fannie Mae and Freddie Mac, responsible for over half of the nation's massive mortgage market, losses are mounting so quickly — and so obviously — that even their supposedly "safer" preferred shares are crashing in value:
As you can plainly see in the charts above, since their mid-May high, Fannie Mae's preferred shares (NYSE: FNM PH) are down a shocking 58.8%, falling almost as quickly as the common shares, which have lost 77% of their value.
Freddie Mac's preferred shares (NYSE: FRE PK) have plunged even more: Down 65.5%. (The Freddie common shares, meanwhile, have suffered an 89.6% wash-out!)
And all of this has happened just since May 15, a meager 102 days ago! All in two giant companies that were the darlings of Wall Street, the creation of Washington and supposedly among the most "conservative" investments in the world!
Event #3. At financial institutions across the country, these devastating losses in Fannie and Freddie paper are ripping through balance sheets like an F-5 tornado. That includes:
Sovereign Bank, the third largest savings and loan in the United States. In our "X" List video, we listed it as a prime candidate for bankruptcy because of its D+ rating and its big exposure to mortgages. Now, it's been revealed that Sovereign has a $632 million stake in Fannie and Freddie preferred shares — the same shares that have lost about two-thirds of their value just since May 15.
Hundreds of other banks and thrifts. They were encouraged by banking regulators to buy billions of dollars in similar Freddie and Freddie preferred shares. In fact, the regulators thought these investments were so reliable, they let the banks use them for capital that's required as a cushion against loan losses. They even allowed banks to take a tax break on 70% of these securities!
Countless U.S. brokerage firms, life and health insurers, property and casualty insurers. Some are in good shape. But many have loaded up with similar investments.
Major financial institutions overseas.
All assumed these shares were safe. All believed they were getting something akin to a government-guaranteed investment. All could be severely disappointed when they discover the truth.
Why a Federal Bailout IsBoth Inevitable and Imminent ...But Preferred Shareholders Could Be Very Disappointed
Last week, we heard a feverish crescendo of denials: At Fannie and Freddie, high-ranking company officials vehemently denied they were asking for a government bailout. At the Treasury Department, officials vehemently denied they were providing one. And everywhere, the more they denied, the more it was obvious that a bailout was both inevitable and imminent.
The big dilemma: In any federal bailout of this nature, if the government uses taxpayer dollars to support the value of high-ranking securities (like bonds), it simultaneously destroys the remaining value of the lowest-ranking securities (like common and preferred shares).
Why?
Because the kind of government bailout that's expected is, in itself, a tacit recognition that the companies are bankrupt. And if the companies are bankrupt, it means that, by definition, the shares in the company are worthless.
Right now, banks stuck with Fannie and Freddie preferred shares are hoping for a miracle. Since government regulators encouraged them to buy the Fannie and Freddie preferred shares in the first place, they're praying they will get some consideration.
Sure, these banks and other preferred shareholders are one rank above common shareholders in the pecking order of investors clamoring for a piece of whatever's left over. But they are also two ranks below senior debt holders.
Here's why I think they will be sorely disappointed: Just to bail out Fannie and Freddie's senior debt holders will be such a massive undertaking for the government, it's hard to imagine that there will be much money left over for preferred shareholders.
Moreover, given the magnitude of the collapse in the preferred shares that has taken place just since May 15, even if the government throws them a bone, it will hardly be enough to make up for all the losses they've already suffered in their Fannie and Freddie preferred shares.
End result: A Fannie Mae and Freddie Mac bailout may give temporary relief to some investors. But it will merely spread chaos among most others.
The Catch-22 Question: Where Does The FederalGovernment Draw The Line?
If the government bails out Fannie and Freddie, will it strictly provide temporary loans of Treasury securities like it has done with the big brokers? Or will it use taxpayer money to inject the permanent capital these companies now require for their long-term survival?
The temporary cash loans require little or no political debate. The Fed acts. The money comes. But the long-term capital investment opens up a pandora's box of objections from Congressional Republicans and Democrats fearful of a mass taxpayer rebellion right on the eve of a major election. Under enough pressure and duress, some money is bound to be forthcoming. But it's bound to have strings attached, including caps, time limits and other restrictions.
No matter what, any bailout will unleash a series of new questions with no answers:
What about Ford, GM and Chrysler?
Think a government bailout for Detroit is far-fetched? The auto executives certainly don't. In fact, just this past Friday, the Wall Street Journal reported that lobbyists for Detroit's Big Three were crowding into the offices of White House officials, U.S. Rep. John Dingell and other Michigan Democrats, giving them a heads up on a bailout proposal to be unveiled after Labor Day.
They want $25 billion in loans. They want to get the money for a cut-rate interest of just 4.5%, one-third what they're now paying. They even want the option to defer any and all payments for up to five years.
With their fortunes sinking fast, and with the nation's major brokers and mortgage lenders already needing handouts, Ford, GM and Chrysler have apparently decided to stake out their place on Uncle Sam's bread line before it gets too much longer.
What about the nation's airlines seeking to make an emergency crash landing?
What about the thousands of local governments that could soon be forced to cut essential services like waste collection or even homeland security?
What about brokers like Lehman Brothers, now scrambling for a foreign white knight to come to its rescue?
What about the big banks we told you about in The "X" List?
Like Fannie and Freddie, each and every one will make the argument that they're critical to the health of the economy and even national defense. All will want cash, loan guarantees, or direct capital injections.
Where will the government draw the line? How will it justify bailouts for some "absolutely essential" private companies but not others?
The answer, my friend, will surprise you.
Even with a Government Rescue,Fannie and Freddie Bond Investors Are STILL in Grave Jeopardy Because ...
1. The quantities of Fannie and Freddie bonds outstanding and needing government support are so massive. According to the Federal Reserve's recently released Flow of Funds (pdf page 96), agency- and GSE-backed securities — mostly issued by Fannie and Freddie — total a whopping $7.6 trillion, or $2.4 trillion MORE than the entire amount of Treasury securities outstanding.
2. These agency- and GSE-backed debts are held so widely around the world, no one in government can control who dumps what, how much, or when. U.S. Commercial banks hold $1 trillion.Insurance companies own another $518 billion. Broker and dealers own $268 billion. Foreign investors hold a whopping $1.5 trillion!
All it takes is for these investors to liquidate 10% of their holdings and the avalanche of supplies on the market would sink their value regardless of the government's efforts to shore up confidence in Fannie and Freddie.
3. Federal bailouts will sink the wobbly market for U.S. Treasury bonds. When private companies are failing, investors rush to the safety of the U.S. Treasury securities. But when the Treasury throws their money into failing companies, investors rush the other way.
Result: To the degree that the government bails out Fannie, Freddie, Detroit, Wall Street, or anyone else, investors in Treasury securities will rebel, dump their own holdings and drive the value of Treasury bonds into a tailspin like none other in history.
And here again, the quantities outstanding are massive ($5.3 trillion) ... the ownership worldwide is far-flung (including nearly half overseas) ... and the ability of the government to control the market, virtually nil.
So, yes, right now, the U.S. Treasury may come to the rescue of Fannie Mae and Freddie Mac debt holders, and these investors will rejoice.
But ultimately, in order to avoid a collapse in U.S. Treasury bonds themselves, the U.S. government will have to
Draw a line in the sand beyond which no more government rescues will be possible.
Let some of America's largest banks, brokers and other companies fail, liquidate their assets, and fade into history ...
Even abandon prior rescue efforts for the sake of saving the one institution it must keep solvent and liquid at all costs: The United States Government itself.
Your best course of action ...
Step 1.Get your savings out of danger and to safety immediately!
We showed you exactly how in our "X" List video.
If you missed it, turn up your computer speakers and click here to watch it now.
Several banks and one brokerage firm on our list are already failing. Others are likely to follow.
Step 2.Clean out your portfolioof financial stocks!
Over three years ago, in April of 2005, we told our Safe Money subscribers to avoid financial stocks like the plague. We even published a list of stocks to get the heck out of immediately. (See the exact reprint of the list at left.)
Nor were we just panning some fly-by-night upstarts. We were telling investors to sell the nation's biggest mortgage lenders like Countrywide Financial, New Century Financial and Washington Mutual ... the largest builders like Beazer Homes, D.R. Horton, and Toll Brothers ... even Fannie Mae and Freddie Mac.
The pundits said we were nuts. But the results prove otherwise:
Stock
Price in April 2005 When we said "SELL"
Latest Price*
% Change
Aames Investment Corp
8.00
3.52
-56.0%
Accredited Home Lenders
36.17
11.76
-67.5%
Beazer Homes USA Inc
50.39
6.56
-87.0%
Countrywide Financial Corp
31.80
4.25
-86.6%
D.R. Horton Inc
30.14
10.73
-64.4%
Fannie Mae
53.24
4.40
-91.7%
Fidelity National
26.00
13.13
-49.5%
Freddie Mac
60.85
3.25
-94.7%
Fremont General Corp
22.04
0.22
-99.0%
General Motors Corp
29.38
10.16
-65.4%
Golden West Financial Corp
60.14
77.25
+28.5%
H&R Block Inc
25.18
24.93
-1.0%
KB Home
59.50
17.41
-70.7%
MDC Holdings Inc
71.11
39.64
-44.3%
MGIC Investment Corp
61.03
6.82
-88.8%
New Century Financial Corp
46.54
0.01
-100.0%
Novastar Financial Inc
36.33
1.10
-97.0%
PHH Corp
21.70
16.63
-23.4%
PMI Group Inc
37.81
3.22
-91.5%
Pulte Homes Inc
37.13
12.77
-65.6%
Radian Group Inc
47.30
3.31
-93.0%
Ryland Group Inc
62.93
19.70
-68.7%
Toll Brothers Inc
40.12
21.76
-45.8%
Washington Mutual Inc
39.34
4.10
-89.6%
Wells Fargo & Company
29.72
28.92
-2.7%
* For companies still trading, reflects closing price of 8/20/08. If companies that failed or were taken over, reflects last price at that time.
Since that time, almost all of the stocks we panned have crashed and burned:
Countrywide Financial has fallen 86.6% ...
New Century Financial shareholders have been 100% wiped out, and ...
Washington Mutual investors have seen 89.6% of their money go down the drain.
What about Fannie Mae and Freddie Mac, now at the core of the crisis? They were also on our April 2005 list of financial stocks to dump. And since that date, their common shares have fallen 91.7% and 94.7%, respectively.
With these huge declines, you may think it's now too late to sell your remaining financial stocks. But the fact is, many are still trading at absurdly high price levels. And even those that have been beaten to a pulp could fall another 80% or 90% in value.
Step 3. If you have other assets at risk — stocks, real estate or business properties — hedge against possibly devastating losses ahead with inverse ETFs in the weakest stock market sectors. Or better yet, if you've cleaned out all of your vulnerable assets, use those same ETFs to turn this dramatic situation into an equally dramatic profit opportunity.
We have a new set of urgent recommendations going to our Safe Money subscribers tomorrow afternoon. So if you want to get them, your deadline for signing up is 12 Noon Eastern Time. Click here to join now. Or click here for our complete report on this opportunity.
Good luck and God bless!
Martin
About Money and Markets
For more information and archived issues, visit http://www.moneyandmarkets.com
Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
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We are now witnessing a rapid-fire 1-2-3 chain reaction of events that's leading to the greatest government bailout of all time ...
Event #1. In the mortgage market, where this crisis first erupted, nearly half of all subprime loans issued in 2006 are now delinquent ... late payments on mid-quality "Alt-A" mortgages have soared 41.5% ... and delinquencies on prime jumbo mortgages are up a staggering 55.2% in the past 6 months.
Event #2. At Fannie Mae and Freddie Mac, responsible for over half of the nation's massive mortgage market, losses are mounting so quickly — and so obviously — that even their supposedly "safer" preferred shares are crashing in value:
As you can plainly see in the charts above, since their mid-May high, Fannie Mae's preferred shares (NYSE: FNM PH) are down a shocking 58.8%, falling almost as quickly as the common shares, which have lost 77% of their value.
Freddie Mac's preferred shares (NYSE: FRE PK) have plunged even more: Down 65.5%. (The Freddie common shares, meanwhile, have suffered an 89.6% wash-out!)
And all of this has happened just since May 15, a meager 102 days ago! All in two giant companies that were the darlings of Wall Street, the creation of Washington and supposedly among the most "conservative" investments in the world!
Event #3. At financial institutions across the country, these devastating losses in Fannie and Freddie paper are ripping through balance sheets like an F-5 tornado. That includes:
Sovereign Bank, the third largest savings and loan in the United States. In our "X" List video, we listed it as a prime candidate for bankruptcy because of its D+ rating and its big exposure to mortgages. Now, it's been revealed that Sovereign has a $632 million stake in Fannie and Freddie preferred shares — the same shares that have lost about two-thirds of their value just since May 15.
Hundreds of other banks and thrifts. They were encouraged by banking regulators to buy billions of dollars in similar Freddie and Freddie preferred shares. In fact, the regulators thought these investments were so reliable, they let the banks use them for capital that's required as a cushion against loan losses. They even allowed banks to take a tax break on 70% of these securities!
Countless U.S. brokerage firms, life and health insurers, property and casualty insurers. Some are in good shape. But many have loaded up with similar investments.
Major financial institutions overseas.
All assumed these shares were safe. All believed they were getting something akin to a government-guaranteed investment. All could be severely disappointed when they discover the truth.
Why a Federal Bailout IsBoth Inevitable and Imminent ...But Preferred Shareholders Could Be Very Disappointed
Last week, we heard a feverish crescendo of denials: At Fannie and Freddie, high-ranking company officials vehemently denied they were asking for a government bailout. At the Treasury Department, officials vehemently denied they were providing one. And everywhere, the more they denied, the more it was obvious that a bailout was both inevitable and imminent.
The big dilemma: In any federal bailout of this nature, if the government uses taxpayer dollars to support the value of high-ranking securities (like bonds), it simultaneously destroys the remaining value of the lowest-ranking securities (like common and preferred shares).
Why?
Because the kind of government bailout that's expected is, in itself, a tacit recognition that the companies are bankrupt. And if the companies are bankrupt, it means that, by definition, the shares in the company are worthless.
Right now, banks stuck with Fannie and Freddie preferred shares are hoping for a miracle. Since government regulators encouraged them to buy the Fannie and Freddie preferred shares in the first place, they're praying they will get some consideration.
Sure, these banks and other preferred shareholders are one rank above common shareholders in the pecking order of investors clamoring for a piece of whatever's left over. But they are also two ranks below senior debt holders.
Here's why I think they will be sorely disappointed: Just to bail out Fannie and Freddie's senior debt holders will be such a massive undertaking for the government, it's hard to imagine that there will be much money left over for preferred shareholders.
Moreover, given the magnitude of the collapse in the preferred shares that has taken place just since May 15, even if the government throws them a bone, it will hardly be enough to make up for all the losses they've already suffered in their Fannie and Freddie preferred shares.
End result: A Fannie Mae and Freddie Mac bailout may give temporary relief to some investors. But it will merely spread chaos among most others.
The Catch-22 Question: Where Does The FederalGovernment Draw The Line?
If the government bails out Fannie and Freddie, will it strictly provide temporary loans of Treasury securities like it has done with the big brokers? Or will it use taxpayer money to inject the permanent capital these companies now require for their long-term survival?
The temporary cash loans require little or no political debate. The Fed acts. The money comes. But the long-term capital investment opens up a pandora's box of objections from Congressional Republicans and Democrats fearful of a mass taxpayer rebellion right on the eve of a major election. Under enough pressure and duress, some money is bound to be forthcoming. But it's bound to have strings attached, including caps, time limits and other restrictions.
No matter what, any bailout will unleash a series of new questions with no answers:
What about Ford, GM and Chrysler?
Think a government bailout for Detroit is far-fetched? The auto executives certainly don't. In fact, just this past Friday, the Wall Street Journal reported that lobbyists for Detroit's Big Three were crowding into the offices of White House officials, U.S. Rep. John Dingell and other Michigan Democrats, giving them a heads up on a bailout proposal to be unveiled after Labor Day.
They want $25 billion in loans. They want to get the money for a cut-rate interest of just 4.5%, one-third what they're now paying. They even want the option to defer any and all payments for up to five years.
With their fortunes sinking fast, and with the nation's major brokers and mortgage lenders already needing handouts, Ford, GM and Chrysler have apparently decided to stake out their place on Uncle Sam's bread line before it gets too much longer.
What about the nation's airlines seeking to make an emergency crash landing?
What about the thousands of local governments that could soon be forced to cut essential services like waste collection or even homeland security?
What about brokers like Lehman Brothers, now scrambling for a foreign white knight to come to its rescue?
What about the big banks we told you about in The "X" List?
Like Fannie and Freddie, each and every one will make the argument that they're critical to the health of the economy and even national defense. All will want cash, loan guarantees, or direct capital injections.
Where will the government draw the line? How will it justify bailouts for some "absolutely essential" private companies but not others?
The answer, my friend, will surprise you.
Even with a Government Rescue,Fannie and Freddie Bond Investors Are STILL in Grave Jeopardy Because ...
1. The quantities of Fannie and Freddie bonds outstanding and needing government support are so massive. According to the Federal Reserve's recently released Flow of Funds (pdf page 96), agency- and GSE-backed securities — mostly issued by Fannie and Freddie — total a whopping $7.6 trillion, or $2.4 trillion MORE than the entire amount of Treasury securities outstanding.
2. These agency- and GSE-backed debts are held so widely around the world, no one in government can control who dumps what, how much, or when. U.S. Commercial banks hold $1 trillion.Insurance companies own another $518 billion. Broker and dealers own $268 billion. Foreign investors hold a whopping $1.5 trillion!
All it takes is for these investors to liquidate 10% of their holdings and the avalanche of supplies on the market would sink their value regardless of the government's efforts to shore up confidence in Fannie and Freddie.
3. Federal bailouts will sink the wobbly market for U.S. Treasury bonds. When private companies are failing, investors rush to the safety of the U.S. Treasury securities. But when the Treasury throws their money into failing companies, investors rush the other way.
Result: To the degree that the government bails out Fannie, Freddie, Detroit, Wall Street, or anyone else, investors in Treasury securities will rebel, dump their own holdings and drive the value of Treasury bonds into a tailspin like none other in history.
And here again, the quantities outstanding are massive ($5.3 trillion) ... the ownership worldwide is far-flung (including nearly half overseas) ... and the ability of the government to control the market, virtually nil.
So, yes, right now, the U.S. Treasury may come to the rescue of Fannie Mae and Freddie Mac debt holders, and these investors will rejoice.
But ultimately, in order to avoid a collapse in U.S. Treasury bonds themselves, the U.S. government will have to
Draw a line in the sand beyond which no more government rescues will be possible.
Let some of America's largest banks, brokers and other companies fail, liquidate their assets, and fade into history ...
Even abandon prior rescue efforts for the sake of saving the one institution it must keep solvent and liquid at all costs: The United States Government itself.
Your best course of action ...
Step 1.Get your savings out of danger and to safety immediately!
We showed you exactly how in our "X" List video.
If you missed it, turn up your computer speakers and click here to watch it now.
Several banks and one brokerage firm on our list are already failing. Others are likely to follow.
Step 2.Clean out your portfolioof financial stocks!
Over three years ago, in April of 2005, we told our Safe Money subscribers to avoid financial stocks like the plague. We even published a list of stocks to get the heck out of immediately. (See the exact reprint of the list at left.)
Nor were we just panning some fly-by-night upstarts. We were telling investors to sell the nation's biggest mortgage lenders like Countrywide Financial, New Century Financial and Washington Mutual ... the largest builders like Beazer Homes, D.R. Horton, and Toll Brothers ... even Fannie Mae and Freddie Mac.
The pundits said we were nuts. But the results prove otherwise:
Stock
Price in April 2005 When we said "SELL"
Latest Price*
% Change
Aames Investment Corp
8.00
3.52
-56.0%
Accredited Home Lenders
36.17
11.76
-67.5%
Beazer Homes USA Inc
50.39
6.56
-87.0%
Countrywide Financial Corp
31.80
4.25
-86.6%
D.R. Horton Inc
30.14
10.73
-64.4%
Fannie Mae
53.24
4.40
-91.7%
Fidelity National
26.00
13.13
-49.5%
Freddie Mac
60.85
3.25
-94.7%
Fremont General Corp
22.04
0.22
-99.0%
General Motors Corp
29.38
10.16
-65.4%
Golden West Financial Corp
60.14
77.25
+28.5%
H&R Block Inc
25.18
24.93
-1.0%
KB Home
59.50
17.41
-70.7%
MDC Holdings Inc
71.11
39.64
-44.3%
MGIC Investment Corp
61.03
6.82
-88.8%
New Century Financial Corp
46.54
0.01
-100.0%
Novastar Financial Inc
36.33
1.10
-97.0%
PHH Corp
21.70
16.63
-23.4%
PMI Group Inc
37.81
3.22
-91.5%
Pulte Homes Inc
37.13
12.77
-65.6%
Radian Group Inc
47.30
3.31
-93.0%
Ryland Group Inc
62.93
19.70
-68.7%
Toll Brothers Inc
40.12
21.76
-45.8%
Washington Mutual Inc
39.34
4.10
-89.6%
Wells Fargo & Company
29.72
28.92
-2.7%
* For companies still trading, reflects closing price of 8/20/08. If companies that failed or were taken over, reflects last price at that time.
Since that time, almost all of the stocks we panned have crashed and burned:
Countrywide Financial has fallen 86.6% ...
New Century Financial shareholders have been 100% wiped out, and ...
Washington Mutual investors have seen 89.6% of their money go down the drain.
What about Fannie Mae and Freddie Mac, now at the core of the crisis? They were also on our April 2005 list of financial stocks to dump. And since that date, their common shares have fallen 91.7% and 94.7%, respectively.
With these huge declines, you may think it's now too late to sell your remaining financial stocks. But the fact is, many are still trading at absurdly high price levels. And even those that have been beaten to a pulp could fall another 80% or 90% in value.
Step 3. If you have other assets at risk — stocks, real estate or business properties — hedge against possibly devastating losses ahead with inverse ETFs in the weakest stock market sectors. Or better yet, if you've cleaned out all of your vulnerable assets, use those same ETFs to turn this dramatic situation into an equally dramatic profit opportunity.
We have a new set of urgent recommendations going to our Safe Money subscribers tomorrow afternoon. So if you want to get them, your deadline for signing up is 12 Noon Eastern Time. Click here to join now. Or click here for our complete report on this opportunity.
Good luck and God bless!
Martin
About Money and Markets
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Tony Sagami, Nilus Mattive, Sean Brodrick, Larry Edelson, Michael Larson and Jack Crooks. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amber Dakar, Dinesh Kalera, Christina Kern, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau and Leslie Underwood.
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