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Monday, August 22, 2011

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Business & Investing
Tuesday August 23, 2011
Ghetto at the Center of the World: Chungking Mansions, Hong Kong
by Gordon Mathews
 

Introducing Chungking Mansions

Chungking Mansions is a dilapidated seventeen-story structure full of cheap guesthouses and cut-rate businesses in the midst of Hong Kong's tourist district. It is perhaps the most globalized building in the world. In Chungking Mansions, entrepreneurs and temporary workers from South Asia, sub-Saharan Africa, and across the globe come to seek their fortunes, along with asylum seekers looking for refuge and tourists in search of cheap lodging and adventure. People from an extraordinary array of societies sleep in its beds, jostle for seats in its food stalls, bargain at its mobile phone counters, and wander its corridors. Some 4,000 people stay in Chungking Mansions on any given night. I've counted 129 different nationalities in its guesthouse logs and in my own meetings with people, from Argentina to Zimbabwe, by way of Bhutan, Iraq, Jamaica, Luxembourg, Madagascar, and the Maldive Islands.

Chungking Mansions is located on the Golden Mile of Nathan Road, famous, according to the guidebooks, for "its ability to suck money from tourists' pockets." If you approach Chungking Mansions from across Nathan Road, you will see a row of glitzy buildings towering on the other side of the street bearing an array of stores, including a Holiday Inn, many electronics places, several entrances to shopping arcades, a number of fashionable clothing outlets, a couple of steak houses, and several bars. This looks like the Hong Kong of postcards, particularly if you approach in the evening and are bathed in the gaudy sea of neon that Nathan Road is famous for. However, in the midst of these fancy buildings is one that looks plainer, more disheveled and decrepit. Its lower floors, seen from across the street, hardly seem part of the building since they too are fancy shops and malls, physically part of the building but inaccessible except from outside and a world away. But then, in the middle of these stores, you see a nondescript, dark entrance that looks like it belongs somewhere else. As you cross Nathan Road on a butterfly crosswalk and draw closer to this entrance, you will notice that the people standing near the entrance to this building don't look like most other people in Hong Kong, certainly not like the throngs of shoppers elsewhere on Nathan Road. As you enter the building, if you are Chinese, you may feel like a member of a minority group and wonder where in the world you are. If you are white, you might instinctively clutch your wallet while feeling trepidation and perhaps a touch of first-world guilt. If you are a young woman, you may feel, very uncomfortably, a hundred pairs of male eyes gazing at you.

If you approach Chungking Mansions from the same side of Nathan Road walking from the nearest underground MTR railway exit on Mody Road, just around the corner from the building (see map on p. 6), you will get a somewhat fuller introduction to the place. You will first see a 7-Eleven that in the evenings may be full of Africans drinking beer in its aisles and spilling outside its entrance. You may also see a dozen Indian women resplendent in their saris who, if you are male and look at them, will offer you a price and then follow you closely for a few paces to make certain that you truly aren't interested in their sexual services. After passing the 7-Eleven, you may, if you are male, be accosted at the corner of Nathan Road by other young women, from Mongolia, Malaysia, Indonesia, and elsewhere. You will also be accosted by a number of South Asian men offering to make you a suit—"A special deal just for you." They may be joined by copy-watch sellers, offering various brands of watches for a small fraction of the price of the original. If you hesitate and show interest, they will lead you to any of the numerous shadowy emporiums in nearby buildings.

Once you cross Mody Road and are on the same block as Chungking Mansions (whose entrance is now some one hundred feet away), the restaurant touts may be in wait if it is the right time of day, shilling for a half dozen different Chungking Mansions curry places. You must either ignore them or decide to follow one tout to his restaurant; otherwise you will be mobbed. You may also—especially if you are white—find a young man quietly sidling up to you and whispering, "Hashish?" and if you query further, numerous other substances as well. Once you reach the steps at the entrance to Chungking Mansions, the guesthouse touts will set upon you if it is late afternoon or evening, with a South Asian man saying, "I can give you a nice room for HK$150" (US$19), and a Chinese man saying, just out of earshot of the South Asian, "Those Indian places are filthy! Come to my place! It's clean"—possibly so, but at a considerably higher price.

After you have passed through this gauntlet of attention, you will find yourself in the midst of Chungking Mansions' swirl, at times more people crowded in one place than you have seen in your entire life. It is an extraordinary array of people: Africans in bright robes or hip-hop fashions or ill-fitting suits; pious Pakistani men wearing skullcaps; Indonesian women with jilbab, Islamic head coverings; old white men with beer bellies in Bermuda shorts; hippies looking like refugees from an earlier era; Nigerians arguing confidently and very loudly; young Indians joking and teasing with their arms around one another; and mainland Chinese looking self-contained or stunned. You are likely to find South Asians carting three or four huge boxes on their trolleys with "Lagos" or "Nairobi" scrawled on the boxes' sides, Africans leaving the building with overstuff ed suitcases packed with mobile phones, and shopkeepers selling everything on earth, from samosas to phone cards to haircuts to whiskey to real estate to electrical plugs to dildos to shoes. You will also see a long line of people of every different skin color waiting at the elevator, bound for a hundred different guesthouses.

You may wonder, upon seeing all of this, "What on earth is going on here? What has brought all these different people to Chungking Mansions? How do they live? Why does this place exist?" These are the questions that led me to begin my research in Chungking Mansions. I first came to Chungking Mansions in 1983 as a tourist, staying for a few nights before moving on. I came to Hong Kong to live in 1994, visiting Chungking Mansions every couple of months to eat curry and to take in the world there. In 2006, I began formally to do anthropological research in Chungking Mansions, finding out all I could about the place and the people in it and seeking to understand Chungking Mansions' role in globalization. I have been living in Chungking Mansions for one or more nights each week over the past three and a half years and have spent my every available moment there (it is a thirty-minute train ride from the university where I live), seeking to answer the questions posed above and, more than that, to understand Chungking Mansions' significance in the world.

Over the past few years I have found some answers. Let me describe a typical walk of late from the train station exit to Chungking Mansions. The Indian sex workers are already out this early evening but know that I'm not a customer, so they ignore me, except for the new ones who see in a white face the chance to make a lot of money; their seniors tell them not to bother. A copy-watch salesman friend waves hello from behind his dark glasses. He was partially blinded by the police in his South Asian country, he has told me, when they taped open his eyelids and forced him to gaze at the sun all day. But the United Nations High Commissioner for Refugees (UNHCR), the arbiter of his case and his fate, may not believe him, he worries, because he cannot provide proof. So he illegally works, attempting to save up enough money to eventually be able to receive cornea transplants. Meanwhile, he looks out for undercover police as best he can and accosts every likely customer: "White people are the best. They buy more than anyone else." But sales are bad this month, and he can hardly pay his rent, let alone save for his longed-for transplants. Whether he was blinded by the police in his country, or by a congenital problem or an accident of some sort, is an open question—how much of his account is true is not for me to judge. But it's good to come across him again.

A few steps later, a restaurant tout greets me effusively. I haven't seen him for two months because he's been back in Kolkata, his home—he is illegally working in Hong Kong as a tourist. He proudly shows me a picture of his baby son, born last month, but says that he's happy to be back in Hong Kong. "I have to support my family! ... I miss my family, but the pay's much better here in Hong Kong, so ..." But he spends a significant portion of his money calling home on his mobile phone, he tells me ruefully.

At the entrance to Chungking Mansions, I meet a Nigerian trader I haven't seen for six months. He says that he couldn't return to Hong Kong because the exchange rates back home were exorbitant, and he couldn't get the dollars he needed. "Now I finally can come back. I had an order for 4,000 phones, but I couldn't come here to pick them up. Now I can do that. I can make money again." He flies back home the day after tomorrow, after checking every phone as closely as he can. His friend, whom I meet for the first time, is going into south China the day after tomorrow—"It's better to buy clothes there than in Hong Kong now. I can get 30,000 shirts made following my own style"—after picking up his visa. Both are worried that exchange rate fluctuations might kill any chance of making a profit, not to mention the vicissitudes of customs back home and the dangers of getting cheated in China and in Chungking Mansions. "It's so hard to make any money," they say, the continuing refrain of so many traders I have spoken with.

A few steps later, I meet an Indian friend standing near the guard post, He works for a large Hong Kong corporation by day and by night comes back to help his family at their guesthouse. His agony at present is not simply that he has no time, but more that he has a Hong Kong Chinese girlfriend that his parents refuse to recognize. He wonders what he should do—choose his girlfriend or his parents—but at present, he just can't decide and only waits.

I then meet a West African friend who until recently ran a business in south China. He, unlike almost every other African trader I've met, has had the capital to obtain a Hong Kong ID card in return for a US$200,000 investment, which he has made by renting and outfitting an electronics store in Chungking Mansions, one that his fellow Africans and fellow Muslims will patronize, he hopes. His wife and children have recently come to Hong Kong, and he looks forward to making a new life for them here, as against what he feels to be the lawlessness of China. "You can trust Hong Kong." Of course, whether he can make money remains to be seen, especially in the economic downturn that has affected Chungking Mansions as much as anywhere else in the world; but he believes that by being an honest Muslim merchant, he can succeed in the building.

Another few steps later, I meet a young South Asian whom I've only met once before. He tells me that he has lost his job and is desperate. "What am I going to do? I have no money! Everyone in my family depends on me!" I don't know if he is telling the whole truth, but he certainly seems frantic. I don't know him, so I only give him HK$100 and wish him luck. I hate playing God this way, but what can I do? There are so many like him. The next time I come back to Chungking Mansions, I don't see him; in fact, I have never seen him again.

These people are all denizens of Chungking Mansions, the subject of this book. In the book's first chapter, I explore Chungking Mansions as a place: its reasons for existing, its significance, and its architecture, history, and organization. In its second chapter, I depict the different groups of people in Chungking Mansions, from African traders to Chinese owners to South Asian shopkeepers to asylum seekers, sex workers, heroin addicts, and tourists, and my interviews and travels around the globe with various of these people. In its third chapter, I describe the goods that pass through the building and the shopkeepers and traders who buy and sell these goods in their global passages. In its fourth chapter, I examine the web of laws that constrain all in the building and particularly consider asylum seekers, with their lives placed in limbo. Finally, in its fifth chapter, I explore the building's significance, for those within it and for the world as a whole, and speculate as to its future.

This book is about Chungking Mansions and the people within it, but it is also about "low-end globalization," a form of globalization for which Chungking Mansions is a central node, linking to an array of nodes around the world, from Bangkok to Dubai to Kolkata, Kathmandu, Kampala, Lagos, and Nairobi. Low-end globalization is very diff erent from what most readers may associate with the term globalization—it is not the activities of Coca-Cola, Nokia, Sony, McDonald's, and other huge corporations, with their high-rise offices, batteries of lawyers, and vast advertising budgets. Instead, it is traders carrying their goods by suitcase, container, or truck across continents and borders with minimal interference from legalities and copyrights, a world run by cash. It is also individuals seeking a better life by fleeing their home countries for opportunities elsewhere, whether as temporary workers, asylum seekers, or sex workers. This is the dominant form of globalization experienced in much of the developing world today.

Chungking Mansions flourishes in a small space through which enormous amounts of energy, people, and goods flow, but this is nonetheless tiny in volume compared to the scale of the developed-world economy that surrounds it. It is one dilapidated building compared to all the financiers' skyscrapers in Tsim Sha Tsui and especially across Hong Kong harbor in the Central District, Hong Kong's concentrated wealth as a center of high-end globalization ten minutes away by train and a universe distant. This book is about Chungking Mansions, but it is also about all the world, in its linkages, its inequalities, and its wonders.

"Ghetto at the Center of the World"

Chungking Mansions is a place that is terrifying to many in Hong Kong. Here are some typical comments from Chinese-language blogs and chat rooms: "I feel very nervous every time I walk past [Chungking Mansions].... I feel that I could get lost in the building and kidnapped." "I am ... afraid to go [to Chungking Mansions]. There seem to be many perverts and bad elements there." "I saw a group of black people and Indian people standing in front of a building. I looked up and saw the sign 'Chungking Mansions.' Just as the legend goes, it is a sea of pitch darkness there." "I went with some classmates for curry today. It was my very first time going to Chungking Mansions. I felt like I was in another country. The curry was all right, but I was scared when I entered the building ... because my dad told me I should never go in." As this last quotation indicates, some Hong Kong Chinese, particularly young people, are attracted to Chungking Mansions because of its half dozen semifashionable curry restaurants on its higher floors, but many more are afraid to even enter the building.

This fear of Chungking Mansions extends beyond Hong Kong—it is apparent among commentators from the developed world as a whole. Consider the following passages, largely written by American and European journalists, also taken from the Internet:

Chungking Mansions is the sum of all fears for parents whose children go backpacking around Asia.... In the heart of one of the world's richest and glitziest cities, its draw card of cheap accommodation has long been matched by the availability of every kind of vice and dodgy deal, not to mention its almost palpable fire and health risks.

(Continues...)

 
 
 
 
 
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Tuesday August 23, 2011

Shattered Wings

By Bryan Healey
ISBN: 9781456398354
 

I'm cold. My back is hurting from being pressed against this building. I sit motionless atop the wet, red-brick sidewalk. My pants are soaked and my arm is sore, but I don't care; I don't care about much of anything anymore. I can barely think, still fogged from the poison in my blood; my world has been upended, and so much faster than I thought possible. I have nothing- no job, no money, no future, no escape. I've lost everything, the love of my life, and my daughter along with him, and I would be destined for prison, or worse, were I to be...

How had it come to this?

I had a good job and a good home and a beautiful little baby girl who loved me unconditionally. ...

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The Other Side of Innocence

By Gerald Myers
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The Invitation—Autumn 2008

He stands staring at the cork bulletin board mounted on the kitchen wall and asks himself, How did they track me down? Like an ancient wizard hiding under an invisibility cloak, he’s gone out of his way to conceal himself. Apparently not as well as I thought. Behind him the late afternoon sun lingers in the western sky, an incandescent gold sphere fading to orange, poised to dip behind the hills west of his Colorado Springs home.

But there it is, unanticipated and unwelcomed, posted next to an appointment calendar featuring a glossy photo of a chocolate-brown Arabian mare named Queen Sheba. This is Autumn’s calendar, full of crosses...

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{Escape from Cubicle Nation} Do you have a judgment-free zone?


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The gifted, amazing, and silly crew from Lift Off 4 in Portland, OR

Dear David,


August has been a whirlwind. Josh started first grade last week (!) which was a huge emotional event. And I mean for me! I was amazed at how scary it felt to watch him move from his very comfortable and familiar surroundings at Montessori kindergarten to a big, new school. While he was very nervous when I dropped him off, I picked him up at the end of the day and asked (with trepidation) "So, how was it?" "GREAT!" he responded. I learn so much about being brave from my little dude.

Charlie Gilkey and I ran an amazing Lift Off in Portland from August 11-14 -- once again, we were met with a powerful group of entrepreneurs who truly want to make a difference in the world. Our 4 day journey together was deep and intense and very productive. We could not be more proud of the new members of the Lift Off family!

I am hot and heavy in design for pamelaslim.com (it now directs to Escape) which will launch in mid-September. It feels like I am opening the window and letting in a huge gust of fresh air, while taking the cover off of a big blank canvas. The site will open the way for new books, new ideas and speaking topics that cover the entire expanse of my career, not just the Escape from Cubicle Nation part of the journey. I believe this will support and strengthen the work we have been doing together here, as well as open up opportunities for more people to work with me in my business as I push the bounds of spreading the larger message of personal leadership in the new world of work.

And hot off the presses (1 hour ago!), I was just awarded an Honorable Mention in the 2011 Small Business Trends Influencer Awards. Fellow honorable mention-ees include Apple, Malcolm Gladwell and Seth Godin, so I feel in great company! :) I am so proud of the entire Escape Community, and know any personal award is a reflection of the power WE have when we lead entrepreneurial trends in the 21st century. Details on the award here. The Top 100 Champions are here.

Updates and Offerings:
  • *Date Sensitive* Ethical Selling That Works will be increasing to $97 from its introductory price of $47 on September 1. This program is perfect for first-time entrepreneurs, and seasoned entrepreneurs who have never felt totally comfortable or successful in the sales process. I have gotten fantastic feedback from people who have purchased the program, who report both decreased stress and increased sales. There is no risk to you if you try out the program -- like all my products, it has a guarantee. Check it out here - $47 until 9/1! Ethical Selling That Works
  • Career Invention Certification, on Wednesday, August 24 at 12pm Pacific/3pm Eastern, my partner Michele Woodward and I are hosting a call to explain the details of this tool-rich intensive mentor program for coaches who want to specialize in career coaching. It launches in September. We have trained over 30 people in this program which prepares coaches for the very lucrative and in-demand field of career and entrepreneur coaching. Check out details here - enrollments are limited.
  • Partnership Playbook is an idea and information -rich product designed to grow your impact, influence and income through effective partnerships and joint ventures. If you want to expand your offerings and income without suffering miscommunication or legal issues, check it out here.

  • The Escape from Cubicle Nation Community is a great way for you to access my coaching and advice on startups from the best advisers in the business, for less than $1 a day. Learn more here.
Links in this section are either my own, or affiliate links to products and programs I fully endorse. Thanks for your trust!

Main Article: Do you have a judgment-free zone?

My Mom spent the last part of her career as a Patient Care Supervisor for her local Hospice.

If you are not familiar with Hospice, it helps patients and families through the last stage of terminal illness, including the process of death itself.

People would often ask my Mom: "Isn't it depressing to work around death and dying all the time?"

She would explain that although it was difficult to get to know patients and then watch them pass away, it was also uplifting to work with a group of people who made a profound difference on entire family systems on a daily basis with one of the most powerful rites of passage in the human experience.

When I spent time at my Mom's office, I would watch nurses and support staff giggling together. My Mom told me that in staff meetings it was not uncommon to have tears balanced with hysterical laughter at morbid humor.

For people on the front lines of death and dying, it was critical to have a judgment-free zone.

A judgment-free zone is a place where you can express exactly what you are feeling without censor.

In a judgment-free zone, you can:

  • Talk about how terrified you are to change a long-time behavior
  • Share how you are sure everyone thinks you are an imposter and a loser
  • Curse
  • Babble incoherently without apology
  • Forget how you should appear since have a law degree from Harvard and just be who you are
  • Share how fricking hard it is to be a parent sometimes
  • Share how lonely it can be to be single sometimes
  • Share how your relatives drive you crazy sometimes
  • Dance around the room and celebrate your accomplishments
  • Say with joy and reckless abandon (to real and imagined critics) "Do you know who I AM?!?"
  • Use really big words
  • Use slang that would make your teenager cringe with embarrassment
Get the gist?

For obvious reasons, it is not easy to find a safe judgment-free zone.

I often meet people who are quite well-known and respected in their field of work. They worry that if people knew they questioned their ability to write a new book, or feel shame at spending so much time away from their family, or are at war with the shape of their body, they may be judged harshly.

I think they are right.

People do judge. That is in our basic human nature.

No Share Zones

In the age of over-sharing, there needs to be a place where you can express your feelings in a healthy manner so you can work through them and get back to doing epic things in your life and career.


Judgment free zones are enhanced by clear agreements. When you are with people in this way, you should all agree to keep confidence.

Or as my 6-year old son Josh is saying to me more and more frequently:

"Mom, DON'T put that on Facebook!" (and he can't even read yet).

I will go out on a limb now and say:

If you are not doing something right now that scares the crap out of you, you aren't fully living.

Truth feels scary.
Acting on the power that you have inside of you feels scary.
Standing up to injustice feels scary.
Working on a broken part of your life feels scary.
Creating something epic feels scary.
Being a parent feels scary.
Creating something beautiful feels scary.
Helping and healing the world feels scary.

If you have no one to trust with your fear, you are making things more difficult for yourself than they need to be.

So start by finding one person that you feel really comfortable with. Create a time, place or forum where each of you can have a no-holds-barred judgment free zone.

Go crazy. Enjoy it.

And watch your power grow.

Do you have tips for creating a judgment-free zone? Share it on the blog.

Awesome Client Projects

I am exceptionally proud of my clients. Here are a few really cool things they have been up to:

Desiree Adaway
(@desireeadaway) consultant, mentor and coach extraordinaire (who also happens to be my best friend of 27 years) is launching a group coaching program which launches in September. Desiree specializes in working with service and non-profit professionals who want expert guidance in their careers. She has an extremely impressive background in non-profit leadership, most recently at Habitat for Humanity. And she is one of the most powerful mentors and managers I have ever know. Check out her program here.

Rebecca Prien (@cnsl2creativity) is an attorney who provides comprehensive strategy around intellectual property. As an artist herself, she is particularly skilled at working with innovators, thought leaders and right-brained entrepreneurs. If your business is growing in complexity and you want a top-notch strategist who can help you sort through the legal sides of your business, Rebecca is for you! Check out her services here.

Yolanda Facio (@yolandafacio) is offering some powerful sessions for business owners who feel overwhelmed and want clarity and direction in their business. Yolanda is a seasoned business owner and a no-nonsense person with a compassionate heart. Check out her programs here.

Great things are happening with my clients, because they are great people. Look for more examples next month!

Pam on the Move

Here are upcoming travel dates, let's meet up!

September 13, 2011
Small Business Influencer Awards
New York, NY

October 15, 2011

How to Write and Publish Books That Change Lives - Keynote
University of Connecticut, Samford, CT

November 8-10, 2011
Society for Human Resource Management and Families and Work Institute
Work-Life Focus 2012 and Beyond
Washington, DC

If you are interested in my speaking services, check out my speaking page.

Escape from Cubicle Nation Book

Escape from Cubicle Nation was chosen as Best Entrepreneur/Small Business Book of 2009 by 800 CEO Read. It is now out in hardcover, paperback, audio and Kindle! Get your copy here.

Blog & Podcast

Here is a selection of blog posts from the last month.

What I have learned from 15 years in business
The upside of economic constraints
On hope
Do your customers and prospects know WHY you are in business?

You can find past episodes of the Escape from Cubicle Nation Podcast here.

Recommended Products

Here are a few of the products I use to power my business. I am proud to use affiliate links to promote them. My "toddlers rapidly growing out of their clothes fund" appreciates it!

I am loving my new mailing list/shopping cart/automated marketing software Infusionsoft! Find out more about their product and get access to a 15-day trial here.

I use InstantTeleseminar for all of my free calls and paid teleclasses. It has been a stable and robust service. For $47 a month, you get unlimited calls, a great web interface so you can mute and unmute individual callers, and webcast capabilities. Check them out here.

Wishing you an excellent start to the month of September!

All the best,

-Pam

Pamela Slim
email: pam@pamelaslim.com
phone: 480-455-1442
twitter: @pamslim
web: www.escapefromcubiclenation.com

My philosophy: Entrepreneurship, at its heart, is aligning your purpose for being on earth with a business idea so compelling that you must do it, despite the fears that hold you back.

Ganas Consulting LLC 3514 N. Power Road Suite 113 Mesa, Arizona 85215 United States (480) 455-1442

Moneybox: Why the Lone Star State Shines So Bright

Slate Magazine
Now playing: Slate V, a video-only site from the world's leading online magazine. Visit Slate V at www.slatev.com.
moneybox
Why the Lone Star State Shines So Bright
Can other states replicate Texas' economic success?
By Annie Lowrey
Posted Friday, Aug. 19, 2011, at 4:13 PM ET

Donna George of Houston, TX, stands and prays during an event organized by Gov. Rick Perry in order to pray for God to help save 'a nation in crisis'. Click image to expand.On the campaign trail, Texas governor and Republican presidential hopeful Rick Perry has repeatedly boasted about the so-called "Texas miracle," the state's impressive economic performance in the last five years. This has set the chattering classes off, debating both whether the miracle is real and, if it is, whether the awesomely coiffed politico should be taking credit for it.

The data under contention are these: Texas has created 40 percent of the nation's new jobs since the recession ended, far more than any other state. It entered the recession later than other states and got out of it faster. Its economy is growing twice as fast as the country's as a whole. Its unemployment rate is high, at 8.2 percent, but lower than it is in the nearby "sand states," like Nevada (12.4 percent) and Arizona (9.3 percent). Judging by those statistics, it is fair to call it a lone star in a fairly depressed region, if not an outright miracle.

To continue reading, click here.

Annie Lowrey reports on economics and business for Slate. Previously, she worked as a staff writer for the Washington Independent and on the editorial staffs of Foreign Policy and The New Yorker. Her e-mail is annie.lowrey@slate.com.

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You're Gonna Need MORE Than Gold...

D.R. U.S. versionThe Daily Reckoning U.S. Edition Home . Archives . Unsubscribe
More Sense In One Issue Than A Month of CNBC
The Daily Reckoning | Monday, August 22, 2011

  • Gold gallops another $40 an ounce as stocks continue to wobble,
  • The "State of the States" – a closer look at the slow, decaying empire,
  • Plus, Bill Bonner on the movements of markets and heavens and plenty more...
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Who gives a damn about America's credit rating?

I'm SICK of hearing about Keynesian vs. Austrian, fiat currency vs. Gold, US credit ratings and other BORING economic theories you have ZERO control over.

"WHO CARES!?"

Truth is, if you want to make money in the markets, none of that stuff even matters!

Let me prove it to you by showing you.

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When the Lights Go Out
Examining the Real Life Effects of a Prolonged Economic Downturn
Joel Bowman
Joel Bowman
Reporting from Buenos Aires, Argentina...

Look at gold go! Another $35 rally today takes the precious metal up over $1,890 per ounce. Run, Midas. Run!

Stocks, meanwhile, are busy doing quite a bit of not all that much. After getting hammered in the backstretch last week, the Dow made a brief showing above 11,000 in early morning trading today, before surrendering a hefty chunk of those gains. As of this writing, the blue chip index is back well below 10,900 points.

After last week's drubbing, we were left with the distinct feeling that few traders wanted to be caught holding the Dow into and over the weekend. It was only a few weeks ago, after all, that S&P ratings dropped the downgrade bomb after trading had closed Friday afternoon, sending stocks spiraling the following Monday. Nothing worse than getting back in the office to begin the workweek only to see your trading screen bleeding red from top to bottom.

The ratings downgrade wasn't really surprising, of course...at least not as surprising as investors' apparent shock that the financial integrity of world's largest debtor was not all rainbows, unicorns and funny money dropped from helicopters.

Looking back (again), Addison Wiggin called it pretty well in advance in his "Hellish Financial Crisis" presentation. (Check it out here if you have not done so already.) In it, he examines the financial "State of The States" and the kind of "Third World America" already popping up in various parts of the country in response to severe and widespread budgetary constraints and state and local governments' uncomfortable collisions with fiscal reality.

Addison noted a few examples of the unfolding crises in Friday's issue of The 5-Minute Forecast:

As August drags on, the dire straits of state and local governments are making themselves known in ways both sublime and ridiculous...

Just as they needed it most, California tax revenue came in $539 billion below the most recent forecasts – about a 10% shortfall.

"Every drop in revenues puts us closer to the drastic trigger cuts that could be imposed next year," state controller John Chiang told the paper. Result in California's case: A cut to education spending that could trim the school year by up to seven days in some districts.
And there's more. Continued Addison...

Fitch downgraded New Jersey's credit rating yesterday. It was AA. Now it's AA-. That's three steps below AAA. The outlook, however, was revised from negative to stable.

The problem, according to Fitch? Not enough money to make good on all the pension and health care promises made to retired state workers. And even if there were enough money... there wouldn't be enough left over for other priorities like property tax relief, schools, and public works.

As a recent study discovered fully funding state and local pensions in New Jersey would require taxing every household an extra $2,475 every year for the next 30 years.

That's enough to put New Jersey #1 on The Pension List – one of three measures we used to assess the economic health of all 50 states. [Where does your state stand, and which states are best prepared to weather an economic storm? Check out the answers in Addison's special report: American Oases. Access here.]
As federal "stimulus" funding dries up, many states and municipalities are finding it tough – nay, impossible – to make good on the unrealistic promises they leveraged to help various politicos win seats in their respective elections. But it's not just lavish payouts and union-fought concessions that are being cut. We're also talking about the end of some pretty basic services here...things a good many people believe the government "has a duty" to provide for them. Things like road maintenance, police services and assorted other "public works"...

But here's a newsflash: the government has no money other than that which it takes from you...and that's already been spent.

Now that the "Summer of Recovery" has been exposed as the empty, misguided fraud it was...now that foreclosures have again begun to tick upwards (as home prices continue to sink)...now that weekly jobless claims are back above that "magic" 400,000 figure...now the thumbscrews are really beginning to tighten.

Continued Addison, highlighting a few more examples of decaying Empire...

  • Rockford, Ill. – where unemployment runs 11.6% – is saving a little money by yanking streetlights out of the ground. The city hopes to shave $500,000 off a $2.7 million annual streetlight bill...by removing 2,400 lights.

  • The state of Illinois announced this week it will no longer pony up for funerals of the indigent. In years gone by, the state budgeted $13 million a year to bury some 12,000 people on public assistance. But this year's budget was only $1.9 million, and that money ran out on Monday. More than 600 funeral homes have been notified they can no longer count on the state to pick up the bill.

  • Starting Monday [today], police in Detroit will no longer answer calls from automatic burglar alarm calls unless the alarm company verifies there's a problem.
That last point might sound a bit rough, especially in a city like Detroit, not exactly known for its carefree, crime-free lifestyle. But is it really that surprising? Compare it to what's already going on in Oakland, California, for instance, where the police chief recently informed citizens that they would no longer respond to various crime calls. Here are a just few things the cops won't show up for there anymore...

  • Burglary...
  • Theft...
  • Failure to register as a sex offender...
  • Passing fake checks...
  • Embezzlement...
  • Extortion...
  • And vandalism...
These observations, it must be said, are not reported here to scare you as much as they are to help prepare you. "You shouldn't feel helpless," writes Addison. "Along with a vivid description of the problem, we lay out a five-part solution set in our latest Apogee Advisory presentation." Readers are invited to check it out here.

Of course, there will be those for whom the "stay and fight" strategy is simply not a prudent option. They're looking to "get outta Dodge" while they still can. For Fellow Reckoners of this persuasion, we offer the following essay, penned by guest columnist, Simon Black. Please enjoy...

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America 2012...Wall Street in Ashes...Main Street in Ruins...

Here's SIX ways to protect yourself and profit from the biggest lies DC, Wall Street, the Fed and your banker are telling today...

Click Here To Find Out How.

Dots

The Daily Reckoning Presents
You're Gonna Need MORE Than Gold...
Simon Black
Everyday more and more people are waking up to the idea that they MUST own gold if they want to protect their assets from an out of control government. Owning gold is a great first step, but as history tells us, responsible people can and should do more before it's too late...

History paints a bleak picture of the decline of Rome. Once warring consuls Antony, Lepidus, and Octavian were finished duking it out with each other in 31 BC, any semblance of the original Roman republic was gone forever.

Successive emperors of Rome included men like Tiberius, a paranoid deviant with a lust for executions. He spent the last decade of his reign completely detached from Rome, living in Capri.

Following Tiberius was Caligula, infamous for his moral depravity and insanity. According to Roman historians Suetonius and Cassius Dio, Tiberius would send his legions on pointless marches and turned his palace into a bordello of such repute that it inspired the 1979 porno film named for him.

Caligula was followed by Claudius, a stammering, slobbering, confused man as described by his contemporaries. Then there was Nero, who not only managed to burn down his city but was also the first emperor to debase the value of Rome's currency.

You know the rest of the story – Romans watched their leadership and country get worse and worse.

All along the way, there were two types of people: the first group were folks that figured, "This has GOT to be the bottom, it can only get better from here." Their patriotism was rewarded with reduced civil liberties, higher taxes, insane despots, and a polluted currency.

The other group consisted of people who looked at the warning signs and thought, "I have to get out of here." They followed their instincts and moved on to other places where they could build their lives, survive, and prosper.

You're reading this because you probably fall into the latter category. You're aware of the problems. You can feel your civil liberties and economic opportunities slowly slipping away, all while the crop of national leadership grows more depraved with every election cycle.

You want to do something about it. You want to take steps to protect yourself, your family, and your livelihood. Perhaps you've already started by investing in precious metals. Gold is a great hedge against inflation, political turmoil, and default – things I call "sovereign risk."

You see, some of the world's largest governments are going broke, and these politicians will take any steps necessary in order to maintain the status quo: they will lie, they will steal, they will declare wars, they will bankrupt their people with hyperinflation...whatever it takes.

This is the greatest risk we face today. Buying gold is a great start, but there is MUCH more that you can do.

I'm an advocate of what I call planting 'multiple flags.' At its core, planting multiple flags means that you are diversifying your sovereign risk around the globe so that no single government has total control over your livelihood. Let me explain.

Let's say you are from the US. If you live, work, bank, invest, register your business, own your property, store your gold, etc. within the US, and one little thing goes wrong, all of those assets and interests are at substantial risk. Any judge or bureaucrat could make them all disappear with a few mouse clicks.

It needn't even be anything big. Maybe some three-letter agency suspects you of wrongdoing. Maybe your neighbor wants to sue you. Maybe they outlaw gold ownership (again). There are infinite possibilities, and infinite risks.

When you plant multiple flags, you diversify those assets around the globe. Store your gold in Switzerland. Open a bank account in Hong Kong. Register your company in Singapore. Establish an emergency 'backup' residency in Chile.

You can plant flags with just about any interest in your life – where you go to get high quality, cost effective medical care, where you set up your web servers for an online business, where you establish an international brokerage account, etc.

This approach is NOT just for the super rich. In fact, I've helped all kinds of people to plant their own flags, young and old, rich and poor.

Taking some simple steps to protect yourself will give you extraordinary peace of mind. You'll know that, without doubt, you have some savings socked away that NOBODY can touch. You'll know that you have a solid emergency backup plan. You'll know that everything you've worked for won't vanish in an instant.

I've made it my profession to know these tactics...and I've set up my own life in this way. I have official residency in one country, bank in another, have multiple citizenships in others, set up my company in another, etc.

A few months ago, I held a comprehensive, hands-on workshop; about 350 attendees spent 3-days learning from a diverse cadre of speakers – bankers, residency experts, gold dealers, corporate specialists, from places like Switzerland, New Zealand, Brazil, Singapore, the Philippines, Uruguay, Estonia, and more.

Because the event sold out so quickly within just 24-hours of the announcement, we hired the most professional Hollywood film crew we could find to record the event and put together a video series.

We're now offering a 12-disc DVD kit of the event, complete with a comprehensive 200+ page workbook containing the personal contact information of every single expert who spoke at the workshop. This kit contains information and solutions you simply cannot find anywhere else at any price.

You owe it to yourself and your family to heed the warning signs. The alarm bells are ringing, and only you can choose to listen. Click here to learn more.

Regards,

Simon Black,
for The Daily Reckoning

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America's Last Judgment

Judgment, pestilence and bloodshed – are they headed for the USA?

An extremely controversial "R-rated" documentary seeks to answer these urgent, historic questions.

Don't wait – watch it now.

Dots
Bill Bonner
Debt Woes in a Cosmic Bear Market
Bill Bonner
Bill Bonner
Reckoning from Poitou, France...

Ursa Major in the sky Time to sell stocks is nigh

Last night was bright and clear in France. We could see the Milky Way stretched out against the dark background.

And there was the bear...Ursa Major.

Last week, stocks got hammered...mauled...beaten up...

Market veterans said they had never seen the buy/sell ratio more lopsided towards selling.

But why?

In the past couple of weeks we've seen zombies rising up and markets crashing down. Not the way we usually like it. But interesting...no?

In the weekend news comes word that the Social Security Disability program is almost broke – thanks to so many claims.

And California's official joblessness figure is at 12%.

Want more bad news? What's wrong with you, dear reader? Do you get a thrill from the suffering of others?

Of course not! You just want to know what's going on. Besides, you suspected for years that the 'prosperity' so many people were enjoying was a fraud. Now, you find out that you were right. People didn't really have the money to buy all those McMansions and luxury 4x4s... They were living on credit. And now that credit has become the darkest kind of debt...

..dense, heavy matter...and becoming heavier. Like a dwarf star...or an imploded sun...

Why is it getting heavier? Because, as the economy gets crushed under the weight of so much debt, it becomes harder and harder for people to earn the money to pay back their loans.

That's why debt is always deflationary. When people have to pay debt, they withdraw money from the economy. They save rather than spend. Result = fewer sales, fewer jobs, falling prices...and an all-around feeling of gloom and doom.

Which, of course, is accompanied by falling asset prices. We've already seen the housing market fall. It's down about a third nationwide, and still going down.

Now, we're watching the stock market go down too.

On Friday, the Dow fell 172 points...after a big whack on Thursday. It will be interesting to see what happens this week. We thought Mr. Bear – Ursa Major – would want stock prices to get up again, after he knocked them down 2 weeks ago. We thought he'd like to see more people come into the stock market theater...before he set fire to it.

Maybe not. Maybe he's going to work already. Or maybe he'll lay off for a while.

But if we were you, dear reader, we wouldn't hang around the stock market at all. Until this Great Correction is over, it's not going to be a very rewarding place to be...

And more thoughts...

Stock market portfolios are getting squeezed. So are retirement incomes. The 10-year note briefly yielded less than 2% last week. And you know what that means. A lot of pensions aren't providing the money people had hoped for. The Wall Street Journal:

Many older people are finding themselves in a position they never expected to be in at retirement age: still working or in need of a job.

And the laundry list of reasons just keeps growing. Already battered nest eggs took another beating this month with the market's wild swings. With interest rates essentially at zero since 2008, income from Treasurys and certificates of deposit is pretty paltry. And the Federal Reserve recently said it would likely keep rates "exceptionally low" through mid-2013. On top of that, housing prices are still in the doldrums, leaving homeowners with much less equity to tap.

More than three in five US workers in their 50s and 60s plan on working past 65 – and 47% of that group say they'll do so because they'll need the money or health benefits, according to a 2011 study from the nonprofit Transamerica Center for Retirement Studies.

But in this tight labor market, working into your golden years isn't easy. And you'll have to make your age and years on the job come across as assets, not liabilities. In addition, with the current market upheaval, you'll need a financial plan that puts your savings on the fast track and takes into account how Social Security and Medicare benefits could be affected.
*** What's going on? Maybe this will be a period like the '30s. There was a market break in '29. Then, a bounce that made people think the worst was over. But then came another long, miserable slide....with stocks losing half their value.

If we follow the '30s pattern, we'll see the Dow hit a low around 6,000...but it will take years to reach.

We'll also see unemployment get worse...we'll see more bankruptcies...and more people on food stamps. And we'll wait until 2035 before the Dow gets back to 12,000.

So relax. Take it easy. No need for panic.

Our advice... Sell. Buy gold. Be happy. Watch the stars.

*** How goes the empire? Badly. It's turning into a zombie.

Vladimir Putin says the whole US economy has become a "parasite." Which is true. Measured by the trade deficit, it takes about $600 billion more than it makes. Measured by the US federal government deficit, the level of parasitism is even higher. The deficit broke the $1 trillion barrier at the end of June.

Where does the US get all this money to spend? That's what being a zombie is all about – you take resources and finished products from productive sectors. Oil from the Arabs, gadgets from the Orientals, caviar and Audis from the Occidentals. And what do you give them in return? Pieces of paper! I.O.U.s.

Meanwhile, the US military has been zombified too. It is no longer interested in protecting America. It is interested in feeding itself:

American pundits decry the onset of sharp defense cuts, but the Pentagon can't even account for $1 trillion in its own spending. Isn't it time to rein in the beast?
By Stephen Glain, August 16, 2011

In its scramble to avoid another legislative gang war over the nation's debt ceiling, Washington is preparing to shake down the Defense Department in the name of deficit reduction. While budget cutters preoccupy themselves with line-item expenditures, they overlook the Pentagon's biggest cost center: empire. The burden of global hegemony, the commitment to project force across every strategic waterway, air corridor, and land bridge, has exhausted the US military and will be even harder to sustain as budget cuts force strategists and logisticians to do more with less. A national discussion about the logic of maintaining huge forward bases, to say nothing of their financial and human costs, is long overdue.

American relations with the world, and increasingly America's security policy at home, have become thoroughly and all but irreparably militarized. The culprits are not the nation's military leaders, though they can be aggressive and cunning interagency operators, but civilian elites who have seen to it that the nation is engaged in a self-perpetuating cycle of low-grade conflict. They have been hiding in plain sight, hyping threats and exaggerating the capabilities and resources of adversaries. They have convinced a plurality of citizens that their best guarantee of security is not peace but war, and they did so with the help of a supine or complicit Congress. Since the collapse of the Soviet Union, US presidents have ordered troops into battle 22 times, compared with 14 times during the Cold War. Not once did they appeal to lawmakers for a declaration of war.

In ancient times, empires exacted tribute from their dependencies. In the age of American hegemony, just the opposite is the case. In return for the global commons, the United States bankrolls a geopolitical welfare state that allows some of its largest beneficiaries to neglect their basic responsibilities as sovereign states and allies...

The price of this deception is vast. If the Pentagon were a corporation, it would be the largest in the world as well as the most sloppily run. Its procurement budget, at a staggering $107 billion in 2010, expands even as the number of deployable warplanes, combat ships, and troops diminishes. To entice lawmakers into approving costly weapons programs, the Pentagon dangles the prospect of jobs in the states and districts of key lawmakers, a costly way of manufacturing but an astute political maneuver. Waste, inefficiency, and political patronage, no stranger to military- legislative affairs, get more lavish by the year. In April 2008, the Government Accountability Office found that 95 major Pentagon projects exceeded their original budgets by a total of nearly $300 billion. A year later, it concluded that nothing had changed. In 2009, lawmakers larded the Pentagon's annual budget proposal with nearly $5 billion in programs and weapons it did not request. With arms factories scattered like feeding troughs nationwide, America has become the equivalent of a company town with the Pentagon as primary employer. The making of war, or at least the preparation for it, has become a money center, a business line – a racket, as Marine general and Medal of Honor recipient Smedley Butler put it nearly a century ago.
And here's another view of the zombie pentagon:

Has our bloated security budget made us safer?
We've spent nearly $8 trillion on counterterrorism since 9/11. It's time to assess the results

By Chris Hellman

The killing of Osama Bin Laden did not put cuts in national security spending on the table, but the debt-ceiling debate finally did. And mild as those projected cuts might have been, last week newly minted Secretary of Defense Leon Panetta was already digging in his heels and decrying the modest potential cost-cutting plans as a "doomsday mechanism" for the military. Pentagon allies on Capitol Hill were similarly raising the alarm as they moved forward with this year's even larger military budget.

None of this should surprise you. As with all addictions, once you're hooked on massive military spending, it's hard to think realistically or ask the obvious questions. So, at a moment when discussion about cutting military spending is actually on the rise for the first time in years, let me offer some little known basics about the spending spree this country has been on since September 11, 2001, and raise just a few simple questions about what all that money has actually bought Americans.

Consider this my contribution to a future 12-step program for national security sobriety.

Let's start with the three basic post-9/11 numbers that Washington's addicts need to know:

1. $5.9 trillion: That's the sum of taxpayer dollars that's gone into the Pentagon's annual "base budget," from 2000 to today. Note that the base budget includes nuclear weapons activities, even though they are overseen by the Department of Energy, but – and this is crucial – not the cost of our wars in Iraq and Afghanistan. Nonetheless, even without those war costs, the Pentagon budget managed to grow from $302.9 billion in 2000, to $545.1 billion in 2011. That's a dollar increase of $242.2 billion or an 80 percent jump ($163.6 billion and 44 percent if you adjust for inflation). It's enough to make your head swim, and we're barely started.

2. $1.36 trillion: That's the total cost of the Iraq and Afghan wars by this September 30th, the end of the current fiscal year, including all moneys spent for those wars by the Pentagon, the State Department, the US Agency for International Development, and other federal agencies. Of this, $869 billion will have been for Iraq, $487.6 billion for Afghanistan.

Add up our first two key national security spending numbers and you're already at $7.2 trillion since the September 11th attacks. And even that staggering figure doesn't catch the full extent of Washington spending in these years. So onward to our third number:

3. $636 billion: Most people usually ignore this part of the national security budget and we seldom see any figures for it, but it's the amount, adjusted for inflation, that the US government has spent so far on "homeland security." This isn't an easy figure to arrive at because homeland-security funding flows through literally dozens of federal agencies and not just the Department of Homeland Security (DHS). A mere $16 billion was requested for homeland security in 2001. For 2012, the figure is $71.6 billion, only $37 billion of which will go through DHS. A substantial part, $18.1 billion, will be funneled through – don't be surprised – the Department of Defense, while other agencies like the Department of Health and Human Services ($4.6 billion) and the Department of Justice ($4.1 billion) pick up the slack.

Add those three figures together and you're at the edge of $8 trillion in national security spending for the last decade-plus and perhaps wondering where the nearest group for compulsive-spending addiction meets....

Are we safer?

An April 2010 Heritage Foundation report, "30 Terrorist Plots Foiled: How the System Worked," looked at known incidents where terrorist attacks were actually thwarted and so provides some guidance. The Heritage experts wrote, "Since September 11, 2001, at least 30 planned terrorist attacks have been foiled, all but two of them prevented by law enforcement. The two notable exceptions are the passengers and flight attendants who subdued the 'shoe bomber' in 2001 and the 'underwear bomber' on Christmas Day in 2009."

In other words, in the vast majority of cases, the plots we know about were broken up by "law enforcement" or civilians, in no way aided by the $7.2 trillion that was invested in the military – or in many cases even the $636 billion that went into homeland security. And while most of those cases involved federal authorities, at least three were stopped by local law enforcement action.

In truth, given the current lack of assessment tools, it's virtually impossible for outsiders – and probably insiders as well – to evaluate the effectiveness of this country's many security-related programs. And this stymies our ability to properly determine the allocation of federal resources on the basis of program efficiency and the relative levels of the threats addressed.

So here's one final question that just about no one asks:

Could we be less safe?

It's possible that all that funding, especially the moneys that have gone into our various wars and conflicts, our secret drone campaigns and "black sites," our various forays into Pakistan, Libya, Yemen, Somalia, and other places may actually have made us less safe. Certainly, they have exacerbated existing tensions and created new ones, eroded our standing in some of the most volatile regions of the world, resulted in the deaths of hundreds of thousands and the misery of many more, and made Iraq and Afghanistan, among other places, potential recruiting and training grounds for future generations of insurgents and terrorists. Does anything remain of the international goodwill toward our country that was the one positive legacy of the infamous attacks of September 11, 2001? Unlikely.

Chris Hellman is a Senior Research Analyst at the National Priorities Project (NPP). More: Chris Hellman
Regards,

Bill Bonner
for The Daily Reckoning

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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
Dots
The Bonner Diaries The Mogambo Guru The D.R. Extras!

Stocks and Gold Point to a Hellish Outcome
We keep an eye on stocks and gold. Stocks measure the value of America's businesses. Gold measures the value of America's – and the world's – money. What are these measures telling us? That we're on the road to Hell! Of the two measures, gold is harder to figure out.

Armageddon Can Wait

Zombies Born of Government Spending

China: Where Money Is Treated Best
I am sure that Mr. Pento is right because every country on the Face Of The Planet (FOTP) is desperately creating more and more money, and the money will eventually find its way to the place where it is treated best and/or has the best prospects, which is, in this case, Bob. Oops! I meant "China."

Buying Gold on the Price Inflation Guarantee

Awaiting the "Zero Hour" of Available Credit

Gold Price Fast Approaching its Inflation-Adjusted High
On Friday morning I wrote about gold extensively, eh? Well, guess what? I'm going to spend a few minutes doing the same today, because, don't look now, but the gold price is at $1,881!!! In the "mother of all flights to safety" gold continues to wind its way toward $2,000...

Gold Sets Record Highs With Every Tick Higher

Gold Rallies to $1,800 Again!

Dots

The Daily Reckoning: Now in its 11th 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.
Cast of Characters:
Bill Bonner
Founder
Addison Wiggin
Publisher
Eric Fry
Editorial Director

Joel Bowman
Managing Editor

The Mogambo Guru
Editor

Rocky Vega
Editor


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Agora Financial© 2010-2011 Agora Financial, LLC. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the World Wide Web), in whole or in part, is strictly prohibited without the express written permission of Agora Financial, LLC. 808 Saint Paul Street, Baltimore MD 21202. Nothing in this e-mail should be considered personalized investment advice. A lthough our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice.We expressly forbid our writers from having a financial interest in any security they personally recommend to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of a printed-only publication prior to following an initial recommendation.Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Yashi

Chitika