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 The Shanghai index has regained nearly all of the $400 billion it shed over the past month. It rallied to a 4,253 close today, up nearly 3% from yesterday and a breath away from another all-time high.
The CSI 300, which tracks yuan-denominated A shares listed on China's two exchanges, hit a record high today, despite shedding 22% of its price only 20 days ago.
 U.S. markets, along with gold and the dollar, were... well... boring yesterday. None showed more than a 0.5% gain or loss.
 “Event-driven” and “short selling” funds both saw record investments in the first quarter of 2007. Over $10 billion rushed into this sector in the first few months of 2007, says a report published by Lipper. Surprise, surprise… the previous records for these two fund styles were set in the first quarter of 2000…
that other recent period of angst in the stock market.
 U.S. home builder confidence fell to a 16-year low yesterday. The National Association of Home Builders index fell 2 points this month, to a score of 28. Translation: Less than a third of the nation’s builders think the market is doing all that well.
“All three components of the housing index fell in June,” reports MarketWatch. “The index for single-family home sales dropped from 31 to 29, also the lowest since 1991. The index for expected sales fell by 2 points, to 39, the lowest since September. The index for buyers' traffic dropped by 1 point, to 21, the lowest since January 1991.”
So… are we looking at a near bottom? Nope, says David Seiders, chief economist of the NAHB. “Home sales most likely will erode somewhat further in the months ahead and improvements in housing starts probably will not be recorded until early next year."
Next Year? Maybe… but history tells us otherwise. The last time the index tumbled this low, in 1991, it took two years to return to a new high, and 17 years before annual housing starts exceeded the 1986 peak.
 A Bear Stearns-sponsored hedge fund is revealing the true underbelly of the subprime bust. Last year, the High-Grade Structured Credit Strategies Enhanced Leverage Fund (doesn’t that just sound greasy?) borrowed $6 billion from various banks to begin investing in packaged securities comprised of subprime mortgage debt. After losing 23% in the first 10 months of the fund’s existence, investors are asking for their money back, and so are the banks. But as you might guess, there is no money to give back.
Yesterday, the fund’s three biggest lenders, Merrill Lynch, Citigroup and JP Morgan Chase, all asked Bear Stearns to fork over more capital. But Bear Stearns, as it turns out, is not the only one behind the eight ball:
Nearly $600 billion of investors’ cash, buried in subprime loan securities, bought with highly leveraged dollars. Again, we cribbed this chart from The New York Times.
 30 SPACs have gone public in the U.S. in 2007… on pace to nearly double last year. What’s a SPAC?
“It’s a blind pool… a blank check,” Chris Mayer tells us. A “special purpose acquisition company” is one that simply accrues a ton of investor cash (often without a specific plan) and goes public with the intention of merging with or acquiring a company with the money it raised.
“There is a boom in these things today,” says Chris. “So far this year, 30 SPACs have gone public in the U.S., raising some $3.5 billion. Last year, 40 SPACs sold their promise to investors and raised $3.4 billion. As recently as 2004, the amount of money put in SPACs was negligible.”
Mr. Mayer, a lover of all things old and reliable, pointed out this Charles Mackay gem from all the way back in 1841: Mackay saw a rush of bubble companies (that one day popped) that were formed for the purpose of “carrying out an undertaking of great advantage; but nobody knows what it is.”
“Funny how the old market seems to run in these well-worn grooves,” Chris mused.
 A renewable energy source that’s already powering 25% of Iceland could be an “energy savior,” even for the U.S.
A 2006 report issued by MIT claims that it would be possible to generate 100 gigawatts of electricity by 2050 with a $1 billion investment in geothermal plants. That’s on par with the U.S.’s entire nuclear energy output.
Our Greg Guenthner is on the case. Geothermal, ancient Greek for “wicked hot,” harnesses the power of heat energy (typically steam) rising from the Earth’s core. Iceland, which is essentially one huge volcanic geyser, has been able to power a quarter of the nation with this energy. “A small-cap company will most likely lead the way,” says Gunner, “and I’m going to find it first.”
 “FreedomBeat: Law gives cops ‘license’ to print money,” read the subject line of an e-mail sent from our liberty watchdog, Jim Amrhein. Think police departments aren't motivated by revenue? Check out this story from Mr. Amrhein:
Houston municipal police have been using a loophole in the wording of a 2003 law intended to prohibit camera-proof coverings on vehicle license plates to write over 9,500 tickets so far in 2007 -- for harmless license plate brackets, like those with dealership logos, personal mottoes (“World's Greatest Dad!”) or sports team names on them.
According to a June 17 Houston Chronicle article, police have written over 2,200 of these $98 tickets since May 4 -- the date a new law was passed clarifying the 2003 ordinance's intent to pertain ONLY to brackets and screens that "significantly obscure" a license plate's vital data! But this new law (which Houston P.D. lobbying organizations SUPPORTED) isn't set to take effect until September...
“Yes, you read that right,” our civil liberties guru wrote. “Houston cops are writing scads of citations (one officer wrote 30 in ONE DAY) for ‘breaking’ a law they know to be improperly applied -- and for which, come September, they'll no longer be able to write anywhere near as many tickets.”
In 2007 alone, revenue from these frivolous citations has exceeded $930,000. As of June 1, Houston cops were still writing these bogus tickets at a rate of around 2,000 per month...
 “The danger that no one talks about,” wrote in a reader in reference to our coverage of the ethanol byproduct DGSS -- a new-age animal feed -- “is that all that waste of the corn is being manufactured to be sold as animal feed and contains the dangerous chemicals that have been used to process the fermentation of the corn. Once the animals eat such animal feed, the contamination will eventually find its ways into every American… causing cancer and God only knows what diseases. The price of this absurd policy of corn ethanol will be a horrible price to pay. What the United States must do is lift the absurd tax on sugar cane, import the sugar cane from Mexico and have excellent-quality ethanol.”
 “Regarding your corn report,” writes another reader, “I just returned from a trip traveling from Ohio to Kansas and back to Florida. Most of the corn I saw along I-70 was knee-high to shoulder high and very healthy looking, especially in Kansas, Missouri and southern Illinois.”
Hmmn… are we going to have to send the Maniac out for another look?
 “Of course, the Canadian dollar will equal the U.S. dollar,” writes yet another reader, this one from Canada. “The idiots in Ottawa sold all our gold, and our currency reserves are 95% U.S. dollars. That makes the loonie a proxy for the greenback. The only thing backing our money is your money. We are not really sure what is backing your money.”
Regards,
Addison Wiggin
The 5 Min. Forecast
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