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Germany/Berlin

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12 top Thoughts on

Berlin/Germany Trip

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  • More outdoor Cafe’s than Paris – Wide sidewalks.
  • Phenomenal tram/train system – Moves millions each day
  • Lots of Graffiti – Origins from Berlin Wall – Most of it art work, but lots trash.
  • No slums – I couldn’t find any in 9 days.
  • Absence of smog – From vistas you can see for miles without cloudy brown scum.
  • Forest in center of city and each major neighborhood has huge park – Mine has a Beer Garden in the center.
  • Beware of cyclists (lots) – Separate bike lanes everywhere. – Germans obey pedestrian signals
  • Streets/parks are safe to walk anytime (Homicide rate 6X less than USA)
  • Most expensive baby carriages I’ve ever seen. Lots (More on German Health care later)
  • Best behaved dogs (mostly smaller) I’ve ever seen – But beware it takes a day/two for them to cleanup dog poop.
  • You can carry open beer anywhere (Street/tram)
  • Large immigrant population (@12% like USA) Like USA they seem to be second class citizens.

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Mucho Thanks to my

pregnant daughter and her guy

for hosting/putting up with me.

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I understand why you chose

Berlin as a place to live.

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Standard German joke – The German police discharged their weapons 87 times (low crime rate) last year – Once at a fellow German and 86 times at Greeks.

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STOCKS

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This month’s Atlantic Magazine

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Why The USA has tools to Fix

Its Economy and

Europe Does NOT

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The Answer lies in the

Activist Fed Bank

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Both the European Central Bank (ECB) and The Fed have the power to set interest rates. The singular difference in this case is the Fed has creatively/controversially printed money to solve/paper over our fiscal/banking crisis.

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Over $7 trillion – Detractors

$2.9 trillion – The Fed

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It’s why you often

see this cartoon of

Helicopter Ben


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  • As a stock investors/trader you have to give Bernanke/the Fed lots of credit. Every time they have directly stimulated the economy/printed money -QE #1 & 2, Operation Twist, (and other ways) stocks have gone UP
  • Also, along with the Obama stimulus/tax cuts and other measures, GDP has gone from from a -8.9% to a relatively steady +2%.

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The Case against Fed Intervention

Inflation

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  • The Fed’s critics (mostly far right)  starting with TARP have screamed INFLATION will come -
  • Examples – WSJ (The Bond Vigilante editorial) MS (5.5% inflation by end of 2010) Bond King Bill Gross, S&P downgrade of AAA rating, of course Republicans, especially Ron Paul.

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Problem is year after year

They’re WRONG

NO Inflation has happened

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  • Consumer Price Index (CPI) measures inflation and it stands at @2.3%. Our 10 year T bill stands at less than 2%.
  • Our dollar is a bit weaker (you could argue that this is good for the USA) but by no means has it melted down. (currently moving higher)
  • DEBT – One reason our Debt is not a Clear and present Danger is that if you adjust for the rate of Inflation 2.3% and how we pay for debt – 10 year Treasury bonds >2.0% (shorter term Treasuries even LESS) we are actually paying down the debt by at least +0.3%

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The EU’s Problem

Unlike our Fed

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No Direct Intervention

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  • The EU has economically sound countries and its PIIGS – The S in PIIGS stands for Spain
  • I in PIIGS stands for Italy (EU’s largest economically unsound country). It’s debt is @120% of yearly GDP (ours @100%)
  • Italian bonds costs Italy (according to Megan MeArdle in this months Atlantic) 5% of GDP each year,
  • Japan with more than a 200% debt/yearly GDP ratio has a more interventionist central bank. Japan had a 1.0% growth in GDP last quarter (smaller than USA, but more than Europe)
  • Japan has had low interest rates for a decade so debt is manageable. (There is a case for higher interest rates – but that’s another editorial)

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Bottom Line

Other problems have

NOT been mentioned

But

If the ECB does NOT institute

more direct intervention

Remember What happened to the

Dodo Bird?

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PAUL’S Corner

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[Sorry this was supposed to run on Friday, but there was No 411 in Friday (Editor)]

As we take off a few days for the 1st official weekend of summer let’s take time to remember our fallen heroes and all of the men and women who have served our country.

A quick review of the charts we find the following stocks from YSL are looking decent and should be watched once this correction is over.

DDD

DLTR

HD

LEN

MNST

TSCO

From the April List

FL (for you Jim)

SWI

AKRX

A few extras to watch

BNNY

ITB

MDVN

ROST

XHB

TNGO

SPB

PATK

AVD

Disclaimer – you know the drill, any stock mentioned is for education only and if you buy any of these dogs…..


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Investors411 currently focuses on the yield of the Spanish 10 year bond as our canary in a cold mine. In a globalized world this rate strongly impacts Europe and less strongly, but significantly the USA. The rate would have to close back below its support at 6.31% for 411 to consider a NEUTRAL upgrade.

Currently you can find the Italian 10 year bond rate here Last look at &:00AM EDT it was 6.46%

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Longer Term Outlook

3 months+

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CAUTIOUSLY BEARISH

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AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

ALL TRADING INVOLVES RISK & POTENTIAL LOSS OF PRINCIPLE

CHECK ALL DATA, I MAKE MORE THAN GRAMMAR  ERRORS.

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