A Key Government Contractor Has Become an Obvious Value Play

Investors tend to avoid companies that generate too much revenue from one key customer or project. If that project ends, sales could easily plunge. That fear is the key reason behind a sharp sell-off in shares of Dyncorp (NYSE: DCP), a key government contractor in Iraq. Shares have fallen from over $20 last summer to a recent $11. But things are beginning to look up...

To be sure, the recent elections in Iraq indicate that the U.S. presence in the country is bound to diminish, and Dyncorp is poised to generate weaker sales and profits from projects in Iraq. Yet investors appear to be overlooking the fact that Dyncorp has been building a robust backlog elsewhere in the world, and looks set to keep boosting sales and profits.

Dyncorp offers a very wide range of services to Uncle Sam and other governments including: police and military training, intelligence services, security, linguistics and translation services, aviation fleet management and logistics. Contracts for these services typically appear large in terms of dollar size, but profit margins are fairly thin. Dyncorp typically generates operating margins of around 5% or 6%.

Dyncorp provides a range of services in Afghanistan including food service, vehicle maintenance, power generation, sanitation, etc. Most importantly, the company is training police officers and soldiers in order to eventually enable the Afghan government to provide its own security.

To be sure, operations in Afghanistan will eventually wind down, but Dyncorp continues to pursue new business in many other countries. For example, the company provides ongoing support services to all eight U.S. military bases in Kuwait. And recent acquisitions have helped bring exposure to government consulting in areas such as anti-corruption and anti-drug efforts. As Washington seeks to rein in budget deficits, Uncle Sam may not throw much more business to Dyncorp in the foreseeable future. But other countries are expected to deepen their relationship with the company.

As a result, Dyncorp's backlog stood at $6.1 billion at the start of 2010, which represents about 20 months of annualized revenue. On a recent conference call, Dyncorp's management ran through a host of new bids that the company is chasing. It appears that backlog will at least stay flat if not grow in coming quarters. This should help the company to maintain sales growth in the +5% to +10% range. Fiscal 2009 sales grew +45% and look set to grow about +10% in the fiscal year that ends later this month. Dyncorp looks set to earn around $1.35 a share and generate around $225 million in EBITDA in fiscal 2010. Those numbers look pretty intriguing in relation to the current stock price.

After the steady downdraft in shares during the last six months, they now trade for about 8.3 times earnings -- a P/E ratio roughly half the market average. Rivals KBR (NYSE: KBR) and Fluor (NYSE: FLR) trade at 13.2 and 15.2 times projected 2010 profits. The key profit catalyst for Dyncorp now is new contract awards, which as management noted, could be announced in coming weeks and months. As they roll in, investors will gain increased confidence that sales and profits can keep growing, and those ultra-low valuations should start to attract the value crowd.

China Central Bank Warns Obama Not to Make Yuan a Political Issue

The United States should not make a political issue out of the yuan, a Chinese central banker said on Friday, as the two countries lurched towards a potentially serious clash about Beijing's currency regime.

People's Bank of China Vice Governor Su Ning was responding to a question about remarks on Thursday by U.S. President Barack Obama, who called on China to move to a "more market-oriented exchange rate."

Speaking on the sidelines of China's annual session of parliament, Su said the United States should look to itself to boost its exports and not cast blame on other countries.

"We always refuse to politicize the yuan exchange rate issue, and we never think that one country should ask another country for help in solving its own problems," he said.

Obama's rare comment about the currency comes as his administration faces a decision over whether to label China a "currency manipulator" in a semi-annual Treasury Department report due on April 15.

With Obama facing domestic pressure to take a tough line against China and Beijing clinging to a de facto dollar peg, this U.S. Treasury report could be a tipping point.

If China flinches, it may soon resume the yuan appreciation halted in mid-2008 to cushion the country from the global credit crunch. If not, scattered trade spats between the two giants could escalate into a full-fledged dispute, with the U.S. even considering across-the-board tariffs against Chinese products.

"The chances of a collision have never been higher," Stephen Green, China economist for Standard Charter. "In the United States, the debate has moved from 'is the renminbi a problem' to 'how do we resolve this problem'." The yuan is also called the renminbi.

Asked whether it might be counter-productive for Washington to ratchet up pressure over the yuan, Green said: "That's the $64-billion question to which no one really knows the answer."

Li Jianwei, a director in Development Research Centre, a think-tank under China's cabinet, was unequivocal: demands for aggressive yuan appreciation will harm not only China but also the United States and others.

"A stronger yuan will hit exports and lead to a double dip in the Chinese economy, which in turn will hamper the global economic recovery," Li said.

Still, there are hints of division within China about the yuan. With inflation fast creeping up, investors are beginning to wonder just when the government will allow the yuan to rise again.

Data this week showed that China has considerable growth momentum and mounting price pressures, leading many analysts to conclude that the central bank will soon increase reserve requirements for the third time this year.

The central bank has been in overdrive trying to dispel worries over inflation after consumer prices rose more than expected to 2.7 percent in the year to February from 1.5 percent in the year to January.

"We had expected that February's CPI would be higher than January," Su said on Friday. After adjustment for seasonal factors, month-on-month inflation did not show any sign of accelerating, he said.

"We are still observing to see whether the price trend is upward or downward, but we hope prices can move down a little bit," he said. He added that inflation was likely to peak in June or July when the base effect caused by the comparison with last year started to fade.

Central bank governor Zhou Xiaochuan also sounded a soothing note on inflation on Thursday, describing February's jump as in line with his expectations.

China's central bank has increased required reserves twice this year as part of its efforts to slow rampant credit growth and prevent the economy from overheating, and economists suspect a third rise is imminent.

But officials have shied away from drastic tightening for fear that fragile global demand could still sap the economy and a senior central banker said it was a tough to strike the right balance between cooling lending while sustaining growth.

Most economists do no not expect interest rates to rise until the second quarter at the earliest.

"The market is in a wait-and-see mode now. The PBOC may want to wait to see March data before deciding whether to tighten monetary policy and raise interest rates," said a money market trader at a mid-sized bank in Shanghai.

How to Survive  The Three Most Imminent Disasters of 2010-2012

Disaster #1: America's Empire of Debt. If you think Americans are living a normal life, think again. Our entire consumer economy, lifestyle, livelihood — and nearly all or wealth — is predicated on one thing: DEBT.

The outstanding public debt is $12.3 TRILLION. The U.S. has a little over 307 million people. So that means every single man, woman and child in this country is responsible for $40,000 in government debt — over and above any money they have borrowed personally.

The government is now struggling to get the deficit back DOWN to $1 TRILLION dollars ... and there's little hope they'll even accomplish that much.

Meanwhile, the public debt is increasing at a rate of $3.5 billion per day. And that's just the public debt. Consumer and corporate debt add trillions more!

The Good-Time Charlies in Washington would have you think this party can continue forever. But now the bill is coming due, and the longer we put it off, the worse it gets.

How will it end? Only two scenarios are possible:

Washington will slash spending to the bone (and raise taxes till), sinking our economy into a depression. Or ...

Washington will DESTROY the value of our money.

Except for a handful of Pollyannas with their heads in the sand, few experts think there's any other alternative. For citizens and investors who are unprepared, it will be an unmitigated disaster lasting for many years. For those who ARE prepared, it could be the opportunity of a lifetime.

Disaster #2: Peak Oil Is Rushing Toward Us Like a Runaway Train. The only reason oil prices aren't higher right now is because of weakness in the U.S. and European economies.

Meanwhile, however, the two most populous countries in the world — China and India — are adding to their fuel demand at a rip-roaring pace.

In response, oil companies are now putting drills down 4,000 feet in the Gulf of Mexico to then drill through 35,000 feet of rock. These wells are deeper than Mount Everest is tall! They aren't doing this because it's fun. They're doing it because it's the only oil they can find! And one thing you can count on — it won't be cheap oil!

How will it end? Potentially in an oil crisis that sends the U.S. deeper into an economic tailspin  dramatically changing the way we live, while creating enormous opportunities for those who invest in the right solutions.

Disaster #3: Water Is the Quiet Emergency That Could Shape the 21st Century. For most Americans, water is less expensive each month than cable television or having a cell phone. So they barely think about it.

Not so for most of the rest of the world! The World Bank reports that 80 countries now have water shortages that threaten health and economies while 40% of the world — more than 2 billion people — have NO access to clean water or sanitation.

Heck, even in the U.S., most local water systems are old and in desperate need of upgrades, with legal battles heating up over water rights across the country.

The key: Sure, you can substitute various alternate fuels for fossil fuels like crude oil. BUT THERE IS NO SUBSTITUTE FOR WATER! This is a crisis that is spinning out of control around the world.

How will it end? Most people would not be able to handle a water emergency. If droughts worsen, we could see people forcibly relocated from cities and areas that just can't support their populations. Meanwhile, companies that can provide real solutions will soar in value.

New Banking Regulations … Same Old Story

U.S. banks, drunk with greed, drove the nation's economy to the brink of financial Armageddon.

To save U.S. banks from losing their license to dangle the nation's economy over a cliff, the U.S. Federal Reserve and the country's elected elite threw them a bailout party and gifted them with the accounting- world's version of "Transformers. "

Unfortunately, new banking regulations aimed at solving these problems are little more than the same old song and dance that forced the bailout - and stuck U.S. taxpayers with a multi-trillion-dollar tab.

A Year After the Market Bottom - Happy Anniversary?

This month marks the first anniversary of Congress putting undue pressure on the Financial Accounting Standards Board (FASB) to gift banks with the ability to transform losses into profits by replacing mark-to-market accounting with mark-it-so-I-get-a-bonus accounting.

It's no coincidence that it's also the one-year anniversary of the bear-market low - from which emerged the near-record-setting stock-market rally that sent U.S. share prices on a 70% rocket ride.

The future of the stock-market rally and of America's position as the world leader in financial services and capital-markets innovation is wholly dependent on having a healthy banking sector. We have a window of opportunity to undo some of the desperate - but sometimes necessary - measures that were put in place to save the U.S. financial system from a complete collapse.

So if this market rally signals that the worst of the crisis is over, thanks to a liquidity-filled punch bowl being fed by a government spigot, and if banks are making so much money, literally in the tens of billions of dollars, why don't we use this "window" to really clean up the U.S. banking system? Why don't we close banks that aren't solvent, break up all the too-big-to-fail banks, and set the stage for a long-term economic rally and a revitalization of the world's faith in the American brand of global capitalism?

We should take these steps. Indeed, some brave souls already are trying to move us in this direction. But other forces are undermining necessary bank-reform efforts and obscuring the transparency needed to determine the true value of the types of securities that drove us into the credit crisis and the Great Recession.

Here's what's not making the daily headlines. And here's what you need to know to participate in the backroom discussions now taking place.

It's Apparent ... it's Not Transparent

Frighteningly, there is still no transparency in the pricing of asset-backed securities (ABS), including mortgage-backed securities (MBS) and collateralized-debt obligations (CDO) that are all widely held by banks. The banks like it that way precisely because they can still hide behind the accounting gimmickry that masks unrealized losses.

On March 1, a new Financial Industry Regulatory Authority (FINRA) rule - which was approved last September by the U.S. Securities and Exchange Commission (SEC) - went into effect.

According to the new rule, any broker-dealer that's subject to FINRA and SEC oversight has to submit trade, price and size data on transactions in debt (bonds) issued by federal government agencies, government corporations, Government Sponsored Enterprises (Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) are two examples) and primary corporate bond issues into FINRA's Trade Reporting and Compliance Engine (TRACE).

TRACE was established in 2002. It is the bond market's equivalent of the stock market "ticker tape." The tape is the scrolling data feed of all exchange-traded securities that lists the stock's symbol, the price of the transaction, and the number of shares traded - all in real time. Until March 1, TRACE only displayed trades on secondary corporate bonds. Trades in new issues of corporate bonds did not have to be posted.

In its conception, TRACE was designed to enhance the "ability to detect fraud, manipulation, unfair pricing and other misconduct" in the bond market. But while the new rules seem to add transparency, don't be fooled. Even if you read the FINRA release on the new rules, you may have missed an important subtlety: The rules apply to the bonds of government agencies and corporate bonds of issuers who package asset-backed securities; but they don't require any ABS, MBS, or CDO transactions to be posted.

There's another problem with this rule: It doesn't apply to banks.

Banks Pull End-Around on New Rules

In a letter to the Federal Reserve Bank and FINRA, the Regional Bond Dealers Association (RBDA) asked FINRA to suspend the new TRACE reporting rules because they correctly claim that it creates an unlevel playing field between bond dealers. According to the RBDA, bank-affiliated dealers constitute the Top 15 of all debt-and-equity underwriters in the country. The RBDA says that big banks are getting around the new reporting requirements by shifting transactions from their broker-dealer subsidiaries back to the banks themselves, since the banks aren't subject to the new rules.

So much for transparency.

On Oct. 1, two days after FINRA announced that the SEC had approved its TRACE reporting requirement and said the new provisions would take effect on March 1, 2010, FINRA issued another news release. The Oct. 1 release was a follow-up to the announcement that had been made the day before - or at least was supposed to appear that way.

Like its Sept. 29 predecessor, the Oct. 1 news release proposed the collection of transaction data on ABS trades. But there was one difference. This data would be entered into TRACE, but would not be publicly disseminated.

If you study the March 1 FINRA news release announcing the start of the new TRACE reporting rules, there's no mention of any trading data being collected on asset-backed securities. If you hadn't seen the earlier FINRA release, the only way to find that important tidbit of data would be to dig it out of the Federal Register, Vol. 75, No. 39 (Monday, March 1, 2010) - which is what I did.

Granted, this is a highly technical point.

But it's also highly relevant to the discussion at hand.

Neither FINRA nor the SEC has any authority over bank regulation. The SEC has authority over publicly traded corporations, but when it comes to banks the agency usually yields to each individual bank's primary regulatory authority. The new TRACE rules don't apply to banks: They apply to broker-dealers owned by banks and to smaller broker-dealers not affiliated with any banks. Big banks get a pass on two counts: first, they can route transactions from their broker-dealer subsidiaries through the banks themselves (thus not posting transactions and prices) and, second, they can route trades back through their broker-dealers when they want to post transactions at favorable prices against which they can mark the assets on their balance sheets. A similar "marking" technique, called "painting the tape," is used in equity trading when someone tries to post the last trade of the day at a price that benefits their position for margin or other purposes.

Since FINRA isn't going to disseminate ABS transaction- and- pricing information, these new rules will fail to create the transparency that has been missing from the U.S. banking sector and the U.S. capital markets. Remember, it was the lack of transparency into the pricing, types and amounts of liabilities banks were carrying on their balance sheets that served as a key financial-crisis catalyst in the first place.

FINRA has indicated that it may eventually post ABS- transaction data, but unless new regulations call for it, escalating pressure from institutions carrying heavy loads of these securities may ensure that the data is buried.The purpose of the "tape" is to show all exchange-listed transactions so that no back-room manipulation can distort equity markets (don't get me started on that one). TRACE was supposed to be a fraud-and-misconduct detection system for the U.S. bond market. Instead, it's a joke. Even worse, the new rules could actually now operate as a high-tech Trojan horse, giving still more inside knowledge to the Masters of the Universe who already possess major advantages by virtue of the massive capital pools and political influence that they control.

We clearly haven't learned a thing. As we observe the first anniversary of one of the biggest stock-market rebounds in U.S. history, it appears the driving force behind this bounce off the bear-market bottom was the healing and strengthening of America's banking system.

The truth, however, is that the new rules enacted to ensure this healing are nothing but a thin veil to further enrich banking-sector executives by pumping up their compensation pools. Given such a realization, we better make sure we have our stop-loss orders down and our hedges in place.

U.S. taxpayers and retail-level investors have been taken into the heart of the forest - and intentionally abandoned. The only way to escape is via a pathway paved by true transparency and real accountability.

At a time when banks are fat with profits - even as deep problems remain - these institutions should be prohibited from making bonus payments, and should instead be forced to write down all their non-performing assets in accordance with proper accounting standards. The projected bank bonus pools would cover most of those write-downs over the next few years.

We have a chance to celebrate a second anniversary of stock- market gains and another year of economic growth, but to ensure that prospect we need to start to break up all the too-big-to-fail banks. Once the giants are cut down to size, maybe we can have real transparency and not be afraid of being driven over a cliff by a bunch of greedy, drunken party boys.

The Scramble for Africa: Profiting From World’s Largest Cache of Commodities

In the quarter century stretching from the late-1880s to the First World War, there was a mad rush by the world's leading powers to occupy and annex African territory.  Now, 100 years later, the world's elite again are scrambling to make their respective marks on the continent.

The methods of extraction have changed, but the end goal remains the same - to gain access to Africa's coveted bounty of commodities.

Most notably, Chinese interests have swarmed Africa, constructing roads, rail lines, municipal buildings, schools, ports, and pipelines in exchange for access to natural resources.

China's success on the continent has attracted the likes of India, Brazil, and Japan. But if these relatively new arrivals want access to Africa's gold, silver, cotton, cocoa, copper, aluminum ore, and oil, they'll have to negotiate around China, which by far has the strongest ties to the continent.

Engineering an Empire

China's African investments in 2009 rose an astonishing 80%. In fact, Africa now represents 10% of China's total outward foreign direct investment (FDI).

Trade between Africa and China has grown 40% a year since 2001, reaching a record-high $107 billion in 2008. That was enough for China to top the United States and European Union as the continent's largest trading partner.

China is most interested in Africa's oil resources, such as those found in Nigeria, Sudan, and Uganda. About 13% of Africa's total oil exports go to China.

The state-run China National Offshore Oil Corp. (CNOOC) (NYSE ADR: CEO) is the main agent in such oil deals. CNOOC recently purchased oil assets in Uganda from Britain's Tullow Oil for $10.5 billion (7 billion pounds), and is in talks with Nigeria to buy 6 billion barrels of oil - equivalent to one-sixth of the country's total reserves - for as much as $50 billion.

CNOOC also paired with Sinopec Corp. (NYSE ADR: SHI) to take a 20% stake in an oil field off the shore of Angola for $1.3 billion, and with Ghana National Petroleum Corp. (GNPC) to bid for a stake in the Jubilee oil field in West Africa.

Of course, China isn't just pursuing industrial resources. With incomes growing among its more than 1 billion citizens, China is growing into one of the world's largest markets for luxury goods.

China last year surpassed the United States and Germany as South Africa's largest trading partner, in part because of its ravenous appetite for diamonds.  Diamond sales in China rose 16.9% to $1.5 billion in 2009.  South Africa-based De Beers' diamond sales in China quintupled to 2.3 million stones.

Total trade value between China and South Africa was $14.29 billion in 2009 - down 1.19% from 2008, according to statistics recently released by South Africa Customs. Those statistics also showed that trade value between South Africa and Germany fell 27.88% year-over-year, and trade with the United States fell 34.8% from 2008.

Bilateral trade between Egypt and China grew to $6.24 billion in 2009 from $610 million in 1999, according to Egyptian government statistics. The annual rate of growth in the past five years has been more than 30%.

"The Chinese people cherish sincere friendship toward the African people, and China's support to Africa's development is concrete and real," China's Premier Wen Jiabao said at the fourth ministerial Forum on China-Africa Cooperation (FOCAC) in November. "We will help Africa build financing capabilities. We will provide $10-billion for Africa in concessional loans."

Premier Wen and Chinese President Hu Jintao unveiled eight measures on bilateral cooperation at that meeting, as well as $10 billion of low-interest loans to African nations.

Can You Hear Me Now? Africa Gets Wired

With the long-term outlook for commodities decidedly bullish - and given China's apparent success on the turbulent continent - many other emerging countries are coming to view Africa as an important part of their economic growth models.

India - China's continental rival - is one such country.

Indian officials next week will meet with representatives from 34 African countries for a three-day conclave to discuss $9 billion worth of business projects. The conclave will also lay out a roadmap for the second edition of the India-Africa Forum Summit to be held next year. India hosted the first summit in New Delhi in 2008.

India's trade with Africa soared to more than $30 billion in 2008 from just $967 million in 1991. And it could reach $70 billion in the next five years. Sudan and Mauritius are among the top five investment destinations for India, with both accounting for about 18% of India's FDI flow.

It's not just Africa's commodities that India is interested in, either.

Indian telecoms tycoon Sunil Bharti Mittal, chairman of Bharti Airtel Ltd., last month shocked investors when he revealed that his company had offered to buy the loss-making African assets of Kuwait's Zain Telecom.

Africa represents "the most under-penetrated market in the world", offering huge potential growth, Mittal told the AFP in a conference call with analysts. The deal could negatively impact earnings in the short term, "but in the long run, we are looking for a growth story in this. And therefore it's not a cause of worry."

Just 36 out of every 100 people own a mobile phone in Africa, compared to India where subscribers total 45 out of every 100, and advanced economies where mobiles outnumber people, AFP said. According to estimates, the total population of the 15 African countries Zain operates in is just under 500 million.

Bharti is offering $10.7 billion for the unit, which lost $111 million dollars for the first nine months of 2009. Bharti twice failed to merge with Johannesburg-based MTN Group Ltd. (PINK: MTNOY), which is the continent's largest operator.

"The Future of the World's Natural Resources"

Brazil - which boasts one of the largest and fastest-growing economies in the world, and with its own cache of valued commodities - is looking to partner with Africa as well.

Brazilian companies have invested just $10 billion in Africa since 2003, but with a booming economy and growing demand for resources that number is likely to rise sharply.

Brazilian imports from Africa rose to $18.5 billion in 2008 from $3 billion in 2000. Exports to the continent have grown eightfold in that time, surging from $1 billion to $8 billion.

Luiz Inácio Lula da Silva, the Brazilian president who took office in 2003, visited Africa six times in his first five years in power. Some Brazilian officials have even suggested that African countries prefer to do business with Brazil, which has had similar struggles with poverty.

"They identify with us because we experienced similar problems to them in the past and have successfully adapted technology to local circumstances," one Brazilian diplomat in Mozambique's capital, Maputo, told the Financial Times. "They see Brazil as a model to be imitated".

Indeed, Brazil is proving to be quite the model for success. Brazil was one of the last countries to actually fall into recession and one of the first to dig its way out. Its gross domestic product (GDP) declined by just 0.3% last year. This year the economy will expand by 5.8%, according to central bank estimates. And with the nation's demand for raw materials expected to rise accordingly, Africa will be a big part of Brazil's growth plans.

"Brazil is positioning itself to be Africa's prime partner in its vital quest for greater energy and food security," says Jeremy Stevens, joint author of a recent research report.

For instance, Vale SA (NYSE ADR: VALE) is working alongside Odebrecht, a Brazilian construction company, in the remote town of Tete, Mozambique to develop some of the world's largest coal reserves.

"The thing about Africa is that sooner or later it will become a reality," said Roger Agnelli, president and chief executive of Vale. "Africa is the future of the world's natural resources, along with South America."

Investing in Africa

Africa's potential is so great that investors should actually prefer it to China because its stocks are significantly undervalued, Jens Schleuniger, manager of the Deutsche Bank DWS Invest Africa LC fund, told Reuters in an interview.

"Few know that Africa is the second-most dynamic growth region behind Asia," he said. "However, there is a lack of trust as many investors attach too much importance to political risks. I believe this is partly exaggerated."

Schleuniger pointed to Bharti Airtel's recent activity in the region as evidence that "the appetite for investments in the region is picking up."

"Above all, you will find investment opportunities in the three Cs - commodities, construction and consumption," says Schleuniger.

Bharti's deal with Zain Telecom is an example of the latter, whereas CNOOC's forays into the continent are an example of a commodities play. Investing in either of these two companies could be preferable to buying into an Africa-listed company because they are profiting from the continent's resources but are less risky than a domestic company.

Another option would be mining companies Anglo American PLC (OTC: AAUKY), which is one of the largest diversified mining companies, and AngloGold Ashanti Ltd. (NYSE ADR: AU), the world's largest gold miner.

The majority of Anglo American's operations are in South Africa, where it was founded in 1917. There it mines thermal coal, iron ore, and platinum. The company has a corporate office in Johannesburg, and its secondary listing is on the Johannesburg exchange. Anglo American also has projects or operations in Namibia, Botswana and Zimbabwe.

There's also African Bank Investments Ltd. (OTC: AFRVY), which underwrites unsecured credit risk through the provision of personal loans to South African residents, and sells furniture and appliances.

For a more general sampling, the Market Vectors Africa ETF (NYSE: AFK), which seeks to replicate as closely as possible the price and yield performance of the Dow Jones Africa Titans 50 Index, might be worth a look.

Politicians: "Don't Like the Message? Shoot the Messenger!"

Okay, stop me if you've heard this one ...

You have an entity that took on too much debt. It cooked its books. It failed to get its fiscal house in order. Its "executives" repeatedly refused to take the necessary steps to rein in risk.

But when the LOGICAL consequences occurred — investors began dumping its debt and equities ... and driving up the cost of insuring against default risk — what happened? Did officials listen to the message of the markets, apologize, find religion, and try to right the ship?

Heck no! They blamed the messenger. Only this time it's not some crooked CEOs doing the whining and complaining. It's a bunch of politicians! It'd be comical if it weren't so sad.

Papandreou, Merkel, Juncker = Pandit, Mack, Fuld?

Two years ago, Wall Street's big wigs refused to accept responsibility for running their firms into the ground.

Back in the financial market crisis of 2008, the CEOs on Wall Street couldn't stop complaining about short sellers — a so-called evil cabal of greedy investors who unscrupulously borrowed their shares, sold them, then looked to profit as they fell.

Former Morgan Stanley CEO John Mack. Citigroup CEO Vikram Pandit. Lehman Brothers CEO Dick Fuld. They couldn't stop pointing fingers — either then or now — at virtually everybody but themselves.

Never mind that these guys amped up leverage to sky-high levels ...

Never mind that they made too many dumb real estate loans, corporate loans, and credit card loans ...

And never mind that they just failed to foresee and prepare for the mortgage, housing, and credit crises. They squarely laid the blame for the collapse in the value of their stocks and bonds at the feet of short sellers.

While in Washington this week, Panpandreou grandstanded about market speculators; then returned home to a hotbed of discontent. Worse, they managed to get the government to implement a short-term, short sale ban in late 2008. That led to a massive, very short-term rally ... one that quickly faded — with vulnerable financial stocks tumbling anew — even after the ban was passed!

The lesson? That dismal fundamentals always, always win out over mechanical attempts by officials to manipulate the markets. If you don't get your house in order, or you run your company into the ground, then you deserve to see your stock and bond prices tank.

And yet, here the same sorry movie is playing out again. Only this time you can substitute names like German Chancellor Angela Merkel, Luxembourg Prime Minister Jean-Claude Juncker or Greek Prime Minister George Papandreou for Mack, Pandit, and Fuld.

They're blaming hedge funds, so-called speculators, and other nefarious market players for their woes ...

They're slamming the credit default swap market for driving up their borrowing costs ...

And worse, they're pushing for the debt market equivalent of short-selling bans, just like those whiny banking execs did almost two years ago.

From Greece's Papandreou in a Washington speech:

"Europe and America must say 'enough is enough' to those speculators who only place value on immediate returns with utter disregard for the consequences on the larger economic system."

Merkel, for her part, added that:

"We're of the opinion a quick implementation of actions in the area of CDS has to happen [to curb] ongoing speculation against euro-region countries."

News Flash Folks: Here's the REAL

Reason Your Bonds Are Tanking!

I'm going to keep things simple for the politicians — not just in Europe, but here in the U.S., too. Your bonds are falling, and your cost of borrowing is going up, because your fundamentals are deteriorating!

You all have too much debt, super-sized deficits, and you lack the political willpower to take the difficult steps to get things back on track.

Take Greece. The country is running a deficit equivalent to 12.7 percent of gross domestic product, more than four times the 3 percent cap mandated for the 27 countries in the European Union (EU). It needs to sell $72 billion worth of bonds to fund itself, roughly 20 percent of GDP.

Sadly, politicians lack willpower to do what's right.

Both Standard & Poor's and Fitch Ratings have responded by slashing Greece's sovereign debt rating to BBB+. Moody's is contemplating its own ratings cut to Baa1 from A2.

In Portugal, the economy is in freefall. GDP shrank 2.7 percent in 2009, the worst recession in more than six decades. The unemployment rate just surged to a 23-year high of 10.1 percent.

Meanwhile, the country's budget deficit has jumped to 9.3 percent of GDP, more than triple the EU limit. Its overall debt load is now 85.4 percent of GDP, the worst in 20 years. In response, the ratings agencies have also downgraded Portugal's credit outlook.

Ireland is in even worse shape. The collapse of its own real estate bubble has devastated its economy, which plunged 7.5 percent last year. The nation's budget deficit is closing in on 12 percent of GDP.

As for Spain, the deficit is only a bit smaller, at 11.4 percent of GDP. But the economy has been shrinking for almost two years, while unemployment has soared to 19.5 percent.

Worse, instead of cutting back, the Spanish government has ramped up spending in an attempt to bolster the economy — a move that's starting to backfire as global investors rush for the exits.

What about Italy? Its debt load should hit 117 percent of GDP this year, the second-worst in the EU, right behind Greece.

Again, the common thread is too much debt, oversized deficits, too many economic problems. And the market response is also the same — plunging bond prices and surging interest rates, as well as an increase in the cost of CDS insurance. It's not that evil speculators are unfairly manipulating things. It's that the fundamentals stink!

You politicians and political types want to stop the move in stock, bond, and CDS prices? Then get your houses in order! The equivalent of a short sale ban in the debt markets won't get you anything more than a very short-term respite.