Monday, July 30, 2007 Vol. 9, No. 180 In Today's Letter: Comment: Talking Turkey: Why a Landslide Election Win = Big Profit Potential for You Wealth: Why the Fed Should Cut Rates Now Privacy: What Your Cell Phone Knows Talking Turkey: Why a Landslide Election Win = Big Profit Potential for You Today's comment is by Mike Burnick, our Senior Editor, Global Markets Analyst and editor of Global Market Investor. Dear A-Letter Reader, Turkey's Prime Minister Recep Tayyip Erdogan and his ruling Justice and Development Party (AKP), in power since 2002, were swept to a landslide reelection victory last week. Mr. Erdogan said, "We've passed an important test of democracy that is an example to the world." You may recall that Turkish politics and their financial markets were thrown into a brief tizzy in May when Erdogan's candidate for the Presidency was blocked by opposition parties. I wrote about this electoral impasse in May . Abdullah Gul, the erstwhile Presidential candidate was seen as a bit too "Islamic" for the likes of many secular Turks. This opposition to Gul included the Army's general staff, which voiced concerns at the time. I felt that this was nothing more than a tempest in a tea-pot and said so at the time. Since then, Mr. Erdogan and the AKP have made all the right moves, avoiding a confrontation that could have spelled trouble for Turkey, Erdogan followed the political book, chapter and verse. Exercising his constitutional authority as Prime Minister, Erdogan called for early parliamentary elections that were originally scheduled to take place this fall, in an effort to seek a broader political mandate for the AKP's programs. Turkish Government Receives a Clear Mandate for Progress and Prosperity Now, the people of Turkey have spoken, and boy did they send a message loud and clear! The AKP took 47% of the vote. That's more than twice the share of the closest rival party! In fact, Erdogan won the largest share of votes in a Turkish election since 1965, providing him with a clear mandate in favor of the AKP's program of economic progress in bringing Turkey closer to the European Union. The magnitude of the election victory is not really surprising to me. Erdogan's party was clearly leading in the polls prior to Election Day. It's also not a big surprise considering the amazing economic progress achieved by the AKP since becoming the majority government in 2002. Turkey stands as a model of modern economic success that many other emerging economies could take lessons from. Its economy is growing faster than any other major economy in the region - with year-over-year growth averaging 7.5% over the past five years. This impressive track record of robust GDP growth is nearly unmatched anywhere else on the planet, with the exception of just a handful of economies like China and India, which are many times Turkey's size! Turkish Stocks Celebrate Election Win in Record Style The fast-pace of economic reform in Turkey has meant record amounts of foreign investment flowing into the country - US$20 billion last year alone. This is boosting the economy even more, which has expanded now for 21 straight quarters - the longest period of growth since the Turkish Republic was founded in 1923! So last week's balloting, more than anything else, was a vote by Turks in favor of the policies of wealth creation and economic progress that Erdogan and the AKP have so skillfully executed in recent years. I've been bullish on Turkey for some time now, and still even I was a bit surprised at the magnitude of the celebration in Turkey's stock market. After all, the election win by the AKP should have been pretty well "discounted" in the market already. Istanbul's ISE National-100 stock index gained more than 5% the first day after the election, notching a new record high! Now that's what I call a strong vote of confidence in Turkey's investment future. Last week, Turkish shares corrected, along with nearly every stock market around the world. It's only natural to see some profit taking after such robust gains. Still, Turkey's 31% year-to-date stock market gains place it among the top 10 global markets in terms of performance this year. And now that the election is settled and Turkey is free to get back to "business as usual," I expect more gains to come. MIKE BURNICK, Senior Editor & Global Markets Analyst P.S. I've already uncovered some of the most strategic ways to play this election-day boost in Turkey's economy. Look for a special update on Turkey coming from me soon with all the details on how you can tap into this fast-growing country that offers explosive upside potential. To get these details right away, along with two of my other top emerging global profit recommendations Click here now!

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Wealth/Investments

Why the Fed Should Cut Rates Now Though I wasn't a fan of former Federal Reserve chairman, Alan Greenspan, I will say this for him: He did know when to open the monetary spigots amid a liquidity crisis. Under Greenspan's tenure from 1987 to 2005, the Fed reacted immediately when liquidity starved the credit market and threatened the financial system. Greenspan's biggest test was right after he became Fed boss in 1987 when stocks crashed 22% on October 19, 1987. The Fed immediately cut rates by 2 full points. And again, when the collapse of hedge fund Long Term Capital Management threatened global credit markets in the summer of 1998, Greenspan reacted swiftly, providing immediate credit to the financial system. But Ben Bernanke is a different sort of Fed boss. In 2007, the Federal Reserve is more concerned with inflation, a misplaced concern considering U.S. home prices are still crashing, suggesting incipient deflation is a concern. With the ongoing turmoil affecting the credit markets, Bernanke should cut short-term interest rates now or at the Fed's next FOMC meeting. All high-risk segments of the corporate and mortgage-backed market are hemorrhaging. That's a clear warning that there's a credit bubble currently unwinding, threatening the financial system unless immediate liquidity is created to assist all parties and affected counter parties. Also, the country's banks are coming undone, sliding to new 52-week lows last week as concerns mount that loan losses will increase as sub-prime defaults spread to the next tier of borrowers. Once again, hedge funds around the world have begun to fail with several high-risk mortgage-backed hedge funds in Australia, England and the United States either near-collapse or teetering on the brink of failure this summer. The spreads between safe Treasury bonds and other high-risk credits have now hit 52-week highs. That's yet another warning that there is a credit crisis underway. As spreads continue to widen, the scope of this liquidity crisis will spread, slowing economic growth and halting the boom in private equity financing, which depends on stable interest rates to finance debt-backed deals. Inflation has never been a real concern for the Fed, despite its official utterances to the contrary. Since it's creation in 1913, the Federal Reserve has consistently debased the dollar's purchasing power. But it does score high points for printing money, especially amid liquidity crises. And now is the time for the Fed to abandon its inflation rhetoric and create immediate liquidity to boost credit and mortgage markets. C'mon, Ben, do what you boys do best... ERIC ROSEMAN, Investment Director   P.S. Our Executive Director, Erika Nolan recently completed a special report on the continuing threat of private equity lenders and their questionable tactics that flood the markets with debt-backed deals. Click here to learn how you can protect yourself, your family and your portfolio when these trigger-happy private lenders rack up more debt.

Privacy&Rights

What Your Cell Phone Knows Cell phones today are much more sophisticated than those manufactured only a few years ago. Using them to make telephone calls is only the beginning. You can also use them to send and receive e-mail, browse the Internet, take photos, etc. All these functions leave a trail that may be difficult to securely erase. What's more, the legal status of these records is, to put it mildly, uncertain. At the very least, these records carry less legal protection than the content of cellular conversations themselves. It's not uncommon for police to seize cell phones and retrieve email messages, photos, text messages, etc., all without a search warrant.  Ask yourself: What information in your cell phone's memory would you prefer not to be in the hands of police? Of a business competitor? Or, for that matter, of your spouse or partner? If the answer is "plenty," then you need to take steps to securely delete information from your cell phone's internal memory.  Should the information you need to do so isn't in your cell phone's operating manual, check out a free service from www.wirelessrecycling.com .  This website lets you choose the brand and model number of your cell phone, and then displays the exact commands you need to delete every piece of data from it. When you replace your cell phone, repeat this process. Also, remove the phone's SIM card, if it has one. Your SIM card is uniquely tied to you, and if ends up in the wrong hands, you could be falsely tied to a crime committed by someone else.  Once you've deleted the data in your phone and removed the SIM card, double-check to make sure your address book, call logs, and other data stores really are empty. Then you can sell your old phone on eBay, or donate it to a charity, with confidence that any information on it can't come back to haunt you. MARK NESTMANN, Privacy Expert & President The Nestmann Group www.nestmann.com

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