Agora Financial’s Rude Awakening

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Kathmandu, Nepal

• Rotting infrastructure shackles India’s ambitious progress,
• The final installment of the 2008 Best in Rude Series
• Voice your big idea forecast for the year ahead and plenty more…

Joel Bowman, reporting from a very cold valley in the Himalayas…

It’s a problem most countries face, both developed and developing, but few places on earth suffer from inadequate infrastructure quite like India does.

Your editor recently spent a few weeks wandering the subcontinent, from the touristy beaches of Goa to the financial nerve center of the bustling Mumbai, then up to Delhi, Agra and finally, to the holy city of Benares.

To be sure, there is much to like about the Indian story, not least of all its impressive average growth rate of 8.8% per year for the last half-decade. The country is also better positioned, theoretically, to whether the global economic slowdown than many other emerging markets. About 22% of its GDP comes from exports, for example, as opposed to 37% in China.

And stocks? Well, stocks are cheap, historically, as they are in most of the rest of the world right now. Bombay’s Sensex Index (BSE) finished the year down by half as foreign direct investment dried up
and emerging market funds in the west sold anything and everything with an Indian stamp to cover losses at home. Solid companies now trade at deep discounts and are beginning to regain some of their former luster.

Even so, the lack of adequate water and power facilities threatens to drag India asunder at every turn. Disturbing statistics are not difficult to come by. Here’s a quick sample:

• Each and every day of the year, 1,000 Indian children die of diarrheal diseases, mostly due to lack of clean drinking water
• Peak power demand outstrips supply by about 15%, making blackouts a constant problem. (The World Bank estimates that 9% of India’s potential production is lost to power cuts.)
• Half the 17 million residents in Mumbai, South Asia’s largest city, live in one of its 2,000 slums. Most don’t have basic sewage systems or electricity.
• Some 700 million Indians do not have a proper toilet and only about 15% of the nation’s sewage is treated

Interested in the water issue, we traveled to Benares (Varanasi) to check out Hinduisms’ holiest river. Alas, we also encountered severe and prolonged power blackouts which, aside from keeping us cold and in
the dark through the night, also prevented us from sending your weekend edition.

So, while we catch up on the news of the world, thanks to Kathmandu’s relatively reliable Internet, we offer today the final installment of the 2008 Best in Rude Series, which was to be your weekend edition. Originally published back in September, guest columnist Robert Fry’s essay on triumph over adversity was one of your editor’s personal favorites. Please enjoy…

— Energy & Scarcity Investor Breaking Report —

A California Energy Site So Secret, You Can’t Even See it Without a Top-Level U.S. Navy Clearance…

But a former Navy ‘insider’ is now ready to disclose the names of five ’secret’ energy companies that could make you $372,340… The Navy has already collected $194 million from this discovery.

And CNNMoney.com reports that ‘Investments in [this 'secret' energy sector] jumped nearly four-fold over the last two years, to about $100 million last year… Because it’s [still] so small, there’s large growth potential here…’ Full Report Here

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Bad Bailouts, Good Americans
By Robert P. Fry, Jr.

“I used to have my own construction company,” a taxi driver named Bruce explained. “We built houses here locally in Birmingham.”

“How big was the company,” I asked, “How many houses did you typically build?”

“Anywhere from 10 to 15 or so per year.”

“What happened?”

“We had a project going last year with 15 lots. We’d put in all the roads and sewers and had about 9 houses built when everything just stopped dead in its tracks…No buyers. And more than that. No phone calls, no inquiries, no agents calling, nothing. The market for new houses simply died.”

“So what did you do?” I asked.

“I’m still not sure that I handled it all correctly,” he began. “Our problem was the debt on the property. The interest cost was roughly $1,000 per day. So even though we stopped all of our other expenses, there was nothing we could do about that. But we had some other assets. So we started selling things to make the payments. Finally, we got so desperate, we sold my son’s Corvette and, after that, the condo in which he was living while attending the University of Alabama.

“I never thought I would have to do something like that,” he continued, “but the corvette was worth $25,000, which meant we could pay the bank for another month. But even after that, we ran out of money. So we went to the bank and started giving them the unsold houses in lieu of cash every time we got behind on the payments. When we finally ran out of houses to give them, we had no choice but to give them the remaining land and then file for bankruptcy.”

“That didn’t solve all the problems,” Bruce explained, “since we still needed to put food on the table and had other bills to pay. So late last year I leased a cab and started driving. That has worked out pretty well; the cab has really been a blessing. So I decided to buy this cab just a couple of months ago.”

Bruce, who looks to be about 50-something – with a daughter out of college and a Corvette-less son who’s a sophomore in college – works all night Friday and Saturday, gets up in the afternoon Saturday to
watch a little football and gets up Sunday morning to go to church, then starts making runs to the Birmingham airport around 4:30 Monday morning. I heard not one word of complaint about his new life, just
the simple statement, “The cab has been a real blessing.”

There were, of course, some good chuckles about that. With the move from business owner to cab driver, he admits that some of his friends and family haven’t known what to say to him.

“What are you doing these days, Bruce?” my friends ask.

“I’m driving a cab.”

“Oh. (Long pause.)…What kind of team do you think the Tide will have this year?”

But Bruce doesn’t seem to care much about “what the neighbors say.” He cares about what his family says. When it came to selling the Corvette, Bruce told me, “Taking my son for a drive and telling him that I needed to sell his car was probably the lowest and most difficult moment of my life.”

“We had done everything that we could for our kids and I was worried that I might have raised some sort of runny nosed-kid who needed a Corvette and would never be able to support himself. In addition to selling his car, we sold the condo where he was living and couldn’t even help him pay the rent on his apartment so he had to get a job while going to school.”

Bruce then told me how his son had gotten a job and was still doing great in school and now calls him regularly just to ask, “How are things going, Dad?”

At which point I said to Bruce, “So was it worth going into bankruptcy, just to learn that you have a son who is actually a stand-up man?”

After a moment’s reflection, Bruce smiled, “Yes it was.”

Bruce and his family and friends – people who get up every day and do what they need to do to provide for their families and to be good members of their communities – represent all that is still good in America. They are honorable people who spend all that they have to pay their debts, even if, like Bruce, it ultimately leads to bankruptcy. And when their businesses fail and life must go on, they take whatever job they can find to put food on the table.

How unlike the whiny, self-indulgent, profiteers who guided Wall Street’s leading investment banks onto the shoals of insolvency. These people, who have nearly destroyed America’s banking system, should be acknowledging their failures. Instead, they are demanding ever more of our resources, and of our children’s resources, as the price for not making things even worse.

America would be better served if Hank Paulson were driving a cab in Manhattan, instead of trying to give billions of dollars of other peoples’ money to his friends and colleagues on Wall Street. As a cab driver, there is some possibility that he would learn the value of a dollar, the importance of community and the inherent dignity of all good work. At the very least, we would all be $700 billion better off, less tips.

— Bulletin Board Elite: Positions Open —

The first time, I called it beginner’s luck…

When it happened again, I called it a coincidence…

But after 9 stocks in a “secret” market one ace analyst was screening JUMPED to major exchanges – and major profits – in just a 12-month span, I knew he was hunting in the right place for huge gains.

In just the first six months of 2007, the AVERAGE top-tier stock in this all-but-unknown universe of securities gained 25,498%! Just $100 invested in the best of these on New Year’s Day would’ve handed lucky shareholders gains of $409,900 before the Fourth of July…

Starting RIGHT NOW, I’m offering those who respond to this dispatch a chance to turn even a small investment into a small fortune on this ace analyst’s best picks in this overlooked market

But you must act quickly: Only a few spots remain in this revolutionary services ranks. Details Here

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[Rude Endnote: Now that the ‘08 season is behind us, it’s time to look forward to what the new year will bring. Over the coming days we’ll be asking for your thoughts on the biggest themes of 2009.

Have we found a bottom in the market? Will the dollar hold on to its tenuous grip as the world’s reserve currency? What will happen to gold, energy and the looming debt cloud that rained on last year’s
parade?

Get your thinking caps on and send us your thoughts if you would like to be part of the next Rude Group Research Project.

We’ll return with the first “new Rude” of the year tomorrow.

Until then…

Namaste,

Joel Bowman

The Rude Awakening
aussiejoel@the-rude-awakening.com