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  • Greece Poised to Default & Exit the Euro

    Greece is coming dangerously close to defaulting on its debt, especially if the next round of bailout loans doesn't happen. Those loans are predicated on Greece continuing its austerity programs to balance its budget. Greece will hold its next national elections on June 17, and the party that is expected to win vows to roll back the austerity measures mandated by the EU and the ECB. At the least, it looks like we're headed for fireworks just ahead.

    The burning question: Is there any way that Greece can default on its debt and withdraw from the euro without causing a global financial crisis. Some believe there is. Today, I present such a plan that was suggested by Nouriel Roubini last Friday. But I will also tell you that I don't believe that the EU, especially Germany, will go along with Roubini's plan. Germany's Chancellor Andrea Merkel reportedly made that clear to President Obama last Saturday in a private meeting following the G-8 summit in Chicago.

    No one knows what will happen with Greece just ahead, but a debt default and an exit from the EU and the euro are now quite likely later this year. This is even more of a threat if the Left Coalition in Greece wins the elections on June 17. Obviously, this is having a very negative effect of the stock markets, making it all the more important to have investment professionals on your team.

    On Thursday we are hosting our latest online WEBINAR featuring Yacktman Capital Group, the latest money manager to make it onto our recommended list. The Webinar will be this Thursday at 1:00 p.m. Eastern Time. Yacktman's founder, Brian Yacktman, will talk about his successful "value-investing" strategy and how it works. There will be time for questions from audience members. With the recent decline in the stock market, now may be an excellent time to consider putting some money with Yacktman Capital Group.

    You can attend the free Webinar on Thursday at 1:00 p.m. Eastern by CLICKING HERE. I hope you'll join us!

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  • Greek Soap Opera Continues to Roil Markets

    While Greece is but a small country, its debt crisis continues to influence financial markets around the world on an almost daily basis. It is not unusual for news from Greece to send the global stock markets up or down 2-3% in a single day. Events in Greece are unfolding daily, including the resignation of its Prime Minister, George Papandreou, just last Sunday. As this is written, a new coalition government is being formed in Greece to pave the way for the latest €130 billion ($180 billion) bailout package agreed to by European leaders late last month.

    In addition to Greece's troubles, the European debt crisis is spreading to other Eurozone countries. Italy appears to be the next domino to fall, and Spain may not be far behind. Italy has the eighth largest economy in the world based on GDP and the fourth largest in Europe. If Italy has to be bailed out, it would likely spark another global financial crisis that could make 2008 look tame. The latest G-20 summit in France failed to do anything to avert another financial crisis in Europe. Surprise, surprise!

    Given the deteriorating situation in Europe, expect stock market volatility to remain very high in the months ahead. Investors are scared by the events unfolding in Greece and the rest of Europe and are herding out of stocks and equity mutual funds in droves. I can't say that I blame them. Near the end of today's letter, I offer some advice on what these investors on the sidelines should consider doing with their money that is no longer invested in the stock markets.

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  • European Debt Crisis Revisited - Implications For the US

    Today we take a fresh look at the European debt crisis which is worsening. Just over a month ago, EU leaders agreed on a second bailout loan for Greece to keep it from defaulting. That bailout loan had to be approved by all EU member nations, and several have refused to do so unless Greece can put up collateral. This has caused the bailout agreement to unravel and Germany's Chancellor Andrea Merkel is frantically trying to put it back together. If she fails, we could get another serious shock to the equity markets in the US.

    Meanwhile, the European Central Bank began buying huge chunks of government bonds from Italy and Spain to keep their credit markets functioning. Some argue that the ECB is not authorized to make such purchases but it is doing so anyway. It remains to be seen just how long the ECB can continue this large-scale quantitative easing. In any event, the European debt crisis is worsening, and I continue to believe that it will have more negative consequences for our markets here.

    A new CNN poll found that Americans' confidence in Congress is at a new low. For the first time ever, a majority of Americans want the bums in Washington voted out of office -- including their own Representatives in Congress. In past polls a majority wanted some members of Congress kicked out, but not their own Representatives. You'll find this story very interesting. Finally, I leave you today with a very good article written by Tony Blankley who offers President Obama some advice for his major speech on Thursday night.

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