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Business/Finance See other Business/Finance Articles Title: The White House Doth Protest Too Much The White House Doth Protest Too Much New Issue Posted 5 Days Ago By Dave Gonigam Print Resize Text •What politicos say about the “strong dollar”… and what they do •Five years of weak-dollar policy: How much longer, and how should you trade it? •The American club the Germans can’t crack (or anyone else) •Best year for U.S. startups in 20 years, and how you can grab early startup profits •Dollar down, but oil and gold don’t benefit… a reader’s plight wiring money overseas… an important question about the IMPACT system… and more! Either the president put his foot in it… or an anonymous French bureaucrat wanted the president to put his foot in it. Says an official White House statement: “The president did not state that the strong dollar was a problem.” Mr. Obama is hanging out today with the other G-7 leaders in the Bavarian Alps. Early in the day, “a French government official with knowledge of the G-7 discussions” — that’s Bloomberg’s description — said the president described a strong dollar as “a problem.” If, indeed, that’s what the president said, the context is fuzzy. The Bloomberg report alludes to “geopolitical risks” including Greece creating “volatility on financial markets, affecting interest rates and currencies.” Whatever. The point isn’t whether the president said it. The point is that a weak dollar is U.S. policy. Not that anyone will say so publicly. No sirree. No matter the strength of the dollar relative to other currencies in recent decades, U.S. officials always pay fealty to a “strong dollar.” It’s right up there with the proverbial motherhood and apple pie. Said Treasury Secretary Jack Lew in January: “The strong dollar, as all my predecessors have joined me in saying, is a good thing. It’s good for America. If it’s the result of a strong economy, it’s good for the U.S., it’s good for the world.” Said Lew’s predecessor Tim Geithner in May 2011: “Our policy has been and always will be, as long as at least I’m in this job, that a strong dollar is in our interest as a country… We will never embrace a strategy of trying to weaken our currency to try to gain economic advantage.” Fact is, that’s exactly the strategy the administration has embraced since January 2010. That’s when the president launched Currency War III, according to our Jim Rickards. During a currency war, nations engage in competitive devaluations, each hoping to gain a leg up on each other. In his groundbreaking 2011 book Currency Wars, Jim said the world has experienced three currency wars in the last century. The first ran from 1921-36; during that period, FDR devalued the dollar against gold from $20.67 an ounce to $35. The second ran from 1967-87; during that period, Nixon cut the dollar’s last tie to gold. We’re now five years into the present one — which began with Obama’s 2010 State of the Union address. On that night, the president announced a “national export initiative” — aiming to double U.S. exports in five years. “The only way to do that was with a cheaper dollar,” Jim explains, “so the president’s policy amounted to a declaration to the world that the U.S. wanted other countries to let their currencies go up so the dollar could go down.” The policy did manage to raise U.S. exports close to 50% by late last year. But then the Europeans and Japanese launched their own devaluations. The dollar rose dramatically. U.S. exports have plunged in recent months. “The problem with currency wars is they last a long time — sometimes even 15 or 20 years,” Jim goes on. “The reason is they have no logical conclusion, just back-and-forth devaluations and revaluations as countries retaliate against each other. “Today, central bankers around the world are all fighting currency wars. In all major financial centers at once — from Washington, D.C., to Moscow to Beijing. This war is fought 24 hours per day, by bankers, traders, politicians and automated systems. The fates of economies and their affected citizens hang in the balance.” That makes it sound like you’re fated to be helpless observer, your finances at the mercy of the power elites waging this conflict that’s destined to go on at least another decade. But it doesn’t have to be that way at all. That’s the point of the IMPACT system Jim developed with his research team late last year and early this. It aims to help you seize on the up-and-down, back-and-forth dynamics of the currency wars for big gains in months or even weeks. “This proprietary strategy uses the very same secrets I helped develop for the CIA to predict terrorist attacks,” he explains. “Based on 20 years of back-tested data, IMPACT is the only way we’ve ever found that could have allowed you to profit an extraordinary 1,246% (or more) from currency wars.” Since mid-April we’ve offered a generous charter-subscriber discount. That discount expires at midnight Thursday night. You can claim your discount and start profiting from the IMPACT system by following this link. Major U.S. stock indexes are stumbling as the week begins. But the movement is meager. As we write, the Nasdaq is registering the biggest drop, down less than half a percent. The S&P 500 has shed six points, to 2,087. The dollar index has pulled back nearly two-thirds of a percent, to 95.8. But the commodity complex isn’t benefiting: Gold is nearly flat at $1,170 and crude is off 1% at $58.52. Treasury yields are pulling back a bit, the 10-year a shade below 2.38%. The market chatter this morning is all about Germany’s Deutsche Bank. Its New York-traded shares are up more than 5% after the co-CEOs turned in their resignations yesterday. If the elite media are to be believed, the changing of the guard suggests Deutsche Bank is giving up its aspirations to be an investment banking giant trying to keep up with the big five U.S. firms — JPMorgan Chase, Citi, Bank of America, Goldman Sachs and Morgan Stanley. In April, Deutsche Bank agreed to fork over $2.5 billion to the United States and Great Britain for interest rate rigging. It’s also kept sloppy books, especially with its derivatives trades. “Deutsche Bank has critical operational issues and management issues,” derivatives expert Janet Tavakoli tells The New York Times. “One cannot effectively manage risk — or measure the current situation — when internal paperwork and records are not in order.” It’s the pile of derivatives — $1.5 quadrillion by one estimate — that’s the focus of Jim Rickards’ new “House of Cards” thesis, which he’ll unveil at our one-day symposium here in Baltimore a week from Thursday. Stay tuned… Never let it be said we withhold good news: Now’s the best time for startups in America in two decades. We think a lot about startups and innovation around here — as you well know if you read our fearless leader Addison Wiggin’s interview series with Juan Enriquez last week at The Daily Reckoning. Here in The 5, we expressed alarm a year ago about a chart showing businesses going defunct faster than they’re coming into existence. That’s a big deal because it’s new businesses — less than five years old — that are the real job creators in the United States. Enter the Kauffman Foundation, the nation’s premier startup researchers. Their Index of Entrepreneurship zoomed up last year for the first time since the “Great Recession”” In this year’s index, 310 out of 100,000 adults are starting new businesses each month — a meaningful rebound. But don’t be too quick to break out the champagne. The index “remains tepid and well below historical trend,” as Kauffman points out. Startup activity grew in 32 of the 50 states. On Kauffman’s map here, darker blue means the strongest startup activity, darker brown the weakest. Looks as if the “American Redoubt” of Montana and Wyoming is the place to be. At the other end of the scale, presidential aspirant Scott Walker has some explaining to do. Kauffman also measured the 40 biggest metropolitan areas. The top six are Austin, Miami, San Jose, Los Angeles, Denver and San Francisco. Halfway between San Jose and San Francisco, our small-cap specialist Jonas Elmerraji spent part of last week checking out a “startup incubator.” “It’s a shared workspace for tiny new companies that provides access to resources like business planning and introductions to private investors,” he explains. “When you step into the facility, there’s no doubt that you’re in the heart of Silicon Valley. The ‘fun’ work culture is definitely there. They even have a slide you can take down to the first floor.” Quicker than the stairs… Several CEOs of these startups spoke to investors at the incubator last week. “More than half a dozen execs pitched their businesses to the audience,” says Jonas, “and I’ve got to admit, there was definitely a lot of ‘wow factor’ at some of the newer additions.” Jonas is withholding details for the moment: Readers of Penny Stock Fortunes will get the scoop first. For months now, they’ve owned shares in a firm that invests in high-tech startups. “On average,” he says, “its portfolio of small, private companies grew sales by more than 140% last year, which is really quite a feat.” Wouldn’t you like to own a piece of these firms long before they go public? Jonas tells you how to seize the opportunity right here. “We have absolutely lost our basic rights,” a reader writes after our latest exploration of the arbitrary Operation Choke Point. “My son and daughter-in-law live in India. I have been sending them money via Western Union. “Last Sunday, I received the nastycall from Western Union that they longer wanted to do business with me. After numerous calls and emails, they will not tell me why, and they keep asking me to send them more and more information. “I have done nothing wrong. All I’m doing is helping my son get established and start his own business. “Apparently, I am now guilty until I can prove I’m innocent. “I can’t tell you how disappointed I am in our government and how they treat us citizens.” The 5: So let’s see if we’ve got this right. Your family is vigorously engaged in globalization, as the financial elites tell us we should all be, and you’re being punished for it? Say it ain’t so! Seriously, you have your sympathies. We wish you luck getting a satisfactory resolution. Best regards, Dave Gonigam The 5 Min. Forecast Post Comment Private Reply Ignore Thread
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