31 Aralık 2012 Pazartesi

"Ode 2 2012"

To contact us Click HERE
"Ode 2 2012"
by Will Durst
"And so we bid a not-so-fond farewell to the bow of another large unwieldy year as it sinks slowly over the horizon wobbling unsteadily towards the graveyard of memory. And cheers erupt from we folks on shore waving the double-handed “L for loser” sign above our heads. “So long. See ya. Don’t let the door slam you in the butt on the way out. And if you got any brothers or sisters, don’t give them this address.”

Normally there’s some small sense of nostalgia for a departing annum. An iota of regret for the calendar discarded. Not this one. Getting through the past 12 months was like navigating a Black Diamond ski run in roller skates with the wheels rusted shut. While wearing a crib. It was an oil-soaked pelican of years. The Year of Living Stupidly. Had the same connection to constructive change that Vladimir Putin has to the editorial board of Crochet Monthly. The Chinese need a new Zodiac sign: Year of the Flatulent Weasel.

But in the interest of keeping this particular piece of puffery positive it might be best if we confine our remarks to reflecting on the good that emerged from 2012.

Okay. Well, that was quick. Wait — got one: at least the presidential election is over. Of course, people are already running for 2016, so we got that to look forward to. Which is real similar to looking forward to having five-year twins playing in the back seat of a cross-country drive with a new set of drums and an unlimited supply of metallic sticks. And tambourines. Tons of tambourines. For four years.

You’d think even your average run-of-the-mill politician would possess the simple common human decency to wait till the current president was re-inaugurated, but nooo. These early birds are intent on stockpiling worms. You know what they say: Early money is like yeast. And very early money is like baking soda. And extremely early money is an egg wash brushed delicately across a pan full of hot cross buns.

When you think about it, the only thing that really went right with 2012 was we misread the Mayan Calendar. Everything else is either worse than we found it or the same. Middle East a mess? Check. Crazy people with guns? Check. Weather getting weird? Check. Congress unable to accomplish any sort of worthwhile task, including differentiating between their gluteus maximus and yellow paint? Double check.

Face it. These days, simple survival has become the goal. Continuing existence is the new victory dance. And then for a half a second you ruminate on how good we got it here. What kind of state the rest of the world is in. And most of our problems just kind of fade away, don’t they?

Sure, with great potential comes great responsibility. But it’s an exciting time. Fifteen years ago, the only people with GPS units were NASA. Now we got them in our cars and phones. We’re also in the middle of a cheeseburger renaissance and pretty good coffee is available almost everywhere. Not half bad perks. So, what do you say? Shall we give another a year a shot? But just 365 this time around. Don’t know about you but that extra day this year kicked my butt.”- http://www.cagle.com/2012/12/ode-2-2012/

Life Skills: "How to Protect Your Energy"

To contact us Click HERE
"How to Protect Your Energy"
By Judith Orloff MD
“As you go through the intuitive healing process you need to know: each of us has our own special power. We carry it within; it waits to be awakened. Call it your inner self, your spirit, or light–however conceived, you must meet and come to know your core-essence. The source of all intuition, it is your fiercest ally and advocate against danger. By connecting with this part of yourself you’ll mount confidence, feel safer in the world. Then whatever or whoever crosses your path–even the devil incarnate–will be no match for your resilience.

I want you to flush out beliefs that divert you from your intuitive healing power. Begin by asking yourself, “What in my life throws me off center and why?” I’m referring to everything from a stranger flashing you a dirty look, to fear of rejection, to dealing with someone in pain. Interactions where your energy dims. Weak spots, points that need securing. And what about negativity? How do you deal with yours, or another’s? If a supervisor says, “You’ll never be successful,” or an ex-lover announces, “You’re incapable of a healthy relationship,” do you buy into it? We each have our triggers. The basis for centering and protection is grasping where we get caught, and then disengaging the trigger.
Four common beliefs that drain your intuitive healing power:
1. I’m not strong enough to protect myself. As children, many of us aren’t taught to believe in the full power we contain. Yes, our parents may support our intelligence, talents, physical attractiveness–even teach us sound ethical values, the difference between right and wrong. But what happens to our inner self? Might even devoutly religious parents fail to realize it is there? Our starting point is to recognize we possess a very real internal source which enables us to deeply see and know. Yet when something goes wrong, frequently our first impulse is to look outside ourselves for someone to “fix” us. We get sick; we rush to the doctor. We become depressed; we call a therapist. We’re in pain; we take a pill. It’s fine to seek expertise–but we have it backwards. Look inside first. Really, it’s not a big blank in there. Then act on what your wisdom tells you. What stops us? A likely culprit is the vulnerable child we each carry within. Mogul or mailman, mother or monk, this aspect of our psyche yearns to be taken care of, protected, and is unequipped to do it alone. He pops up in the darndest circumstances, reducing us to a helpless tiny tot. Of course we must tenderly acknowledge her needs–but know where to draw the line. Would you want a baby running your boardroom? Your life? Remember: Your inner self is more than your inner child. Far grander–capable of ministering to all your needs–is the radiance of your spirit. Feeling this, knowing this, is the best protection of all. You must become your own champion before anyone else can. When you believe in yourself, no one else can diminish you.

2. Other people’s negative thoughts can harm me. In my workshops, I’m struck by how worried participants are about being thwarted by other people’s negative thoughts. Such concerns need to be addressed. On an intuitive healing level, ill intentions or feelings can affect us, creating anxiety or physical dis-ease. We must train ourselves to deflect them. What is negative energy? Any force antithetical to your well-being. How does it turn up in everyday life? Let’s start at the lower end of the spectrum. Your neighbor doesn’t approve of you. A friend puts down your plan to start college at forty. Your ex-boyfriend’s girlfriend is sending you bad vibes. What do you do?
Strategies to develop intuitive healing:
• Don’t lead a lifestyle based on assuming others are out to get you. This perpetuates fear.
• If someone is sending you negative thoughts, avoid dwelling on them. The more attention you pay to negativity, the more influence you give it.
• Focusing on the strength of your inner self is the best defense against negativity, no matter how dramatic its manifestation. If you are solidly connected to yourself, nothing can get you.

3. I’m too sensitive for my own good. The arch-enemy of intuition is lack of sensitivity. Know this: There is no such thing as being overly sensitive. To grasp the concept, you may have to reconfigure old ideas that have been drummed into your head. When parents or teachers said, “You have to toughen up,” or especially with boys, “only sissies cry,” unknowingly they were undermining the very crux of your intuitive tie with the world. Male sensibility, in particular, has been bludgeoned by such rigid conditioning. But, for both sexes, to break down childhood armoring requires extraordinary commitment, trust, and resolve.

What I’m speaking of isn’t simply expressing your emotions. It’s slowly learning, in your own time frame, to remain wide open to an intuitive realm–being one with the wind, the moon, other people’s joys, sorrows, the continuum of life and death. From this comes an intimate ecstatic bond with all of existence, exactly what you don’t want to protect yourself from. Sensitivity only turns against you when you feel overwhelmed. But how do you stay receptive and not get obliterated by the intensity of such input? It is possible to remain vulnerable and feel safe. The answer is never to shut your sensitivity off but to develop it as a creative resource.

4. It’s my job to take on the pain of others. We’re trained that as big-hearted people it’s laudable to try to relieve the pain of others. A homeless person holding a cardboard sign, “I’m hungry. Will work for food” at a busy intersection; a hurt child; a distraught friend. It’s natural to want to reach out to them, ease their angst. But many of us don’t stop there. Inadvertently, we take it on. Suddenly we’re the one feeling desolate, off kilter, bereft, when we felt fine before. This loss of center is what I want to address. It does not serve us. I am adamant: the most compassionate, effective route to healing people is to be a supportive presence, not attempt to live their pain for them. Moreover, sometimes suffering has its own cycle that has to be respected, hard as that may be to witness.

We must lie to rest the old metaphysical prototype of the empathic healer. Typically grossly obese women (extra weight, they mistakenly argued, was the only way to stay grounded), who cured patients by absorbing symptoms with the technique of laying on of hands. The result? Patients would leave feeling better; the healers would be a sickly wreck. These women were convinced such a sacrifice was necessary to lessen the suffering of others. As a young physician, I almost got snagged in the same trap. During the first months of private practice, I used to drag myself home, flop into bed half-dead from everything I’d absorb: a sure path to burn-out. This tack wasn’t good for me or my patients.

I’ve learned the value of being a catalyst for people’s growth without compromising my well-being. Patients themselves have taught me I can’t do the work for them. That is not my job. Nor is it yours. Keep this in mind: it is none of our business to deprive anyone else of their life experiences. I understand the impulse to want to make things better. Compassion and the desire to console are human. But there’s a fine line between supporting someone and trying to do it for them. No matter how well-meaning or heartfelt your intention, doing too much is not an act of love but of sabotage. You can be caring and honest with someone, yet still let them be. Don’t equate honoring their growth process with abandoning them. A practical philosophy of intuitive healing must include preserving your energy as well as serving others. Striking a balance is essential."- http://beforeitsnews.com/•Dr. Judith Orloff, an Assistant Clinical Professor of Psychiatry at UCLA, has helped patients find emotional freedom for over 20 years. She passionately asserts that we have the power to transform negative emotions and achieve inner peace.

"Only One Rule..."

To contact us Click HERE
“There’s only one rule that I know of, babies- God damn it, you’ve got to be kind.”
- Kurt Vonnegut
“Man shows inhumanity to Man. It’s axiomatic of our existence. It’s the story of our past, it’s the story of our present, and it will very likely be the story of our future. Indeed, it’s a story that’s reinforced every day, whether we’re watching the evening news or the latest entry in the “Saw” series. However, our history is also littered with awe-inspiring examples of men and women showing incredible compassion in the face of unspeakable evil and insurmountable odds. Every story of tragedy has a story of heroism to go with it. For every Holocaust there’s a Schindler. Vonnegut’s words, spoken so simply, are nonetheless laced with considerable profundity. The imperative to be kind to one another may seem obvious, but part of being human means that both the right thing and the wrong thing are forever at arms reach. It doesn’t hurt to be reminded every now and then which one we should choose.”
- Stephen H. Segal, “Geek Wisdom”

"Why We're Addicted to New Year's Hope...and How to Make the Most of It"

To contact us Click HERE
  "Why We're Addicted to New Year's Hope...and How to Make the Most of It"
by Kelly McGonigal, PhD
“Do you think you are smarter, nicer, or funnier than most people you know? Most people answer yes, a quirk psychologists call the "better-than-average" effect. Although it's statistically impossible, everyone likes to think of themselves as at least one standard deviation above the norm.

Our positive illusions aren't totally self-centered, though. We have the same faith in our sports teams. A recent study from Yale found that football fans always expect their favorite team to win more than 50% of games (a statistic as impossible as the above-average effect). Experience makes no difference. When people's predictions didn't pan out, there was a temporary drop in expectations - followed by an increase in unrealistic optimism. Even when the researchers paid for accuracy, and gave feedback to help the fans make more accurate predictions, people held on to their positive biases. It turns out that hope is worth more than the $50 a week the researchers were offering. The emotional cost of realism was too steep. We'd rather be wrong tomorrow but happy today.

That's where New Year's resolutions come in. Most resolutions fail, but 60% of people make the same resolution the following year. Why are we addicted to resolutions we should know are unlikely to succeed? In my experience helping people make difficult changes, I've come to realize that New Year's Resolutions are an expression of hope. They aren't an action plan for the future; they're an emotional strategy for today. Research shows that setting a resolution immediately puts people in a better mood. They feel more confident, in control, and hopeful. They even feel stronger and taller.

True to the above-average effect, most resolutions are unrealistically optimistic. People expect change to come easier and faster for them than for other people. We also expect to improve more in the future than we have improved in the past. So the last diet didn't work? No matter. Tomorrow is another day. This is another quirk of the human mind: people reliably expect their future selves to have more willpower, motivation, and energy than their present selves. And while this thinking may not be realistic, it isn't entirely foolish. The more optimistic we are about our future selves, the happier we are today.

In fact, the science of happiness shows that anticipating good things - whether it's your team winning the Super Bowl or your New Year's resolution succeeding - is the most reliable source of day-to-day happiness. Not only that, but the more positive we feel about our future selves, the more likely we are to do things to support our future selves' happiness - like save for retirement, exercise regularly, or cut back on salt.

So go ahead and make your resolution, and make it big. Research shows that the average person makes a resolution five or six times before they succeed. Even if you're above average, you'll probably need a few attempts. So savor the joy of resolving to change. It's the best part of a New Year's resolution - and you'll need that hope to try again in 2013.”- http://www.psychologytoday.com/•Kelly McGonigal, PhD, is a psychologist at Stanford University and the author of "The Willpower Instinct: How Self-Control Works, Why It Matters, and What You Can Do to Get More of It."

"Thoughts For The New Year"

To contact us Click HERE
“What can be said in New Year rhymes,
That's not been said a thousand times?
The new years come, the old years go,
We know we dream, we dream we know.
We rise up laughing with the light,
We lie down weeping with the night.
We hug the world until it stings,
We curse it then and sigh for wings.
We live, we love, we woo, we wed,
We wreathe our prides, we sheet our dead.
We laugh, we weep, we hope, we fear,
And that's the burden of a year.”
- Ella Wheeler Wilcox
“For last year's words belong to last year's language and next year's words await another voice. And to make an end is to make a beginning.”
- T. S. Eliot
“New Year's is a harmless annual institution, of no particular use to anybody save as a scapegoat for promiscuous drunks, and friendly calls and humbug resolutions. New Year's Day now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual.”
- Mark Twain
“Tomorrow is the most important thing in life. Comes into us at midnight very clean. It's perfect when it arrives and it puts itself in our hands. It hopes we've learned something from yesterday.”
- John Wayne
“Finish each day and be done with it. You have done what you could; some blunders and absurdities have crept in; forget them as soon as you can. Tomorrow is a new day; you shall begin it serenely and with too high a spirit to be encumbered with your old nonsense.”
- Ralph Waldo Emerson
“Cheers to a New Year and another chance for us to get it right.”
- Oprah Winfrey

27 Aralık 2012 Perşembe

"How to Deal With A Victim Mentality"

To contact us Click HERE
"How to Deal With A Victim Mentality"
by Dr. Judith Orloff

"As a psychiatrist I teach my patients the importance of learning how to deal effectively with draining people. In “Emotional Freedom”, I discuss one of these types which I call “The Victim Mentality.” The victim grates on you with a poor-me attitude, and is allergic to taking responsibility for their actions. People are always against them, the reason for their unhappiness. They portray themselves as unfortunates who demand rescuing, and they will make you into their therapist. As a friend, you want to help, but you become overwhelmed by their endless tales of woe: A boyfriend stormed out…again; a mother doesn’t understand; a diva-boss was ungrateful. When you suggest how to put an end to the pity party, they’ll say, “Yes…but,” then launch into more unsolvable gripes. These vampires may be so clingy they stick to you like flypaper.
Take the AM I IN A RELATIONSHIP WITH A “VICTIM” Quiz:
If you typically get drawn into fixing other people’s problems, chances are, you’ve attracted numerous victims into your life. To identify if you are in relationship with a victim mark Yes or No to the following characteristics:
● Is there anyone in your life who often appears inconsolably oppressed or depressed? Yes/No
● Are you burned out by their neediness? Yes/No
● Do these people always blame “bad luck” or the unfairness of others for their problems? Yes/No
● Do you screen your calls or say you’re busy in order to dodge their litany of complaints? Yes/No
● Does their unrelenting negativity compromise your positive attitude? Yes/No

Give each “Yes” response one point and count your score. If your score is three or more then you are probably in relationship with a victim. Interacting with this type of person can cause you to be irritated or drained and will make you want to avoid them.
Strategies to deal with a victim mentality:
● Limits with an Iron Hand and a Velvet Glove: I love what Mahatma Gandhi says: “A ‘No’ uttered from deepest conviction is better and greater than a ‘Yes’ merely uttered to please, or, what is worse, to avoid trouble.” Kind but firm limit setting is healthy. People must take responsibility for their own lives. You’re not in the business of fixing anyone. Enabling always backfires. Without limits, a relationship isn’t on equal ground; and no one wins. You might well feel, “I’m sick and tired of your complaints.” But instead, using a more measured tone, here’s how to address some common situations.
Use these methods to deter victims:
● With a friend or relative: Smile and say kindly, “Our relationship is important to me, but it’s not helpful to keep feeling sorry for yourself. I can only listen for five minutes unless you’re ready to discuss solutions.” Get ready to be guilt-tripped. If the victim, irate, comes back with, “What kind of friend are you?” don’t succumb to that ploy. Just reply, “I’m a great friend and I love you, but this is all I can offer.”

● With a coworker: Sincerely respond, “I’m really sorry that’s happening to you.” Then, after listening briefly, smile and say, “I’ll keep good thoughts for things to work out. I hope you understand, I’m on deadline and I must return to work.” Simultaneously employ this-isn’t-a-good-time body language–crossing your arms, breaking eye contact, or even turning your back. The less you engage this victim, the better. (Studies reveal that most workers can barely focus for eleven minutes without being disturbed by an office mate!)

● With yourself: The way I snap out of victim mentality is by remembering how blessed my life is compared with much of our global family. I’m not fighting to survive genocide, poverty, or daily street violence from an insurgency militia. I have the luxury to feel lonely when I’m without a romantic partner or to get irked by an annoying person. I have the gift of time to surmount negative emotions. Seeing things this way stops me from wallowing, an imprisoning indulgence. So, when you think you’re having a bad day, try to keep this kind of perspective.

Whether you’re confronting a drainer or transforming your own negativity, being empathic is vital. Elevating you to the realm of the heart, empathy allows you to non-defensively understand, even have mercy on antagonizers. Also, you’ll better intuit the feelings behind someone’s words. If a friend complains that you’re being selfish, the deeper meaning could be, “I’m hurt because we’re not spending enough time together.” With empathy, you’re privy to hidden motives. Seeing people’s frailties with compassion doesn’t make you a door mat. Though you may not choose to subject yourself to them, you need not hold this suffering against them. Labeling someone “the enemy” is a spiritual wrong turn." - http://beforeitsnews.com/●Adapted from Dr. Judith Orloff’s NY Times bestseller, “Emotional Freedom: Liberate Yourself From Negative Emotions and Transform Your Life” (Three Rivers Press, 2011)

"Centering Ourselves: Gathering Our Straying Thoughts"

To contact us Click HERE
 "Centering Ourselves: Gathering Our Straying Thoughts"
by Madisyn Taylor, The DailyOM
"All too often our lives can be spread too thin and it becomes important to gather our thoughts and center ourselves to become whole again. When our thoughts are scattered in several directions at once and we are no longer conscious of what we are doing or why, it is time to center ourselves. When we center ourselves, we begin by acknowledging that we have become spread too thin and we are no longer unified inside. Our thoughts might be out of sync with our feelings, and our actions may be out of sync with both. The main signs that we need to center ourselves are scattered thoughts and a feeling of disconnection or numbness, as if we are no longer able to take anything in. In addition, we may feel unfocused and not present in our bodies. Centering ourselves is a way of coming to terms with all the different energies within us and drawing them back into ourselves.

Centering yourself means that you are working from or being aware of the core of your being in the solar plexus area of your body. At first it may not make sense, but as you progress you will understand what this feels like. We naturally know how to center ourselves when we take a deep breath, for example, before making a big announcement or doing something big. Another way to center ourselves is to sit down and engage in breath meditation. We can start by simply getting into a comfortable upright position and noticing as our breath enters and leaves our bodies. Our breath flows into our center and out from our center, and this process can serve as a template for all of our interactions in the world. In conversations, we can take what our friends are saying into the center of our beings and respond from the center. Our whole lives mirror this ebb and flow of energy that begins and ends at the center of ourselves. If we follow this ebb and flow, we are in harmony with the universe, and when we find we are out of harmony, we can always come back into balance by sitting down and observing our breath.

When we sit down to center ourselves we can imagine that we are gathering our straying thoughts and energies back into ourselves, the way a mother duck gathers her babies around her. We can also visualize ourselves casting a net and pulling all the disparate parts of ourselves back to the center of our being, creating a sense of fluid integration. From this place of centeredness, we can begin again, directing ourselves outward in a more intentional way."- http://www.dailyom.com/

“The Three Truths”

To contact us Click HERE
“The Three Truths”
   "• The soul is immortal, and its future is the future of a thing whose growth and splendor has no limit.
    • The Principle which gives life dwells in us, and without us, is undying and beneficent, is not heard or seen, or smelt, but it is perceived by the one who desires perception.
    • Each of us is our own absolute lawgiver, the dispenser of glory or gloom to ourselves, the decreer of our life, our reward, our punishment.

These truths which are as great as is life itself are as simple as the simplest mind of man. Feed the hungry with them."
- “The Idyll of the White Lotus”
- https://www.theosophical.org/

The Economy: “Say Goodbye To The Good Life”

To contact us Click HERE
“Say Goodbye To The Good Life”
by Michael Synder
"Will this be the last normal holiday season that Americans ever experience? To many Americans, such a notion would be absolutely inconceivable. After all, in the affluent areas of the country restaurants and malls are absolutely packed. Beautiful holiday decorations are seemingly everywhere this time of the year and children all over the United States are breathlessly awaiting the arrival of Santa Claus. Even though poverty is exploding to unprecedented levels, most families will still have mountains of presents under their Christmas trees.

Of course a whole lot of those presents were purchased with credit cards, but people don't like to talk about that. It kind of spoils the illusion. Sadly, the truth is that our entire economy is a giant illusion. The extreme prosperity that we have been enjoying has been fueled by debt, and any future prosperity that we will experience is completely dependent on our ability to go into even more debt. The total amount of debt in our economy is almost 10 times larger than it was just 30 years ago, but we don't like to think about that too much.

Most Americans are way too busy living the good life to be bothered with "doom and gloom". Well, get ready to say goodbye to normal. As history has shown us, no financial bubble lasts forever, and time is rapidly running out for us.

You know that the hour is late when even mainstream news sources start publishing articles with titles such as this: "Will 2013 Mark the Beginning of American Decline?" That article appeared on Bloomberg the other day, and it was written by Simon Johnson, a former chief economist at the International Monetary Fund. He is convinced that a day of reckoning is coming for U.S. government finances, and he seems resigned to the fact that we will not be ready when that day arrives:  "Sooner or later, it will be America's turn to fall out of favor with investors and to see its own interest rates rise. It is hard to know when that day will come, or precisely what pressures the country will face. Let me only venture one forecast: We will not be ready."

Other analysts are far more pessimistic. For example, the following is what Gerald Celente said about the "bond bubble" during a recent interview with King World News:
 Eric King: "Gerald, I wanted to take a look at this upcoming issue you have coming out. (In here it says,) 'Bonds Away! The bond bomb is ready to explode ... threatening to make the real estate and dot-com bubbles, and even the Great Recession, look like market corrections.' Can you talk about that?"
 Celente: "Yes. This piece is being penned by Dr. Paul Craig Roberts, the former Assistant Treasury Secretary under Ronald Reagan. And he is convinced that the bond bubble is about to burst. This cannot continue to go on the way it is. Everyone knows that the whole game is rigged, and so is this... The whole game is rigged. It's ready to go down, and Dr. Paul Craig Roberts believes it's 'Bonds Away' in 2013 as the bond bubble explodes and brings about a financial disaster even worse than the Great Depression."
 Eric King: "He's saying here it's a road to financial collapse that we are going to head down when this thing bursts."
 Celente: "It is. Because the whole world is being propped up by these phony bonds and it's going to collapse. It has to happen. Interest rates are going to start going up, and when they do the bond bubble explodes. You cannot keep interest rates at zero for this amount of time and expect anything other than disaster to follow."

For much more on all this, you can listen to another excellent interview with Gerald Celente right here.

Our politicians just assume that we will be able to borrow trillions upon trillions of dollars far into the future at super low interest rates, but that is a very dangerous assumption. As I noted the other day, the average rate of interest on U.S. government debt was 2.534 percent at the end of November. If that number just rose to where it was about a decade earlier we would be in a massive amount of trouble. Back in the year 2000, the average rate of interest on U.S. government debt was 6.638 percent. If we were at that level today, the U.S. government would be paying out more than a trillion dollars a year just in interest on the national debt. But our politicians just keep borrowing and spending as if we could do this forever.

From the time that George Washington was inaugurated (1789) to the time that George W. Bush was inaugurated (2001), the U.S. government accumulated about 5.7 trillion dollars of debt. During the first four years of the Obama administration, the U.S. government accumulated about 5.7 trillion dollars of debt.

How can anyone support this kind of insanity? You can see an excellent video demonstrating the vastness of our national debt right here. In the end, all of this debt will absolutely destroy the U.S. dollar, our economic system and the bright futures that our children and our grandchildren were supposed to have.

As if all of that was not enough to be concerned about, there is also the threat that Wall Street could implode at any time. Most Americans have no idea that Wall Street has been transformed into the largest casino in the history of the world. The "too big to fail" banks are the ringleaders, and the derivatives bubble hangs over our financial system like a "sword of Damocles" that could fall at virtually any moment. Everything will remain fine as long as the spiral of derivatives that our bankers have constructed remains perfectly balanced. But if something happens and it becomes unbalanced and starts to collapse, the consequences could be unlike anything we have ever seen before.

A recent Zero Hedge article entitled "1000x Systemic Leverage: $600 Trillion In Gross Derivatives 'Backed' By $600 Billion In Collateral" detailed how there is barely any collateral backing up the hundreds of trillions of dollars of derivatives that are out there: "But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world's combined GDP, because as the "derivative" name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled "Shadow Banking: Economics and Policy" where quietly hidden in one of the appendices it answers precisely this critical question. The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage."
Our entire economy has become a giant pyramid of debt, risk and leverage. At some point there is going to be a giant crash. When that happens, people are going to become very desperate. When people become very desperate, they often accept "solutions" that they were not willing to consider previously.

We need to learn some lessons from history. This is exactly the kind of thing that happened back in the 1930s. For example, an elderly woman named Kitty Werthmann is telling audiences what life was like in Austria back in the late 1930s: "In 1938, Austria was in deep Depression. Nearly one-third of our workforce was unemployed. We had 25 percent inflation and 25 percent bank loan interest rates. Farmers and business people were declaring bankruptcy daily. Young people were going from house to house begging for food. Not that they didn't want to work; there simply weren't any jobs. The Austrian people were really hurting and they were desperate for answers. When Hitler came to them with "solutions", they were ready to embrace him with open arms...
 We looked to our neighbor on the north, Germany, where Hitler had been in power since 1933." she recalls. "We had been told that they didn't have unemployment or crime, and they had a high standard of living. Nothing was ever said about persecution of any group - Jewish or otherwise. We were led to believe that everyone in Germany was happy. We wanted the same way of life in Austria. We were promised that a vote for Hitler would mean the end of unemployment and help for the family. Hitler also said that businesses would be assisted, and farmers would get their farms back. Ninety-eight percent of the population voted to annex Austria to Germany and have Hitler for our ruler. We were overjoyed," remembers Kitty, "and for three days we danced in the streets and had candlelight parades. The new government opened up big field kitchens and everyone was fed." Sadly, America is already starting to go down the same path in many ways. If you doubt this, you can read the rest of her account right here.

Right now, things are still relatively good in America. Yes, there are a whole host of economic numbers that look really bad, but what we are experiencing right now is nothing compared to the horrific economic pain that is coming.

When our economy finally crashes, nobody is going to be able to press a button and restore things to how they were previously. We will be told that we have to "adjust" and consider "new solutions" to our "new challenges". Someday we will look back on the good life that we were enjoying in 2010, 2011 and 2012 and wish that we could go back to those days.

So enjoy the relative peacefulness and prosperity of these times while you still can. A horrific economic collapse is on the way, and once it strikes none of our lives will ever be the same.”- http://www.sott.net/

"Cognitive Dissonance: Avoidance, Denial, And Rationalization"

To contact us Click HERE
 "Cognitive Dissonance: Avoidance, Denial, And Rationalization"by TruthMove "Sometimes people hold a core belief that is very strong. When they are presented with evidence that works against that belief, the new evidence cannot be accepted. It would create a feeling that is extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they will rationalize, ignore and even deny anything that doesn't fit in with the core belief."- Frantz Fanon
"Denial and avoidance are among the most important psychological concepts to the Truth Movement. Mentally, what allows people to block out clear signs that our modern way of life is corrupt and unsustainable? What keeps people from caring? How are people able to go on with their lives as normal when they hear that 50% of all species will be extinct by 2100? Why don’t such facts disturb people and make them curious enough to start looking into the details for themselves?

Cognitive dissonance relates to the concept of being exposed to information or having experiences that conflict with our existing base of “what we know.” The theory holds that our minds are not always flexible or rational when it comes to evaluating uncomfortable information or questioning our own beliefs.

“Dissonant cognitions” will cause us to dismiss or alter conflicting information or add justification to one side or the other—not necessarily rationally—in order to regain psychological balance. It’s an important concept to consider in terms of the way people block things out or justify things to themselves.
 If there is a lot of built up psychological stake in a certain position or attitude and a piece of solid evidence comes in which conflicts with that position, it may be easier, psychologically, to dismiss the new information than alter the existing structure.

You can imagine how ingrained psychological structures can be when a human being is raised within a certain country, system, or reality. Growing up in the US, or any culture, for that matter, you will absorb an overwhelming number of messages about what is true, what is possible, and what is important. Many of of these messages are absorbed subconsciously and become part of the basic structure of our reality. It becomes very difficult to question the fundamentals when opposing messages only come in small doses from the “fringe.” Consider these two examples:
 • Believing that your friend is trustworthy (having built up that attitude over years of experience) is a cognition that would be dissonant with the sudden discovery of your friend stealing money from you. As a result, you might seek to dismiss or minimize the importance of this new information—maybe telling yourself it was a freak thing, a joke, or an accident, or that he was broke or desperate or on drugs. You might even try to forget that you saw it.
 • In presenting new, contradictory (dissonant) evidence concerning 9/11, it is frustrating how many people immediately begin to bring up rationalizations and excuses in order to dismiss the significance of the information. You can often witness cognitive dissonance in action as these skeptics try to avoid the psychological turmoil of facing the very disturbing implications of 9/11 Truth. The collapse of WTC 7 is an interesting example. Skeptics are likely to quickly dismiss this piece of evidence rather than acknowledge the suspicious fact that the destruction of a third skyscraper was essentially blacked-out of the official story of 9/11 by the government and media.

“Conspiracy theories” seem to be the quintessentially cognitive dissonant concepts of our culture. For many people, the idea that JFK was killed by the government or “9/11 was an inside job” threatens the entire fabric of their consciousness. These things simply cannot be true and people will bend over backwards and resort to irrationality and ridicule to avoid considering them.

Cognitive dissonance can work both ways. It is extremely difficult to maintain a vigilantly open mind. Whatever your dominant perspective or worldview happens to be, it is inevitable that you will sometimes use rationalizations in order to save the time or mental stress of dealing with conflicting information. Cognitive dissonance is actually a necessary and natural mental function, but it is also a phenomenon that we should be aware of, in ourselves and others, as it is a process that does not always serve us well in the quest for objectivity and truth."- http://www.truthmove.org/

20 Aralık 2012 Perşembe

A more stable European economy should feed E.ON's growth plans

To contact us Click HERE

by Travis Miller (Analyst at Morningstar)
E.ON EONGY reported nine-month operating income of EUR 4.0 billion and adjusted EBITDA of EUR 8.8 billion. Both are up substantially from 2011, as we expected, and remain in line with our full-year projections. Management reaffirmed its 2012 earnings guidance of EUR 4.1 billion-4.5 billion and EBITDA guidance of EUR 10.4 billion-11.0 billion. Management also reaffirmed its intent to pay a EUR 1.10 per share dividend.
However, management said it was reviewing its 2013-15 outlook, given increased uncertainty since it issued its outlook in March and reaffirmed it in May. We also will review our EUR 22 fair value estimate for a possible cut. We are reaffirming our long-term midcycle earnings estimate, so any near-term adjustments will have a minimal impact on our fair value estimate.Management initially forecast 2013 net income of EUR 3.2 billion-3.7 billion and EBITDA of EUR 11.6 billion-12.3 billion. Management also forecast an annual earnings per share growth rate exceeding 10% in 2011-15. Our projections were at the high end of those ranges, and we will review our outlook for a possible cut.
Although the nuclear shutdowns in Germany are behind it and the firm's wholesale gas trading margins have improved, E.ON still had to take a EUR 1.2 billion impairment charge in the quarter across several of its businesses.E.ON also in November made two moves that demonstrate its intent to sharpen its focus and pare back its growth capital spending. The company announced it plans to sell its 34% stake in Finnish energy company Fennovoima as part of its plans to exit the Finnish market and focus on the Danish and Swedish markets. Fennovoima had proposed building a new nuclear plant with E.ON's help. E.ON also sold its joint venture interest in Horizon Nuclear Power, which targeted new nuclear plant development in the United Kingdom.
Thesis 09/18/12

Nationalist protectionism and political meddling in European energy markets constrain E.ON's ability to create value from its attractive asset portfolio and have forced management to look beyond its core region for growth opportunities. Still, management has shown strict adherence to return on investment hurdles and free cash flow generation, both key metrics for investors. Even with the nuclear phaseout in Germany and lackluster energy demand in the depressed European economy, we think E.ON could be a good long-term investment for those seeking European diversification.
Founded in the 1920s as Germany's national power company, E.ON ranks among the world's three largest investor-owned utilities, along with France's Electricite de France and GDF Suez. Acquisitions in 2000-08 enlarged E.ON's international footprint to include the United States, the United Kingdom, Scandinavia, and continental Europe. Its largest was the EUR 11.5 billion purchase of Enel and Endesa assets in June 2008. E.ON also acquired stakes in U.S. renewable energy, a Nordic utility, power plants in Russia and Turkey, and an Italian utility in 2008-09.
However, the European financial crisis, collapse in commodity markets, and worldwide recession led management to reverse course in 2009. For 2011-13, management is targeting EUR 15 billion of divestments and using much of that capital to reduce debt or invest outside the eurozone. The divestitures included government-mandated disposals of certain power transmission and generation assets in Europe, sale of its regulated distribution utilities in the U.K. and U.S., and elimination of its minority interests in German municipal utilities (Thuga) and Russian energy firm Gazprom. Despite the challenging market conditions, we think E.ON achieved good returns from those deals.
We believe management has shown good discipline to protect its double-digit returns on capital. The prompt shutdown of 4 of its 11 nuclear plants in Germany in 2011 took a big bite out of those returns, but we expect returns to rebound by 2014-15. In 2011, E.ON's regulated and quasi-regulated businesses contributed the same amount of EBITDA as its merchant generation portfolio, and we expect that mix to continue for several years.
With a bleak outlook for generation margins and demand, management has turned its focus to renewable energy and conventional generation investments outside Europe. Management hopes to take advantage of the opportunities for renewable energy growth to fill the lost nuclear generation in Germany and to meet the European Commission's Energy Roadmap 2050, which aims to cut carbon emissions 80%-95% by 2050.
If European markets stabilize and E.ON's investment plan continues, shareholders should see strong returns for many years.
Valuation

We are reaffirming our $29 fair value estimate for E.ON's ADR shares after a first-half performance that puts E.ON on track to exceed our previous expectations.
We are raising our 2012 EBITDA projections primarily because of E.ON's faster-than-expected success renegotiating its gas supply contracts. We now estimate E.ON can earn EUR 10.8 billion EBITDA in 2012, up from EUR 9.9 billion previously. Offsetting this near-term benefit, we cut our 2013-15 EBITDA estimates 2%-3% to incorporate lower hedged and open generation margins. Our new earnings per share estimates are EUR 2.19 in 2012 and EUR 2.60 in 2013.
From trough earnings in 2011 to our normalized midcycle commodity market assumptions in 2015, we estimate E.ON can double its net income. Driving these results are our assumptions that European commodity markets remain near current levels for the next two years and that the nuclear phaseout in Germany proceeds as scheduled. This results in only one additional nuclear plant closure in E.ON's fleet during our five-year forecast. We discount our perpetuity value to account for the final nuclear plant shutdowns in 2017-22.Key profit drivers in 2013-beyond include E.ON's cost-control program, its renewable energy growth projects, and its full realization of benefits from its gas supply contract renegotiations this year. We expect these positives to offset an additional EUR 1 billion of costs we estimate from the full auctioning of carbon credits and mostly flat generation margins.
We assume E.ON invests an average of EUR 6 billion annually in 2012-16. In our discounted cash flow valuation, we use current market credit spreads and an 11.0% cost of equity to produce a 9.6% cost of capital. Our fair value estimate is based on an exchange rate of $1.31 per euro as of Sept. 17.
Risk

Our medium fair value uncertainty rating stems from the sensitive political environment throughout Europe and increasing earnings exposure to volatile energy commodity prices. A key uncertainty was resolved in mid-2011 when the German government passed legislation to shut down all of the country's nuclear plants and impose a tax on nuclear fuel until the plants retire. Although the outcome was a significant negative for E.ON, it allows the company to move forward with its post-nuclear strategy. Government-imposed limits on power prices in Germany and elsewhere are another recent concern. E.ON also could have trouble continuing to invest its large amount of capital at value-creating returns, especially given the influx of cash it has received through its divestitures. For U.S. investors, appreciation in the dollar relative to the euro will depress the ADR shares.
Management & Stewardship

Management has faced numerous hurdles the past three years and has embarked on an aggressive restructuring plan. This makes it very difficult for investors to determine core financial performance since 2007; however, we think management has negotiated fair prices for its divestments, and we like that it has retained its most valuable power generation assets. E.ON historically has achieved returns on capital near 10%. That's likely to fall, but we still think management has the right balance of growth and cost management to maintain returns in the high single digits.
The German corporate governance structure includes a board of management, which oversees day-to-day operations, and a supervisory board, which acts like the board of directors for a U.S.-based company. E.ON's supervisory board has 20 members, each with five-year terms. German law requires shareholders elect 10 members and E.ON employees elect 10. The strong employee presence is common throughout all but eliminates shareholder activism.
E.ON's 10 shareholder-elected supervisory board members have high-level experience across many sectors. In 2011, the supervisory board approved Werner Wenning as chairman. He succeeded Ulrich Hartmann, who retired in May 2011 after being chairman of the supervisory board for the previous eight years and the CEO and chairman of the board of management for the preceding ten years. 
The board of management has six members, appointed to five-year terms by the supervisory board. CEO and chairman Johannes Teyssen assumed the role from Wulf Bernotat in May 2010 after Bernotat passed the standard retirement age (60) and his contract expired. Teyssen has held key management jobs at E.ON for many years, including COO since 2004, and we expect a smooth transition. We like that compensation for the supervisory board and the board of management includes variable components linked to dividends, earnings before interest and taxes, return on capital, and stock performance.
Overview
Financial Health: 
E.ON's strong balance sheet has allowed it to re-sign credit agreements and issue debt through the credit crisis. As it moves toward completing its plan to sell EUR 15 billion of investments in 2011-13, E.ON has cut its net debt nearly in half, supporting its premium credit rating even through a trough earnings period. If energy prices rebound from recent lows and management reaches its target of EUR 9.5 billion of controllable costs by 2015, we expect interest and dividend coverage to remain strong. We were not surprised that management decided to cut the 2011 dividend to EUR 1.00 per share from EUR 1.50 per share in 2010, given our projections for its payout ratio to fall below management's 50%-60% target range. In August 2012, management reaffirmed its plan to pay out a EUR 1.10 per share dividend for the 2012 fiscal year.
Profile: 
E.ON is one of the world's largest integrated power and gas companies. It generates, transmits, and distributes electricity and natural gas in 30 countries, primarily in Europe. As of 2010, the firm was the largest German gas company and generated one third of Germany's electricity, sourcing about 40% of this with nuclear power. However, the country's nuclear shutdown legislation will reduce E.ON's power generation share significantly.

With divestitures and modest rate case successes, American Water Works has righted the ship

To contact us Click HERE

by Mark Barnett (Analyst at Morningstar)

American Water Works is the largest investor-owned water and wastewater utility in the U.S. As such, the company enjoys some considerable advantages over its competitors in pursuing the investment opportunities presented by the dismal state of American water infrastructure. Despite its position, we recommend that investors dial back their enthusiasm when considering this investment, as government regulation limits the profits the company can make and creates hurdles to rapid growth. 
Much of the U.S. water infrastructure dates back to the Great Depression, and the Environmental Protection Agency estimated in 2007 that it would require about $335 billion to upgrade and repair just community and not-for-profit water systems. With municipalities struggling to finance basic repairs and federal funding unable to bridge the gap, the signs point to massive opportunities for investor-owned businesses.
American Water's size and geographical diversity mean that the firm is better able to capitalize on these opportunities, as it is easier to connect new customers to existing systems and treatment plants than to build new infrastructure. It also helps the company maintain lower rates, as it can balance less profitable operations in one state with more profitable operations in others. This helps with regulatory goodwill but doesn't generally lead to attractive regulated returns. Continuing economic weakness also weighs on performance, as regulators are more inclined to sacrifice shareholder returns in exchange for political capital.
American Water's regulated businesses occupy local monopoly positions, since it would be prohibitively expensive to reproduce those assets. However, as most of the company's revenue is dictated by state and local regulators, profits are effectively capped, diminishing the attractiveness of investments American Water could make. In our opinion, this is the source of the company's narrow economic moat. Allowed returns are often not achieved, and excess returns are almost never allowed.
An investor must be willing to sacrifice excess returns for stability that is not necessarily guaranteed. In 2003, German conglomerate RWE acquired this company and took it private with dreams of huge growth. It is telling that RWE took only three years to decide to divest its holdings, finding American regulation too onerous. After the initial public offering and three follow-up offerings in 2008 and 2009, RWE no longer holds a stake in the company. American Water's team has proven to be better regulatory managers than RWE, but all the same we are not bullish on the regulatory environment for water.
While the company will press ahead with its regulated investments and try to gain some ground with its allowed returns, we think appealing opportunities could lie in nonregulated contract operations. The firm designs, builds, and operates facilities, as well as assuming responsibility for operating and managing existing systems. Given the company's size, expertise, patents, and past successes, we believe this is an area where it could greatly expand its footprint. If it can, this story may get more exciting. The regulated businesses should continue to be a consistent, if unexciting, backbone for profits, and management is committed to paying a steady dividend. The firm has made some sizable divestitures to raise cash, narrowing its focus to a smaller number of states. Still, American Water Works has a slog ahead to reach the top tier of regulated investments in our coverage universe.
Valuation

We are increasing our fair value estimate to $29 per share from $27 per share after updating our capital expenditure projections, lowering our assumed growth in operating expenses, and lowering our assumed cost of debt in our cost of capital calculation to better reflect markets and comparability with peers.
We expect the company to grow at a fairly strong clip for a regulated utility, increasing EBIT at a 7.5% average annual rate through 2016. We project capital expenditures totaling $4.9 billion during the same period to drive growth with contributions from minor acquisitions and tuck-ins given the highly fragmented nature of the industry. Rate cases after years of stay-outs should continue to provide some operating margin improvement. We project operating margins to average nearly 33% through 2016. We expect that returns on equity however will be unimpressive, remaining around 8.5%.
One of our key assumptions is high-single-digit average growth in the firm's nonregulated wastewater and contract services segments during the five-year period. We agree with management's assessment that nonregulated design, build, and operate projects as well as operating and maintenance partnerships provide an attractive avenue for growth for which American Water is poised to take advantage.
Our fair value estimate is sensitive to our 6% assumed weighted average cost of capital and 8% cost of equity. If we decreased our cost of equity by 50 basis points, our fair value estimate would rise to $32 per share. If we increased it by 50 basis points, our fair value estimate would fall to $25 per share.
Risk

American Water Works derives most of its profits from regulated operations. Consequently, the greatest risk it faces is regulation that does not permit the company to earn its allowed return and does not protect it from regulatory lag, which is the time between the incurring and the recovery of costs. A prolonged freeze in the credit markets could force the company to scale back growth expenditures. As acquisitions are a major source of growth for this company, competition with rival regulated utilities is a threat to American Water Works' growth prospects. Municipalities may also resist its overtures, as they did in Trenton in 2010. Its nonregulated businesses are also subject to competition.
Management & Stewardship

American Water Works' senior management has a wealth of experience in dealing with regulation and in the water services industry in particular. Former president and CEO Donald Correll had more than 30 years of experience at water utilities, including 25 years with United Water Resources, and managed to keep the company's house in line despite a difficult period with the RWE debacle. New president and CEO Jeffry Sterba served more than 30 years with PNM Resources PNM in both power and water. Judging by the regulatory successes in 2010 and 2011, Sterba has done a fine job at the tiller so far, though there have been some disappointing cases thus far in 2012. We think management deserves a standard stewardship grade.
The decision to trim debt and divest non-core operations strikes us as prudent, and should allow the company to focus its efforts on improving regulation in its largest segments. However, American Water is likely to continue doing deals, which brings risk of overpaying and expectations of improving returns that don't materialize.
Overview

Financial Health: 
American Water carries a significant amount of debt with a 57% debt/capital ratio at the end of the second quarter of 2012, treating redeemable preferred as debt. Coverage ratios should continue to improve with rate increases, and we expect EBIT/interest coverage will average just below 3 times through 2016. Asset sales are helping the firm deleverage in the near term, with a large divestiture completed in early 2012. We expect the company to continue to be both an active shedder and acquirer of assets.
Profile: 
Founded in 1886, American Water Works is the largestinvestor-owned U.S. water and wastewater utility. It provides waterand wastewater services to residential, commercial, and industrialcustomers, and operates predominantly in regulatedmarkets, which account for nearly 90% of its total revenue. Itsnonregulated businesses include wastewater management operationsand public/private partnerships.

Citigroup is growing around the world as it shrinks domestically

To contact us Click HERE
by Jim Sinegal (Analyst at Morningstar)
Citigroup C announced an ambitious cost-cutting program aimed at reducing expenses by $900 million in 2013 and as much as $1.1 billion by 2014, in its first significant move since Michael Corbat replaced Vikram Pandit after the bank reported third-quarter earnings. Citigroup will eliminate 11,000 jobs as a result. We see the announcement as evidence that Corbat plans to more aggressively pursue a strategy of scaling back operations. We believe this makes sense, given Citigroup's past problems managing its size and complexity. The company expects that revenue could be reduced by no more than $300 million as a result of the changes, but it will record a $1 billion restructuring charge in the fourth quarter. Our forecast and valuation incorporate a reduction in the company's expense base, so we do not expect to make any major changes to our fair value estimate as a result of the announcement. 
About one fourth of the announced restructuring charges will be incurred in the company's corporate segment, as operational and technological processes are streamlined. We think this should be achievable as the conglomerate undertakes long-overdue steps toward better integration. Global consumer banking will incur approximately 35% of the charges as Citigroup scales back its branch network in peripheral markets, another strategically sound action. Securities and banking will incur 25% of the charges, again primarily resulting from cuts related to operational and technological functions. The company is also cutting back in the competitive arena of cash equities and realigning its expense base to fit a more temperate investment banking environment. In general, we expect to see a smaller, more focused, more efficient Citigroup in the next three years, and we think these cuts are another step in the right direction.
In our view, there are two main risks to the cost-reduction program. The first is that back-office cuts will affect control and communication--two areas that have not been strong points at Citigroup. We'll be looking for both financial and anecdotal evidence that the cuts are hampering, rather than helping, performance. The second risk is that some of the expense reductions, especially in the investment bank, will prove temporary in the event that business picks up from current levels. It's relatively easy to cut costs when deal and trading activity is slow, but it will be much harder for management to maintain its focus on expenses in a more favorable environment.  Stabilized by massive government capital injections in the depths of the financial crisis, Citigroup now offers investors something unusual for a U.S.-based bank: the possibility of loan growth. Thanks to its presence in developing economies, Citigroup is poised to continue adding high-margin loans to its balance sheet while many of its peers in the U.S. and Europe suffer from low interest rates and minimal loan demand in deleveraging developed economies. All else equal, this tailwind (and the company's newly boosted capital levels) might be enough to make Citigroup the envy of its money center peers around the world.However, Citigroup's turnaround is by no means complete. Citi Holdings--the bank's collection of unwanted assets--still accounted for 11% of the balance sheet as of March 31 and resulted in a large portion of the company's credit losses in the first quarter of the year. These assets are likely to eat away at earnings for several more quarters and contribute to slow to negative balance sheet growth for the company as a whole.
Furthermore, risk management has never been a strong point at Citigroup. The company has been involved in financial fiascoes ranging from the subprime crisis to the less-developed country debt crisis in the 1980s. Arguably, the bank's presence in so many countries and businesses also makes it vulnerable to relatively small missteps in far-flung locales, as it is difficult to keep tabs on operations spanning 100 countries and six continents. We're therefore pleased that Citigroup has scaled back its ambitions under Vikram Pandit's management.
The company's newly replenished capital levels also serve to mitigate risk. Near insolvency in late 2008, the company now boasts a much-improved tangible common equity ratio and reserves sufficient to cover well over 4% of the loan book, dramatically reducing risk. These levels position the company to withstand a significant deterioration in credit quality, in our view. At the same time, Citigroup can afford to invest in fast-growing markets in Latin America and parts of Europe, the Middle East, and Africa, where consumer loan yields can be up to twice the level the bank receives in its North American consumer business. While management's capital return plan was scuttled by regulators, who found that Citigroup could find itself just shy of capital minimums in a stress case scenario if its dividend/repurchase plan were approved, we don't see this as a major negative. The lack of approval means the company will not be able to create value for shareholders through repurchases this year, but it also ensures the company will not fall behind peers on the capital front, in our opinion. As this is a positive for bondholders, the company could also find its funding costs falling and margins expanding. In any case, with a market capitalization approaching $100 billion, Citigroup would need a fairly large repurchase program to create much value.
Valuation
We are lowering our fair value estimate to $46 per share from $52 based primarily on an increase in our cost of equity. We are now assigning Citigroup a 12% cost of equity (versus 10.5% previously) based on the volatility of the company's post-provision revenue, the moderate level of operating leverage inherent to the business, and the bank's high level of financial leverage relative to the rest of our coverage universe. In our base-case valuation, we think assets will remain relatively flat over the next five years, with the continued runoff of Citi Holdings' assets offset by the growth of loans outside the U.S. We think the net interest margin will average 2.9% over the next five years, improving slowly as nonperforming assets fall and the company adds higher yielding emerging market loans to its balance sheet. We forecast noninterest income to increase by approximately 15% cumulatively over the next five years, as capital markets revenue normalizes. We expect net charge-offs to slowly decline over our forecast period, averaging 1.8% in the long run. We expect the company's efficiency ratio to fall to 60% by 2016. Our valuation reflects a middling level of profitability, with return on assets reaching 0.9% and return on tangible equity reaching 12% by the end of our forecast period.
Risk
Citigroup's presence in emerging markets is the company's biggest advantage, but also the source of the most risk. Rapid credit growth can be highly profitable on the way up, but almost never ends well. Citigroup is banking on the long-run rise of the global consumer, but there are bound to be bumps on the way, leading to volatile financial results. A secondary source of risk is the company's investment bank, a business that we consider to be a perennial source of disappointment for investors.
Management & Stewardship
CEO Vikram Pandit joined Citigroup in 2007 and was named CEO shortly thereafter. We think he performed admirably, given the difficult task he was assigned as the institution plummeted toward failure. Pandit accepted an enormous amount of government assistance, diluting existing shareholders, but positioned the company for an eventual resurgence. He also refocused the company on its core competencies, designating billions of dollars in assets for disposal as a part of Citi Holdings. Citigroup's board of directors has also made great strides in recent years, adding members like Michael O'Neill, who served as CEO during the transformation of Bank of Hawaii BOH from an average institution to a truly outstanding bank.
We think it's too early to judge management's capital allocation skill, but are encouraged that Pandit has refocused the company's attentions on a simple strategy. We're disappointed that the company misjudged regulators' appetite for returning capital to shareholders, but considering that both Citigroup and Bank of America BAC have made this mistake in recent quarters, we're beginning to suspect that lines of communication with regulators are not as clear as we initially thought. We believe that Citigroup is likely to repurchase shares once it is approved--an excellent decision, in our view, as long as the company is trading below tangible book value.
Overview
Financial Health: 
Citigroup is now in acceptable financial health, with a tangible common equity ratio of 7.7% as of March 31 and an allowance for loan losses sufficient to cover 4.4% of its loan book. The company is also now consistently profitable.
Profile: 
Citigroup is a global financial services company doing business in more than 160 countries and jurisdictions. It serves commercial and consumer clients through its regional consumer banking segment and provides investment banking, treasury, and securities services through its institutional clients group. The company is winding down its involvement in the brokerage, asset management, and consumer lending businesses that are part of its Citi Holdings segment.

Six Reasons Natural Gas Prices Will Pop in 2013

To contact us Click HERE

by Dr. Kent Moors
Natural gas is developing into a very different market from oil, one that offers plenty of opportunities for investors to make big profits in 2013.There are two contrasting dynamics when it comes to natural gas prices. First, the amount of recoverable volume has been accelerating, thanks to increasing unconventional (shale, tight, coal bed methane) reserves and technological improvements to extract it.
A rise on the supply side would generally reduce prices, especially if the number of operators continues to increase. More gas moving on the market from more suppliers results in a downward pressure on prices.
The second dynamic, however, is moving in the other direction, enticing the increase in drilling and expansion of infrastructure. This factor considers the demand side, and there are at least six major trends colliding to increase the prospects for gas usage as we move through 2013.
As a result, I expect gas prices to see a 25% increase from current levels… here’s why.

1) Winter Chill Increases Natural Gas Demand

The first factor driving price increases will come from a colder winter throughout the United States. Traditionally, gas prices have been quite sensitive to seasonal shifts. The overly mild winter in the East last winter was enough to depress gas prices across the board. In 2011, NYMEX futures contracts declined to less than $2 per 1,000 cubic feet (or million BTUs).
The price has recovered to as much as $3.90 recently, although it is currently down to about $3.50. Nonetheless, the recovery (largely a result of companies pulling drilling rigs out of service and reducing the number of new wells) combined with a colder winter will provide a base pushing the price $4 as we start the new year.
The other five elements are more directly affecting on demand increases moving forward. These will have primary effects on the gas balance between anticipated needs and drilling volume.

2/3) Industrial and Petrochemical Usage on the Rise

The second and third elements are increasing industrial and petrochemical uses for gas. Industrial use has been building for a while, but it is one of the last demand factors to emerge during an economic recovery. That is now beginning to kick in.
However, petrochemical usage is resulting in an appreciating demand situation. Gas, natural gas liquids, and byproducts are replacing crude oil and oil products as feeder stock for an entire range of petrochemicals – from solvents and polymers, to plastics and fibers.
The intense competition over where the next “crackers” will be located in the U.S. is clear testimony to the added demand coming from petrochemicals. These facilities will break down gas flows, making the feeder stock ingredients more accessible. This development is also putting some additional weight on the processing of “wet” gas, raw material containing value-added by products.

4) Natural Gas Fleets Expand Across the U.S.

The fourth demand factor is the increasing use of natural gas as a vehicle fuel. We have been witnessing a rise in interest here for several years, but the move to using liquefied natural gas (LNG) and compressed natural gas (CNG) to replace gasoline and diesel has been gaining strength.
Entire fleets of heavy-duty trucks have been retrofitted across Canada, while refueling terminals have been popping up near interstates in the U.S. to service company-designated vehicles. The cost savings in fuel is significant, usually representing more than two dollars per gallon.
The downside is on the infrastructure side. It will take several years of heavy capital investment to provide the network of transport pipelines, storage and terminal facilities, filling stations, and related requirements.
And we must consider the cost of retrofitting engines. At an average of $35,000 per vehicle, it will remain an obstruction for some.
I expect to see an increase in natural gas-as-fuel usage continuing, but remaining on the truck side for 2013. Personal autos will stay a niche market in the near-term. Still, this will comprise an improving demand area for natural gas.

5) Electricity Consumption from Gas Set to Spike

It is in the last two categories that the demand will surge.
Fifth is the massive transfer underway from coal to gas as the preferred fuel for generating electricity. Coal will remain a fuel of choice in several sectors of the world and will still be cost effective in certain regions in the U.S. But the days of “King Coal” in the generation of electricity are drawing to a close.
The figures here are massive. The American market is replacing more than 90 gigawatts (GW) of generating capacity by 2020, virtually all of this coal-fired. In addition, the phasing in of non-carbon regulations (cutting mercury, sulfurous, and nitrous oxide emissions) will add another 20 GW to the retirement agenda, once again coming almost exclusively from coal.
Each 10 GW transferred to natural gas will require an additional 1.2 billion cubic feet of gas per day. If only 50% of the expected transition from coal to gas occurs, the added demand will eliminate three times the current total gas in storage nationwide.
This demand factor alone has been the reason operators have continued to extract gas for much of 2012 at wellhead costs higher than can be gained from the sale to market, while hedging the resulting volume forward in futures contracts. The companies know this windfall is approaching.

6) U.S. LNG Trade Set to Go Global

The sixth element is likely to dwarf all the others, as it is the single most significant change in the energy market for the next several decades.This is the impending export of LNG from the U.S. to global markets. None of this will be happening in significant volume before 2014, but its impact is already noticeable.
Back in 2005, we would all be discussing how much U.S. domestic gas demand would be covered by LNG imports. At the time, the prevailing opinion was as much as 15% annually…and as early as 2020.
No longer.
With the rise of significant shale gas reserves, and the development of techniques to extract it, imports are a thing of the past. Attention has turned to exporting the surplus internationally as LNG.
Last week while I was in Moscow, Russian natural gas giant Gazprom again gave an estimate. They now believe that the U.S. will account for 9-12% of the world’s LNG flow before 2020 from 0% today.
Major exporting terminal projects are underway, and Washington gave its initial approval with the release of a much-anticipated report last week. American operating companies recognize the LNG market will provide a major outlet for surplus production.
The only question is whether this will increase domestic gas prices and stifle economic recovery. This has been a political issue bounced around throughout the recent campaign. But the answer to this is a resounding “No.”
This fear of rising prices to local consumers resulting from an increase in exports rests on a chimera that domestic supplies would be cut below effective demand levels. Consider only this simple observation in response. At current trends, the U.S. could increase gas production at least 25% per year for the next four decades or more.
Now doing so would be idiotic; it would destroy the market and its pricing mechanisms. But it indicates a simple fact. Additional supply is no longer a problem.

Natural Gas Prices Set for Big First Quarter

With all of these elements coming into the picture, what is the answer to the question posed at the beginning?
Where will gas prices be on March 31, 2013?
All of the factors above will not be hitting at the same time, and a prolonged economic slump in the U.S. and continuing angst in Europe may put their own kibosh to a full return of demand.
But I am looking at an average price of $4.35 per 1,000 cubic feet for near-month NYMEX gas futures by March 31 (assuming that Washington gets its fiscal house in order). That would be more than double the price a year earlier, and about 25% higher than the current price.
And the prospects moving forward look even more promising.
Companies have learned to stagger production to reduce gluts. That will mean improving returns as all of the demand elements mentioned above start moving into place.