Today's comment is by Patrick Bove, Special Situations Analyst for The Sovereign Society.

In just about every Western movie, a villain is thrown from his horse.

Suddenly a much larger man - atop an impossibly giant steed - looks down on him, cocks his gun and mutters, "You have any last requests?"

The fallen man squints, spits a wad of tobacco juice and says: "If you're gonna kill me, then do it fast."

Most of the time - he gets his wish.

If only Wall Street were so kind.

It's been a rough year for investors of every stripe - obviously. The Dow and S&P have slipped nearly 13%.

We've been teased by bear market rallies, soothing words from Washington and bizarre internal memos from Manhattan. And that's just for starters.

A Week to Remember

The week of August 25th flew by - like the last days of summer always do. But behind an imposing wall of news that included Olympic records...political jibber jabber and a strengthening hurricane Gustav - another story passed silently beneath the headlines.

And I'd argue this unreported footnote is more important than all of Michael Phelps' medals, Barack Obama's high-fives and Gustav's tropical force winds combined.

Last Thursday, a company called Popular, Inc. - a 115-year-old bank holding company - slashed its quarterly dividend from 16 cents to 8 cents.

In itself, that's a boring statistic.

But as part of a trend - it's a very big deal.

Popular, Inc. just happened to be the 142nd company to cut its dividends in 2008.
That's a new record. And we still have nearly four months left to go.

And the Great Depression...

Clearly, it's a bad sign when hundreds of companies choose to slash their shareholders' income - all at once.

And we're not talking chump change either. An estimated $21 billion has been lost to dividend cuts this year. If this pace keeps up - we'll see over $30 billion evaporate, right before our eyes by the new year.

Investors are Under Attack

Stockholders are facing a "death by 213 cuts." And it doesn't matter whether you're a fixed income investor - or a day trader - you are in danger.

Through the years, dividends have been one of our steady friends. They've supported us through the ups and downs of the market and beaten back the steady advance of inflation.
Speaking of inflation, since 2000, the Dow has only managed to climb 2.6% but inflation is up 30.6%
That means stock investors - by and large - have lost 28% in real terms.

And now, a significant part of their profits - dividends - is being clawed back by desperate boards and CEOs.

At the same time, home prices are plunging...food and fuel bills are soaring...and more banks are failing every month.

But how bad is it, really?

Citigroup Values Toilet Paper More Than Dividends?

Here's an interesting question:

What does Citigroup CEO Vikram Pandit value more - the enrichment of his shareholders - or the quality of his toilet paper?

Just days ago, an internal memo leaked to the press. It revealed the desperate cost-cutting strategies now being enforced at 399 Park Avenue.

According to the memo, Citigroup employees can no longer make unlimited color photocopies, hold offsite meetings, fire-up new BlackBerries or make personal phone calls.

In a separate - but related - commentary, one anonymous Citigroup employee told the financial blog, Dealbreaker, that the firm had taken far more serious action. They're cutting the company toilet paper back from two-ply to one.

Just another sign that all is NOT well at the lumbering financial giant.

Pandit's alleged TP snub gives us some insight into his priorities. The besieged CEO (along with the board) cut Citigroup's quarterly dividend from 54 cents to 32 cents in January. That was seven months before he considered downgrading their more private holdings.

Some Good News, for a Change: 10% to 25% Guaranteed Cash Dividends

Last week I bumped into David Newman - our former membership director. And I told him what I just told you. I showed him piles of statistics and tales of woe. And you know what? He said three little words that floored me:

"I don't care."

So I stepped into his office for ten minutes and he told me why.

And get this... As scary as this stock market can be...and as much as we've slogged from peak to trough - I came out of that office feeling a whole lot better.

I don't want to spoil the surprise, but he emailed me his new report that explains everything.

You can read it too - absolutely free. Just click here and you'll know the truth.
I hope it helps you as much as it helped me.

Until next time - keep your chin up and your ears open.

PATRICK BOVE

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"Enter at Your Own Risk"(on Holidays)

Yesterday was the first trading holiday we've had in a while. That means I kicked back, spent time with my family, and I left my FX trades alone.

This is pretty typical of professional traders. All the pros leave the FX market alone on holidays. In fact, my opinion is that the Forex market should post a sign that says "Enter at your own risk" during major U.S. holidays.

I say this because the Forex market is like a renegade switch on most holidays. The market is either "turned on" and your trades are moving like crazy (which means it's hard to predict what will happen next). Or the market is completely "turned off," and it's about as interesting as watching paint dry.

More often than not, you'll see BOTH scenarios happen on a single holiday. First the market will be switched on, and then it will suddenly switch off - or vice versa. Unfortunately, there's never any telling which comes first...the "calm" or the "storm."

So on any given holiday, I generally wait until the afternoon to check on the currency markets. Then I just wait for the "show" to start. Frankly, for a seasoned trader like myself, it's fun to watch the markets move that fast.

But it's definitely NOT time to start trading. Please keep that in mind for every holiday going forward.

SEAN HYMAN, Currency Analyst

Welcome to the Next Generation of 24/7 Surveillance

Are you ready to be watched 24 hours a day? Whether you are or not, the future of surveillance is coming, courtesy of radio-frequency identification (RFID) tags.

Stage 1 of your tagged life is now in the form of new high-tech driver's licenses. Each license incorporates an RFID tag encoded with a unique identification number. These licenses can be used to identify you at U.S. border crossings in Mexico and Canada.

As you approach a border crossing, an RFID reader sends out a signal that an antenna on the tag picks up. The tag in turn reveals its ID number. By the time you arrive at the border crossing, customs agents already have your name, address, photo, and other details in front of them.

Ordinary U.S. passports also contain an RFID tag. The only difference is that your tag can't be read remotely (at least in theory).

States on the U.S. and Mexican border have now started to issue RFID-equipped licenses. The state of Washington now issues an RFID tagged "enhanced" driver license, which can be used for border crossings to and from Canada. In the near future, Arizona, Michigan, New York, and Vermont will begin issuing them.

Although there's no law requiring you to obtain an enhanced driver license, once you sign up, you open the door to privacy invasion on an unprecedented scale. That's because the RFID tag number on your license is associated with your identity. Anyone with an RFID reader (which only costs a few hundred dollars) can interrogate the tag and access the data on it.

Combine that with the growing number of products which contain RFID tags, including credit cards, ATM cards, cell phones, key cards, etc., and the potential grows exponentially for surreptitious tracking, wherever you go.

Besides the wholesale invasion of privacy, this system creates more threats. For starters, the data on driver licenses' RFID tags isn't encrypted. That means any identity thief, a stalker, a private investigator, or anyone else who wants to learn your identity, and potentially match it to the growing array of data tied to your tag number, can remotely interrogate the tag with a simple RFID reader.

You won't even know when it happens. (In contrast, the data on the RFID tags in U.S. passports is encrypted, although hackers have already figured out how to clone the data).

What can you do to slow down the RFID juggernaut? For starters, don't apply for an enhanced drivers license if the state you live in offers one. And while you're at it, get involved in the effort to reduce RFID surveillance.

The most influential organization in this fight is CASPIAN, Consumers Against Supermarket Privacy Invasion and Numbering. Visit their website at http://www.nocards.org to learn more.


MARK NESTMANN, Privacy Expert &
President of The Nestmann Group
www.nestmann.com

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