Britannia Radio

The Daily Reckoning Weekend Edition Saturday, October 16, 2010 Montevideo, Uruguay ------------------------------------------------------- "Unhappy China" and the unrelenting march of the downtrodden, Is the "Spirit of 2006" leading us on a path to war? Plus, all this past week's reckonings, neatly archived to read while sipping your weekend mate (mah-tay) and more... --- Brand New Report from Technology Profits Confidential... --- Expert Researcher Breaks His Silence To Reveal a Chance at FIVE Generations of Wealth... The next decade will change everything. In government. In the markets. In science and technology. Will you be ready for it? This shocking new presentation reveals how you could turn the next decade into a 5-generations wide stream of wealth for your family. It's fast, easy, and cheap. Start your shot at wealth by watching the presentation, right here. ------------------------------------------------------- Joel Bowman, from somewhere along a long, dusty road in Uruguay... War, children, it's just a shot away It's just a shot away (hey)... - Rolling Stones, "Gimme Shelter" Reading through the history of this rich, fertile land, we are at once inspired and saddened. The Uruguay of today is a peaceful, largely prosperous country...but this was not always so. From their struggle for independence from colonial Spain through to the modern, largely secular political landscape of today, this tiny land, wedged between Portuguese-speaking Brazil to the north and Spanish- speaking Argentina to the west, has endured the extremes of social unrest; The Guerre Grande (Civil War of 1839-52), including a nine year siege of the capital city, Montevideo, followed in quick step by the War of Triple Alliance just a few years later. Fleeting periods of peace were routinely corrupted by the pursuit of competing interests, both from abroad and from within. Even as recently as the 1980s the country suffered emergency military rule and found itself under a perennial state of national emergency. Guerilla-style combat, indefinite suspension of civil liberties, political coups and economic crises were the norm. Indeed, Uruguay's past is a colorful one, tainted with the blood of tyrants and enriched by the struggles of her patriots. In other words, it is not so different from almost any country on earth, where periodic, mass upheaval casts otherwise reasonable citizens into the dark, unthinkable din of war. Walking around the forts and barracks of the portside town of Colonia del Sacramento (itself having been under the rule of no less than twelve different thumbs during the past three centuries), we are reminded that man - fallible, imperfectly evolved man - is seldom more than a few generations away from such unimaginable conflicts. The question for today's edition of The Daily Reckoning, therefore, is not if we are headed for another, but when? Please enjoy our special guest essay, penned by Ton Coumans, below... 1914 All Over Again? By Ton Coumans I am not one for art, statues or monuments. Most of these objects fail to touch me but every now and then I bump into something that sticks in my mind. Last summer I was drawn to the monument in the picture below, which stands on a square in Nevers - a beautiful city on the river Loire in France. I spent quite a long time studying it and I eventually took some pictures that, for some reason, I regularly review at home. You will have recognized that this is a monument commemorating the tribulations of the First World War. There is a lot of symbolism in the statue but it is the French soldier's sorrowful stare that won't let me go. What trauma has he lived through? France eventually battled its way to an armistice (not victory) in 1918 after having incurred 1.7 million dead (one in 28 of the population) and over 4 million wounded. Everyone will see something different, but for me this monument is whispering; my God, what have we done? The uncanny thing is that before the outbreak of World War I, most Europeans expected the future to provide an endless stream of good fortunes, to the point of being bored by the prospect. In fact many soldiers such as the one represented by the statue, just four years earlier, were swept up by the bizarre spirit of 1914 that took hold of the peoples of Europe. The "Spirit of 1914" which seems to have infected the passions of most of the European populations is described as a reckless urge for adventurism under the flag of nationalism. Young men in all countries volunteered to leave their prosperous lives behind and take up a fight with their European neighbors. It is difficult to comprehend the spirit of 1914. All those men lusting for adventure and the glory of battle and no one was sensing danger. There were only a handful of people, too few to sway the opinion, that realized what lay ahead. A useless and long-forgotten quote by one of them reads: "If the scientific nations of Europe were to wage war on one another they would be thoroughly sick of it before it was finished". That quote is by Sir Winston Churchill who at the time was 37 years old and First Lord of the Admiralty. He had seen the power of artillery and machine guns in the Sudan and the Boer War and repeatedly warned against armed conflict in Europe, to no avail. Europe had been at peace for 40 years and the millions of men that charged off to battle had no way of being able to imagine what war would be like, until they found themselves mugged by reality and stuck in the horrors of trench warfare "In Flanders Fields". That was obviously not where they had wanted the free market to take them, as Bill Bonner might assess. Nemesis, the Goddess of divine retribution, had finally found a way to sink her teeth into Europe, having waited patiently in the background during the 40 years of the Belle Epoch. The question now is, do we stand at a similar point in history where we expect the future to provide expanding, effortless wealth, and have we been swept up by the spirit of 2006; flipping houses and living high on mortgage equity withdraws and debt? Does Nemesis have a special surprise for us and what could that be? We are in a global de- leveraging process, which is painful, but is it, in itself, truly destructive? I contend that if we are to "fall deep" there will need to be some kind of major breakdown of cooperation or even "conflict amongst peoples" resulting in a major lose-lose event that sinks the physical economy. What could that be? In the run up to WWI, an influential book was written by General Von Bernhardi titled Germany and the next War. The book manifests Germany's frustration and militancy. Von Bernhardi proclaims that, with her scientific and intellectual achievements, Germany should have a more prominent role in world affairs, more colonial trophies with access to petroleum reserves. Germany's GDP had passed that of Great Britain and France and they now wanted more respect. France and Great Britain were maneuvering as best they could to keep Germany (a perceived threat) out of the game. Bernhardi's book also argues that war was not only a justifiable means to achieve that goal but even an obligation of Germany's leadership. And now in 2009 we witness the wide distribution of a book titled Unhappy China, which expresses China's frustrations with their current position. The similarity in tone is uncanny. China is on its way to become the second economy of the world, yet China is not "embraced" as a member of the G8 and has almost no influence in the IMF and World Bank. China is frustrated with the West's meddling in internal affairs and with the humiliation endured by the Olympic torch run that was, in their perception, disgraced by demonstrations. All the maneuvering by the West now is to keep China out of the game and treat them as a potential threat. Does this have automatic conflict baked into it? All out "kinetic" war does not seem realistic and more something of the past century. We have since organized the UN Security Counsel to regulate conflicts involving the use of force. But do we have adequate global institutions for monetary policy? I judge that today every government and their symbiotic Central Bank feels they have the right and obligation to use monetary policy to the advantage of their own short-sighted wealth preservation and power games. Could the conflict of the twenty-first century revolve around currency wars? Should we rephrase Churchill's warning to state, "If the financially developed nations of the world were to wage a war of competitive currency devaluation on one another, they would be thoroughly sick of it before it was finished". Could competitive currency devaluation be the bear market surprise mechanism that pits countries and peoples against one another? The First World War is remembered for the senseless slaughter of trench warfare. Will this period be remembered for disruptive impoverishment of currency warfare? It does seem to have the potential to breed distrust and breakdown cooperation between the nations. It also has a runaway nature since it invites tit for tat exchanges. It is inherently instable because the currency that moves first and fast could have the advantage. But does it have the destructive power to sink our global physical economy? Let's hope that some years from now we will not find ourselves sorrowfully staring at the horizon and whispering; my God, what have we done. Regards, Ton Coumans for The Daily Reckoning --- Mayer's Special Situations' New Report... --- American Nuke Bomb LOST under Ancient Ice Fields... Way back in 1968, an American B-52 crashed in northwest Greenland... Unfortunately, the nuclear bombs on board got forever swallowed by an ancient ice sheet... But there's an unknown penny stock set to rise 2,000% from this sorry situation. Sound unbelievable? Watch this presentation for proof... ------------------------------------------------------- ALSO THIS WEEK in The Daily Reckoning... Opportunity in Ecuador By Ronan McMahon Waterford, Ireland My name is Ronan McMahon. I'm a real estate investor. I specialize in hunting down real estate in the world's emerging economies. But right now, I'm looking at opportunities in three distressed markets: Ecuador, Ireland and Nicaragua. A Global Grain Powerhouse By Chris Mayer Gaithersburg, Maryland The appeal of farmland as an investment is pretty clear in a market in which clarity on anything is hard to find. It starts with one basic premise: The global population is expected to reach 8 billion by 2030. There are certain inevitable outcomes we can take from this. The most reliable is that we'll need to produce a lot more food. Biotech, An American Success Story By Patrick Cox Marco Island, Florida BioTime Inc. (AMEX: BTIM) announced a breakthrough agreement with Big Pharma. Israeli pharma giant Teva Pharmaceutical Industries Ltd. and BioTime's majority-owned Israeli subsidiary Cell Cure Neurosciences Ltd. have entered into an exclusive license option agreement. Together, they will develop and commercialize Cell Cure's Regen for the treatment of age-related macular degeneration. The Really, Really Long Bond By Ian Mathias Baltimore, Maryland For the time being, income investors are probably better off being owners than lenders. Many solid US companies are paying dividend yields of 2%, 3% and 4%. Short-term corporate bonds, meanwhile, yield next to nothing. The bond market is getting nuttier by the day - offering ever- lower interest rates at ever-higher risks. The recent spate of 100-year bond issues illustrates the point. Plaza II By Bill Bonner Buenos Aires, Argentina Peace talks broke down last weekend. Observers had expected the IMF meeting on the weekend to result in the equivalent of the Peace of Amiens or the Surrender at Appomattox. But Treasury secretaries and central bankers went home, unpacked their bags, and resumed their premeditated mischief. --- A Penny Stock Fortunes Presentation... --- ------------------------------------------------------- The Weekly Endnote: Before we leave off for the weekend, we wanted to make sure you received the email Patrick Cox sent to the Agora family on Wednesday. He and Ray Blanco have spent the past couple of years putting together an in-depth transformational technology report, detailing the coming wave of investment opportunities in that space. Anyway, the report was emailed around on Wednesday and, as our publisher, Joe Schriefer wrote yesterday, "is already throwing off sizable gains." Just to give you an idea of the kinds of stocks Patrick and Ray are monitoring, here is the two-year performance of BioTime Inc., a tiny stem cell outfit they recommended to readers back in '08. Not bad, eh? Anyway, in case you missed their email, or deleted it by accident, we've posted their report online for your consideration. Check it out here. Enjoy your weekend. Cheers, Joel Bowman Managing Editor The Daily Reckoning P.S. By the time you read this, and if all goes according to plan, your editor will have arrived safely in Uruguay's capital city of Montevideo. If you happen to be in town and want to catch up for a drink, drop us a line at the address below. (Hey, don't laugh...we once met up, by sheer happenstance, with a Canadian reader who lived with his wife Philippine in Cambodia while on vacation to Nepal. Seems that wherever we go in this wide and wonderful world, Fellow Reckoners are on the case, hunting down opportunities and experiences. Kudos!) ------------------------------------------------------- Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at joel@dailyreckoning.com The Daily Reckoning - Special Reports: Gold: The Truth About Gold Fiat Currency: Using the Past to See into the Future Have You Heard of the OTHER Government Backed "Pension Program?"

AGORA Financial Resources: The Daily Reckoning Is: Economics & Politics Crisis & Opportunity Gold, Oil & Energy Growth, Tech & Medical Options Investing Founder: Bill Bonner Editorial Dir: Addison Wiggin Publisher: Eric Fry Managing Ed.: Joel Bowman Web Ed.: Greg Kadajski About The Daily Reckoning: Now in its 10th anniversary year, The Daily Reckoning is the flagship e-letter of Baltimore-based financial research firm and publishing group Agora Financial, a subsidiary of Agora Inc. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas. Published daily in six countries and three languages, each issue delivers a feature-length article by a senior member of our team and a guest essay from one of many leading thinkers and nationally acclaimed columnists. For additional articles and commentary follow The Daily Reckoning on Twitter and Facebook.