Mumbai, India
There was a time... not so very long ago... when Americans held all the top spots. We had the most... the best... the biggest companies. And the richest people.
Those days are gone...
MEXICO CITY(AP) - Mexican telecom tycoon Carlos Slim is the first man from a developing nation to become the world’s richest person - a shift that underlines the loosening of America and Europe’s stranglehold on the top spots in the billionaires’ club.
Slim’s arrival at the top aroused both pride and anger in Mexico, where many see his fantastic wealth in a poverty-afflicted nation as a sign of what ails it.
With a recovery in the value of his cell phone holdings pushing his estimated fortune to $53.5 billion, Slim jumped past Microsoft founder Bill Gates and investor Warren Buffett when Forbes magazine released its 2010 list of the world’s wealthiest Wednesday.
The rise of Slim, the 70-year-old son of an immigrant shopkeeper, is just a part of the emergence of billionaires in developing countries, Forbes reporter Keren Blankfeld said. She noted this year’s top 10 richest also include two billionaires from India and one from Brazil.
Here’s another item in today’s news:
“China becomes world’s biggest internet market,” says a Reuters headline. There are more internet users in China than in any other country, says the article. And more cars sold. And more concrete poured...
Travel broadens your horizons, they say. More importantly, it humbles you. You realize that there are a lot more people doing a lot more things than you thought.
All over the world, people bus, hump, schlep, toil and strain. Some work hard. Some work not so hard. Some work smart; others don’t.
But over time, fashions and circumstances change. What goes around, comes around. Those that did once ride so high now lie low...
Yes, dear reader, the world turns. And traveling around... you get to see different parts of it... with different stories to tell...
Friday morning’s news tells us that 60,000 people are rioting in Greece... torching German cars and generally behaving badly.
What’s their beef? They’re running out of money, running out of credit... and running out of time. Modern macro-economic policies have turned against them.
But they’re not alone. The news from the plains tells us that Kansas might have to close half its public schools... if it doesn’t find a way to close its budget gap.
The news from other states is not very different. Many foreign governments are in the same fix. Ireland has already begun its “austerity” programs. Italy and Spain can’t be far behind.
But what about the US federal government? No austerity at all. Just the opposite. The feds announced the biggest budget deficit ever – $221 billion for the month of February. In other words, per family, the American government spent approximately $2,000 more than it received in tax revenues. Hmmm... if it continues at this rate, it will spend $24,000 more per family this year. In round numbers, the typical family will pay about $25,000 in taxes... and receive about $50,000 worth of ‘services.’
Is that a great deal... or what?
It’s an absurdity... it’s preposterous... it’s weird and unnatural. And it can’t last.
It is only possible now because of the peculiar circumstances of today’s financial world. Lenders, investors... Chinese creditors... give their dollars to the US government, believing it to be the most credit-worthy borrower in the world. But as the supply of US debt goes up the quality of it declines.
Already, the US is – from a GAAP accounting point of view – bankrupt. Lenders cannot reasonably expect to get their money back. But that doesn’t seem to bother them. US debt still looks like a better bet than, say, Greek debt.
But the world is full of surprises. What a shock it will be when the US finds itself in Greece’s shoes!
** The coming battle against Smartphone cybercrime – and how you could profit…
If you’re reading this Daily Reckoning on your iPhone or Blackberry, this will be particularly interesting. But even if you’re not, this is a tip-off that could make you some good money by the sounds of it.
“It started with a lap dancer,” explains Paul Hill, one of our ‘underground’ share tipsters in London. He’s getting his small group of readers in the mood for his latest recommendation.
It’s quite a story... how we get from a lap dancer to a market that is set to rocket fivefold by 2014. But we get the feeling that this is one sector that’s going to be all over the news in the months ahead.
As usual, Paul Hill’s ahead of the curve... and he’s found a bunch of stocks that could make you money from it. (More on how to get these below…)
Let’s get back to the story. Paul writes in his latest Precision Guided Investments email:
“Eleven years ago, a young computer programmer named David Smith met a lady named Melissa in a lap-dancing bar in Florida. We don’t know exactly what happened that night. But it inspired the young programmer to go on a spree that ended up causing $80m worth of damage.
“You see David Smith is famous for unleashing one of the most deadly computer viruses in history. In late 1999, he uploaded the “Melissa” virus into a word document at his home in Aberdeen, New Jersey – and pressed send.
“Within seconds it had infected its first unsuspecting victims - and the infected programs soon replicated and wormed their way through hundreds of email systems and internet forums across America. Thousands of PCs were crashing every hour. And by the time the virus started knocking out government computer networks, Smith had the New Jersey State Police and the FBI banging down his the door.
“Since the early lessons of Melissa, a colossal industry has sprung up to combat a string of highly destructive copycat viruses. I'm sure you've already installed an anti-virus package on the computer you’re reading this on.
“But I bet you don’t have internet security loaded on your mobile phone. And I think there’s a staggering investment opportunity here. The explosion in web use on smartphones such as the iPhone and Blackberry is leaving millions wide-open to cyber criminals.
Paul goes on to reveal that internet security is now a $10bn plus sector – and is predicted to continue to expand by 5% pa.
Apparently we lose $100bn each year to cyber-criminals engaging in credit-card theft, bank fraud and other scams. It’s no wonder there’s such a massive industry that’s build up around protecting our computers.
But Paul reckons the opportunity is in protecting mobile ‘Smartphones”…
“I’m sure these cyber crooks have already latched onto the massive potential of attacking mobile phones. With powerful new 3G handsets - like the Blackberry, iPhone, Palm and the emerging Droid - being launched almost daily to surf and buy goods over the web, it can’t be long before a deadly mega virus infects millions of 3G phones across the world.
“This deluge of internet nasties (see Fig 1) will wreak havoc on confidential data, security passwords and personal files – and perhaps even cause billions of dollars in damage.
Fig 1 Estimated growth in computer viruses
Click here to view a larger version of this graph
“The mobile security sector, however, seems to have completely passed the City by so far. It won’t stay that way for long.
Paul believes the “cellphone security” sector will grow fivefold by 2014. He’s advising readers to buy in before this becomes mainstream.
To find out more about Paul Hill’s Precision Guided Investments newsletter – and to access the full cellphone security story – click here. Be quick, though, Paul will be releasing his specific new recommendation next week.
Click here to sign-up: Precision Guided Investments
Precision Guided Investments is a regulated product issued by Fleet Street Publications ltd. Your capital is at risk when you invest in shares, never risk more than you can afford to lose. Commissions, fees and other charges can reduce returns from investments. Please seek advice if necessary. 0207 633 3600.
And more thoughts:
*** The air is so hot and humid, here in Mumbai, you can boil an egg in it.
Last night, we ventured out of the hotel for an authentic Mumbai experience. We went out the front door, around the corner, and a half block down the street to a restaurant called Indigo.
We would have taken a taxi but the only thing worse than walking in Mumbai is taking a cab. Taxis are everywhere... small black and yellow cars. They are banged up veterans of many years on Mumbai’s chaotic roadways.
If the car doesn’t break down or get in an accident, you merely suffocate.
*** Friday morning, our driver sounded his horn, then started the engine. Cars are never taken in for repair in India unless the horn doesn’t work. You can drive without brakes, but not without a horn. Maybe that’s why 110,000 people die on India’s roads and railways every year.
We were on our way to CNBC, where we were being interviewed. For some reason, your editor has achieved minor celebrity on the subcontinent. The announcer told his audience that we were a “venerated western economist.” Other interviewers ask for autographs. Many have read our books. All want to know what we really think.
This is probably because our views flatter them. Unlike the US, India is not at the end of a 50 year credit expansion. It’s only at the beginning. Investors might look forward to many years of growth.
“In the West, the situation is very different,” we explained. “The Western economies – especially the Anglo-Saxon economies, and particularly Britain and America – have been on a spending binge for many years. That reached its zenith in 2005-2006; now, it will be very hard for these economies to grow. They can’t do it by expanding consumer spending and consumer credit. In the first place, consumers already have too much stuff. In the second place, the consumer has neither the income nor collateral to justify more debt. So, the economy needs to find a new model to move forward.
“In India, on the other hand, people don’t have so much stuff. There are people sleeping on the sidewalk outside my hotel room. They have nothing except the clothes they are wearing. And they certainly don’t have credit cards and home equity lines. So India can grow for many, many years simply by providing basic goods and services to its own people. And the nice thing about it is that India doesn’t seem to be capable of central planning... or any planning at all. The country can expect a long spell of prosperity, until the central planners get in position to lead. Then, you’re in trouble.”
*** CNBC didn’t like what we had to say. Even if we were generally optimistic about India, we were definitely not cheerleading for world economic growth. And CNBC... along with most of the other mainstream financial media... like to keep viewers smiling.
“Sorry that you are so gloomy,” said the interviewer, adding to the audience that “those are just his views.”
Of course, dear readers know we’re not gloomy at all. Around the office they call us Mr. Sunshine. Why? Because we welcome a depression in the economy like we welcome a hard freeze in the winter; it kills off the parasites.
Until Monday,
Bill Bonner
For The Daily Reckoning
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