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To: heinz44 who wrote (88070)	8/16/2011 5:29:00 PM
From: heinz44	Read Replies (1) \| Respond to of 233951

Piscod daily!! Which gets us to Avner Mandelman. I’m sure the Director of Venator Capital and some time columnist with the Globe and Mail doesn’t walk on water, but he just completed one of the gutsiest calls we’ve ever seen or heard anyone predict with his bet back in February on American long bonds and made some great money the last while as everyone else was seeing their holdings trashed. Note his comments on energy. We re-print the Globe and Mail article from Saturday, August 13 in full. “The World Isn’t Ending: Sell your bonds, Buy Stocks.” .......................... Think of the world as an indebted company. Based on my reading of the statistics, we can assume it has roughly $70-trillion in sales, on which it owes a staggering $100- trillion or so. Now assume you're a turnaround specialist asked to fix this “company” so it doesn't go broke. What are your choices? Barring hope and prayer, you must cut costs. And, as in every money-losing operation, there are only three kinds of costs: Employee wages, interest expenses, and the cost of materials and supplies. If you choose mass unemployment, you'd be voted out of office (as in Spain), or face riots (Athens, London), or both. So that's out. And if you force banks to take big writedowns, you would merely be exporting unemployment to rich countries. So that's out too. What's left, then? Telling suppliers to cut prices – and the West's biggest suppliers are Middle Eastern oil sellers. Just how big? At the $100-a-barrel price of six months ago, the United States was spending more than $800-billion a year on oil, of which about 50 per cent was imported, according to the U.S. Energy Department. (To recall: U.S. GDP is about $15-trillion.) Europe spent a tad more. So if prices were, say, halved, the U.S. would save about $200-billion a year – more than the proposed cuts by Congress – while Europe would save about $600-billion. In other words, deep oil price cuts would solve the West's problems. Of course, it would also export austerity to the Middle East. But they don't vote here, do they? He writes, “Six months ago, despite the consensus view that the United States was going broke, I recommended buying U.S. Treasury long bonds, then at $118 (U.S.). Following the U.S. budget deal, the 30-year bonds are now at $136, or 15.3 per cent higher. Add 2.2 per cent for six months' coupon, and the return is 17.5 per cent. The S&P plunged 11 per cent during this period. I don't say this to crow (well, maybe a little), but to note that the time has come to sell your long bonds into the bondbuying hysteria and start buying stocks. Why? Because even as stock markets were plunging following Standard & Poor's downgrade of the United States' credit rating, the solution to the world's debt problem was already in motion. No, not cost cutting by Congress. Lower oil prices.