The Rude Awakening
Budapest, Hungary
Monday, July 16, 2007 ------------------------- - Mining's David and Goliath - Big potential for little players,
- Infrastructure - Your say on public vs. private,
- A silver CD on its way, road trips in Brazil and much more…
------------------------- Amidst both the ruble and grandeur of Budapest's infrastructure, Joel Bowman reports… It's a scorcher here today. Temperatures in the old Fahrenheit measurement are hovering around the mid-eighties and the ice-cream stalls along the side of Andrassy St., in the centre of Pest, are struggling to keep up with demand from their sweaty patrons. Yesterday we took advantage of similar weather to ponder our own question, posed to you in the weekend edition of the Rude Awakening: "Should a nation's infrastructure be funded by public or private monies? Which system is fairer and more efficient and what have we learned from the success and failures of both systems in the past?" As I'm still busy penning my own thoughts on the subject, I thought I'd leave you with a couple of pictures of the infrastructure from the Hungarian capital and, of course, some opinions from the inimitable Rude readers themselves. Enjoy… 
Winding backstreets lead to an architectural delight at every intersection. 
Slate and cobblestone streets in Pest, with St. Stephens's in the background. 
Bastille Day celebrations on the chain bridge connecting Buda and Pest over the Danube River. ----------------------------------- And the mail…
Rude,
Here in Brazil, specifically in the State of São Paulo, many highways have been privatized with the concessionaires charging tolls. Although it is unpleasant to have to pay to use these roads, it is much fairer than taxing those who do not have an auto to maintain highways for those of us who do.
Also the highways in private hands are in much better shape than those still under Federal control, namely BR 116 that runs from São Paulo south to Curitiba and onward to Uruguay and eventually Buenos Aires.
Government entities as a rule do not function as efficiently as private ones since there is less graft, corruption and nepotism when owners are interested.
Richard Hayes
Sousas, SP, Brazil
PS- Enjoy your roaming around the former Soviet block.
[Thanks, Richard. I heard that apart from decent infrastructure you guys also boast some pretty spectacular beaches down there. Perhaps the next roaming adventure may be in your neck of the woods.] -------------------------------------- Dear Sir, I could argue either side (private or public development of infrastructure), but, at the end of the day, public should prevail. That's because the day is long, and the public side is the most likely to be around 20, 40, even 100 years down the road, whereas the private side will have been bought up, sold, spun off, hedged and quartered, and thus provides much less likelihood of long-term accountability. Long-term accountability is essential in infrastructure. Not that the public side has proved itself on that score--just look at the sorry state of infrastructure in the US today. But I think that if we'd relied primarily on private development and maintenance of infrastructure in the US in the past, we'd be in much worse shape than we are today. Thanks for asking an interesting question. Lacen Horter --- Big Gains from "Worthless" Oil --- Find out how one penny stock will soon begin to transfer the world's "junk oil" into pure profit… But you have to hurry: It's rallied hard in recent trading. Here are the details. -------------------------------------- Rude, Easy answer: Private - Always. We've never really had the opportunity to experience absolutely free enterprise so most folks won't understand that the gumint is the problem, not the solution. Every gumint program is a disaster: Post Office, Social Security, Medicare; you-name-it. BUT, they have a monopoly so private industry doesn't stand a chance - to compete. Your question is the subject of many books and they still don't do justice to the real problem. As long as the "folks" think that gumint is the solution, we'll continue to experience these disasters. Cheers, Tex --------------------------------- Rude, No system beats the free market in resource allocation, whether in providing product, services or maintenance. Forget "logical" alternatives and follow experience. Unaccountable bureaucrats can be counted on to make a muck of anything. The public can never match the political influence of the in crowd. Jack Dixon ---------------------------------- Rude, The advantage of public funding is that it happens and then is used by the entire society. Look at I70 across Ohio. It was built and all comers are welcome to use it! The MAJOR disadvantage of private funding is that the user NEVER gets finished paying for it! Witness the PA, OH and IN turnpikes which had PROMISED to become free roads when the initial bonds were retired but which will NEVER become free roads! Best, Joe B.
Bowling Green, OH [For anyone interested in infrastructure plays, our own Chris Mayer has been following the water story (and the pipes that are crumbling around our most precious resource) for quite some time now. The picks from his Blue Gold Water Report are up big time. In an email to me just the other day Chris wrote, "Joel, the latest scorecard on the water report stocks is: +62%, +82%, +68% +56% and +32%…Pretty remarkable, eh? In only one year!" If you want to give the report a bit of a read, you'll find it here: Chris Mayer's Blue Gold Report ---------------------------------- Rude, I've been a loyal, interested reader of the Reckoning for some years and have an enormous appreciation for your informed commentary. I'm an investor and a former financial/investment writer at this regional newspaper based in Waterloo Region in Ontario. I have only one comment to make re: the seeming unrelenting depreciation of the U.S. dollar against so many of the world's commodity-backed currencies and it is this: The depreciation would be even greater than it has been to this point were the currency of China not linked to the greenback. The yuan rises and falls in concert with the dollar due to the currency link - and the only thing preventing the dollar from falling even more dramatically is the outrage that would be generated around the Pacific Rim if the yuan were to lose value as well, thus badly skewing the already-strained trading relationship among China, Japan, Korea and the Philippines. I believe, over time, that the yuan-dollar "trading band" will be loosened further, but in the meantime, China benefits hugely as currencies such as the Euro, Canadian dollar, Aussie buck etc. strengthen madly against the greenback. Many thanks for your excellent work, research and occasional out-of-the-box thinking. Sincerely, Al Coates. ---------------------------------- Rude, We had a joke in Jakarta before the commodity bull ramped up. "What do you say to an Australian Geologist?" "Big Mac and large fries!" Now they can't find enough of them. More power to your elbow guys. Steve
Jakarta, Indonesia ----------------------------------- Rude,
A few months ago I met a Swedish gentleman on a golf course here in Bangkok. Turns our he earns his keep investing in "junior" mining and energy companies in Canada. He kindly shared one of his favorites with me, a company called Southern Resources (STP on the TSX) (STPJF on the OTC). It was $1.34 and I bought a couple of thousand shares on his word. The shares are trading above $4.00 now and from what my friend says this is the beginning. I do not know if you share this type of info with the readers, but if you do, do the needful.
Best wishes,
Bill [Thanks Bill. It goes without saying, Rude reader (although I'll say it anyway), that you will need to conduct your own research into any companies mentioned in these humble pages, be they from your editors or fellow readers. Having mentioned the need-not-be-mentioned, it must now be mentioned that plenty of juniors are experiencing exponential growth thanks to the world-wide resource boom. With the big guns in the mining sector jostling for position, it's often the little takeover targets that are
left exposed to more of the upside potential. Take the recent case of Australian mining giant, Rio Tinto, for example. When Rio trumped a hostile bid for Canadian Aluminum producer, Alcan, by U.S. company, Alcoa Inc., it became the single largest producer of the highly demanded metal in the world. In overnight trading Down Under, shares of the mining giant sagged for a second successive day (down 4.2% in Monday's trading to close at A$97.10) on fears that the acquisition may be a debt overload for the heaving giant. Shane Oliver of AMP Capital Investors in Sydney spoke to Bloomberg about the slump saying, "With Rio, there's no doubt takeovers are generally more positive for the acquired stock than the acquirer." Too right, I say. Alcan Inc. will enter today's trading near their 52-week high of US$99.97 and a long shot from their low for the past year of about a third of that (US$37.42 last September). Certainly there is plenty of wiggle room for the smaller outfits to profit either from takeovers or by simply hitting the jackpot the old-fashioned way, i.e. discovering a reserve of highly-demanded, lowly-supplied resources in their own backyard. We've been working with some of the folks over at Casey Research to bring you some insights into the juniors, particularly in gold and uranium. Here are a couple of links to Rude columns of yore that might give you a starting point for your own investigations into little outfits with big potential. Gold, Jr. - By Doug Casey The Australian Renaissance - By Chris Gilpin --- Trading The Resource Bull Market --- The Resource Market is HOT…and few traders are loving it quite as much as Kevin Kerr. Those who heeded his call banked 400% in just 34 days on this "sterling" options play - one of the 10 Triple Digit winners he picked in 2006… Join the Maniac's rampage and YOU could rake in even more than this - and faster - as the global commodities crunch escalates. Read On Here: Resource Trader Alert ---------------------------------------- And finally, while we're on the subject of all things metal, keep in mind that tomorrow is the launch of EverBank's Silver CD. We've been working with the folks over at EverBank to create a vehicle you can use to back your flailing dollars. EverBank and the Agora Financial editors have recognized the climate of roaring resource prices and floundering dollars and we're pretty excited about being able to offer you the chance to protect some of your wealth. You can check in tomorrow for all the details but, for now, keep an eye out for your 5-Minute Forecast, en route from the desks of Addison and Ian back in Baltimore. Cheers, Joel Bowman
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