In Taipan Daily, Irwin Greenstein examines another country looking to uranium as a source of clean energy, with potentially significant implications for the market:

The current decline in uranium prices gives these China super-traders a critical inflection point to pick up the slack and clean up the environment.

China could benefit greatly from plunging uranium prices… as well as investors who take a long-term position in China’s growth.

Uranium futures contracts through the end of this year are trading in the mid $60 range. By comparison, U308 uranium was priced at about $140 per pound as early as January of this year.

The steep decline in uranium could be just what the Chinese need to make their move before manufacturers start moving out entirely to countries such as Vietnam.

There is a growing sense of urgency to corner the uranium market.

This stealth team of Chinese traders is armed with a $300-billion war chest to grab up every last ounce of U308 uranium. And if anyone can pull this off, it’s the Chinese.

Unlike gold, oil or copper, there’s no regulated trading exchange for U308. You can’t buy an ETF for it. U308 moves in a near-underground economy of secretive auctions where uranium trading is fast and furious.

The absence of a regulated trading exchange gives an enormous advantage to a stealth team of Chinese traders instructed by the government to track down every last pound of U308.

This crackerjack team is headed by a cabinet-level rising star who is chauffeured around Beijing in a big, black Audi. He sports a cigarette holder like FDR and is considered one of China’s top economist.

Under his brilliant supervision, the Chinese uranium traders will draw on a war chest of $300 billion in U.S dollars. That amount is nearly twice the size of the world’s largest mutual fund. It’s about six times bigger than the legendary Magellan Fund. And it’s bigger than the world’s top four mutual funds combined.

Over the next 15 years, China plans on building 30 new nuclear reactors. Without those critical reactors, the country’s environment and economy could be heading straight for the dumpster.

China desperately needs another 23,000 megawatts to maintain its nonstop growth.

And 23,000 megawatts is a massive amount of electricity. It’s how much New York City lost during the great blackout of 2003, when 19 million New Yorkers were plunged into darkness and the city was dead in the water.

That’s why China is committed to shelling out $50 billion on 30 nuclear power plants. The country must make the leap from 8.7 million kilowatts today to 40 million kilowatts by 2020. It’s the most ambitious nuclear power expansion in history.

For investors interested in China, the move to nuclear energy is great news. It means that China will overcome its energy problems — removing another obstacle to long-term growth.

Who stated last Sunday that Tony Blair is convinced that Brown can’t possibly beat David Cameron in a General Election.

Or maybe he’s put out by the fact that he’s having to promise concessions to all the people who are going to suffer from the abolition of the 10p tax.

Either way… as Brown staggers around the country putting all his efforts into convincing us he’s not a wounded animal… who’s looking into fixing the crippled economy?

Alistair Darling? He doesn’t operate without Brown standing right behind him… does he?

It’s all very well for Brown to come out and say he’s not going to concentrate on: “gossip and rumour.” But it seems to me that this is all he has been doing lately.

What is the point of all these publicity stunts and safe facing exercises when we have real problems to solve? A cynic might say it’s to detract attention from what you’re actually doing… i.e. NOTHING…

Well I think that fixing our problems is a better avenue to attempt to win a General Election on… as opposed to publicity and spin.

The finance sector makes up one third of our economic output, contributes £20 billion to the trade balance… and accounted for nearly HALF of UK GDP growth in 2007.

There are now more finance sector workers in Britain than there are construction workers, farmers and factory workers combined.

And they are in trouble!

What’s being done to fix our problems – other than our Leader touring the country to let people know he’s still got a job? Nothing that’s what!

And before anyone points to a £50 billion bail-out…

WE’RE THE ONE’S PAYING FOR THAT BAIL-OUT… YOU AND I… OUT OF OUR OWN POCKETS…

It’s not a bail-out… it’s us shoring up things that are failing – so they fail a bit more slowly…

Even the City is saying that this won’t solve a thing. One investment banker we know said:

“The terms of the Bank of England facility are pretty rubbish, I doubt many banks will use it, you can get better terms privately through the Repo market. I think it’s just a fig leaf to cover the Bank’s total inaction on the sub-prime crisis.”

But hey – slip a sly supposed bail-out in to the mix, whilst getting publicity with one of the world’s most beautiful people – AND MAYBE NOBODY WILL NOTICE THAT THIS £50 BILLION SOLUTION IS A LOAD OF RUBBISH.

WELL GUESS WHAT… WE’VE NOTICED… AND WE’RE PRETTY DARN RILED AT THE CHEEK OF IT ALL.

Let me ask you something dear reader…

What do you think’s going to happen to the domestic economy… and to YOUR savings and investments… if Britain’s ‘Miracle Money Machine’ has its output slashed by one tenth… one third… or even half?

Well – as the pound sinks to a record low against the Euro and investment banks brace themselves for further fallout… it’s time to batten down the hatches, because you’re about to find out.

Below you’ll find the link to a brand new Crisis Report published by The Fleet Street Letter. They’ve also identified three stocks poised to benefit from the finance sector-led recession they believe has to kick off in 2008.

Click here to find out more.

Not only is the most dramatic asset bubble of modern times clearly over… not only are the recent falls in real estate and equities just a taste of what’s to come… but a sector that accounts for nearly one third of Britain’s entire economy is about to get hammered!

If City activity dries up, so does growth, says Damian Reece in The Daily Telegraph. “The entire southeast, from house prices to employment, is a geared play on global financial markets.”

According to its analysts this could be one of the biggest challenges to face the British economy in The Fleet Street Letter’s entire 70-year history.

And it’s hurtling towards your savings and investments like a freight train even as you read this.

And if you’re not ready yet, you’ll want to be soon.

The Fleet Street Letter has been helping its readers prepare their portfolios for the coming crisis since October 2005.

With the situation deteriorating daily, they’ve decided to issue some advice to you today.

Specifically, the team have identified three “gloom loving” stocks they believe will thrive during the finance sector-led recession.

This could be the most important investment advice you read this year.

For the full briefing, click here.

Erin and Isabel
Editors
The Miner Diaries

PS: The Fleet Street Letter says: “If you want to keep your hand in the stock market, these are the simplest ways I know to position yourself to potentially grow wealthier from a likely recession in 2008 and 2009. One 5 minute call to your broker and you’re done.”

Go here for the full report.

Sure, he made a few deals, but nothing spectacular. Largely, while everyone else was borrowing like mad, he amassed an even bigger cash pile than he already had.

Of course, now that credit is a dirty word, and basic, non-derivative-based hard cash is suddenly worth something again, that cash pile is in demand.

And that means Mr Buffett is suddenly doing deals again…

Buffett’s hard cash buys him a half-price chunk of Wrigley

Warren Buffett is helping confectionary giant Mars to take over chewing gum group Wrigley. Mars is stumping up $80 a share, or $23bn in total, of which Mr Buffett will provide $4.4bn. The rest of the money is coming from JP Morgan and Goldman Sachs.

What does Mr Buffett get out of it? A 19% chunk of Wrigley, for the trifling sum of $2.1bn – pretty much half-price.

Chairman Bill Wrigley Jr said: “There’s no question that the financial markets are very challenging right now and coming up with the financing was a challenge.” Which is why people with deep pockets and large savings piles, like Mr Buffett, are able to command such attractive terms in return for their support.

The deal will make the combined group into the largest confectioner in the world, reports The Times, with a 14.4% market share, pushing Cadbury Schweppes into second place on 10.1%. Mr Buffett is well known for his general fondness for the sector, which he believes is about as recession-proof as you can get.

And it’s a good thing too, because he also expects that “the recession will be longer and deeper than most people think – this will not be short and shallow.”

This is a view that commentators are gradually coming round to – at least as far as the US goes. More than a few research notes predicting a U-shaped (long trough), rather than V-shaped (short and sharp, followed by a rapid recovery) recession for the US.

Many people still think however, that the UK will be just fine – not least our Chancellor, Alistair Darling. Sadly for Mr Darling, even the EU disagrees with him. The European Commission yesterday said that the UK’s economic growth would slow to 1.7% this year, at the bottom end of the Government’s forecasts for 1.75%-2.25%.

But where the Treasury sees a miraculous rebound to 2.25%-2.75% growth next year, the Europeans reckon we’ll see 1.6% growth in 2009.

I still think this is rather optimistic, but at least it’s going in the right direction. Given that Britain will be in the midst of a fully-fledged housing slump at that point, accepting reality now and making some preparation for the downturn would be a good idea.

Banks are finally accepting reality

You can’t of course, expect the government to accept reality – it would rather spin it out of existence. But the banking sector looks as if it’s being a little more realistic. Britain’s biggest mortgage lender, HBoS, as was widely flagged in the weekend press (see yesterday’s Money Morning for more: Why HBoS should jump at the chance to raise cash), has decided to go ahead with its £4bn rights issue. The group will offer to sell two new shares for every five at 275p a share, 45% below Monday’s close of 495.75p. Shareholders will have until August 7th to decide whether to take up the offer or not.

The dividend will also take a hit, unfortunately. The bank will cut its dividend payout ratio from 46% to 40%, while the interim dividend will be paid in shares. It still aims to pay the final dividend in cash.

Meanwhile, it has taken about £2.8bn in writedowns. The bank is also targeting a core Tier 1 ratio of between 6% and 7%, which would put it at the higher end of the banking sector, and also raises the game a little on RBS’s aim for 6%.

Chief executive Andy Hornby said he expects house prices to fall by “mid-single digits” both this year and next. The bank warned that it also expects bad debts to rise this year.

The move to raise money seems a wise decision. It’ll be uncomfortable for management and shareholders just now – particularly after HBoS’s indignant reaction to the recent rumour-fuelled share price collapse – but better to make a cash call now than have to do it later.

Rival banks who have dismissed the idea, such as Bradford & Bingley, may come to regret it. We’ve regularly warned readers to ignore tempting dividend yields and stay away from the banks, and we’re certainly not changing our tune yet.
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