Morning Commentary
I think Mead Johnson (MJN) should be in everyone's portfolio now. You can wait for The Correction or you can simply take a position and if the stock pulls back then buy more.
Consider the stock idea and the commentary a freebie. Mead Johnson is an official long idea for paid subscribers, and I have another idea as well.
Will Merkel Blink?
Essentially what's going on now in Cyprus is a game of chicken
On one end is Germany which has more or less funded all these European bailouts to the dismay of its hard working citizens and on the other end Cyprus which could also represent any troubled European nation that wants a future bailout on its own terms.
Cyprus knows Greece played hardball and has been bailed out twice (2010 and 2012), and more importantly knows Germany likes the idea of a United States of Europe (as long as its calling the shots) so even if the smallest, weakest player drops out it could be like that skit where someone pulls a small thread and the entire suit falls apart.
There are already a lot of Euro-skeptics so any hiccup would be seen as massive failure and warnings about the future of a shared-currency and shared rules that come with being a member.
The initial deal to tax all savers was met with natural disgust and horror. Cyprus tried to make Russia the white knight but that seems to have fallen apart and a deal there would also need EU approval. So, it's back to square one with the clock set to strike midnight in minutes.
The ECB says no more emergency cash next week without a deal.
There are at least nine bills floating around Cyprus and suggestions of things like collateralized church assets and future natural gas revenues (selling them now) have been shot down by the ECB.
Cyprus could decide it likes having low business taxes, control of its natural gas assets, and its banking center the way it is, and go through a meltdown by leaving the Euro but having the ability to print its own currency and rebuild the nation under its terms is an attractive long term option.
It's a nail-biter for sure.
Comments |
How about option 3... they tell themselves that the party is over and suck it up. The savers should not be punished. The EU is part of the problem... read more here www.citizenkehoe.com (just an invitation to the blog) :)) Kevin Kehoe on 3/22/2013 10:10:06 AM |
get out of the EU. dale glasgow on 3/22/2013 10:11:53 AM |
Hello Charles, Great piece of commentary. Always interesting to see your point of view. Now a confession: After years of investing, I have never heard of MJN. Thanks for the wake-up call. I always learn something new from you. Best wishes, Lawrence Klepinger Lawrence Klepinger on 3/22/2013 10:39:42 AM |
The politicians in the government of Cyprus, like the U.S. government, will try and delay making a hard decision. I expect some half-baked idea will be adopted that will allow them to claim success while doing nothing more than delaying the inevitable hard choices they need to make. Alexander Nunes on 3/22/2013 11:15:35 AM |
Merkel wants to keep the EU together at any cost, she will pay a price in Sept when she COULD LOOSE HER ELECTION.Germans are getting tired of her. The EU keeps kicking the can down the street. Eventually the EU will have to break up, there is just to much internal stress. They might form some looser union to replace the EU.Brussels is out of control. Cyprus will have a run on their banks next Tuesday.They don't have much choice other than to leave the EU and make a deal with Russia and the EU is stupid enough to let them......Russian naval ships in Cyprus instead of Syria... Tom Wayne on 3/22/2013 11:18:03 AM |
They should tell the EU to take a flying leap, but I bet they will steal that money, or at least what they can get a hold of. I would sure try to withdraw all of mine if I had any there, but I bet that will be impossible for many. Fran Touchette on 3/22/2013 11:29:43 AM |
Both are bad. I think we need to just let them start FAILING. Everyone just expects a bailout. Once these countries realize that they have to get their house in financial order, they will. they will not as long as there is a bailout looming in the wings. Larry Lalime on 3/22/2013 11:49:37 AM |
Charles: I think they should get out of the EU. Develope their resources and be responsible for their own fate. I don't think the German workers should be the answer this time. Frances Wiggins on 3/22/2013 12:19:49 PM |
With a total population of one million people, Cyprus is a grain of sand on the beach. Mt vote is to back their legislators and tell the EU" to scratch where the sun don"t shine". They will get their rescue elsewhere or just leave the ECU. Harold ader on 3/22/2013 2:44:46 PM |
Cyprus has only one choice to save its economy at this point, but I doubt they have the guts to do it. They need to have an immediate constitutional amendment which immediately and permanently makes it impossible to apply a tax to funds in banks or investment accounts. If they open the banks for business without such a guarantee, every smart person will immediately try to withdraw every penny and the banks will collapse unless the Russians come in with a huge loan to prop them up. That is the only way I can see to cancel the fear that has been created simply by proposing such a regressive measure. Their other option wold be to capitulate and hope everyone thinks it won't happen again and there is no run, but I wold not bet on there being that many fools who will leave their money there after losing so much once. Of course, such an amendment would only delay the inevitable unless they did some massive changes toward fiscal responsibility and to cut the umbilical cord from the socialist leaches. As an aside, even if they did impose the tax, I don't see that it would generate any money for the government. As soon as the banks open, there will be a run on the accounts. Unless the government takes the taxes before the banks open, the banks will end up giving out every Euro to cover withdrawals and the government will lose it all to the bank failures and resultant total collapse of the economy as all businesses lose all their working capital. Bob G on 3/22/2013 3:45:53 PM |
It's Spring - pretty good kite-flying weather. What an outrage that the EU, ECB and IMF could even propose a plan to steal from private Cypriot citizens to fix this mess. Have we gotten to a place where people really can't define theft? Are we all that dense? Patricia Flynn on 3/22/2013 3:53:52 PM |
Answer is A Im 70 years old I need to know if it is safe to invest in a JP Moragn stock portfolio. Joseph Newberry on 3/23/2013 3:23:02 PM |
Bitting the bullet would be the best solution. I am just not sure we can handle the harsh out come. It would set a precedent that would be hard to ignore. Stephen Trussell on 3/25/2013 2:07:15 PM |
I am not for any solution that sets a precedent that allows any government to play the role of thief Richard Stumpp on 4/1/2013 3:03:50 PM |
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