U.S. troops available for deployment to fight a full-blown war is 1.4 million, with an additional 2.1 million, if all of NATO were to oblige. Read more…

Dominique de Kevelioc de Bailleul: War drums beat in the Middle East and, now, the drums suddenly beat strongly between two Asian mights.  That, on top of a global financial system on the brink of entering the slide to hyperinflation has many thoughtful analysts suggesting Read more…

Michael Snyder: Barack Obama cares about Barack Obama far more than he does about either Israel or Iran.  And as far as Barack Obama is concerned, delaying the coming war between Israel and Iran until after the election is what is best for Barack Obama. Read more…

Michael Snyder: There is going to be war in the Middle East.  It is just a matter of time until it happens.  Israel has decided that there is no way that it can ever allow Read more…

“Today is a frankly historic day!” exclaimed German Vargas Lleras, the interior and justice minister in Colombia, this morning

Ordinarily, we take blather from politicians with a 40-pound bag of water softener salt.

But this time, as we have taken a more intense interest in Colombia of late, caught our attention…

The “Victims Law,” the passage of which Mr. Vargas Lleras refers to, aims to compensate people victimized by four decades of violence.

For millions of Colombians, it could mean the return of ancestral lands they were forced to flee. The United Nations refugee agency estimates 3.4 million Colombians – among a population of 46 million – are “internally displaced.”

Drug gangs, the left-wing guerrillas, the right-wing paramilitaries… They’re still around, but we saw firsthand in March, they’re not as omnipresent as they once were.

Of course, sorting out the rightful ownership of 10 million acres of land will take years. But we daresay for Colombians, the passage of the “Victims Law” to which Mr. Vargas Lleras was referring is as big a deal as the end of apartheid was for South Africans.

The Victims Law marks a decisive break with the past.

By way of contrast, we continue to witness the dithering in Washington over a US-Colombia “free trade” agreement.

Today and tomorrow the Senate Finance Committee hears testimony about trade agreements for South Korea and Panama. Somehow, these two have gotten tied up with the Colombia agreement as a package deal in the minds of many Republican lawmakers.

Meanwhile, the White House is holding off on submitting the treaty to the Senate until lawmakers agree to fund a “job training” program for people who would supposedly be thrown out of work by this agreement.

Oy. We have our own qualms about a “free trade” agreement codified in hundreds of pages of documents; the section on “intellectual property” alone runs 33 pages, for example.

But really, what’s so bad about a deal that allows the textile maker we met in Medellin to ship his jeans to the United States tariff free in exchange for getting American cotton tariff free?

Seems like a good deal for everyone.

Why else has the US government spent billions trying to help the Colombians fight the FARC? What other interest would the gringos have in a motley gang that started out as a left-wing guerrilla force and morphed into drug-running thugs?

“Plan Colombia” started as a key front in President Clinton’s prosecution of the “War on Drugs.” The US sent in planes to spray coca crops and US Special Forces to work alongside Colombian police and soldiers.

Among the program’s illustrious accomplishments…

• Coca cultivation largely fled Colombia…only to shift to Peru
• US street prices of cocaine were nearly unchanged
• Colombia became the No. 3 recipient of US foreign aid, after Israel and Egypt.

The authors of Freakonomics examined the evidence and wondered aloud if Plan Colombia amounted to “a $5 billion failure.”

Perhaps.

But folks on the ground in Colombia attribute the military aid given them by the US and intelligence handed over by the CIA and Mossad, the Israeli intel outfit, with helping to rout the guerillas and restore relative calm after nearly 40 years of fear.

Yesterday, the Colombian military rescued 100 people the FARC had taken hostage three days before. The hostages, it turned out, were guarded by all of three guerillas.

When we were in Bogota in March, the FARC kidnapped 23 oil workers. Twenty-one escaped on their own within hours… the two others were rescued by the end of the next day.

Developments like these give the folks we’ve met along the way confidence that the security situation is increasingly in hand. And the passage of the “Victims Law,” redistributive as it is, Colombians are getting their rebuild on right quick.

Hence, for a short time, the opportunity in “perception arbitrage” we see developing in the land of El Dorado.

[Ed Note: At the Phnom Penh shareholders meeting of Leopard Capital last Thursday, the firm laid out plans for the first-ever agriculture fund in Colombia, targeting, to begin, palm oil production in the rich valley south of Cartagena before the northern spur of the Andes rises toward Medellin. The idea is new enough their plan hasn’t even graced the pages of the Leopard website yet.

In the meantime, we recommend you check out the two Colombian plays – both easily available to US investors – we discuss in the most recent issue of Apogee Advisory. Get your copy (along with Ron Paul’s “lost” gold bible) right here.]

Addison Wiggin
for The Daily Reckoning

The Winds of Change: Colombia Passes the Victims Law originally appeared in the Daily Reckoning. The Daily Reckoning provides over half a million subscribers with literary economic perspective, global market analysis, and contrarian investment ideas.

Read more here:
The Winds of Change: Colombia Passes the Victims Law

The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Light Sweet Crude is touching another post-Panic of ’08 high this morning.

At $108.25, we’re still a stretch from the record $147 price set in July 2008. But it’s $2 higher than it was on this date in April of that year. So we’ve got time.

No single factor lies behind the latest run-up as we begin the trading week. Rather, a confluence of events across the Middle East and North Africa continues to make the markets nervous:

• The civil war in Libya drags on. Gaddafi’s forces and the rebels are stalemated and US airstrikes are doing little to shift the balance

• Bahrain’s government has shut down the leading opposition newspaper. Bahrain’s Shiite majority is ruled by a Sunni minority. The US Fifth Fleet, stationed in Bahrain, watches nervously

• Troops have opened fire on protesters in Yemen, killing 12 and wounding 30 critically.

Yemen has little oil to speak of, but it sits on the eastern side of a narrow waterway crucial to the world oil trade, described in Byron King’s “New War” scenario as the Bab-el-Mandeb, “the Gate of Tears.”

Yemen is home to a volatile religious mix – 52% Sunni, 46% Shiite. The dictator, Ali Abdullah Saleh, has ruled the place for 32 years.

Saleh has been helping the United States wage a secret war against al-Qaida sympathizers since Sept. 11. So unlike with Libya, the US government doesn’t want to see him go.

The problem is how Saleh is suppressing the protests – especially on the country’s northern border with Saudi Arabia.

“What Saleh’s been doing,” explains Nation Institute fellow Jeremy Scahill, “is taking sides with really extremist Wahhabi factions from Saudi Arabia and allowing the Saudis to go in and try to exterminate the Shiite minority inside of Yemen.

“So the Houthis [Shiite tribesmen] see him as a puppet of the US and the Saudis.

“The US and the Saudis are creating a situation that could draw in Iran to defend the Shiite population there. The dangerous game the US is playing in the north of Yemen could well draw in the Iranians because this is Shiites being exterminated, and it gets covered a lot on Iranian state television.”

“Saleh has lost allies,” the BBC reports this morning, “Yemen’s army is split. The government has lost control of entire areas of the country. And the economy is collapsing.”

Yemen, as we described in Apogee a year ago, is a demographic time bomb waiting to blow. Perhaps the fuse has already been lit. The desolate, arid country is also another front in the 1,354 year-old Sunni-Shiite conflict Byron’s describes in his New War scenario.

A year ago, the media laughed when Mr. King suggested the New War could send oil to $220 in a heartbeat. At $108 – and rising – journalists are beginning to sober up and ask different questions.

On the other side of the peninsula, Egypt state media reports police have thwarted an attack on a natural gas pipeline that supplies Jordan, Syria, Lebanon and Israel. The same pipe was recently reopened after an explosion at a terminal shut the pipe down for six weeks in February and March.

In response to the first incident, Israeli leaders ramped up efforts to develop a gas deposit known as Leviathan. With some 16 trillion cubic feet of gas, Leviathan is one of the world’s largest new gas fields of the past 25 years:

“The geology off the coast of Israel,” Byron explains, “has every indication of meeting criteria for a major ‘petroleum system.’ It has analogues with other of the world’s best hydrocarbon-rich areas. There are salt layers similar to, but not as thick as the pre-salt of Brazil. There are structures and stratographic traps, like off West Africa, with oil plays like Angola and Namibia.

“Plus, I think it’s fair to speculate that the really deep stuff offshore Israel has some similarity with what I’ve seen of the Wilcox Trend beneath the Gulf of Mexico.”

Regards,

Addison Wiggin
for The Daily Reckoning

Record Oil Price: A Ways to Go, But Time to Get There originally appeared in the Daily Reckoning. Daily Reckoning founder Bill Bonner recently wrote articles on stagflation and introduced his new book Dice Have No Memory: Big Bets & Bad Economics From Paris to the Pampas.

Read more here:
Record Oil Price: A Ways to Go, But Time to Get There

The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Many of the great declines in the stock market over the past 30 years have been related to oil (United States Oil (USO)). This week we have seen the major indices plummet on geopolitical chaos throughout North Africa, especially the large oil-producing Libya, as investors returned to gold (SPDR Gold Shares (GLD)), silver (iShares Silver Trust (SLV)), and oil. As the market reached record overbought territory, any excuse could begin a significant pullback in equities (SPDR S&P 500 (SPY)).

Investors are monitoring key assets in Egypt (Market Vectors Egypt Index (EGPT)). If either the Suez Canal or Sumed Pipeline come under attack, then we will see a major oil spike, possibly worse than in the late 1970s. Already Iran has taken advantage of the chaos and passed into the Mediterranean, further escalating potential conflicts between Israel (iShares MSCI Israel Cap Invest Mkt Index (EIS)) and the Iranian Allies of Hezbollah and Syria who want to take back control of the Golan Heights. This Middle Eastern instability may have deeper consequences and I don’t believe it will end anytime soon. In fact, it may even eventually spread to Saudi Arabia where the royal family maintains weak control and extremists are gaining popularity. In late January in an article entitled, Will Gold, Oil Prices Soar on Revolts in Tunisia, Egypt? I wrote about the domino effect hypothesis, stating that chaos would not be contained in Tunisia and Egypt. This spread of chaos, causing volatile power vacuums, could have a significant impact on gold and oil, especially now that the domino hypothesis is being confirmed.

At the end of January investors returned to precious metals. Gold has been on sale every six months. A January phenomenon occurs when mutual funds and institutional investors reposition their holdings, sometimes allowing investors to buy a sector on sale. At the end of January, gold and silver found support as geopolitical conditions worsened. The recent Libyan crisis has caused oil to jump which in turn has caused a decline in equities.

As much as the financial crisis and record government spending has helped gold soar to record highs, terrorism and war have been major drivers of the price since September 11, 2001. The Middle East possesses approximately 65% of the world’s oil reserves, and Egypt in particular has two key assets which effect the global oil trade: the Suez Canal and the Sumed Pipeline. Many analysts did not expect Libya to fall into civil war. Reports are showing that oil exports are being curtailed, sending oil into new 52-week highs.

The “Sputnik” moment which President Obama spoke about in his State of the Union address may come faster than expected out of necessity. Washington is actively pursuing supply of North American heavy rare earth assets to fast-track into production as top-secret defense technologies depend on it. Sanctions on China from the WTO will not be enough to meet the growing demand. Even China, which produces over 97% of the rare earths, has expressed interest in heavy rare earth assets globally. Hyundai, the latest company on the electric-car scene, recently commented that it was pursuing a rare earth supply as well.

Economies are growing and demand has increased since the last major Iranian Revolution in 1979 when oil spiked higher. An oil spike now could be much more detrimental 32 years later. The world is more dependent on fossil fuels and many nations are struggling with slow growth and huge debt burdens. An oil spike could cause a major setback for the global economic recovery unless governments initiate major alternative energy and clean energy programs. I believe these current events will create a more significant push into clean energy, non carbon energy. A few commodity sectors may benefit including uranium (Global X Uranium ETF (URA)), lithium (Global X Lithium ETF (LIT)) and rare earths (Market Vectors Rare Earth/Str Metals ETF (REMX)).

President Obama has released this year’s budget and it was shocking. Many analysts were surprised by the huge amount of capital allocated to clean, alternative energy in order to spur innovation and job growth. In the recent budget, a $7500 tax credit will be given to car buyers who purchase an electric car. Obama has a goal of putting 1 million electric vehicles on the road by 2015. Many analysts are predicting about a 10% increase in cars sold due to this legislation. However, tensions are escalating as Iran sticks out its tongue at Israel by passing through the Suez Canal. Oil prices could spike as turmoil spreads through North Africa and the Middle East. Legislators are sending a message that they want to wean themselves off of Middle Eastern oil and look into clean and independent energy.

Investors should expose themselves to the potential supply-demand constraints and rise in oil prices by purchasing developers with major assets in these clean energy mineral sectors or by diversifying into these newly created ETFS, such as REMX or LIT, which track these sectors. As oil spikes, these clean energy commodities should receive a renewed interest by legislators and investors who believe in clean energy power generation.

Make sure to click here to sign up for my free 30 day daily technical intelligence report.

Read more here:
Middle East Turmoil: Gold, Silver, Oil and Clean Energy Commodities

The Dow dropped another 122 points yesterday, while crude oil jumped 5.4% to $103.41 a barrel and gold surged to a fresh two-month high. But that was before lunchtime in New York, when traders got the chance to talk things over and decide that widespread Middle East turmoil, bloodshed and coup d’états aren’t as bad as they sound.

Shortly after lunch, the mood on Wall Street reversed. Stocks rebounded. “Enough of this sturm und drang,” investors seemed to say to themselves. “By golly, we still love US stocks and we’re going to buy them no matter how many Middle East tyrants flee their countries!”

The Dow closed out the New York session with only a modest 37-point drop. The S&P 500 ended the day nearly unchanged and the NASDAQ Composite advanced about three quarters of a percent.

By contrast, crude oil’s early morning gains evaporated throughout the day. By the end of the New York trading session, the price of crude was down 82 cents to $97.28 a barrel – snapping a nine-day winning streak. The morning gains of gold and silver also evaporated, as gold slipped nearly one percent and silver tumbled nearly 5%.

“The worst is over,” Mr. Market seemed to say. He’s the expert, but we still don’t trust his judgment.

Earlier this week, the lovers of US stocks began noticing the serial “Facebook Revolutions” unfolding in the Middle East. These investors seemed to decide that the violent images on their TV screens that started pre-empting Jim Cramer’s “Mad Money” might mean something…perhaps something bad. So they decided to take a break from their habitual, manic stock-buying. The Dow dropped almost 200 points on Tuesday – its worst one-day decline since last summer. And the Blue Chips dropped another 100 points the next day.

The “Risk Off” trade was on!…at least momentarily.

Evidencing this momentary relapse into caution, the VIX Index stirred from its slumbers. This Index, known as the “Fear Gauge,” bounced a bit during the last few days. But at its highest point yesterday, the VIX had merely regained its average level of the last 12 months. And already, the index has slipped back below that average level.

Net-net, US investors continue to exhibit very little anxiety about stock price trends. They continue to cling to US stocks like a baby clinging to a “blankey.” Presumably, these investors consider the recent events in the Middle East to be of transitory and/or minor significance. By extension, the resulting spike in oil prices must be nothing more than a pothole on the superhighway to robust stock market profits.

Your California editor is not so certain that the “somethings” that are occurring in the Middle East mean next to nothing. Neither is he certain that the contagious revolutionary virus spreading throughout the region is bullish for anything other than the oil price…and Anderson Cooper.

Interestingly, some of the investors who are closest to the action seem to share your editor’s malaise. The cost of insuring 5-year government bonds issued by the State of Israel has jumped 50% during the last few days – the highest level in almost two years. By contrast, the VIX Index here in the US, barely reached its highest level of the last two months.

Perhaps these conflicting impressions of investor anxiety mean nothing at all. On the other hand, we would not derive any comfort whatsoever from the fact that investors over here scarcely acknowledge the risks that terrify investors over there.

Just sayin’…

Eric Fry
for The Daily Reckoning

Why Investors Continue to Find Comfort in the Stock Market originally appeared in the Daily Reckoning. The Daily Reckoning has published articles on the impact of quantitative easing, bakken oil, and hyperinflation.

Read more here:
Why Investors Continue to Find Comfort in the Stock Market

The Daily Reckoning is a contrarian e-letter, brought to you by New York Times best-selling authors Bill Bonner and Addison Wiggin since 1999. The DR looks at the economic world-at-large and offers its major players – investors, politicians, economists and the average consumer – some much-needed constructive criticism.

Unrest in Egypt is barely three weeks old and already the ripple effect has crossed the globe in several waves.
I find it interesting how regional and country ETFs can be of some assistance in evaluating how investors are thinking in terms of contagion risk, be it political or economic – or at the very least in terms of the breadth and depth of the economic impact of specific events.

In this week’s chart of the week, I endeavor to track some elements of the relative geographical spread of concern with a handful of ETFs. The baseline ETF, EGPT, shows how the situation deteriorated over the long weekend in the U.S. from January 14^th to January 18^th, then began to accelerate downward during the January 26^th trading session.

In terms of impact, the additional four ETFs include one broad-based frontier ETF, FRN, and three single-country ETFs: Turkey (TUR); Israel (EIS); and South Africa (EZA). Of this group, the Turkey ETF has proven to be the most volatile during the crisis and also suffered the largest drawdown. Interestingly, the Israel ETF has been the least volatile of the group, but the only one which appeared not to find a bottom on January 28^th and continued to trend lower. The top performer of the group is EZA, the South African ETF. EZA has fallen slightly more than half as far as EGPT since the beginning of the crisis and has steadily gained strength during the past week. Among country ETFs, EGPT and TUR were the top two performers during the past week.

Note that there are several regional ETFs which cover northern Africa and the Middle East. I discussed these during the Dubai crisis at some length in Frontier ETFs and Chart of the Week: Market Vectors Gulf States ETF (MES).

Related posts:

• Frontier ETFs
• Chart of the Week: Market Vectors Gulf States ETF (MES)
• More Turkey Anyone?
• Chart of the Week: Irrepressible Colombia (GXG)
• More Top Emerging Markets ETFs
  

Read more here:
Chart of the Week: EGPT and Collateral Damage

This New Year, income investors like me will likely be finding some of the richest dividend yields overseas. As a general rule of thumb, foreign stocks often have higher dividend payouts than their U.S. counterparts, and pay a much larger dividend as well. While lately there's been more emphasis on dividends in the United States, domestic stocks on the whole still offer some of the lowest yields in the world. At present, the Standard & Poor's 500 Index yields a paltry 1.8%. Yields on the MSCI EAFE Index, a widely followed measure of stocks in developed foreign markets, are far more attractive at 2.4%.

When foreign companies have extra cash, they are far more likely than U.S. firms to share the cash with investors as dividends. And most indicators suggest it will be foreign companies with much of the excess cash this year, since many overseas economies are predicted to grow faster than the United States. Experts forecast 3% growth for the U.S. economy in 2011, while growth is pegged at 6% for Latin America and 7% for parts of Asia. [See "The Most Undervalued 12% Yield on the Planet"]

To profit from growth rates twice those of the United States, income investors should be adding foreign dividend-paying stocks to their portfolios right now. Here is a list of foreign stocks that offer strong appreciation potential and hefty dividend yields… [For more, see our free course: "Guide to the World's Highest Yields"]

1. Cellcom Israel Ltd (NYSE: CEL)
Yield: 11%
Cellcom Israel is a leading Israeli cellular service provider established in 1994, currently serving some 3.4 million subscribers. The company has been paying quarterly dividends since 2007. Last year, the company generated $1.8 billion of cash flow and paid out $639 million in dividends. Dividends have grown 39% in the past three years to an annualized rate of $3.58. Cellcom Israel continued to record robust growth in the September quarter of 2010. Operating income was up 14.1% year-over-year, and consensus analyst estimates target 9% annual growth during the next five years, providing ample cash flow for more dividend increases.

2. Just Energy Income Fund (Toronto: JE-UN.TO)
Yield: 9%
Toronto-based Just Energy markets natural gas to homes and businesses in the Canadian provinces of Quebec, Ontario, Manitoba, Alberta and British Columbia. The company also serves customers in Illinois, New York and Indiana. Since its initial public offering in 2001, Just Energy has increased its monthly payout 29 times. The company has historically grown its cash flow by about 10% a year. Last year, Just Energy produced $230 million in distributable cash flow and paid out $187 million in distributions.

Investors should note, however, that this income fund will convert to a corporation, but it intends to continue paying monthly dividends at a $1.24 annualized rate. The company's stock currently trades on the Toronto stock exchange, but it also plans to pursue a listing on a major U.S. exchange.

3. Deutsche Telecom AG (Frankfurt: DTE)
Yield: 8%
Deutsche Telekom provides telecommunications services in Germany and internationally. Last year the company generated $20.8 billion in cash flow and paid $5.7 billion in dividends. Net profits rose 7.9% year-over-year in 2010's September quarter, and the company anticipates cash flow will rise to $26.3 billion this year. In the past five years, dividends have grown 5% to a current annualized rate of $0.78 per share. The shares trade on the Frankfurt stock exchange as DTE, and also as American Depository Receipts (ADRs) over-the-counter in the United States as under the symbol “DTEGY.”

4. Westpac Banking Corporation (NYSE: WBK)
Yield: 6.5%
Westpac is one of the largest banks serving Australia and New Zealand. This bank also ranks among the elite stocks that have paid dividends for more than 150 years. Westpac just reported an 84% rise in full year net profits. The company produced net income of $6.1 billion and paid $2.7 billion in dividends. Westpac pays quarterly dividends and hiked its dividend 20% last year to a $7.37 annualized rate per share. The shares currently yield 6.5%. Analysts think Westpac can grow income 9% a year in the next five years, which suggests more dividend increases are likely.

5. Administradora de Fondos de Pensiones Provida S.A. (NYSE: PVD)
Yield: 6%
AFP Provida administers private pension funds in the Republic of Chile and also owns interests in private pension fund administrators operating in Peru, Ecuador, Mexico and the Dominican Republic. In 2009, AFP Provida produced net income of $161 million and paid out $40 million in dividends. The company recently hiked its dividend 29% to a $5.53 annual rate per share. Earnings have grown 17% annually in the past five years. AFP Provida's shares were a stellar performer in 2010 — up more than 83%, compared with a 12% gain for the S&P.

As we enter 2011, investing abroad has become awfully tricky. Emerging market economies have been the shining stars of the past few years, and many of their stock markets have been on a tear. As I noted a few weeks ago,

As we enter 2011, investing abroad has become awfully tricky. Emerging market economies have been the shining stars of the past few years, and many of their stock markets have been on a tear. As I noted a few weeks ago,

In an attempt to broaden its horizons, ETF provider WisdomTree Investments, recently filed paperwork with the Securities and Exchange Commission to provide actively managed emerging market bond ETFs.

According to the filing, the first ETF of the proposed three, would be the WisdomTree Asia Bond Fund,  which seeks to offer broad exposure to Asian government and corporate bonds.  Furthermore, the fund intends to invest in fixed income securities denominated in the local currency of countries in Asia.  Particularly, the fund is expected to focus its investments in China, Hong Kong, India, Indonesia, South Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand. 

The second ETF is expected to be the WisdomTree Latin American Bond Fund, which is designed to provide broad exposure to Latin American government and corporate bonds through numerous investments in a range of instruments with varying credit risk and duration.   Additionally, the fund intends to invest in fixed income securities denominated in the local currencies of countries in Latin America as well as provide broad-based exposure to the region’s bond markets through investing in both investment and non-investment grade securities.

The last proposed active fixed income ETF is the WisdomTree EMEA Bond Fund, which seeks to give investors exposure to fixed income in securities in Europe, the Middle East and Africa.  To be more specific, the fund expects to focus on the Czech Republic, Egypt, Hungary, Israel, Poland, Qatar, Romania, Russia, Slovakia, South Africa, Turkey, and United Arab Emirates.  The fund is expected to invest in both investment and non-investment grade securities issued by the governments in the EMEA regions as debt instruments issued by corporation in the region. 

As developed economies continue to struggle to show signs of economic growth, bolstering the appeal of emerging markets, these ETFs are likely to attract assets once they start trading. 

Disclosure: No Positions

Read more here:
WisdomTree Files For Actively Managed Emerging Market Bond ETFs

HERE IS YOUR FOOTER