The problems Wall Street and investors face this year are unprecedented: a Dow 30 stock, American International Group (AIG), was headed for bankruptcy until the federal government intervened; Merrill Lynch, the country’s #1 brokerage firm, suddenly was bought by Bank of America in a fire sale; household names such as Washington Mutual, Lehman Brothers, Freddie Mac and Fannie Mae are sullied.

I spent a week in Japan attending the general session of the Mont Pelerin Society, an organization of international economists and political thinkers of which I’m a member. Several Nobel Prize economists and political leaders attended, and it was a good opportunity to see how world leaders assess the current crisis.

Fearing a Japanese-style doldrums, the Federal Reserve under Alan Greenspan reduced the Fed Funds target rate to 1% in 2004, far below the natural rate, causing a dangerous increase in irresponsible lending patterns, over-leverage of capital investment, and speculative heat waves in real estate, subprime ARMs, corporate bonds, and other assets.

Both major presidential candidates, Barack Obama and John McCain, are promising "change." Whoever is elected president is going to face a daunting task of reforming an out of control financial whirlwind. (The political futures markets still favor Obama to win in November.)

The fund is beating out its competitor, Boston Scientific, in its sales of IVUS (intravascular ultrasound device) and other products. The company’s IVUS products have increased market share and burgeoned by roughly 39% in the second quarter.

Last month, there was a rush to quality, and panicky investors poured millions into T-bills, T-bonds, and other "safe" government securities. The Fed wisely decided against lowering rates below its current 2% target rate in its latest meeting.

October is often viewed as a volatile month, but historically, September has been the cruelest. Inflation, recession and tight credit conditions are our greatest fears, both here and abroad. The best approach during these uncertain times is to play it conservatively, while looking for bargain opportunities.

Most financial writers and brokers are high on promises, but seldom deliver. Every investment advisor promises to beat the market, but it’s easier said than done. Financial writers and brokers have the hot hand one year, and the cold hand the next.

In this era of inflationary recession, your best bet is to focus on high dividend-paying stocks and funds, including safe bank CDs and fixed annuities. I make several recommendations in this issue.

First, the Fed’s anti-inflation policy is suspect. The good news is that M2 (the broad-based money supply) is slowing down to 2% a year, which means less price inflation in the long run.

Fortunately, not all is lost. There are ways for my subscribers to survive and to profit. One way is to invest in countries that are more positive toward saving and investment, especially countries that have adopted a low flat tax.

It’s a new fund, but when it reaches $10 million in assets, it will have a symbol. Meanwhile, you can invest directly in the fund.

This fund invests in Russia, Poland, the Czech Republic, Hungary and Turkey. It looks weak right now, but should be a good long-term play due to the flat-tax revolution in Eastern Europe.

For those of you who are uncomfortable about this year’s bear market, or who are afraid your bank might go under, you might consider investing in a fixed-rate annuity.

This summer, I celebrated the most unusual 4th of July fireworks I’ve ever experienced — in Edinburgh, Scotland, where Nobel Prize-winning economist Vernon Smith unveiled a giant statue of Adam Smith on the famed Royal Mile road.

This year’s summer Olympics in Beijing, China, was a huge success. The United States surprised the pundits, who predicted that China would win more medals for the first time. But it turned out that the United States won 110 medals and China came in second with 100.

Last month, I had the unique opportunity of meeting with Bill Gates, founder of Microsoft and the world’s wealthiest technologist. In this issue, I talk about his vision of the global economy now that he has assumed full-time responsibilities of the Bill and Melinda Gates Foundation.

FreedomFest always offers offbeat topics. Mr. Anti-IRS (a CPA in Las Vegas who wished to remain anonymous) spoke before a standing room-only crowd about aggressive ways he saves taxpayers money without getting audited.

One of the most novel speakers at this year’s FreedomFest was Eric Singer, a long-time Wall Streeter who has created a novel mutual fund that handily beats the market, but only is invested about 30% of the year!

Our portfolio benefited tremendously this past month by the sharp sell off in oil prices. Foreign stocks still are the best place to make money, however.