Inter-dealer broker Tullett Prebon expects worries of a second crisis caused by sovereign debt defaults to boost volumes in its industry this year, although revenue from trading is down 5% so far. Terry Smith, the company's chief executive, said the company would benefit from greater volatility causing more trades, after profits rose slightly and revenue remained flat in 2009. "I would be shocked if there was not another crisis at some point during the course of this year," Mr Smith said. "Banks have de-leveraged, but governments have leveraged up." The company's revenue was flat at £948m and pre-tax profits grew 14% to £156.5m on cost reductions. – UK Telegraph

Dominant Social Theme: If it's not one thing, it's another.

Free-Market Analysis: In keeping with the Bell's analysis of dominant social themes for investment purposes, we draw the reader's attention to perhaps the most important point of the above article: "Banks have de-leveraged, but governments have leveraged up." This is an innocent sentence, perhaps, but to us its eight words manage to purvey radical confusion. They are in fact symptomatic of an economic confusion that has expanded drastically over the past century.

Billionaire investor and Soros Fund manager George Soros (left) says President Obama mishandled the financial crisis big time. Soros would have preferred that the government take over U.S. banks instead of bailing them out, a move he believes would have been more popular with Americans, The Wall Street Journal reports. "The solution that he found to the financial crisis, which was to effectively bail out the banks and allow them to earn their way out of the hole, was, in my opinion, not the right solution," Soros said in an interview with CNN. "He should have compulsorily replaced the capital that was lost." Soros says China did a better job of managing its banks by forcing them to increase their minimum capital requirements. Soros also noted that the "market fundamentalist" belief prevalent in the U.S. during the Fed tenure of Alan Greenspan is wrong, citing his own investment decisions as evidence. "When I see a bubble, I buy that bubble, because that's how I make money," Soros says. - MoneyNews

Dominant Social Theme: Stop fooling around! Take real action – nationalize something.

Free-Market Analysis: We found the article, excerpted above, fascinating. We did not find it so because Soros advocates US bank nationalization (of a sort), however, but because in it Soros reveals – inadvertently or not – what we have always known (but could not always convince others of), that he is at heart a free-market, Austrian-based economist. At least he is from an investment/strategy standpoint.

In the national referendum Saturday, Icelanders sent a resounding message to the rest of the world: We are not paying the debts of reckless financiers. While we are few and powerless, we refuse to be bullied by our European neighbors. Some 93% said "No" to a recent deal negotiated by their government with its British and Dutch counterparts; only 7% voted for it. The deal concerned the so-called Icesave accounts that an Icelandic bank, Landsbanki, operated from 2006 in the U.K. and later also in the Netherlands. When the Landsbanki collapsed in October 2008, the British and the Dutch governments rushed in to pay depositors in their respective countries the amount insured under EEA (European Economic Area) regulations. They then demanded reimbursement from the Icelandic government, which reluctantly agreed to pay, against the wish of the great majority of Icelanders. The Icelanders argued that there was no legally binding government guarantee of the deposits. The Icelandic government had fully complied with EEA regulations and set up a Depositors' and Investors' Guarantee Fund. If the resources of that fund were not sufficient to meet its obligations (which was almost certainly the case), then the Icelandic government was not legally bound to step in with additional resources. Thus the British and the Dutch governments had no authority to create new obligations on the part of the Icelandic government by paying their nations' depositors. This legal position is indeed also that of the Norwegians, who are, with Iceland and Liechtenstein, the only non-EU members of the EEA. Arne Hyttnes, chairman of the Norwegian Depositors' and Investors' Guarantee Fund, is adamant that there is neither by law nor international agreements a government guarantee of deposits in Norwegian banks; there is only the guarantee of the fund itself. Moreover, Jean-Claude Trichet (pictured left), president of the European Central Bank, and Wouter Bos, the Dutch minister of finance, have both publicly admitted that European regulations on depositors' guarantees were not designed for the collapse of a whole banking sector - such as occurred in Iceland in 2008. - Wall Street Journal

Dominant Social Theme: A few more votes will be needed before Iceland falls in line.

Free-Market Analysis: Let's try to boil down the Iceland saga. Iceland was a fairly socialist entity until the 1990s when its government went on a privatizing spree and sold off almost everything under the theory that Iceland would be more prosperous if the government ceased to interfere with every Icelandic entrepreneurial decision. This was perhaps a very good idea. But in practice what happened was that Iceland's three big banks were privatized as well and this has proven more questionable, mostly because of the timing and because of the global financial system itself.

Gold has proved to be the best value investment over the last 10 years, new research has disclosed. The price of the precious metal rose 277 per cent during the past decade, with investors particularly attracted to gold during the recession as they sought a safe haven for their money. Overall, gold, silver and platinum increased in value by 242 percent between December 1999 and December 2009, the equivalent of an average annual return of 13.1 percent. The price of gold soared during the recession as investors sought a safe haven for their money. Despite the slump in the housing market in the past two years, property has produced the second highest return after precious metals during the past decade of 187 percent or 11.1 percent a year, according to the findings by Halifax. Shares saw an average return of just 18 percent over the decade, while cash returned 57 percent. It comes despite savers seeing their rates of return plummet to record lows after the Bank of England cut interest rates to just 0.5 percent a year ago. Suren Thiru, an economist at Halifax, said: "Precious metals were the top performing asset during the noughties, largely reflecting increased demand from China and India for industrial uses and jewelry." – UK Telegraph

Dominant Social Theme: We are puzzled and perplexed, but no doubt things will soon get better.

Free-Market Analysis: It is really is unfair in our view how the mainstream media misleads so many people when it comes to investing. As financial journalists throughout the 1990s we heard over and over from the planning and brokerage establishment that gold and silver were purchases for up to maybe five percent of one's investments as a so-called "safe haven" but no more. This was the standard line - and many in the US and Canada where financial planning is most advanced may not even have recommended this much to clients.

The theory of the big (but good) lie goes back to a certain reading of Plato's most famous dialogue, the Republic. There are more or less crude versions of it but the gist of the theory is that for reasons for state - that is, so as to secure the chance of the ruler to rule smoothly - telling lies can be justified and may even be necessary. Indeed, the big lie could well have been the very idea of the perfect political system itself that Socrates sketched in that dialogue, one that really amounts to a utopia, an impossible blueprint for a human community and its basic principles. Some have concluded from this that Plato (Socrates) never meant to advocate what the dialogue depicts as the perfect regime but merely presented it as a kind of model, the way that the gorgeous women on the covers of Vogue or other fashion magazines function, just reminders of what to pay attention to as women dress up.

But ever since Plato appeared to make the big lie respectable in politics, quite a few regimes have made use of it. And in our era no less seems to be the tactic, at least for the cheerleaders of more government planning who routinely appear on the Op-Ed pages of The New York Times. As a case in point, check out the article by Alan Tonelson and Kevin L. Kearns "Trading Away Productivity" (March 5, 2010). The gist of the piece is nothing less than the defense of international economic protectionism, a policy thoroughly discredited by now except for diehards desperate to keep their establishment and industry intact at the expense of domestic consumers and foreign competitors. Nothing new here - every politician is tempted to offer to square the circle; just watch how in Washington nearly everyone believes that one can indeed get blood out of a turnip and pay for goodies with, well, nothing.