The former CEO of Goldman Sachs, our Secretary of the Treasury, Hank Poulson, is asking for nearly a trillion dollars from all of you to bail out his friends on Wall Street. But this grab of power and wealth may end up being far bigger than you think. One hint at the vast goals of the banking special interests is found in this MSNBC story :

In Washington, Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Securities and Exchange Commission Chairman Christopher Cox appeared before Congress Tuesday morning to update lawmakers on the bailout plan, which would take hundreds of billions of dollars in bad mortgages and other risky assets off of banks' and brokers' books.

The Treasury Department's first draft said that only mortgage-related assets would be purchased. But in a later version, the Treasury secretary asked for the power to expand purchases to troubled assets beyond real estate.

That would conceivably leave taxpayers picking up the tab on things like bad car loans and credit card debt. 

The Constitution was meant to severely limit the power of government and to prevent power grabs and insane spending. Where does it authorize a Cabinet member or a central bank to manipulate the markets in this manner? Where is anyone on government given authority to bail out the businesses of their friends with your money?

This is the end of financial freedom and liberty if we do not oppose it. Call your elected officials today and demand that they oppose this power grab and theft by the insiders of the Bush administration. 

The Carbonite backup service is handy, but there are some limitations you need to know about. First off all, let me point out that there appears to be no meaningful tech support. I've run into several issues and have submitted questions through their Web site several times in the past couple of months, with no answer as far as I can tell. Checked spam filters, etc., without a trace. So don't expect help, I guess.

The Carbonite service can play mild havoc with your basic Windows Explorer program, at least under XP. Strange things have occurred, such as Explorer replacing file dates in Details view with Carbonite backup status. And when files names are edited or photos in an album are rotated, Explorer automatically refrehses the window and takes you back to the beginning of the list of files, which can be a real pain when working with large folders. I think Carbonite is what brought on this behavior - I think it's related to its tracking of the status of every file and distinguishing between what needs to be updated and what doesn't.

You may also find that what you really want is an older version of a file you're overwritten with a file error or lost data, and then you may find that by the time you go to Carbonite to get the old file, it's already been overwritten with the messed up one. This should motivate you to frequently change file names, and if you've just made a huge error, quickly change the file name before Carbonite overwrites what it already has.

But for the backup service they provide, it's easily worth the $50 a year I'm paying. Overall: good service, with a grade of B. Could be A if technical support responded within 24 hours.

It's amazing how blind companies get when trying to save a few bucks on customer service calls. I tried to work with Best Buy this past week to fix a problem with my RewardZone account. In the most recent problem, I had to be on hold for maybe 15 or 20 minutes before a human came online. She asked for my phone number, then put me on hold again. I exercised, answered email, etc., during this time, but after 30 or more additional minutes, it was just ridiculous and I gave up. Bad customer service for supposedly "premier" customers sends a pretty strong signal. I was trying to buy a computer for my wife tonight, but with their inadequate customer service leaving my RewardZones problem still not fixed (contrary to the results of last week's call on this issue), I'll be thinking about other vendors.

Update: BestBuy actually did follow through and I did get a response to my email inquiry. They fixed the problem for me, and I did end up going back to Best Buy, RewardZone certificates in hand, to get the computer my wife needed. Just wish customer service centers were easier to reach, but they did work to respond electronically and the problem is fixed now.

Here's an article I strongly recommend: "Why Oil Speculators Are Your Friend" by Steve Maich in Macleans, June 25, 2008. It discusses the stabilizing impact that investment in oil futures has, and explains why Congress is misguided in blaming mysterious "speculators" rather than the real sources of the oil crisis. 

As oil prices escalate, Congress is looking for a scapegoat to blame and punish. Oil companies, the people who produce the much-needed commodity of oil, are easy to blame. The solution of Congress is to punish the producers with taxes and regulation, one of the worst moves possible if the goal is to reduce the price of oil. No rocket science here: adding taxes increases the price, and punishing producers discourages future production and exacerbates the shortage.

Speculators are the most trendy scapegoat at the moment. Leftist and arch speculator George Soros appeared before Congress earlier this year and accused oil speculators for the prince increase. Is it possible that Soros is shorting oil and would benefit hugely from Congressional action to temporarily force down the price of oil? Congress has taken up Soros' call and begun blaming "speculators" - i.e., investors in oil futures - for the price increase. They've got to blame somebody besides the real culprits, because Congress themselves are among the leading suspects.  The high price of oil and our dependence on oil is due in large part to Congressional actions that have halted American drilling of our abundant oil resources, and halted production of nuclear power that could truly liberate us from dependence on foreign energy. To avoid the burden of expensive foreign oil, we need to drill more - we have vast resources - and create more inexpensive nuclear energy. We also need to allow refineries to be built - none have been built for about 30 years because of impossibly expensive regulatory burdens.

We also need to recognize that the ravished dollar is a major factor in the rise of commodities, and the finger must point to Congress and the Fed here. Runaway spending and printing of vast amounts of currency have crippled the dollar, making oil and almost everything more expensive. Congress is a big part of the problem here.

Here is an excerpt from the Macleans article:

The bogeyman of the shadowy speculator may be a politically expedient myth to win votes. But it's also a diversion from the truth about our energy markets.

Consider a little recent history. Back in July 2004, with oil prices at US$42 a barrel, analysts at PFC Energy warned clients that prices were too high to be sustained, and that speculators were playing "a key role" in driving the market. By March, prices had climbed to US$56 and Steve Hanke, professor of applied economics at Johns Hopkins University and a world-renowned expert on commodities trading, said "we're in the late stages of a bull market that's about to collapse" driven by reckless speculation. In what must be one of the most regrettable forecasts of his distinguished career, Hanke predicted oil would fall to about US$10 a barrel within months. By September, oil was at US$66 and Republican Senator Pete Domenici called for a gasoline act to protect consumers from "profiteers and speculators" driving prices to excessive and irrational heights.

This recurrent theme has been with us since long before George W. Bush sent U.S. troops into Iraq, and has only gained volume as the price has risen. But ask a consumer to set a "fair" price for oil, and their answer will always be about 30 per cent less than we're paying today. When oil was $60, people thought it should be $40. When it was $100, then $70 seemed reasonable. Today, most would welcome a drop to $100 a barrel. The underlying assumption never changes: if only the millionaire manipulators and fear mongers would go away, we could afford to fill up the ol' Hummer again. The only thing the oil market has to fear is fear itself.

But fear, in this case, is not an artificial paranoia, stoked up by shady conspirators in some Wall Street back office. Fear is a real, fundamental and quantifiable element of the oil price. We are talking about a finite resource, upon which we are extraordinarily dependant, and the bulk of which lies buried beneath unstable and often hostile nations. Geopolitics, terrorism, natural disasters and old-fashioned nationalist antipathy are all factors that can and do have serious implications for the stability of supply. The "fear premium" isn't a sham. It's real and it's rational.

In that sort of environment, speculators aren't the enemy. In fact they play an essential role in the market. Speculators make predictions about the future direction of prices and buy futures contracts, either to protect themselves against rapid price swings or to make a profit. If their predictions are wrong, they lose a whole lot of money and that's their problem. But if they're right, then they actually reduce volatility by helping to factor future risks into the current price. As Kevin Hassett, director of economic-policy studies at the American Enterprise Institute, wrote recently, "their activities are stabilizing. Speculation is good." Mark Perry, a professor of economics and finance at the University of Michigan, puts it another way. "Speculators don't determine market forces, they respond to market forces of supply and demand," he wrote recently. "Speculators can't be blamed for high oil prices."

 

Just flew Frontier Airlines for my first time, the airline whose central hub is in Denver. Low cost but excellent. Reasonable space for my legs (I'm very tall and often struggle to keep my knees from getting banged up), friendly staff, and both flights arrived early. Most impressively, we took the high risk of checking a cello in its case from Salt Lake City on its way to Milwaukee, via Denver. While waiting nervously at the baggage claim in Milwaukee, we were pleased to see an employee hand carry it to the baggage office instead of having it sent through the baggage carousels where things can be mercilessly bumped and knocked around. Maybe other airlines do this, too, but we were really impressed with the little touches we encountered. Thanks, Frontier!

Here's an interview with one of the rising gems of the Hmong community, Kao Kalia Yang, author of The Latehomecomer:

There are some great bargains in the stock market right now. Here are a few to think about:

Endeavour Silver (EXK) - great junior producer with mines in Mexico making money and growing. Market has fled from silver shares recently, an overreaction. Get EXK under $3.50 and hold it until silver hits $25-30. Then sell 30% and keep holding, unless there are signs of political craziness in Mexico.

Silver Standard Resources (SSRI) - vast holdings and mines coming into production. Cheap.  

Ceradyne (CRDN) - ceramic expert making protective armor and ceramics for manufacturing and solar power. Market has fled thinking that we will be giving up on war and war contracts. Great time to buy.

Crocs (CROX). They were trading at nearly $50 a few months ago and have plummeted to $11 and a P/E of about 6. For a brand that still has a lot of recognition and enforceable IP, that's insane. Yes, there is competition - but it's been prized in several times over. Crocs is a steal at $11.

Orion Energy Systems (OESX). Booming green business making lighting more energy efficient for many customers. Growing and very creative, with rich intellectual property. I've met Neal Verfurth and greatly respect his vision and accomplishments. Brilliant. I've also toured their manufacturing facility near Manitowoc. Wow. Innovation at every turn. I'm impressed. Bought some at $13 in January, and bought again at $8 after Wall Street punished OESX for not playing their short-term focus games (my opinion of what happened). This is one for long-term growth and real market leadership. Get it under $13 while you can. 

Celgene (CELG) is  still a favorite among pharma/biotech leaders, along with Sangamo Biosciences (SGMO). Both are cheap now. 

Other recommendations: Dennison Mines (DNN), Flotech (FTK), and either Frontier Oil (FTO) or Marathon Oil (MRO) for a cheap refiner.  

 

Location is everything for those who invest in mining companies. If a company is operating in a Marxist state that might seize your assets or add punitive taxes on a whim, it's best to not invest. Venezuela just wiped out the value of several mining companies (e.g., KRY) by moving toward nationalization of mines. Investors in Newmont Mines (NEM) should consider the risk posed by Ghana, where 20% of Newmont's reserves are found. The government in Ghana is not one to trust, and all the wealth of that mine must be looking awfully tempting about now. Gold Fields International (GFI) investors should also worry, for 28% of GFI production is in Ghana, not to mention 49% in Marxist South Africa which could get greedy any day. If you own NEM or GFI, I suggest selling and looking for something safer, like Kinross Gold (KGC) or Agnico-Eagle (AEM), as well as Silver Wheaton (SLW).

A hat tip to Casey Research and the Big Gold Report for the info on Ghana. 

Biotech investing is fraught with pitfalls. One of the best discussions of what a sophisticated investor should look for is Adam Feuerstein's article, "How to Review Biotech Clinical Data." He exposes some of the data trickery used by Introgen in a recent scientific presentation. Major red flags! If you don't want to look at actual data, you'll need to rely on third parties like Adam Feuerstein to tell you who's playing fair and who's not. He does mention Celgene  (CELG) as one of the good guys, and I fully concur. They are my favorite biotech with an incredible pipeline, excellent patents, and strong technology. I also like Sangamo Bioseciences (SGMO) with their zinc-finger proteins that I see as revolutionary.

I gave up on GTCB recently (sold when they briefly rose above $1, breaking even) and took a small position on ENZ because I think the sell-off over a patent problem was overdone. But Celgene is my major position and a great play for the future. 

In other areas, I think this is a good time to add OESX (Orion Energy Systems) to your portfolio. I recently toured the factory and had a wonderful interview with the CEO that I'll be writing about in the future, and I'm solidly impressed. Get it under $12, if you can. 

Also a good time to get into Dennison Mines (DNN), Endeavor Silver (EXK), Sterling Mines (SRLM.ob), Ceradyne (CRDN), refiners like FTO and MRO, and the oil services company, Flotec (FTK).  All cheap!!

GATA (the Gold Anti-Trust Action Committee at GATA.org) published a full-page ad in the Wall Street Journal documenting manipulation in the price of gold and the possibility that central banks are grossly overstating the amount of gold they hold. It appears they have been selling for some time to manipulate the price down to prop up fiat currencies. When word gets out on just how scarce gold is, the price could move strongly upwards. Take a look at the ad (click on the image on the left-side of the GATA page in this link) and check out the references as well. Sobering information!

Denison Mines, a leading mid-tier uranium producer with properties in the US and elsewhere, has surprisingly descended from a high over $15 down to under $7 a share right now. Given the steady demand for uranium and its high price of almost $90 per pound, Denison is well positioned for growing profits in the future. The sell-off strikes me as utterly irrational. Thus, it is with great pleasure that I present you with my stock pick of the week, Denison Mines (DNN). It's $6.59 as I write. This could be near the low, according to my instincts (hah! - it's just a gut feel, of course). Consider adding DNN to your portfolio today. Options are also available. If you buy now, I suggest a target price of $12 within 16 months to sell half, and keep the rest with a target of $20 in 3 years. 

Another grossly oversold top-notch company is Frontier Oil (FTO), an excellent refiner. Down way too fast. I think it bottoms near 31 and heads above 50 by summer. But hold for my 2010 target of $70. 

And don't forget gold, silver, and some leading mining stocks like SLW, EXK, SRLM.ob, KGC, and AUY.