Europe crisis has created an exceptional investment opportunity and other must-reads

And don’t forget to meet me in the chat room on for this week’s anything-goes Q&A at 2pm EST.  Be there or be square.

Here’s what I was reading and thinking about today when I wasn’t working on all the stuff that goes into making this magic happen everyday.

Caught Short on the Europe Story? Understand the Fundamentals – Jeff Miller with another very insightful analysis, this time, giving a satellite’s eye view of Europe and the seemingly endless financial and sovereign crises over there.  They need lessons in how to legalize balance sheet gimmicks and use taxpayer funds to prop up their control fraud institutions, er banks, if they really want to kick that can down the road as far as our own government has been able to.  Regardless, read this column because as Jeff puts it in there (italics are mine): “My analysis does not include anything new — it just pulls together what we already know.  The European leaders have clearly been working on each of these angles, but not fast enough to satisfy financial markets. This creates an exceptional investment opportunity.”

On Penny Stocks (2) – I had a huge amount of great feedback and traffic on my Monday column that I’d simply called, “Simple rule: Don’t ever buy a penny stock” in which I’d linked to David’s earlier post, On Penny Stocks.  Read any and/or all of these but heed the advice therein.

Bernanke: Wealth Gap an Issue for Country – Yesterday I was laughing when I saw the headlines that muted CNBC was putting underneath Ben’s head as his mouth moved. Stuff like “Europe crisis is worrisome” and “Wealth gap an issue for country.” And then AP used it as their headlines and I realized, “Oh yeah. Those probably are headlines for the purveyors of the mainstream news.”

Mortgage rates may not have any further to fall – Given that they are at the lowest levels they’ve ever been in history and that a 4% 30-year mortgage loan vs. just about any other use of that money is probably a better place to risk it, I’d agree.  And that last reason there, that of 4% 30-year mortgage loans being a terrible use of a bank’s capital when they could just borrow from the Fed at 0% or less and then get paid by the Fed to hold the reserves or to loan the money back to our government in the form of Treasuries for 2%-3%, is the reason nobody can get a mortgage from Bank of America BAC, Citigroup C, JP Morgan JPM or any other TBTF bank these days despite those “record low mortgage rates that may not have any further to fall.”  And likewise, it’s all that need for return on capital that you can’t get lending on mortgages or to the governments that is likely to percolate the still building asset bubbles for this cycle.

U.S., N.Y. Sue BNY Mellon – We got short BNY Mellon BK in my Revolution Investing newsletter and in my personal portfolio at my independent service,, a couple weeks ago because I expected to see this and more lawsuits hitting BK.  Here’s what I wrote at the time: “I also want to add another bank-run-rampant stock to the short side of the portfolio, Bank of New York. Long story short, this company has supposedly certified that all those millions of mortgages in the MERS system that were never properly conveyed through the chain of title, were properly conveyed. That is, they told all those investors who are presently suing all those TBTF banks who packaged all those trillions of dollars of worthless mortgage securities and derivatives that everything was kosher.  And it appears that it wasn’t and that is now coming home to roost, as evidenced by all the billions of dollars of suits that are now flying around the industry. Bank of New York isn’t exactly trumpeting their big liability and other financial risks that are clearly starting to point to it, and I think much like Lender Processing Services, which has fallen more than half since we first added it as a short to the portfolio, it’s going to be a scapegoat of the industry. So I’m adding it as a short to the portfolio.” Check.

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Cody Willard writes Revolution Investing for MarketWatch and posts the trades from his personal account at At time of publication, Cody was net short Wells Fargo.