HIDDEN VALUE

Dear Value Seeker,

Yesterday, the “Big Three” automakers came to Washington with a plan: ask for even more money.

GM wants $18 billion, with $4 billion for December’s bills.

Chrysler says it needs $7 billion in the next few months.

Ford is after $9 billion…but only as a precaution. It feels pretty confident it can make it without help.

After all, Ford’s sales fell only 31% year-over-year in November. GM and Chrysler both saw sales for the same period tumble by over 40%.

In exchange for $34 billion in taxpayer money, the automakers promised major restructuring, reduced labor costs (that’s right, it’s promising to fire employees in return for taxpayer backing) and the sale of some product lines.

The CEOs even said they would even work for $1. (Never mind that their salaries only make up about 10% of their overall pay packages.)

But decades of waste and mismanagement aren’t forgotten

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One of the biggest fears today is that the US is entering a Japanese-like slump that could last a decade. But Justice Litle says we have learned the lessons from that crisis. This time, the government fears doing too little, but gives little thought about the risks of doing too much. And this is why we should be more scared of one day ending up like Zimbabwe…

This from Taipan Publishing Group:

The world is clearly afraid that “Great Depression 2.0” could be at hand. Downturns come and go, but the global economy as a whole hasn’t contracted since the 1930s. Some think it could happen again next year.

We hear less about it in the news, but there is another fear that keeps investors up at night – the off chance that America turns into Japan.

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The short-term path of gold is still unclear says David Galland. But its a good sign that demand for physical gold soars when prices tip towards $750 an ounce. And this threshold is likely to creep upwards as the US dollar loses its worth, and foreign governments convert currency reserves for the precious metal.

This from Money Morning:

Of late, I have read a number of analysts, Jim Rogers even, who have expressed the view that gold could dip to the mid- to low $600 level.

It could happen, but I think not. Already, buyers of physical gold are finding anything near $700 to be cheap and are helping to build a floor under the monetary metal. On that topic, a friend sent this item along recently:

(Gulf News, Nov. 12) Riyadh: There has been an unprecedented demand for gold in the Saudi market recently, with over 13 billion Saudi riyals ($3.47

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We expect stock prices to remain volatile and susceptible to headline risk. Moreover, depreciation of many foreign currencies relative to the US$ is depressing US$ stock prices. Combined with the grim economic outlook for many economies ranging from outright recession in developed economies to slowing growth in emerging market economies, we expect share price performance to continue to weaken.

As in the US, non-US bank stocks have been hammered this year due to the financial problems that began in the US subprime mortgage market and spread globally to engulf many major financial institutions in most countries. The median stock price decline for non-US bank in the Zacks' universe is 57.5% compared to a loss of 42.1% for the S&P 500. This includes median price declines for non-US banks in the Zacks' universe

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Global stocks decline as gloomy economic news flow resumes… Euro zone services activity falls to a fresh record low… Central banks expected to cut rates aggressively… MSCI World stock index down 0.4 percent

A tentative rebound in global stocks spluttered on Wednesday while euro zone government bond yields hit a three-year low as gloomy economic news highlighted the case for more aggressive interest rate cuts in Europe this week.

The euro stayed on the backfoot and oil held near a 3-1/2 year low a day before the European Central Bank, Bank of England and Sweden’s Riksbank are all widely expected to cut borrowing costs.

Supporting those expectations, economic reports on Wednesday showed the euro zone’s services economy fell deeper into recession in November than initially thought and inflationary pressures eased.

“This is a horrible survey across the board, showing that the euro zone service sector is being hit ever harder

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By David Galland Editor, The Casey Report Of late, I have read a number of analysts, Jim Rogers even, who have expressed the view that gold could dip to the mid- to low $600 level. It could happen, but I think not. Already, buyers of physical gold are finding anything near $700 to be cheap and are helping to build a floor under the monetary metal. On that topic, a friend sent this item along recently: (Gulf News, Nov. 12) Riyadh: There has been an unprecedented demand for gold in the Saudi market recently, with over 13 billion Saudi riyals ($3.47 billion) being spent on the yellow metal during the prior two weeks. Demand is expected to rise still higher as more investors turn to gold as a safe haven in the midst of the global financial crisis, according to market sources. Sami Al Mohna, an ...

PKey Newsbr•nbsp;Russia’s central bank probably doubled spending of foreign reserves to defend the ruble from its biggest weekly plunge against the euro in more than four years. (Bloomberg)brimg alt= src=http://local.content.compendiumblog.com/uploads/user/7e88b461-578b-47f3-88ec-038e212ad053/a56c87c5-8253-45b7-aa80-26c89da2fa75/120208-1.JPG _width=75 _height=75brnbsp;br•nbsp;The Canadian dollar recovered some ground versus the U.S. dollar on Tuesday but remained range-bound and at risk of pressure from falling oil prices and political uncertainty in Canada. (Reuters)/P PQuotable brThe great question is whether the government will succeed in reinstilling the inflationary spirit of reckless abandon in American lenders and borrowers.nbsp; Debasement is what the authorities are driving toward.nbsp; It’s why they keep inventing new [lending] facilities.”br Jim Grant/P PFX Trading – Can you say 1% Treasury Bond Yield?nbsp; brThe Fed’s announcement that it will start buying Treasury bonds, along with everyone else in the world it seems, pushes the Fed into official Quantitative Easing (QE) territory.nbsp; /P Pnbsp;img alt= src=http://local.content.compendiumblog.com/uploads/user/7e88b461-578b-47f3-88ec-038e212ad053/a56c87c5-8253-45b7-aa80-26c89da2fa75/120208-2.JPG _width=75 _height=75/P PbrA recent article, dated October 10th, carried in the ...

HIDDEN VALUE

Dear Value Seeker,

The good news is there is only one month left before the end of the year.

But that’s still plenty of time for the crisis that began in the subprime mortgage market to wreak more havoc in 2008.

Especially if today’s carnage is anything to go by.

The Dow has plunged over 400 points at the time of writing. The S&P 500 and the Nasdaq have also been taken to the woodshed.

Oil is back below $50 a barrel. Gold has given up $50 to reach $770 an ounce.

Last week’s bailout-fueled optimism has given way to economic reality.

Today, the US manufacturing index slumped to its lowest level since 1982.

Retailers did manage to tempt bargain hunters out on Black Friday. But once the mega-discounted products had gone, so did much of the shoppers’ enthusiasm.

We’re reminded that the America’s recession is now a year old. The wonks

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GM is essentially already bankrupt, says Horacio Marquez. And it has been for years. This clearly makes the company one to avoid for investors. But Horacio says there are still some ways for those with a big risk appetite to make big profits with the giant automaker.

This from Money Morning:

With America’s “Big Three” automakers all due to submit turnaround plans to Congress today (Tuesday) – a requirement if General Motor Corp. (NYSE:GM), Ford Motor Co. (NYSE:F), and Chrysler Corp., are to receive $25 billion in government loans – I couldn’t help but recall the moment eight years ago when I realized the U.S. auto industry was skidding toward a financial collapse.

I’ve been thinking about that market call of mine a lot of late, particularly after recently reading that JP Morgan Chase & Co. (NYSE:JPM) credit analysts had

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nbsp; P class=MsoNormal style=MARGIN: 0in 0in 10ptThe official “No-Duh” happened yesterday when the National Bureau of Economic Research declared the United States entered a recession in December 2007. Remember, if it hobbles like a recession and mumbles like a recession, it probably is a recession. Thanks NBER./P P class=MsoNormal style=MARGIN: 0in 0in 10ptWhile it’s only a matter of time before the infection, which is now a worldwide illness, runs its course, you can expect more moves to the downside in just about every sector, especially commodities./P P class=MsoNormal style=MARGIN: 0in 0in 10ptUntil July, commodities were untouched by the mess that sparked the worst financial crisis since the Great Depression. Now the United States, Europe and Japan are up again the first simultaneous recession since World War II./P P class=MsoNormal style=MARGIN: 0in 0in 10ptOil prices have tanked 68% since hitting $142.27 a barrel on July 11, and they are likely to head lower as ...