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Unprecedented Economic Risk: Stick to Multinational Investments

What USA investors might make money in for the rest of 2008 and up to October 2009.

Short positions in a portfolio of USA common stocks to be covered in October 2009 might work out with a gain. We think the factors mentioned by Joe (above) and higher USA interest rates will push down common stocks to lower P/E multiples. A USA depression would push them down more as sales fall and profits do to.

Next, some one year to mature date in USA dollar bonds would save some money to invest starting in late 2009 as world markets and economies start to recover losses and begin growing again.

Some funds can be placed in gold and gold mining companies,

Some money can be placed in Swiss Franc short term notes.

We are looking to preserve and augment USA $ wealth until October 2009 at which time we will switch to long positions and more stock investments and fewer bond positions.

Wall Street Breakfast: Must-Know News

Today's "Must Know" news presents news appropriate to the moment.

1. MER got itself into a financial mess by ignoring the basics of the business cycle. The Federal Reserve Bank runs short-term interest rates on USA dollars up until they exceed long-term USA bond yields. This causes those who borrow short and lend long to loose money as the market value of long bonds falls due to higher interest rates. Once that happens, the short borrowings can not be repaid with the proceeds of long bond sales. A cash shortage results at MER. Losses on sales and on the present value on the unsold long bonds in inventory must be reported.

This situation is particularly bad in this cycle because foreign investors are pulling out of the dollar and selling their long USA bonds and short USA notes. No one wants to take their places because the USA dollar is falling against foreign currencies.

Nokia is in the same position as USA companies were in the past. As the Euro rises relative to other country currencies in which their products are sold, the financial revenues reported in Euros falls relative to costs of production also reported in Euros. And, non Euro competitors are happy to price cut against Nokia in Euro land keep their revenue in Euro and ride the currency up against thir own currency.

The cash hog situation is getting a lot of attention in US Congress lately. Why should corporate managers get big pay checks and etc for retirement packages voted to them by the board of directors they over pay and hand pick based on their willingness to channel company funds to the president that brought them on board.

Basic truth is that big cash balances are evidence that top managers is incompetent and should be fired fast. Cash should be paid to share holders so they can invest it, to buy companies with good products, and to support in house invention and product development and marketing

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