A Fascinating Tale from Peru

OUT OF A CLEAR GREY SKY

Peru1.jpg 

One day in 2007, a meteorite landed in a Peruvian hamlet. And it wasn’t just any meteorite. Hugh Thomson visits the locals and tracks the fall-out…

 

From INTELLIGENT LIFE magazine, November/December 2012

ON A WINTER’S morning, the sun is rising over Lake Titicaca and steam is coming off the frosted water as it melts. The light at 13,000 feet is so thin that the Andean mountains around the lake have an eerie, insubstantial quality: cardboard cut-outs in a puppet play.

At Puno, the largest town in this region of south-eastern Peru, passengers are being piped aboard the Orient Express, with its leather armchairs and complimentary pisco sours, to take the high pass to Cusco and Machu Picchu. In lakeside boutique hotels like the $1,000-a-night Titilaka, foreigners and now a few well-heeled Peruvians are sipping muña tea as they contemplate a trip to the islands or a spa session. And I’m bombing along a rutted road into the badlands beside the border with Bolivia, to an isolated community which, until a few years ago, no one had ever heard of.

My destination is Carancas, some 20 miles from the lake, a scattered hamlet of Aymara homesteaders tending their sheep and llamas on a wide-open plain of tufted ichu grass that looks like a worn carpet. It is too poor a community to have any cars. Even so Eduardo, my taxi driver, is not taking chances. Every bicyclist, chicken or señora in a stately bowler hat gets due warning with a double blast of his horn.

The wide-open plain and the clarity of the light mean that the few inhabitants I can spot are picked out as if by Edward Hopper. A boy of about nine is wheeling an old bicycle wheel across the grass. Another is playing with a toy truck outside an adobe hut; being a truck driver is something to which many campesinos aspire. In the fields, the donkeys are staked and hobbled, a belt-and-braces approach to ensure that they, like the campesinos, are never likely to leave.

A motorcycle comes into view down the pock-marked road. The driver and his two passengers are wrapped in overcoats, goggles, scarves and peaked caps, as if they’ve just arrived from the 1920s. We ask directions. The driver gives that indeterminate wave of the hand, so common in South America, halfway between a direction and a gesture of hope: “It’s somewhere beyond the school and the bridge.” We follow a grass lane that winds between the homesteads with their beehive barns and crumbling adobe walls, until even that track runs out.

There is no sign of what we have come to find. We look for someone to ask, but already most of them are far away, in the fields gathering hay or huddled in small groups having what may well be a second breakfast: in the highlands the native people, the Aymara and the Quechua, like a rolling breakfast of soups and stews.

I feel a sudden sense of futility and absurdity at what is a quixotic quest. An old woman is observing us as she leans over the wall of her cancha. From her stovepipe hat hang what look like corks, as black and frozen as the potatoes she has left out to preserve in a neat square in front of the hut. She says something in glottal Aymara. Eduardo, like most city boys, speaks little Quechua and less Aymara, so we try to converse in Spanish, but she is partially deaf.

A younger woman comes to our rescue. She introduces herself as Nora Maquera and tells us the older woman is her mother-in-law, Valentina, and is over 90, although her exact age is unknown. Together, they walk us slowly towards the end of their land. Masked by a rise in the plain, and by some scrappy canvas sacking I had taken to be agricultural but that turns out once to have been a marquee tent, is a large, perfectly round 50-foot crater, now filled with water of a startlingly deep blue.

THE METEORITE FELL on Carancas on September 15th 2007, at 11:40:14 precisely. Unlike most, it did not break up in the atmosphere, but landed with an impact one scientist has equated to 3,000 kg of explosives, enough to destroy a city block. It sent up a mushroom of smoke that could be seen five miles away, in Desaguadero, on the border with Bolivia.

Seismologists in La Paz and southern Peru registered the impact. The story was reported by news services around the globe, although at first there was uncertainty as to what had caused the crater. Pravda even speculated that it might have been an American spy satellite that had fallen out of the sky. But then nothing. A two-day wonder that fluttered the attention of the world before its gaze turned elsewhere.

Something about the story had stuck in my mind and brought me here: the idea of a meteorite landing in a village’s backyard, like something out of Tintin; tales that reached me from Peruvian sources about the hardship and fights that the villagers had then endured; and a perennial fascination with the life of the Aymara and Quechua who eke out a living in the thin air of the Andean highlands. I first came to this area of Peru 30 years ago and have been back many times to try to trace the old pre-Columbian roads that lace the region, and see the monuments that survived the Spanish Conquest, like the nearby ruins of Sillustani.

Now, as we stood by the crater, Valentina told me how she had been inside her house when she heard what sounded like an immense clash of thunder and a rushing noise she described as “aah-ugh-aah”. She felt the shock of the impact, and thought it must have been a flash of lightning—although when she had just been outside, it was a perfectly clear morning. Like many of the inhabitants of Carancas that day, she fell to her knees and prayed to God.

The meteorite appeared as a fireball with a smoky tail, coming out of the clear sky above Lake Titicaca. It could easily have fallen in the lake itself. But with a last burst of energy, it carried across the water and this sphere of compacted iron and pyroxene and feldspar and kamacite buried itself in the plain of Carancas.

Valentina’s son, José, I later discovered, had seen the meteorite fall. He had been standing in a field nearby, watching over their sheep. A man of few words, José’s first thought as the fireball slammed into the ground was “this is how the world ends”.

As soon as the fireball landed, the skies turned dark with a toxic cloud that killed cattle, put many of the villagers in hospital, and left 600 people, including many of the emergency services, with nausea and headaches. One man told me that the cloud made the village smell “like hell must smell—of sulphur and rotten eggs”. The sky rained down with stones hurled up by the meteorite’s landing. The only glass windows in the hamlet, at the health centre, all shattered.

Eight policemen were sent from Desaguadero to find out what had happened and guard the meteorite, which had buried itself deep inside the ground. They too were hospitalised. The rumour among the villagers was that they had tried to steal some of the meteorite. Yet, as scientists soon established, it was not necessarily just the meteorite that was toxic. It had landed close to a small stream that meandered over the plain from the hills above. Since the meteorite had fallen at a point on the Earth’s surface of an unusually high altitude—13,000ft—it had had less time to cool as it passed through the atmosphere.

In this case, the residual heat and impact of the meteorite combusted with the water, which the villagers had been drinking for years. Local health officials now realised the water contained traces of arsenic and that, over the long term, this had caused the liver problems and early mortality in Carancas which had always been put down to the hardship of the villagers’ lives. The meteorite had sent up such a concentrated dose of this arsenic that it finally became apparent; some geologists think that this may have combined with the troilite already present in the meteorite to form a dangerous cocktail.

It took a while for this to emerge. More immediately clear was that, for the first time in its history, Carancas was in the news. Along with the police, many geologists, medics and Peruvian journalists converged on the village. The crater was sealed off.

It was when two engineers arrived to remove the meteorite that the villagers took action. They refused the engineers access. The government, pompously, quoted a mining law that declared that “everything above ground belongs to the owners of that land. Everything below it belongs to the state.” Since the meteorite had penetrated to a depth of over 15 ft, it could now be treated as a mineral deposit. But, as every villager made a point of telling me, no one in Carancas was going to accept that. Not least because by then a man had arrived whom the villagers called El Cazameteoritos, the “Hunter of Meteorites”.

Photograph: The meteorite fell with such force that it buried itself more than 15 ft into the altiplano, spewing out stones and rocks (Alamy)

go to the article for page 2.  This story is worth it.

PLACES  HUGH THOMSON  NOVEMBER/DECEMBER 2012

Apple Should be Ashamed about this Map Business

THE MARKETS NEWS AND ANALYSIS BLOG

Apple cans another executive over maps – as iPhone 5 sales soar

November 27, 2012, 3:51 PM

A divergent set of news items emerged on Tuesday with Apple Inc. AAPL  firing another high-level executive over its disappointing new mapping application launched with the iPhone 5 – at the same time that data emerged showing the new smartphone booming in sales and helping the company regain ground against the rival Android platform.

It remains unclear whether sales of the iPhone 5 would have been even bigger without the flubbed mapping software, or if consumers ignored the groundswell of media reports about the application’s flaws and bought the new smartphone anyway.

On Tuesday afternoon, the AllThingsD technology blog reported that Apple has fired Rich Williamson, who oversaw development of the mapping software. This news comes a month after the company announced the surprise departure of Scott Forstall, the senior vice president who oversaw the entire iOS line and reportedly clashed frequently with other high-ranking executives. Subsequent reports had Forstall’s refusal to sign a public apology for the embarrassing Apple Maps launch as the final straw in his dismissal, with CEO Tim Cook signing the statement instead.

However, another piece of data on Tuesday suggests the iPhone 5 has been selling well despite the maps controversy. According to market research firm Kantar Worldpanel ComTech, sales of the iPhone 5 drove Apple’s iOS platform to a 48% share of the U.S. smartphone market — overtaking Google’s GOOG  Android platform, which had a share of 47% for the three-month period ended Oct. 28. The iPhone 5 went on sale on Sept. 21.

“The last time we saw iOS overtake Android in the US was when the iPhone 4S was released and Apple managed to retain its lead for three consecutive periods,” wrote Kantar analyst Dominic Sunnebo in a statement.

The Kantar report did not estimate unit sales of the iPhone 5. Apple will issue its report for the December quarter sometime in late January.

– Dan Gallagher

Follow The Tell blog on Twitter @thetellblog

The End of the Three Amigos

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Published: November 26, 2012
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WASHINGTON — For over a decade, the bipartisan trio of senators traveled the world together, from war-torn Iraq to security conferences in Germany to the remote kingdom of Bhutan. Their hawkish world views often placed them at odds with their respective parties, but together they secured a place at the center of every major foreign policy debate.

Doug Mills/The New York Times

Sen. Joe Lieberman, center, with Republican senators John McCain, left, and Lindsey Graham, right, in 2007.

Now the senators — John McCain of Arizona, Joseph I. Lieberman of Connecticut and Lindsey Graham of South Carolina, a triumvirate of frequent fliers dubbed “the three amigos” by Gen. David H. Petraeus — are breaking up the band, as Mr. Lieberman retires in January.

For Mr. McCain and Mr. Graham, the loss of Mr. Lieberman, a Democrat turned independent who is the chairman of the homeland security committee, goes beyond personal deprivation and could profoundly affect their ability to influence foreign policy. Though he frustrated many Democrats with his interventionist ideas, Mr. Lieberman gave Mr. McCain and Mr. Graham, both Republicans, a veneer of bipartisanship that lent credibility to their policy goals.

An illustration of life without Mr. Lieberman surfaced recently when Mr. McCain and Mr. Graham, along with a new amiga, Senator Kelly Ayotte, a Republican freshman from New Hampshire, called for a special committee to investigate the deadly attack on the American diplomatic mission in Benghazi, Libya. The push quickly fell flat, and Mr. McCain, who had harshly criticized Susan E. Rice, the ambassador to the United Nations, over the attack, appeared to retreat over the weekend from his original assertion that Ms. Rice was unqualified to be secretary of state.

“I think she deserves the ability and the opportunity to explain herself and her position,” Mr. McCain said on “Fox News Sunday,” adding, “She’s not the problem.”

On Tuesday, Ms. Rice plans to travel to Capitol Hill to meet with Mr. McCain, Mr. Graham and Ms. Ayotte on the Libya issue, according to Congressional and administration officials.

The question is whether the group, whose profile rose after the Sept. 11 attacks, will be able to maintain an influential voice without Mr. Lieberman or will become isolated on an island of partisan poking.

“I think it’s becoming increasingly difficult for them to defend their positions,” said Senator Richard J. Durbin of Illinois, a member of the Foreign Relations Committee and the No. 2 Democrat in the Senate.

Even Mr. Lieberman seemed skeptical of a one-party band. “I think John McCain and Lindsey Graham will always be leaders on foreign policy,” he said in an interview. “But their voices would be stronger if they are part of a bipartisan group.”

Mr. Lieberman and Mr. McCain became friendly in the late 1980s when they joined the Senate. “I approached John on the floor and said, ‘Hey, I’d like to work with you on some things,’ ” Mr. Lieberman said.

The two were united on issues like the Bosnian war and efforts to stabilize post-Soviet republics. Their travels began with an annual security conference in Munich, and they added other venues. “We felt if you’re going to take a position on what is happening in the Balkans or Asia,” Mr. Lieberman said of their dozens of trips, “you better go there and meet and talk to people.”

When Mr. Graham was elected to the Senate in 2002, he joined the duo, whose militaristic foreign policy views suddenly had deeper resonance. “The ‘amigo’ dynamic really began to materialize after 9/11,” Mr. Graham said in an interview. “Everything changed about American security threats then.” (Mr. McCain declined to be interviewed for this article.)

The three men became even more powerful in 2007 as President George W. Bush pursued his “surge” strategy in Iraq. The Republicans had just lost the House and the Senate, in no small part because of the Iraq war, and both parties were highly skeptical of the president’s decision to double down on troop levels in Iraq under General Petraeus. Mr. Lieberman’s pressure on the Senate floor day after day helped prevent an earlier withdrawal sought by many Democrats.

“Our biggest contribution was giving the surge a chance and giving Bush political cover to change strategies,” Mr. Graham said. “Joe was the real hero because he denied the Democrats the 60th vote to set a timeline for withdrawal. If that had not happened, we would have never had the surge.”

The success of the operation earned them further respect among their colleagues, even though many members who voted to authorize the war say they regret doing so. “I have no regrets about taking out Saddam,” Mr. Graham said. “But I have a lot of regrets that we didn’t understand what we were getting into better.”

The three did not agree on every military issue. Mr. Lieberman broke with the others on various policies, most prominently the Clinton-era “don’t ask, don’t tell” policy governing gays in the military. He and Senator Susan Collins, Republican of Maine, successfully pursued its repeal.

While other senators, including Republicans, have been tossed from Mr. McCain’s inner circle for disagreeing with him so publicly, Mr. Lieberman remained firmly in his camp, perhaps the only member who enjoyed such immunity from Mr. McCain’s well-documented temper.

“We’re really a band of brothers,” Mr. Lieberman said of their relationship. “What is perhaps important about that is that in a time of increasing partisanship and ideological rigidity, that friendship has transcended the obvious differences between us.”

After President Obama’s first years in office, the trio seemed to lose some of its power on foreign policy issues, and often appeared to be scolding the administration rather than seeking bipartisan policy solutions. The foreign policy landscape has become especially complex with many intraparty differences in the wake of the Arab Spring.

“There is so much more of a muddle on foreign policy now,” said Jon B. Alterman, the director of the Middle East Program at the Center for Strategic and International Studies. “I testified before the Senate Foreign Relations Committee in April on Syria, and I couldn’t understand what the partisan line was.”

Some lawmakers have argued for deeper sanctions or more assistance to the Syrian opposition, while others are against both notions, but they do not break down along party lines.

That dynamic makes notable the inclusion of Ms. Ayotte, a member of the more conservative wing of Senate Republicans, who has traveled with Mr. McCain and Mr. Graham.

Ms. Ayotte said she began working with the pair on the issue of detainees. Of Mr. Lieberman, her Senate mentor, she said: “I don’t look at myself as taking his place. I hope to add another voice.”

Ms. Collins said she thought it might have made a difference if Mr. Lieberman had joined the others in calling for a special committee to look into the administration’s response to the Benghazi attack. “But not surprisingly, he felt, correctly in my view, that there was no need for a special committee,” she said.

The amigos say they will miss their travels, watching Borat films, walking together after dark on Friday nights instead of driving so Mr. Lieberman could observe the Sabbath and visiting with troops.

Mr. Lieberman remembers going to Vietnam with Mr. McCain, who spent more than five years as a prisoner of war there after his plane was shot down over Hanoi. “Going with McCain to the Hanoi Hilton for me was quite an emotional experience,” Mr. Lieberman said, noting that there is a statue of Mr. McCain where his plane was shot down.

“We complained to our Vietnamese hosts that the statue was much too small and not at all grand enough,” he said. “They claimed they would replace it.”

 

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Violating the Pledge

Perhaps now Norquist will be banished to the dustbin of recent history.

Graham: ‘I Will Violate the Pledge’

On ABC’s This Week, Senators Lindsey Graham and Dick Durbin discussed the fiscal cliff and the possibility of a bipartisan deal on tax increases and spending cuts. Graham repeatedly indicated to host George Stephanopoulos that he is open to raising revenues, though not through raising tax rates, saying, “I will violate [American for Tax Reform’s] pledge for the good of the economy.”

Stephanopoulos pushed Graham about the possible consequences of that maneuver, quoting a threat from Grover Norquist about whether senators who are considering violating the pledge “like being senators.” Graham responded that, “I love being a senator, but when you’re $16 trillion in debt, the only pledge you should be making to each other is not to end up like Greece.” He noted that “we’re below historical averages” of revenue, and would “tell Grover Norquist that the sequester destroys the United States military.”

He emphasized, however, that it would have to be a quid pro quo deal, and since Democrats’ promised spending cuts rarely actually happen, they’d have to come in the form of entitlement reform, defending the ideas of raising retirement ages and reforming Social Security in the face of objections by his ostensibly reform-friendly partner Dick Durbin.

Asset Allocation

Asset allocation

Earning a bob or two with Dylan

Nov 23rd 2012, 14:31 by Buttonwood

SORRY to see that Dylan Grice is deserting his strategist post at Societe Generale, where the team never fails to keep readers entertained. He is off to join an investment management firm as did his predecessor, James Montier, who is now at GMO.

His final piece, in typical style, invokes the cockroach, that consummate survivor, which follows the rule that a gust of wind indicates a potential predator and accordingly scurries off in a different direction. The cockroach has survived several mass extinctions, including the one that wiped out the dinosaurs. The calamities that affect investors occur when they herd into an asset class, as they did in equities in the late 1990s and as they are doing in government bonds today.

So Dylan prescribes a native diversification strategy for those who do not know what the future holds (which means all of us). A 50% bonds/50% equities split would have worked well over the last 20 years, but would have been disastrous in the stagflationary 1970s. So he suggests a four-way split – 25% equities, 25% government bonds, 25% cash and 25% gold.

The annual return from this strategy would have been highly respectable – 5% real since 1971, compared with 5.5% in equities and 4% in government bonds. But the volatility is much lower – the maximum drawdown was 20% in the early equities, compared with 50% (twice) for equities and 40% for government bonds. Investors would have found it easier to sleep at night.

Many years ago, in the FT, I proposed a similar native strategy, involving just equities, bonds and cash; one took the expected return from the three asset classes and dividend the portfolio accordingly. The expected return on bonds and cash is the current yield; the expected return on equities was the dividend yield plus nominal GDP growth. So if cash yielded 4%, bonds 5%, equities 3% (with nominal GDP growing at 4%), expected returns were 4/5/7. The three returns added up to 16, so one put 4/16 in cash, 5/16 in bonds and 7/16 in equities. The beauty of this system is that it made you rebalance when asset classes looked expensive; at the time (back in 2005), it also had a record of low volatility.

The End of the Ames Straw Poll?

Other Things We Should Abandon with the Ames Straw Poll

AP
Connor Simpson 2,400 Views Nov 22, 2012

There’s a movement growing that says we should get rid of the Ames Straw Poll. Iowa Gov. Terry Branstad was the first person to say that this thing has got to go, and now other politicians are agreeing with him. Do you remember who won last year’s straw poll? Hint: it was not Mitt Romney.

It was Michele Bachmann. She… well, let’s be nice and say she didn’t win the Republican nomination. So, in the spirit of getting rid of the straw poll, here are some other thing we think should be abandoned:

  • The Dixville Notch. It was a tie this year. Get rid of it.
  • The New Hampshire primary. It used to be first. Now it’s, like, third. Get rid of it.
  • Every primary that tries to jump the New Hampshire primary to be the first one, as if it matters. Get rid of them, too.
  • Actually, let’s eliminate the entire primary process. Have them fight in the UFC and the winner becomes the nominee.
  • Republicans. They’re all terrible. Get rid of them all.
  • Democrats. They’re all terrible. Get rid of them all.
  • Independents. They’re all terrible. Get rid of them all.
  • Football on Christmas.
  • Christmas.
  • Football.
  • Survivor Series. It’s a bad pay-per-view, and hardly a Thanksgiving tradition like it used to be.

Want to add to this story? Let us know in comments or send an email to the author at connorbsimpson@gmail.com. You can share ideas for stories on the Open Wire.

More on the Fiscal Cliff

Obamacare on table for ‘fiscal cliff’ talks: “We can’t afford it…the law has to stay on the table,” says Boehner

As President Barack Obama and Congress try to avoid the looming fiscal cliff, House Speaker John Boehner said the Affordable Care Act or ‘Obamacare’ as it’s commonly called, will be included in deficit negotiations.

The nation can in fact afford the act despite the possibility of tax rate increases and federal spending cuts at the beginning of next year,  according to Boehner’s editorial in the Cincinnati Enquirer, but it must be deliberated by both parties first.

Although Republicans have openly pushed for the full repeal of Obamacare, Obama’s re-election kept the act on the table. The act will mandate each state to provide individuals and small businesses with healthcare, either through a state or federal-run exchange.

But with Mitt Romney out of the picture now Boehner says the GOP must adopt a new approach in getting Obamacare repealed.

OutFront tonight: CNN Contributors Roland Martin, Reihan Salam, and David Frum.

Boehner: Obamacare on table for ‘fiscal cliff’ talks

As congressional leaders and President Barack Obama search for common ground to tame the national debt as the weeks dwindle down to end of the year, House Speaker John Boehner said the Affordable Care Act, often referred to as Obamacare, must be included in deficit negotiations.

“We can’t afford it, and we can’t afford to leave it intact,” Boehner wrote of Obama’s signature healthcare initiative in the Cincinnati Enquirer. “That’s why I’ve been clear that the law has to stay on the table as both parties discuss ways to solve our nation’s massive debt challenge.”

FULL POST

Filed under: Economy • Fiscal Cliff • Politics

Interesting News for Investors

Recent Global Events Investors Should be Keeping an Eye On

By Frank Holmes| Tue, 20 November 2012 23:10 | 1

Benefit From the Latest Energy Trends and Investment Opportunities before the mainstream media and investing public are aware they even exist. The Free Oilprice.com Energy Intelligence Report gives you this and much more. Click here to find out more.

Indian Gold Demand Picks Up

The love for gold has been reignited in India, according to the World Gold Council (WGC) in its Gold Demand Trends for the third quarter of 2012. India regained its title as the strongest performing market, overtaking the greater China area, as the country experienced a bounceback in demand due to improved sentiment during the festival season.

Compared to the third quarter of last year, Indian gold jewelry demand grew by 7 percent while gold bar and coin demand rose 12 percent. Total consumer demand was 223 tons, compared to 205 tons this time last year. The second largest market was Greater China, which consumed 185 tons in the third quarter of 2012. This was less than the 201 tons consumed in the third quarter of last year.

Together these markets in the east made up 55 percent of the world’s jewelry and investment demand, according to the WGC.

Indian Gold Demand

Although India experienced a setback earlier this year when gold shops boycotted a proposed tax on the yellow metal, imports recovered by July “as inventory levels were bolstered (aided by a well-timed dip in the local price) and the market adjusted to the customs duty,” says the WGC.

The third quarter has historically been a strong seasonal time for the Love Trade to come alive in the east. Monsoon rains and the festival season in the fall are generally associated with the buying and giving of gold. Still, for the year, don’t expect the Love Trade in India to be as strong as it was in 2011, as gold demand remains subdued with the ongoing weakness of the rupee.

The WGC has a wealth of information about the gold market in the third quarter. I encourage all serious gold investors to download its reports at www.gold.org.

FHA in Need of Taxpayer Bailout Keeping Fear Trade Alive

The Federal Housing Administration reported that it has exhausted its reserves, possibly requiring a bailout from U.S. taxpayers for the first time ever in its nearly 80-year history.

FHA Insured Loans

The agency prides itself on being “the only government agency that operates entirely from its self-generated income and costs the taxpayers nothing.” Meanwhile, delinquent loans have been steadily climbing for the last few years. According to data from the FHA, the Wall Street Journal reported that the number of single-family loans insured by the FHA that are 90 days or more past due climbed to roughly 739,000 in September. “That represents about 9.6 percent of its $1.08 trillion in mortgages guaranteed,” says the WSJ.

Now its capital reserves have dropped to a negative $16.3 billion. This is considerably below the required 2 percent capital cushion. Based on its $1.1 trillion portfolio, it should be reserving about $22 billion.

To keep the FHA solvent and meet its requirement, approximately $38 billion of cash would need to be injected.

The FHA has played an important role in keeping the housing market healthy, as it provides insurance on mortgage loans for single- and multi-family homes. Many of the loans backed by the FHA are held by borrowers who make a small down payment, which can be as little as 3.5 percent of the purchase price. Without the government’s guarantee, most private lenders wouldn’t have originated these loans.

It appears that another government bailout is on the horizon. The housing market is key to the U.S. recovery, which incentivizes the government to print more money and debase the currency, just as the Federal Reserve is driven to seek maximum employment. These continuing actions should stoke gold’s Fear Trade all through the winter.

Gold is a “must have” investment today, according to Investment Strategist Keith Fitz-Gerald of Money Map Press. During our latest webcast, Keith explained how gold helps hedge value. The yellow metal has been “proven to have a roughly 10-to-1 relationship with interest rates. And that means it’s an indirect correlation or a corollary to bond portfolios,” he says.

“If interest rates start rising, that’s where your gold is really going to pay off,” Keith says.

Keep in mind that although there are many powerful reasons to accumulate gold, make sure you invest prudently. We recommend having a 5 to 10 percent weighting of gold and gold stocks in your portfolio. How should you invest the other portion?

Keith suggests structuring portfolios using the 50-40-10 pyramid model shown here. At the bottom of the pyramid are the “Base Builders,” where 50 percent of the portfolio is invested in defensive positions that tend to hold their value in nearly all market conditions.

Money Maps Portfolio

One base builder that Keith recommends is U.S. Global’s Near-Term Tax Free Fund (NEARX), which invests in municipal bonds that have a relatively short maturity.

Above the Base Builders are the “Glocal Income & Growth” investments, which should make up 40 percent of a portfolio. These are globally recognized brands with strong balance sheets, experienced management, high levels of cash flow and above-average dividends.

The remaining 10 percent is invested in what Keith calls “Rocket Riders,” which are riskier assets. Special situations, IPOs and options fall into this category, allowing the investor to “swing for the fences.”

China’s Pyramid of Power

The global economic picture came into focus a little more with the announcement of China’s new leadership. We now know the seven men who will lead the world’s most populous country and second largest economy over the next several years.

But don’t expect sweeping changes, as the new pyramid of power will likely follow the path of its predecessors. Yet the leaders will likely feel pressure to “continue making significant reforms to China’s economic structure and expanding the personal freedom of its people,” says China Macro Strategist Andy Rothman of CLSA. Likely pushed to the top of the agenda is the rule of law, as it is a key evolutionary step for China and can benefit both the rich and the poor. CLSA believes it is fundamental to the country’s economic growth as well as its social stability.

We will need to wait until after the Party’s economic work committee meeting in December to hear about China’s economic strategy for 2013, however, more details will be revealed after the new government formally takes office in March. Regardless, it would be helpful to eager investors to communicate stronger reform messages sooner rather than later.

“We’re in for a barbecue Economy”

Despite the clarity that we have following the outcome of the U.S. elections and the selection of China’s new leaders, we’ll likely continue facing uncertainty during this long, slow recovery, says Keith. It helps to think of the economic recovery like a good barbecue. It doesn’t come from being cooked fast; rather, it requires patience and time. So even if progress is slow in this “barbeque economy,” growth will continue, he says.

Make sure your portfolio is well prepared.

By. Frank Holmes, CEO and Chief Investment Officer, U.S. Global Investors

U.S. Global Investors, Inc. is an investment management firm specializing in gold, natural resources, emerging markets and global infrastructure opportunities around the world. The company, headquartered in San Antonio, Texas, manages 13 no-load mutual funds in the U.S. Global Investors fund family, as well as funds for international clients.

Christie Taking Heat from Arch Conservatives

The Republican Wrath Over Chris Christie, Revealed

Associated Press
Elspeth Reeve 5,153 Views 9:41 AM ETing behind the scenes, either. The Drudge Report is still holding a grudge — “CHRISTIE CLOWNS ON ‘SNL’ AS RESIDENTS SUFFER…” was Monday’s headline. “I know people who think that what Christie did was, for all intents and purposes, endorse Obama,” Rush Limbaugh said before the election. “Will Chris Christie Pay Any Price?” he asked after it. And Limbaugh warned that conservative recriminations might go the wrong way. “I’m gonna be the reason — not Chris Christie, I’m gonna be the reason — all this happened… [I]t’ll be said if the Republican Party wants to have a future, they’re gonna have to shut up people like me and stop listening to people like me.”

You can see why that might happen, since the one Republican guy who’s recently shown he can get non-Republicans to actually like him is Chris Christie. A new Quinnipiac poll of New York City voters finds the plurality, 36 percent, though Christie did the best job in responding to the storm. Obama was in second place, with 22 percent thinking he did best, followed by Mayor Michael Bloomberg, with 15 percent.

Want to add to this story? Let us know in comments or send an email to the author at ereeve@theatlantic.com. You

Mitt Can’t Just go Away

GOP Repudiation of Romney on “Gifts”? Don’t Be Fooled

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| Fri Nov. 16, 2012 1:17 PM PST
jindal backs romneyGov. Jindal speaks at a November 3 rally for then-presidential hopeful Mitt Romney. Mark Nassal/Flickr

Mitt Romney initially called his remarks on the 47 percent video unearthed by my colleague David Corn “inartfully stated.” But since his defeat, he’s returned to a political theory that divides the United States into makers and takers, arguing that President Barack Obama only succeeded by providing young people, women, and minorities with exhorbitant “gifts” to buy their support, in the form of things like health care coverage and help with student loan debt. (Jon Stewart piled on with some gifts of his own devising.)

“What the president’s campaign did was focus on certain members of his base coalition, give them extraordinary financial gifts from the government, and then work very aggressively to turn them out to vote, and that strategy worked,” Romney said on a post-election conference call with donors.

A better example of an unearned “gift” is being born the son of a wealthy, famous politician.

My colleague Kevin Drum has already addressed why Romney’s remarks are ridiculous—political parties reward their constituencies, and Romney would have pursued goodies for GOP backers had he been elected. Financial institutions would have been very happy with a Romney administration that repealed Dodd-Frank, military contractors would have been delighted with Romney’s plan to raise military spending to astronomical levels, and Romney’s wealthy donors would have been delighted with his tax cuts for high earners. These are all “extraordinary financial gifts,” and unlike student loans or health care coverage, they do nothing to help ensure that being born into a family of modest financial means doesn’t prevent a person from succeeding. Help with student loan debt doesn’t mean you didn’t have to work hard to get good grades. A better example of an unearned “gift” is being born the son of a wealthy, famous politician so that you’ll never have to worry about student loan debt.

The more interesting phenomenon, however, is the oppobrium from Romney’s fellow Republicans. Louisiana Gov. Bobby Jindal, who likely has his own presidential ambitions, called Romney’s remarks “absolutely wrong,” and said “We have got to stop dividing American voters.” Wisconsin Gov. Scott Walker backed up Jindal, saying that the GOP is the party that “helps people find a pathway to live the American Dream.” Conservative writer JP Freire, echoing a theory that Romney’s conservatism didn’t sell in part because it was not genuine, wrote “I think Romney’s saying what he thinks a conservative would say.”

Jamelle Bouie: “If there’s a problem with Romney’s statement, it was the language, not the sentiment.”

My former American Prospect colleague Jamelle Bouie, writing at the Washington Post, has a different theory, namely that Republicans are rejecting Romney’s remarks because they’re politically harmful—not because they see them as incorrect. “If there’s a problem with Romney’s statement, it was the language, not the sentiment.”

I think Bouie has it right. If Romney is saying “what he thinks a conservative would say,” it’s probably because there are so many conservatives saying it. Rush Limbaugh, whose influence on conservatism dwarfs Romney’s, explained the 2012 election results by saying “People are not going to vote against Santa Claus, especially if the alternative is being your own Santa Claus.” The sentiment was repeated on Fox News incessantly, with on-air personalities like Eric Bolling saying “people voted to continue to get free stuff,” and Bill O’Reilly saying Romney was “right on the money.” This notion is deeply flattering to conservatives who would like to imagine themselves as rugged individualists, and those who disagree with them politically as lazy moochers.

As with the 47 percent tape, several conservative intellectuals have rejected Romney’s statements and explained why they were incorrect. In both cases, however, Romney’s problem was not diverging from conservatism so much as expressing it in ugly and unappealing terms. The Republican reaction from party leaders like Jindal is not a rejection of the worldview underlying Romney’s remarks, which is extremely popular in right-wing media. It’s an expression of political opportunism from politicians who want to leave their footprints on Romney’s back as they chase their own ambitions. If it were anything else, you’d see Jindal telling Rush Limbaugh or Fox News, not Romney, to shut up.

But you aren’t.