The Cynical Economist

China Will Face Crisis Within 5 Years, 45% of Investors in Global Poll Say – An additional 40 percent anticipate a Chinese crisis after 2016, according to a quarterly poll of 1,000 Bloomberg customers who are investors, traders or analysts. Only 7 percent are confident China will indefinitely escape turmoil.

Watchdog Says Financial Overhaul Won’t End Future Bailouts – Barofsky says in a report released Tuesday that recent comments by Treasury Secretary Timothy Geithner and other top regulators suggest the government would rescue banks if one of them threatened the broader financial system.

Banking `Toxic Cocktail’ Is Too Big to Forget: Simon Johnson – At the end of the third quarter of 2010, by my calculation, the assets of our largest six bank holding companies were valued at about 64 percent of gross domestic product — compared with about 56 percent before the crisis and about 15 percent in 1995. Barofsky quotes Thomas Hoenig, president of the Kansas City Federal Reserve, who uses similar numbers and draws the same conclusion: The big banks have undoubtedly become bigger.

Can we get to below-4% unemployment? Do we need to? – We need more entrepreneurs, less barriers and less taxation on businesses…

The IRS Targets Income Tricks – There’s a saying: Pigs get fed and hogs get slaughtered. The Internal Revenue Service surely hopes that includes tax hogs.

The American Nomenklatura – The Daleys of the world, the Rubins of the world, the Rahm Emmanuels of the world who rotate out of commerce secretary, treasury secretary, White House chief of staff positions and into positions at the top of investment banks, government-regulated utility monopolies and various GSEs are our nomenklatura. They are the members of our permanent ruling class. They are tribute imposers. The fact that they wrap themselves in the rhetoric of street-level populism just means that they are poseurs in addition to being imposers.

Are the Republicans, like Immelt, just as bad? No, but they are almost just as bad. And almost just as bad is not nearly good enough.

‘The stock market is for suckers’ – According to the New York Stock Exchange, in the 1960s the holding period for stocks was eight years. By 1990 it had fallen to two years and today the average stock is held for just nine months. As investors have shortened their time horizons, companies have been focused on each next quarter’s financial results at the expense of the next decade…

Arnott: Market Hyped Up on Stimulus – Research Affiliate’s Rob Arnott sees much more downside than upside in the market today.

The Obama Presidency remains in a dangerous state of denial – If there is one big takeaway from Barack Obama’s State of the Union address last night, it is that this presidency remains in a complete state of denial regarding the massive threat the United States faces with its budget deficit. Obama’s speech was a major lost opportunity to address the number one menace to America’s long-term prosperity – the towering mountain of debt.

Japan’s Credit Rating Cut to AA- by S&P on Debt Load – Japan’s credit rating was cut for the first time in nine years by Standard & Poor’s as persistent deflation and political gridlock undermine efforts to reduce a 943 trillion yen ($11 trillion) debt burden.

Social Security posting $600B deficit over 10 years – Waning economic recovery, surge in boomer retirements sink Social Security fund into deficit

U.S. Muni-Bond Funds Had $5.75 Billion in Net Withdrawals in Past Week – U.S. municipal-bond funds had withdrawals for the 11th straight week amid investor concern that financially strapped states and cities may default, according to estimates by the Investment Company Institute.

Jerry Brown to big-city mayors: Redevelopment ‘money is not there’ – “The hallways are going to be crowded in the coming months with people who say, ‘Please keep the money coming.’ And my message is, ‘The money is not there,’” Brown said. “The taxes don’t produce as much money as people in recent years expected. We’ve got to retrench, cut back and if we do, if we take the budget that I presented, California will be in balance.”

Initial Jobless Claims in U.S. Rose Last Week to 454,000 – LOL blame it on the winter

Soros Says U.S. Recovery Temporary, Deficit a ‘Serious’ Threat – “It is temporary,” Soros, 80, said today in a television interview with Bloomberg at the World Economic Forum in Davos, Switzerland. “Once the economy picks up a little momentum,interest rates will go up and choke of the recovery. We are destined for stop, go, which is better than no go at all.” LOL what about this: In 2009 George Soros give his plan to save the economyA Plan for Economic Recovery and in 2010 Soros predicts recovery in 2010

The liars…

and the reality…

Wall Street Partying in Davos as Crisis Angst Fades – As Wall Street chief executive officers flock to the World Economic Forum, they’ll be breathing a sigh of relief along with the Swiss mountain air: There are no panels on compensation or redesigning financial regulation.

Davos elites see global economic shift East, South – Power in the global economy is shifting from the advanced world to Asia as recovery takes hold….as they thought 30 year ago…..Japan will buy all the American assets and rule us…did not happen then, but do not trust the Chinese sneak bastards willing to play communist propaganda in our Withe House

Obama’s State of the Union Was Tantamount to Plagiarism - If imitation is the sincerest form of flattery, what can be said of plagiarism? President Obama’s second State of the Union address contained enough recycled ideas and lines lifted from speeches of others to make historians wince. I suppose this is what one does when one not only has nothing new to say, but is required by custom and Constitution to come forth with a report of some kind by a certain time and day.

Ohio Mom Kelley Williams-Bolar Jailed for Sending Kids to Better School District – Judge Sentenced Mother Convicted of Falsifying Residency Records to 10 Days in Jail. Kelley Williams-Bolar was convicted of lying about her residency to get her daughters into a better school district. Good education for all, right Mr Obama?….but you just  cannot chose it yourselves…Government is going to take care for your need…

School defends experiment to separate black students in a bid to boost their academic results – A high school in Lancaster, Pennsylvania, is defending its decision to segregate its students by race and gender. Here you go Mr. President  - a 50′s moment…..Not a “Sputnik”, but a segregational one…. Spending on education is unlikely to fix the problems we have in the school system today in theUSA

Walmart offers new makeup line for 8-12-year-olds – Walmart is going after the tween (ages 8-12) market (and their parents’ wallets) with the newGeoGirl beauty line.

CBO: 2011 Budget Deficit to Hit $1.5T – A stunning new record.

Dennis Kucinich sues House cafeteria over olive pit – Kucinich didn’t detail the costs of the dental work, or precisely what “enjoyment” he lost. Or why he’s filing a complaint three years after the olive incident. But he’s suing Restaurant Associates and three other companies involved in running and supplying the cafeteria for $150,000, claiming negligence and breach of implied warranty.  Boy , Don’t we deserve to be in that economic mess we are in, since we continue to vote those people in public office… Look at the video taken 5 days after the alleged accident,  that caused “serious and permanent dental and oral injuries requiring multiple oral and dental surgeries.” He looks fine and talks normal!

Slopes behind ropes: fear of lawsuits closing great New Jersey sledding hills – It’s one of the simple, most wonderful pleasures of life: zooming down a snow-covered hill just fast enough for a touch of fear to quicken your pulse. Maybe it’s a solo run. Maybe you’re clinging to a loved one as you tear down the hill tandem. Surely, sledding is one of those things that makes it worth toughing it out and living in New Jersey when sunnier climes often beckon. Unfortunately, it’s getting tougher and tougher to find a place to do it. For the past two years on Ledger Live, we’ve taken viewers suggestions and hit the road in search of New Jersey’s best sledding hills. But more and more, we found, the hills that have thrilled generations of sledders are now closed. America the Great… But what do you expect, if an elected official can sue you for hundred of thousands of dollars, because he did not like the sandwich you sold him…

Cash-Strapped Bergen, N.J. To Fight Snow With ‘Pickle Juice’ -Salt-Water Concoction Costs Just 7 Cents A Gallon…Good luck with that…Have you ever asked yourselves how the Canadians survive the winter weather? Largo post your experience here….

New-home sales in 2010 fall to lowest in 47 years – Sales for all of 2010 totaled 321,000, a drop of 14.4 percent from the 375,000 homes sold in 2009, the Commerce Department said Wednesday. It was the fifth consecutive year that sales have declined after hitting record highs for the five previous years when the housing market was booming.

Failure to end ‘too big to fail’ could trigger next financial crisis: SIGTARP - “As long as the relevant actors (executives, rating agencies, creditors and counterparties) believe there will be a bailout, the problems of “too big to fail” will almost certainly persist,” SIGTARP said. In the SOTU, Obama said the economy is coming back, but the evidence, that nothing  has been changed and nothing has been fixed is mounting….. Brace yourselves…

Thousands of Georgia taxpayers lose directly deposited refunds – The Georgia Department of Revenue says thousands of Georgia taxpayers might be affected by a computer glitch that removed tax refunds which had already been deposited in their bank accounts. Government at work

By the numbers: Long waits, harsh impact of being jobless – ‘Who are America’s jobless?”

VW unveils an ultra-efficient car – Volkswagen has made a car it says can travel 313 miles on a gallon of diesel, and that emits just 24 grammes of carbon dioxide per kilometre traveled. These 1 million electric cars, that the president said we are going to put on the Americans roads before year 2015…. it seems they will not be Chevy VOLT’s… Here goes in smoke your (involuntary) investment in GM…

U.S. Home Prices ‘Bouncing Around’ Bottom, Economist Case Says – U.S. home prices have reached a bottom and may be set to rise in the first half as buyers take advantage of increased affordability, said Karl Case, the economist who co-founded the S&P/Case-Shiller home price index.

TCE thinks the home prices will fall more. Should you wait? Or not?

I do not know…. I believe that the home prices will fall further, but at the same time keep in mind that the mortgage rates will rise.

If you have the money to buy a house, that you like and you meet all of the following…

1) will stay in it for more than 5 years,

2) can afford to pay 20% or more of the asking price as a down payment

3) get a 3-3.5% fixed loan for 15 years

4) the monthly mortgage payment is less than 30-35% of your wage…

…then if you meet all of those criterias,  the time to buy is probably right now!

(this is not investment advice, just my opinion as if I talk to the readers as a friend!)

Russia threatens NATO with nukes – The Russian president has called on NATO to clarify Moscow’s role in a European missile system, warning if no agreement is reached, Russia will be forced to deploy “offensive” nuclear weapons. Hey, hey Obama’s START treaty is working right?….Senate Ratifies START Treaty, 71 to 26; a Win for Obama, a Loss for Jon Kyl..as I said Obama’s and our leaders policies are full of $hit!

White House official: Obama will tackle ‘very important issue’ of gun control – Gun control will fix the violence...Obama’s home town Chicago, has had a hand gun ban for 25 years. 100′s of homicides by armed offenders every year! “Gun control” only controls law abiding citizens. How about baning knifes – you know hundreds of people die from stabbing wounds…How about baning cars and trucks? There are thousands of people dying each year in car accidents….

FACT CHECK: Obama and his imbalanced ledger – The ledger did not appear to be adding up Tuesday night when President Barack Obama urged more spending on one hand and a spending freeze on the other

Getting Into Harvard Easier Than McDonald’s University in China – …The 1,565 square meter (16,846 square foot) facility doesn’t have a pool or a gym and its one-room library holds books with titles such as “Just Listen,” “Personal Accountability” and “None Of Us Is As Good As All Of Us: How McDonald’s Prospers By Embracing Inclusion and Diversity.”…. Gee I see all of those as they can be a communist literature, just rewritten by McDonald’s as a training books. Are they required readings for the American trainees? I guess they are. No wonder the dear leader – Obama – had such a support….

Judicial Watch Uncovers New Documents Detailing Pelosi’s Use of Air Force Aircraft in 2010 – Pelosi Logged 43 Flights Covering 90,155 Miles from January to October 2010; Received “Chocolate-Covered Strawberries” for Birthday Surprise. Yeah what a surprise …. a self important queen living large on the taxpayers dollars

Medicare official doubts health care law savings – Two of the central promises of President Barack Obama’s health care overhaul law are unlikely to be fulfilled, Medicare’s independent economic expert told Congress on Wednesday… Are you surprised that the supreme leader Obama lied to you?

IMF chides US for fiscal folly – The International Monetary Fund (IMF) has issued its clearest warning to date that the latest US fiscal stimulus is ill-judged, unlikely to do much for growth and raises the risk of a bond crisis over the medium term.

Senate leaders eye option of state bankruptcy – Senate Republican leaders said on Tuesday they were considering introducing legislation to allow financially stressed U.S. states to declare bankruptcy, even though the No. 2 Republican in the House of Representatives has rebuffed the idea.

Roubini On 4 Major U.S. Risks – In the U.S., Roubini is keeping his eye on four main downside risks.

• Continuing high unemployment rates
• A double-dip in the housing and real estate markets
• State and local governments at risk of bankruptcy
• Inaction with regards to federal deficit

Empty Promises: 5 Reasons Why Barack Obama’s State Of The Union Address Was Completely Wrong About The Economy – Barack Obama’s State of the Union address sure sounded good, didn’t it?  There were lots of solemn promises, lots of stuff about America’s “bright future” and a line about how we are now facing this generation’s “Sputnik moment” that will surely make headlines all over the globe.

Marc Faber interview

John Stossel- My State of the Union Address – We are in trouble…

Public Education Needs Transparency & Competition, Not More Money – In honor of School Choice Week, President Obama seems set to use his SOTU address this evening to demonstrate how truly pathetic most education “reform” ideas are in this, the era of our Great Recession.

New Heroes vs. Old – Thomas Sowel

Administration Readies Transportation Plan –

Jobless Rise in 20 States as Workers Still Laid Off

Federal Agency Headquarters Leave Lights On In DC – One month’s electricity bill at the Department of Labor topped a MILLION dollars. That was a bill paid in July of last year. The month before, the department paid a bill of nearly $700,000. And utility costs of that magnitude are not unusual.

Obama’s Business-Friendly Optics Are an Illusion: Caroline Baum

How Public Unions Took Taxpayers Hostage – Must read

America the Broke

Obama’s Entrepreneur Problem

Where Did the Stimulus Go?

NOW President: Federal Government Should Run a Deficit To Keep Social Programs

22 Facts About California That Make You Wonder Why Anyone Would Still Want To Live In That Hellhole Of A State

A disappointing State of the Union address

The Great Misallocators – What Barack Obama and General Electric have in common.

The Economic Stimulus That Wasn’t

From WSJ

The U.S. Postal Service plays two roles in America: an agency that keeps rural areas linked to the rest of the nation, and one that loses a lot of money.

Now, with the red ink showing no sign of stopping, the postal service is hoping to ramp up a cost-cutting program that is already eliciting yelps of pain around the country. Beginning in March, the agency will start the process of closing as many as 2,000 post offices, on top of the 491 it said it would close starting at the end of last year. In addition, it is reviewing another 16,000—half of the nation’s existing post offices—that are operating at a deficit, and lobbying Congress to allow it to change the law so it can close the most unprofitable among them. The law currently allows the postal service to close post offices only for maintenance problems, lease expirations or other reasons that don’t include profitability.

read the rest

From CNBC
By: Shaun Rein, CNBC Contributor

“As the Chinese get richer,” the private equity investor glowed, “this company is going to be the next Google.”

I was sitting in my office in Shanghai, while the investor rattled off about why he loved the company. It had 50 retail outlets and planned to open another 100. Moreover, its website had 10 million monthly hits.

The executive was ready to invest $50 million but at the last minute one of his partners wanted some due diligence first. This was why he was Skyping me from the U.S.. He had only been to China once, when the CEO of the target firm had wined and dined him, introduced him to some supposedly high-ranking government officials, and showed him a packed outlet.

Four weeks later, after traveling around the country, my team had only found a grand total of two of the target firm’s outlets. At one, there were a couple of security guards sleeping at the front desk and not much else. At the other, an elderly lady sat idly, drinking tea out of a jar. The other 48 outlets? We couldn’t find them. Calls to phone numbers went unanswered.

And those web hits?  Not a single consumer we surveyed had ever heard of the store. Not one. Most surprisingly, while we were in the process of due diligence, the site switched from a social media site to a dating site to a portal for soccer fans.

It was obvious that the CEO of the target company was trying to mislead  the private equity firm. He had gamed the system to make it look toAmazon.com‘s [AMZN  176.85   -0.57  (-0.32%)   ]web traffic subsidiary, Alexa, touted that his portal got a lot of web traffic and spruced up an outlet to make it look packed.

Luckily for my client, he did his homework before committing the $50 million. But not everyone is this lucky. Despite the many horror stories investors run into in China, it still amazes me how little due diligence is actually done by people investing there.

Read the rest of this entry »

From InvestorInsight.com
by John Mauldin

The Unsustainable Meets the Irresistible
State and Local Spending
QE Policy Meets the Tea Party
A Bug in Search of a Windshield
Miami, Vegas, Thailand, and Some Needed Help

This week’s letter is a result of two lengthy conversations I had today, which have me in a reflective mode. Plus, I finished the last, final edits of my book, all of which is causing me to mull over the unsustainability of the US fiscal situation. There is a true Endgame here, and it may happen before we are ready.

The first conversation was with Kyle Bass, Richard Howard, and Peter Mauthe, over lunch (more on Peter, who has come to work with me, below). Kyle is the head of Hayman Advisors, a very successful macro hedge fund based here in Dallas. Then I recorded a Conversation with David Rosenberg and Lacy Hunt, which is one of the best we have ever done. Subscribers will be very happy. The new Conversation with George Friedman is now online, too. You can learn more about Conversations with John Mauldin at www.johnmauldin.com/conversations/ .  Now, to this week’s letter. My goal is to make this one a little shorter than normal. We’ll see how I do.

The Unsustainable Meets the Irresistible

Kyle, Lacy, and David are typically pushed into the bearish category, but (not surprisingly to me) their forecast for the next few quarters is rather strong. None of us would be surprised by a high-3% number for GDP this quarter, and 4% is not out of the question. And we all see GDP tailing off as the year winds down. Inventory builds begin to slow, and in 2012 the 2% payroll holiday goes away. Plus, as I have written and David has noted, the pressure on state and local spending is getting larger with every passing day.

State and local spending is the second biggest component of the economy. The chart below, from David’s letter this week, gives us a visual image of just how large it is. Note that budget deficits at the state and local levels total more than 1% of GDP. Revenues, though, are still off 10% (on average) from where they were at the peak. The “fiscal stimulus” from the US government has run out and states and local communities are having to balance their budgets the old-fashioned way – through spending cuts and increased taxes.

As this budget cutting works its way through the economy, and as inventories are no longer being built (they are already at adequate levels), the growth from the current stimulus (both QE2 and payroll and federal government expenditures) the economy will have to stand on its own in terms of organic growth. And as the year wears on it will become apparent there is less true organic growth than currently meets the eye.

State and Local Spending

A few more thoughts on state and local spending. First, Congress needs to go ahead and authorize a bill allowing states to file for bankruptcy. At the very least, this send s very clear message to the states that the federal government will not come to their aid. It is not fair to ask states that have done what they need to do to keep their fiscal houses in order, to support states that have overspent, typically by trying to fund their pensions and run other well-intentioned but underfunded programs.

Second, states need the ability to force public unions to come to the table. Many states have overpromised, and they are simply in a very deep hole and need concessions. Private workers have had to take the brunt of the recent crisis, and meanwhile government workers get far more on average than private employees.

There is an interesting table in a USA Today story from last year, comparing the compensation of federal and private employees. I am going to put the whole table in this letter and let you quickly scroll down through it. The link to the article is at the end. (Notice that government economists make more than private ones!) Now let me say that I begrudge no one their income. What I am saying is that the disparity, when budgets are tight, between what the private sector must deal with and what the public sector has on its plate, should not be as great as it is.

Source: Bureau of Labor Statistics, USA Today analysis http://www.usatoday.com/news/nation/2010-03-04-federal-pay_N.htm

You can see in the next graph that this differential has built up over time. It used to be that a federal government job paid less but was more secure. Now it is still more secure but pays about 44% more on average (35% higher wages and 69% higher benefits). (source: Reason magazine)

Further, while there has been a clear drop in private employment, we have seen 10% growth in federal employment (state and local employment was flat through the middle of last year, but is likely to fall this year, with budget cuts).

That clearly implies there is room at the federal level for some “austerity.” The calls for a rollback to the budget and employment levels of 2007 will become more vocal as the set of facts we will address in a moment become evident.

Before we get to that, however, I want to take a side trip. Illinois recently passed a very real tax increase as a way to start the process of dealing with its massive deficits. It did so in a lame duck session of its state legislature, even though the voters had clearly elected a far more fiscally conservative legislature that would not have passed the tax increases.

The response of the governors of Indiana and Wisconsin, their closest neighbors? They immediately suggested to Illinois businesses that they are welcome to come to their states and set up shop and pay less taxes.

Higher taxes are hardly a cure. Look at the migration of businesses from high-tax states to low-tax states. Over the last ten years it has been pronounced. For those who argue that higher marginal taxes don’t make a difference, the facts clearly overrule you. Oregon decided to tax the wealthiest 2% of its citizens. They collected 40% less than they projected, and over 25% of the people they expected to tax somehow “disappeared.” And that is just in the first year. At some point, the “rich” get tired of being in the crosshairs of politicians and repair to more favorable climes.

This is all part of the national conversation we need to have on taxes and spending. That we need a complete tax overhaul, a thorough rethinking of how we raise the monies we need, should be obvious. To hear the “this is dead on arrival” conclusions of the various federal deficit commission reports, from the left and even from Republicans, is disheartening, at least to me. There are a lot of things I do not like in those reports, but they are a starting point for a much-needed national conversation. We are soon going to find ourselves in very deep kimchee, if the report Kyle showed me today is close to right.

QE Policy Meets the Tea Party

Kyle shared with me a presentation by the Lindsey Group called “QE Policy Meets the Tea Party.” It was wide-ranging in scope, but what caught my eye was the table I print below. Larry Lindsey is one of the better economists in the country, a former Fed governor with stints at the White House. I have not met him, but his associate Marc Sumerlin is whip-brilliant. (http://www.thelindseygroup.com/)

America, they assert, is in a fiscal trap due to the low interest rates we currently enjoy. What if I told you we could cut defense and discretionary spending by 20%, put in a two-year pay freeze on federal employees, and go ahead and let the Bush tax cuts on the “rich” expire. Wouldn’t that go a long way to fixing the deficit? The answer is, sadly, likely to be no.

As the table shows, if interest rates go back to their long-term historical average, spending could rise by $800 billion in just 8 years. Even under the more optimistic assumptions of the Congressional Budget Office, it is still $500+ billion. The government debt held by the public would be around 120% of GDP (back of my napkin), or close to what I said last week was completely unsustainable by the Irish. It will be no less so for the US. Spend a few moments with the table, and see how even deep cuts and freezes have so little impact. That is not to say they are not necessary, but this just shows that a much different approach is needed.

What approach might that be? Dealing with entitlements, of course. The very item that most politicians give lip service to but have no real solutions for. But that is a topic for another month’s worth of letters.

The takeaway is that we are on an unsustainable path. Absent something more serious even than what the Lindsey Group has outlined, long before we get to 2019 the bond markets will have taken away our ability to finance our debt at low rates.

Peter Orszag wrote a column in the Financial Times today. (Orszag was the Director of the Office of Management and Budget under President Obama.) His closing paragraph:

“The bottom line is that there may well be U.S. public debt tremors this year, both during federal debate over raising the debt ceiling and with at least a limited number of crises in local and city governments. The bigger problem, though, lies beyond 2011, as the unsustainability of the federal government’s fiscal trajectory becomes increasingly clear. I hope it does not ultimately require a crisis to restore fiscal sustainability at the federal level, but I fear it will.”

A Bug in Search of a Windshield

One of my speech lines that usually gets a laugh (although I am not sure how it will go over in Japan next month) is that Japan is a bug in search of a windshield. In today’s FT there is an article quoting an interview with the new Japanese finance minister, a rather surprise appointment from the opposition party and a budget hawk. Quote:

“ ‘We face a dreadful dream that one day the long-term interest rate might rise,’ Kaoru Yosano, the new minister for economic and fiscal policy, told the Financial Times. Japan has hit a ‘critical point’ where it risks losing investor confidence if politicians fail to reach agreement on how to rein in the ballooning national debt, a cabinet minister has warned.”

Greece. Ireland. Japan. They are coming to the end of their ability to raise debt at an affordable level. There will be defaults in one form or another. Whether you call it restructuring or adjustments or printing money, it will happen.

If the US does not get its act together, we will soon be trying to avoid the windshield of the bond market, which will be coming at us faster than we can swerve to avoid it.

On a more optimistic note, I have just returned from giving a speech in Winnipeg. In the mid-’90s, Canada was in much worse shape than the US is in today. They made the tough choices and have since done very well. So has Sweden. We do not have to become Argentina or what will soon be Japan. Let us hope that we make the tough choices and avoid that windshield. The world does not want to suffer through a crippled US economy and government. That is almost unthinkable. So we must start to think the unthinkable and hedge our bets. Just in case.

Miami, Vegas, Thailand, and Some Needed Help

We are in the final stages of planning our annual Strategic Investment Conference. You do NOT want to miss this. It is going to be our biggest and best ever. It will be April 28-30 in La Jolla. Save that date.

Next week I go to Miami to speak at the Tiger 21 Conference. I am on a panel with former Majority Leader Richard Gephardt and former head of the GAO David Walker, following a speech by Newt Gingrich, rounded out by a serious assortment of financial types. I think they bring your humble analyst in as the comic relief, but I have fun all the same.

The next week I am off to Vegas for a day at Steve Blumenthal of CMG’s conference, then it’s on to Thailand. I sing for my supper in Phuket, but will then go to Bangkok for four days with my long-time friend Tony Sagami for some vacation and sightseeing time (although I plan to write a letter from there).

I am racking up the airline miles the first quarter of the year. I have to say that wifi on the plane is one of the greatest things since sliced bread. It is tough to keep up, but that helps.

I am MOST PLEASED to announce that Peter Mauthe has joined Millennium Wave Investments. Peter is well-known in the investment industry, having run some very well-established firms. He is a management professional. He is also a very savvy investment professional, as he is a recent past president of the American Association of Professional Technical Analysts. He really is a master of technical analysis, and I intend to sit at his feet and learn. Over time, you will see some of that wisdom creep into my writing.

Most importantly, if you go to LinkedIn, you will see that Peter has taken the title Chief Implementation Officer (yet another CIO title, but this one is a real description of his role). We have so many opportunities coming at us that Tiffani or I just do not have time to deal with. We are swamped. We have never been busier. We need someone who can manage that process and make things happen. And it has to be someone we can trust implicitly, as he will speak for us in so many business situations.

This is a true new era here at Millennium Wave Investments. I feel we are taking it to a whole new level this year, and I am excited. There are more and even better things coming, down the road. But this letter will still be in your inbox each week. The reason for everything is you, gentle reader, and I am reminded of that every day. Thanks for your support over the years.

Now, have a great week. I see some family time in my weekend and a hectic schedule next week. But I am having way more fun than the law allows.

Oh, and my throwaway line at the annual CFA Forecast Dinner in Winnipeg? It was minus 12 degrees Fahrenheit that night. “Seriously, you should show some sympathy to your speakers. Why not schedule your forecast dinner for July? You would be ahead of everyone else and the forecasts would be just as accurate.” Which is to say, not so much. But I try, gentle reader, I try.

Your needing to stop so his shadow can catch up analyst,

John Mauldin

Muni bonds: Now what? A checklist for investors – The plunge in tax-free municipal bond prices over the last three months has been unnerving for veteran and novice muni investors alike.

Warning From S&P on Munis – Downgrades of bonds issued by state and local governments could increase this year, according to a report to be issued Monday by credit-rating agency Standard & Poor’s.

U.S. dollar is China’s Achilles’ heel – Commentary: Beijing secrecy muddies global currency picture

Yuan soon to be currency of choice - Analysts see ‘dim sum bonds’ emerging as fund-raising preference for global firms

Brace Yourself: Peter Schiff Predicts U.S. “Inflationary Nightmare”, Made in China

Trichet Signals ECB Won’t React to Inflation Jump Unless It Boosts Wages – European Central Bank President Jean-Claude Trichet signaled the bank won’t react to a temporary jump in inflation caused by higher commodity prices as long as it doesn’t fuel wage increases, or so-called “second-round effects.”

Europe struggles with the pension puzzle - One of the primary concerns for world leaders gathered at Davos will be how to handle the financial challenge of the world’s ageing population and understand the risk it poses for future economic and political stability.