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2/11/2010 9:29:21 AM Eastern Time

Age Old Problems (Final Edition)
By Charles Payne, CEO & Principal Analyst

It looks like a solution to Greece's deficit problem is near, and that's good news. However, the fact is that this is another can being kicked down the street. The thing is that the problems facing Greece are not unlike those facing the United States. Sure, America can print money, still has its AAA credit rating, and is still the most dynamic economy in the world. But we can't ignore telltale signs that there will be some serious issues that will test our reputation and test our fortitude down the line. I've already pointed out how eerily our deficit to GDP ratio echoes those European nations in a heap of trouble right now. There is yet another issue we share with our European counterparts that can't be fixed with money, at least not directly. The world's economic powerhouses are getting long in the tooth. The world's economic powerhouses are leveraged to the hilt and owe gobs of money through entitlements revolving around medical and retirement benefits.

Greece has one of the lowest birthrates in the EU, which is a problem for this nation of 10 million people. Their government is coming to grips with the unsustainable trends of aging workers, low birthrates, and outrageous pension liabilities. I read a quote from an angry Greek citizen yesterday; the guy was a 57-year old retired factory worker. Say what? In America, a 57- year old factory worker might be the new kid on the block and not thinking about the day he/she can stop punching in. New austerity measures include:

> Wage cuts
> Hiring freezes
> Cutting supplemental wage allowance
> Banning early retirement
> Raising retirement age to 63 from 61
> Hiking the top income tax rate to 40% for incomes over €60,000 from €75,000

Although 64% of its citizens accept the measures as necessary medicine, unions are going berserk, striking yesterday and today. They will likely strike later in the month as well. Things are so awful that Greece is even letting tax cheats bring money back under amnesty. Don't snicker, it's estimated that Greece needs $73.0 billion and its shadow economy is $20.0 billion a year.

By the way, in the developed world the countries listed below that have black market economies that are 24% to 30% of GDP include:

* Greece
* Italy
* Spain
* Portugal
* Belgium

Let's take the issues facing Greece and see how America is in the same orbit. The average birthrate in the world is 20.3 per 1,000 people. In the meantime, people in the developed world are living longer. These developed nations enjoyed fabulous growth and prosperity coupled with increased productivity, thus making it easier for earlier retirement. Now it's all changing, and it's a bitter pill to swallow.

These are not official ages but instead averages; in the meantime there are changes on the drawing board. Japan will go to 65 from 60 by 2013, Spain 63 from 61 by 2015, the U.K. to 68 by 2046, and Italy 61 from 57 by 2013.

The percentage of adult women entering the workforce will increase dramatically.

A band-aid by Germany for Greece could provide the firewall the former is seeking, but how long can that wall hold back what is destined to be a painful problem at some point. Much work has to be done.

First: Let's get the economies of the world going by focusing on positives and the future. This myopic war against banks and rich people is so ass-backwards that it's killing the potential for a swifter recovery.

Second: Let's make tough decisions, people have to work longer and pensions have to be cut. Taxes should be cut as well.

Third: Let's put the onus on education, which in my mind is more important than solar panels. I disagree with President Obama that it's not the nation that takes the lead in renewable energy (once everyone has renewable energy where does anyone have an advantage since the sun and wind grace the entire planet) but the nation with the brightest population that prospers.

Economic Data

Initial Jobless Claims

It will be interesting to see how storm activity impacts claims data over the next couple of weeks, but today we could breathe a slight sigh of relief. Initial jobless claims totaled 440,000, 25,000 below consensus forecasts. Continuing claims had a nice drop to 4.538 million from 4.617 million previously. Consensus was looking for a continuing claims total of 4.60 million.

Tidbit
I did so much shoveling last night I wonder if I will show up in the government's next couple of saved or created jobs?

Long Idea: Diodes Incorporated (DIOD) @ $19.28
Click here to view the trading alerts that followed this recommendation

Trading Parameters
Entry Price	Entry Limit	Stop Loss	Trading Target	Target	Long-term Target	Options
$19.28	see comments	$17.00	N/A	$24	N/A	N/A
Options Trade Parameters
Type	Option Symbol	Entry Price	Strike Price	Expiration Date
Call	DUH100619C00	$1.85	$20.00	6/17/2010

BACKGROUND: Diodes Incorporated, together with its subsidiaries, engage in the manufacture and distribution of semiconductor products to manufacturers in the communications, computing, consumer electronics, industrial, and automotive markets worldwide. Its products include diodes, rectifiers, transistors, MOSFETs, protection devices, functional specific arrays, amplifiers and comparators, Hall effect sensors and temperature sensors, DC-DC switching and linear voltage regulators, voltage references, and silicon wafers; power management devices, including LED drivers; and special function devices, such as USB power switch, load switch, voltage supervisor, and motor controllers. Diodes Incorporated sells its products through direct sales and marketing personnel, independent sales representatives, and distributors. The company was founded in 1959 and is headquartered in Dallas, Texas.

SKINNY: We believe the company stands to benefit from a strong upswing in industrial and communications sales for the next couple of quarters.  Not only will revenue continue to be supported by this uptrend but also gross margin should strengthen as these segments carry much richer profits than the consumer and computing businesses.  Most recently, the company posted much better than expected earnings, delivering non-GAAP earnings of $0.36 per share, seven cents above the Street's consensus estimate.  Diodes Inc. has certainly emerged from the economic slowdown a much stronger company, with better efficiency and products.  As such, we believe the company is well positioned  to benefit from the slowly recovering economy.  We see shares of Diodes moving to $23.00 and then to $24.00; use $17.00 as a mental stop-loss.

Key Fundamentals
PEG	Book Value	Institutional Holdings	Price/Sales	Average Daily Volume	Shares Outstanding
0.86	9.674	67	1.93	290K	290K
Market Value	Insider Activity	52-week High	52-week Low	Annual Earnings Estimate
22.17	3 SELLS	22.17	6.5	1.22

Analyst Coverage
Longbow – Upgraded BUY	Collins Stewart – Reiterated BUY	UBS – Upgraded BUY