Renowned money manager Felix Zulauf told King World News that despite the rally in stocks, the world economy is still in trouble. Zulauf, founder of Zulauf Asset Management and 20+ year Barron’s Roundtable panelist, believes the current euphoria among investors and optimistic expectations going forward are creating a very dangerous environment. Zulauf also feels that although there has been a long consolidation in gold, the fundamentals are still quite bullish.

This is the final part of a three part written interview series which has been released on King World News. In these interviews the legendary money manager has discussed why he believes central planners will fail, how this will lead to systemic collapse, gold repatriation, what investors should be doing with their money right now, how they can protect themselves going forward, and much more.

Here is what Zulauf had to say: “I think the world economy is still having difficulties. Some leading indicators are picking up a little bit, and the world is getting very optimistic that we have passed the crisis, we have solved the problem, and sentiment is very optimistic. Actually it is as optimistic in the stock market as it was in 2007.

We have entered a very dangerous territory, and I think the world economy will not deliver what people expect. You just saw the numbers coming out about the eurozone GDP in the fourth quarter, it was quite a bit weaker than expected and still in negative territory….

Read More at kingworldnews.com .

There are certain sounds that tend to make people crazy. Think of nails on a chalkboard. An infant screaming nonstop on a long flight. A piercing whistle that won’t go away.

Now we need to add another: a U.S. president who thinks he can legislate high wages into law. For anyone who knows the basics of economics — not distorted by a bogus central-planning mentality — hearing this is like torture. It’s painful. It makes you crazier and crazier until you finally want to yell, “Make it stop!”

This is how I felt when President Obama said the following:

“Let’s declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families.”

Why stop there? Let’s also declare that everyone should make $9,000 or $9 million per hour. If all that stands between us and total riches is the word of a president and an action by Congress, let’s get on with it!

Does Obama really not get what’s wrong with this approach? I’ve long disagreed with him, but I’ve never really thought he was ignorant. But even from the earliest interviews I’ve read, he does seem to have a tin ear on economic topics. He doesn’t seem to get where wealth comes from. He doesn’t seem to understand how prices work. And now we can be certain that if he understands how wages work, he isn’t willing to let on.

Read More at The Daily Reckoning . By Jeffrey Tucker.

NEW YORK  — Someone must have sounded an all-clear signal on New Year’s Day because in January, after five years of fasting and penitence in the bond market, investors poured money into U.S. stocks.

But much of that money probably went into stock funds and exchange traded funds, not individual stocks. Though few statistics are available, there are many indications individuals have abandoned individual stocks as their preferred form of equity investing. Remember how people worshipped Cisco Systems CSCO -0.19% , Qualcomm QCOM -0.19% , and JDS Uniphase JDSU -2.07% back in the 1990s?

Now they’re buying target funds, index funds, and their close cousins, ETFs, instead of individual stocks. With one big, bright red exception, which we’ll get to later, individual stock investors may be a dying breed.

Nothing brought that out more starkly than an article last week in The Wall Street Journal, which dealt with the demise of investing clubs, that former pop-culture icon. (Remember the Beardstown ladies?) Read WSJ story (subscription required).

Investment clubs flourished in the era of do-it-yourself investing, when every man and woman was their own stock picker. Who needed professional managers when all the data was right at your fingertips? Especially when friends and neighbors could help each other find winning stock ideas.

Read More at Marketwatch . By Howard Gold.

Group of 20 governments disagreed over the strength of new fiscal goals as they risk missing the targets set three years ago.

After committing at a Toronto summit in 2010 to halve budget deficits by this year, most advanced nations are now facing failure on that score and on a related pledge to stabilize their debt by 2016.

As G-20 finance chiefs meet in Moscow, the challenge now is to find a replacement for the Toronto goals after weak economic growth hamstrung fiscal consolidation worldwide. While German Finance Minister Wolfgang Schaeuble advocated “concrete” targets, Russian official Ksenia Yudaeva said formal commitments would be “counterproductive.”

“We might want to have long-term principles and particular strategies for countries with high deficit levels,” Yudaeva, Russia’s G-20 sherpa, said in an interview. “But I don’t think we need any precise commitments like during Toronto. It should be much more flexible.”

The G-20 will discuss adopting a new deadline for deficit goals and may set 2016 as the new target date, Russian Finance Minister Anton Siluanov said today. Given the debt burden of industrial nations, “a credible path of debt reduction is really essential and the positive environment should be used by the G-20 countries,” Schaeuble said.

Read More at bloomberg.com . By Ilya Arkhipov and Rainer Buergin.

Federal Reserve Chairman Ben S. Bernanke said the U.S. economy is far from operating at full strength and reiterated his commitment to record easing.

“With unemployment at almost 8 percent, we are still far from the fully healthy and vibrant conditions that we would like to see,” Bernanke said today at a meeting in Moscow of his counterparts from the Group of 20. “The United States is using domestic policy tools to advance domestic objectives.”

The U.S. central bank has faced criticism from some foreign officials, including Brazilian Finance Minister Guido Mantega, who in October said that its accommodation has weakened the dollar, threatening to fuel a “currency war” of competitive devaluations. The Fed under Bernanke has expanded assets to a record exceeding $3 trillion and pushed down the benchmark interest rate close to zero.

“We believe that by strengthening the U.S. economy we are helping to strengthen the global economy as well,” Bernanke said.

The Fed last month affirmed a plan to buy $85 billion per month in bonds, seeking to foster growth and reduce a 7.9 percent jobless rate. “The Federal Reserve continues to provide accommodative monetary policy in our effort to foster maximum employment and price stability,” Bernanke said.

Read More at bloomberg.com . By Aki Ito.

“Recovery Shows a Soft Spot,” declared a banner headline of a recent edition of the Wall Street Journal. “Soft spot” pretty much sums up the Journal’s explanation for a reported 0.1% contraction in gross domestic product (GDP) in the fourth quarter of 2012.

Viewing things from further west on 8th Avenue and 41st Street, The New York Times spun the same story differently, toward its chronic, Krugman-esque view of trickle-down government. The Times encapsulated the tale of a 0.1% GDP decline in a front-page headline, declaring that “Growth Halted in 4th Quarter on U.S. Cuts.”

Which angle should you trust? How about neither! Instead, let’s take our own look behind the curtain…

U.S. cuts? Huh? What cuts? Has Congress cut spending and not told anyone? Are fewer people receiving lower entitlement payouts? Do we have fewer people on Social Security? Fewer on food stamps? Less Medicare? Are government agencies laying off personnel down in Washington? Are we shutting off military aid to, say, Egypt?

Cuts? What is The New York Times talking about? Has U.K. Prime Minister David Cameron secretly been advising President Obama and setting U.S. spending policy? Nope.

Read More at The Daily Reckoning . By Byron King.

Economists have been talking for decades about why some countries get wealthy, and some do not. It was the subject of Adam Smith’s famous book, The Inquiry Into the Nature and Causes of the Wealth of Nations. I suggest that the secret could be expressed in four words: Low Taxes, Stable Money. I call this the Magic Formula.

The reason for this is simple. The primary way that countries have become wealthy is via capitalism. Capitalism works best with stable money and low taxes.

If taxes are too high, and money is too unstable, capitalism – the incredibly complex arrangement of relationships that allow humans to cooperate together in vast networks of investment, production and trade, via the market system – becomes impaired, or collapses completely.

Recent books like Why Nations Fail, by Daron Acemoglu and James Robinson, take up this fascinating subject for our own age. In general, they tend to focus on a menagerie of what I would call secondary factors, while missing the foundational importance of the Magic Formula.

If you don’t have the Magic Formula, you might maintain a decent standard of living. Many European countries maintain a high standard of living today, despite rather high taxes. But, they didn’t become wealthy this way. If you look back into the history of Germany or Japan, or the United States, you typically find a period when the Magic Formula is in full effect. Most of the gains are made during these eras.

Read More at Forbes . By Nathan Lewis.

This year marks the 100th anniversary of the federal income tax (February) and the Federal Reserve System (December), both of which today are doing immeasurable harm. And, thankfully, both will be undergoing enormous changes.

Income taxes punish the very things we want more of: productive work, risk-taking and success. We can’t say this enough: A tax on income is the price you pay for working; a tax on profits, the price you pay for success; and a tax on capital gains, the price you pay for taking risks that work out.

In times past when the income tax burden has been eased–that is, rates have been lowered–our economy prospered because people weren’t hindered or punished for engaging in more productive activities. The 1920s, 1960s and 1980s were all marked by fantastic innovation, greater economic growth and a gratifying rise in the standard of living. Even during 2003–08, when the income tax burden was eased, the economy did better (as we’ll discuss, the Federal Reserve undid this prosperity).

Some cite the period from the end of WWII through the 1950s as demonstrating that our economy could blossom under high income tax rates. They overlook the enactment of joint filing after WWII, which effectively cut a family’s tax burden in half. We grew in the 1950s because tax thresholds were high. There were also countless tax shelters that eased the bite of high rates. But those high rates took their toll as the U.S. was beset by a number of recessions, and the economy’s average growth rate in the 1950s was subpar.

Today federal income taxes are crushing us again. The fiscal cliff deal not only raised top rates but also reduced the deductions of higher-income people. Add in the Medicare tax–now 3.8% for upper-income earners–and the effective marginal federal rate is 44%. And President Obama wants to boost these levies even more. He envies France, which is putting in a 75% tax rate on the “rich.” Even more destructive, France is also hiking capital gains levels to that catastrophic height.

Read More at Forbes . By Steve Forbes.

WASHINGTON, DC, February 13, 2013 ― Ben Bernanke announced in September that the Federal Reserve would buy $45 billion per month of mortgage backed securities. In December, he announced the Fed would be purchasing $40 billion per month in US treasuries.

Since then, bank holdings of mortgage backed securities have barely budged. What little change there has been, has been upward. The banks are buying, not selling the MBS.

So where is the money going?

Every Friday the federal reserve releases a report called the H.8. It is not an entertaining read. Line 25 on page 18, however, is very interesting. It indicates that the cash assets of foreign banks which have divisions within the US mysteriously jumped, between January second and this past Friday, by $228 billion.

This is nothing new, but it would certainly be new to most Americans. A second round of quantitative easing, QE2, was used in the summer of 2011 entirely to prop up failing European banks.

Read More at The Washington Times . By Mike Shortridge.

President Obama’s greatest strategic accomplishment during his first term was his recruitment of big business to join the existing collection of special interest groups within the Democratic Party.

The national impact of Obama’s collusion with big business can’t be overlooked. Big business helped deliver his biggest political achievement, ObamaCare, and it recently contributed to his victories with the fiscal cliff negotiations and the temporary extension of the debt ceiling.

The addition of huge corporate lobbying infrastructures to the existing left-wing coalition of unions, environmental activists, minority and feminist interest groups will fundamentally transform the special interest lobbying force in Washington. And as long as big business can profit from an expanding government, CEOs representing many corporations will support the progressive agenda of increased spending and government control over individual lives.

Last November, President Obama rallied leaders of big business to pressure Republicans to support his plan to avoid the fiscal cliff. After meeting with Obama’s key big business allies, General Electric CEO Jeff Immelt became a visible spokesperson for his goal of raising taxes.

During a December 2012 interview on “CBS This Morning” on the fiscal cliff, Jeff Immelt said, “We need revenue, everybody knows we need revenue…” and he added, “…Speaker Boehner is the only guy who can lead us in that… He’s gotta take the heat and I trust that he can do it.”

Read More at Real Clear Markets . By Tom Borelli.