Paula Rojas Blog

Dear Money Morning Reader:

The end of another year approaches, giving us the opportunity to thank you for your continued interest and support and to wish each of you a Merry Christmas and a Happy Holiday.

We truly appreciate your loyalty, attention to detail and feedback, which is why a few months ago we made it possible for you to post your comments directly to our Web site. Below are some of the comments we’ve received, as well as responses to your questions and insights.

We’ll continue to respond to your comments and questions going forward, and we encourage you to let us know what stories and features you’ve liked, and what you’d like to see more of.

Again, we wish you all a happy, warm and safe holiday season.

Respectfully yours;

The Editors
Money Morning

The One Global Market Where There are Gains Behind the Gloom

Comment by P. Denaco on 21 November 2008:

“Shows good thought in a general sense, but lacks content as to what you would recommend to do with that information. I was in China this past year, including the major cities of Beijing, Xian, and Shanghai. It is a powerhouse of labor potential, with over 200 million of that labor force being itinerants. They need to make “stuff” and to be able to sell it as well as to assure that, as a nation they have exposure to the raw materials and commodities it takes for them to continue. What say you as to actions to take re: China?”

Great question – thank you! As you know from personal experience having been there, Chinese companies active in the provision of water, electricity, filtration, travel and pollution control figure prominently in Beijing’s plans (and ours), which is why we’re focused on them right now. The same can be said for the international companies tied up with them. Obviously there are other trends to consider in China but there’s nothing else even remotely on the radar screen with this kind of potential and state funding.

Keith Fitz-Gerald
Investment Director
Money Morning

Five Ways to Profit From China’s $585 Billion Stimulus Plan

Comment by Robert on 11 November 2008:

“I would like some clarification on these ADRs.

As I understand it, the shares are actually held by an American bank (American Depository Receipts), and [are] not registered in the purchaser’s name.

Is there any risk to the purchaser should the bank hit the wall? In other words, I’m more concerned about the American situation than the Chinese.

Appreciate your insight.”

The ADRs are held mostly by JP Morgan Chase & Co. or Bank of New York Mellon Corp., which are among the most solid banks out there. The underlying shares are fiduciary assets, so can’t be touched in a bankruptcy. If they’ve got Madoff running the fiduciary operation, you’d have to worry, but even then, the banks have insurance.

Martin Hutchinson
Contributing Editor
Money Morning

The Big Three Need a Shakeout, Not a Bailout

Comment by Rob Shippy on 9 December 2008:

Keith,

I agree with most of your sentiment, but the one place you are off base is the employees. Those companies will not absorb our workers, because the demand they fill will largely be produced overseas, where they are able to keep their costs LOW. Therein lies the problem, because now those wages are being spent in a foreign country, and the profits are going to a foreign country. And while in principle, theory, and soapbox I agree with you, my livelihood is in Detroit, and I need those workers to have jobs to have money to spend in my business… solve that.

Thanks for the kind words, Rob. Unfortunately, I’m not in charge. And, neither are the guys in Washington despite what they’d like to believe. The markets are. As long as consumers prefer Hondas and Toyotas, no amount of bailout funding is going to do anything other than perpetuate the inevitable. Which is why a Big Three shakeout that may kill Detroit could ultimately be good for the Carolinas, Alabama, Georgia and Mississippi where VW, Toyota, and KIA are all in the process of completing new factories right now despite the downturn thanks to more than $1 billion in Southern legislative incentives. Incentives, I might add, that Michigan could pass if it wanted to more directly help businesses like yours, like Southern representatives are helping their constituents.

Keith Fitz-Gerald
Investment Director
Money Morning

Auto Bailout Could Have Strings Attached: Ousting CEOs, Appointing Car Czar

Comment by Bobbie on 9 December 2008:

Why do you keep calling the “Loans” for the big 3 a “bailout”. The financial world was given a “bailout”, the auto industry is asking for loans that they will re-pay … not a handout like we gave to select banks.”

We call it a bailout because there is virtually no possibility that these companies – given the state of their balance sheets and business models – would be able to secure $34 billion in loans on the commercially. The government is bailing them out buy offering taxpayer money. Also, there’s no guarantee that these loans will be paid back. General Motors, for instance, is burning through cash at such an exorbitant rate that it could easily fail even if it does get a “loan.”

Jason Simpkins
Associate Editor
Money Morning

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