Ireland bailout rumors spook markets

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/8010097/Ireland-IMF-bail-out-rumours-spook-markets.html

Spain the next Dubai?

http://www.businessinsider.com/the-ecb-is-the-only-thing-stopping-spain-from-becoming-the-next-dubai-2010-9

Yen intervention

http://www.ft.com/cms/s/0/43627416-c074-11df-8a81-00144feab49a.html

Now that the Bank of Japan has manipulated the yen down, will they draw criticism from the US for "currency manipulation", as they have from Europe? The US has already pointed fingers at China for currency manipulation. Could it be that all sovereign governments are manipulating their native currencies down in an attempt to stimulate their exports? Guess which store of value wins when paper currencies race each other to the bottom? I'll give you two guesses. And they're not colored pieces of paper.

Soros reiterates gold as the ultimate bubble

He declared gold is the "ultimate bubble" in January, and reiterates that sentiment today. Problem is, his fund loaded up on gold and gold-related assets last December. Is he talking down his book? You decide.

http://uk.reuters.com/article/idUKTRE68E3PX20100915

In the video, he declares gold is the ultimate bubble destined to "disappoint" investors, yet he admits gold has been the best-performing asset in his funds in 2010. He could have said gold was the best-performing asset class for the last 10 years, and still have been correct.

http://insider.thomsonreuters.com/link.html?ctype=groupchannel&chid=3&cid=144412&start=0&end=124&shareToken=MzoxOTI3YTRkNS1jMzRjLTQ1OTYtODJiNS1mNDY3OTg2ZWVjOWY%3D

Third world America

http://www2.macleans.ca/2010/09/14/third-world-america/

Congressmen Weiner and Waxman Set Gold Hearing

Thanks to my friend John for sending this article.

http://seekingalpha.com/article/225579-congressmen-weiner-and-waxman-set-gold-hearing

Atlast just shrugged

http://www.gata.org/node/9022

Greenspan's warning on gold

http://www.nysun.com/editorials/greenspans-warning-on-gold/87080

Arena plunges, blames FDA panel over obesity drug

http://www.reuters.com/article/idUSTRE68G2CF20100917

CHARLIE MUNGER: “MORE PAIN TO COME”

http://pragcap.com/charlie-munger-more-pain-to-come

Just a day after Warren Buffett expressed his optimism in the US economy Charlie Munger, his right hand man, said there is “more pain to come”.

China hints it could dump U.S. bonds

http://www.moneynews.com/Headline/China-Fires-Shot-Over/2010/09/14/id/370164

The Chinese dumping US bonds will cause yields and interest rates to soar, which will unravel any hopes of a US economic recovery. Is Congress really thinking this through in accusing the Chinese of currency manipulation and threatening to impose import tariffs? My short answer is no.

Zero down mortgages restarted by Fannie

http://www.fundmymutualfund.com/2010/09/zero-down-mortgages-restarted-by.html

Good news folks... the "no skin in the game" mortgage is back. You know the game right? It's a one sided bet where the buyer can only win. If the house goes up, you pocket that and hopefully get that granite countertop you so deserve with the home equity. If it doesn't go up.... you walk - but only after living in the home rent free for at least 18-22 months as you strategically default your way to a mountain of savings while waiting for the sheriff to show up. If you are smart you can save at least $30K during this time. There are no losers here (except the U.S. taxpayer).

Gold and silver will lead the way

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/14_James_Turk_-_Gold_and_Silver_Will_Lead_the_Way.html

John Hathaway Says Gold Bull Run At Midway Point

http://www.kitco.com/reports/KitcoNews20100913AS_hathaway.html

Frank Holmes does not see a bubble in gold

http://www.kitco.com/reports/KitcoNews20100913AS_Frank.html

Silver demand surging in India

http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=111161&sn=Detail&pid=102055

Piper Jaffray Says Arena Pharmaceuticals (ARNA) Sell-Off is an "Overreaction"

Piper Jaffray reiterates their Overweight rating on shares of ARNA with a price target of $10.

http://www.streetinsider.com/Analyst+Comments/Piper+Jaffray+Says+Arena+Pharmaceuticals+%28ARNA%29+Sell-Off+is+an+%22Overreaction%22/5967972.html

Handicapping Lorcaserin's advisory committee review

This is my attempt to handicap the voting by members of Lorcaserin's advisory committee, given they are the same panel as Meridia's advisory committee.

ENDOCRINOLOGIC AND METABOLIC DRUGS ADVISORY COMMITTEE MEMBERS (Voting)

Eric I. Felner, M.D.
Associate Professor of Pediatrics
Director of Diabetes and Endocrinology
Hughes Spalding Children's Hospital
Emory University School of Medicine
Atlanta, Georgia
* Yes on Lorqess, due to lower HbA1c glucose levels

Lamont G. Weide M.D., Ph.D., F.A.C.E.
Chief, Diabetes & Endocrinology
Professor, Internal Medicine
University of Missouri - Kansas City
Truman Medical Centers
Diabetes Center
Kansas City, Missouri
* Voted No on Qnexa, wanted 2 year data
* Yes on Lorqess, due to 2 year echo data, and lower HbA1c glucose levels

Allison B. Goldfine, M.D. Associate Professor
Harvard Medical School Section Head of Clinical Research
Joslin Diabetes
Boston, Massachusetts
* Voted Yes on Qnexa
* Strong Yes on Lorqess, due to better safety profile, and lower HbA1c glucose levels

Abraham Thomas, M.D., M.P.H.
Acting Chair Division Head
Endocrinology, Diabetes, Bone, and Mineral Disorders
Henry Ford Hospital
Whitehouse Chair of Endocrinology
Detroit, Michigan
* Voted No on Qnexa
* No on Lorqess, didn't seem to believe in drug therapeutics for obesity

CARDIOVASCULAR AND RENAL DRUG ADVISORY COMMITTEE MEMBER (Voting)

Sanjay Kaul., M.D.
Director, Fellowship Training Program in Cardiovascular Diseases
Cedars-Sinai Heart Institute
Professor, David Geffen School of Medicine at UCLA
Division of Cardiology
Cedar Sinai Medical Center
Los Angeles, California
* Voted Yes on Qnexa
* Strong Yes on Lorqess, due to better safety profile and 2-year echo data

CENTER FOR DRUG EVALUATION AND RESEARCH TEMPORARY MEMBERS (Voting)

Melanie Coffin
Patient Representative Rockville, Maryland
* Voted Yes on Qnexa
* Strong Yes on Lorqess, due to better safety profile

Jessica W. Henderson, Ph.D.
Acting Consumer Representative
Professor of Community Health Education Division of Health and Physical Education
Western Oregon University
Monmouth, Oregon
* Voted Yes on Qnexa
* Strong Yes on Lorqess, due to better safety profile.

John M. Flack, M.D., M.P.H., F.A.H.A., F.A.C.P.
Professor of Medicine & Physiology
Chair, Department of Internal Medicine
Chief, Division of Translational Research & Clinical Epidemiology
Wayne State University School of Medicine
Detroit, Michigan
* Yes on Lorqess, due to 2-year echo data, and lower HbA1c glucose levels. Also, half-life for Lorqess is faster and metabolized in the kidneys, not the liver.

William R. Hiatt, M.D., F.A.C.P.
University of Colorado Denver, School of Medicine
Section of Vascular Medicine
Divisions of Geriatric Medicine and Cardiology
President, Colorado Prevention Center
Aurora, Colorado
* Yes on Lorqess, due to 2-year echo data.

Jacqueline S. Gardner, Ph.D., M.P.H.
Professor Emeritus
Department of Pharmacy
University of Washington
Seattle, Washington
* Strong Yes on Lorqess, due to no teratogenicity or unwanted pregnancy concerns (see Qnexa). Formulary journal endorses Lorqess as a safe, effective drug that can be taken for longer than 12 weeks, unlike phentermine.

Jodi B. Segal, M.D., M.P.H.
Associate Professor of Medicine
Health Policy and Management, and Epidemiology
Johns Hopkins University
Baltimore, Maryland
* Yes on Lorqess, due to better safety profile, and lower HbA1c glucose levels

Peter A. Gross, M.D.
Executive Vice President & Chief Medical Officer
Hackensack University Medical Center
Hackensack, New Jersey
* Don't Know

David D. Waters, M.D. Emeritus Professor
Division of Cardiology
San Francisco General Hospital University of California
San Francisco, California
* Yes on Lorcaserin, due to 2 years of echo data

REGULAR GOVERNMENT EMPLOYEES (Voting)

Dennis O. Dixon, Ph.D. Mathematical Statistician
Biostatistics Research Branch
National Institute of Allergy and Infectious Diseases (NIAID)
National Institutes of Health (NIH)
Bethesda, Maryland
* Strong Yes on Lorcaserin, as clinical trials had the most patients and benefits are statistically significant.

Katherine M. Flegal, Ph.D.
Senior Research Scientist
Distinguished Consultant
National Center for Health Statistics
Centers for Disease Control and Prevention
Hyattsville, Maryland
* Voted No on Qnexa
* Yes on Lorqess, due to 2-year echo data and clinical trials had the most patients and benefits are statistically significant

Edward W. Gregg, Ph.D.
Chief, Epidemiology and Statistics Branch
Division of Diabetes Translation
Centers for Disease Control and Prevention
Atlanta, Georgia
* Don't Know
* Could be a yes for Lorqess as clinical trials had the most patients and benefits are statistically significant.

Michael A. Proschan, Ph.D.
Mathematical Statistician
Biostatistics Research Branch
NIAID, NIH
Bethesda, Maryland
* Voted No on Qnexa
* Strong Yes on Lorcaserin, as clinical trials had the most patients and benefits are statistically significant

ENDOCRINOLOGIC AND METABOLIC DRUGS ADVISORY COMMITTEE MEMBER
(Non-Voting)

Enrico P. Veltri, M.D.
Industry Representative
Pharmaceutical Industry Consultant
Princeton, New Jersey

FDA PARTICIPANTS (Non-Voting)

Curtis J. Rosebraugh, M.D., M.P.H.
Director
Office of Drug Evaluation (ODE) II
Office of New Drugs (OND)
Center for Drug Evaluation and Research (CDER)
Food and Drug Administration (FDA)

Mary H. Parks, M.D.
Director
Division of Metabolism and Endocrinology Products (DMEP),ODE II
OND, CDER, FDA

Eric Colman, M.D.
Deputy Director
DMEP, ODE II, OND
CDER, FDA

Monique Falconer, M.D., M.S.
Clinical Reviewer
DMEP, ODE II, OND
CDER, FDA

David Hoberman, Ph.D.
Mathematical Statistician
Division of Biometrics II
Office of Biometrics
Office of Translational Sciences
CDER, FDA

My best guess tally is 14 Yes, 1 No, and 2 Don't Know. Seven of the Yes votes are a Strong Yes. Even though cardiac valvulopathy has been ruled out based on 2 years of echo data, I did not include all of the cardiovascular voting members as a Strong Yes.

Worst-case scenario is 9 Yes, 8 No. ARNA shares probably drop to $3 - $4 in this scenario.

Best-case scenario is 16 Yes, 1 No. ARNA shares could soar to $15 - $20 in this scenario.

See disclaimers in the side bar. This is not financial advise, and any price or directional targets are my opinion only. Perform your own due diligence.

Disclosure: long ARNA shares, short January 2011 puts, long October calls and short October puts (bullish risk reversal spread, or synthetic long stock split strikes position).

September 15-16, 2010 Meeting of the Endocrinologic and Metabolic Drugs Advisory Committee

FDA and Sponsor briefing documents for Abbott's Meridia and Arena's Lorcaserin advisory committee reviews will be posted here.

http://www.fda.gov/AdvisoryCommittees/CommitteesMeetingMaterials/Drugs/EndocrinologicandMetabolicDrugsAdvisoryCommittee/ucm191113.htm

Lori Ann LaRocco must-hear interview

This is a must-hear interview from Lori Ann LaRocco, which is surprisingly but now predictably gloomy about our chances for an economic recovery. It is predictable because it's becoming quite obvious our government's stimulus programs are failing to create jobs and stimulate the economy, something us naysayers have been forecasting all along, at the risk of sounding dogmatic. With the benefit of hindsight, we were right.

But why is Ms. LaRocco's candor surprising? She happens to be CNBC's Senior Producer for Squawk Box, so one should expect her to be a cheerleader pandering to our government's propaganda on an economic recovery. Yet, she shares her honest, behind-the-scenes interactions with CEO's pessimistic about the path our country has taken. And in case readers may forget, CEO's of companies do make employment decisions.

http://kingworldnews.com/kingworldnews/Broadcast/Entries/2010/9/9_Lori_Ann_LaRocco_files/Lori%20Ann%20LaRocco%209%3A9%3A2010.mp3

The funeral of Keynesian theory

http://www.zerohedge.com/article/eric-sprott-we-are-now-paying-funeral-keynesian-theory

A two percent spending increase inevitably requires an increase in taxes. Due to the nature of interest costs, however, the government would have to raise taxes by MORE than two percent in order to pay back the initial borrowing. According to their data, this increase in taxes would generally lead to a seven percent drop in GDP. As they state in their study: "This shows that when government spending is financed contemporaneously that the contractionary effects of the tax increases outweigh the expansionary effects of the increased expenditure after a very short time."2 Stated simply, ‘borrowing to stimulate’ has never worked as planned because the cost of paying back the borrowed funds surpassed the immediate benefits of the stimulus.

In a follow-on study, Harald Uhlig estimated that an approximate $3.40 of output is lost for every dollar spent on stimulus.3 Another study on the same subject by C’ordoba and Kehoe (2009) went so far as to say that, "massive public interventions in the economy to maintain employment and investment during a financial crisis can, if they distort incentives enough, lead to a great depression."4

Deficit spending, which has generated smaller and smaller increases in GDP over time, is now generating a negative impact on GDP due to the costs of servicing the debt.

Since Keynesian economics is no longer relevant, some are now arguing that tax cuts will save the day. Two of the academic studies we reviewed suggest that tax relief is a much stronger stimulus to the economy than government spending, and under normal circumstances this is probably true. But we are not in a normal economic environment. Even if the tax cuts implemented by George Bush in 2006 are extended by the next Congress, the US will still face the ‘Keynesian Endpoint’. A Government Accountability Office (GAO) report published in January 2010 states the following: "In our Alternative simulation, which assumes expiring tax provisions are extended through 2020 and revenue is held constant at the 40-year historical average; roughly 93 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs by 2020."12 Extending tax cuts won’t solve anything.

Keynesian stimulus can’t be blamed for all our problems, but it would have been nice if our politicians hadn’t relied on it so blindly. Debt is debt is debt, after all. It doesn’t matter if it’s owed by governments or individuals. It weighs on the institutions that issue too much of it, and the ensuing consequences of paying off the interest costs severely hinders governments’ ability to function properly. It suffices to say that we need a new economic plan – a plan that doesn’t invite governments to print their way out of economic turmoil. Keynesian theory enjoyed a tremendous run, but is now for all intents and purposes dead… and now it’s time to pay for it. Literally.

FDIC's Bair Warns of Government "Exposure" in Mortgages

http://abcnews.go.com/Business/wireStory?id=11589815

Melrose Avenue blues

http://www.latimes.com/business/la-fi-melrose-avenue-20100911,0,3944812.story

Gold wars

Gold at $36,000? I thought I was bullish.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/9/9_Ben_Davies__Gold_Wars_-_A_Golden_Renaissance.html

New Jersey Governor Christie responds to teachers' uniion

http://www.youtube.com/watch?v=PkuTm-ON904&feature=player_embedded