Seeing around corners – is the end in sight? April 27, 2009
Posted by wonderingin in Business, Financial Markets, The Economy.add a comment
One of the great surprises of the current economic crisis is that few saw it coming, and worse yet, the first wave of investors jumping in to help (think sovereign wealth funds which invested in the big banks) were brutally savaged by the continuing market decline.
Now comes Wilbur Ross with a plan to invest $1 billion in troubled assets through the government’s new Public-Private Investment Partnership.
Mr Ross is neither the timid sort, nor is he inexperienced in dealing with troubled or distressed assets. In fact, that’s how he made his fortune. He also made a lot more money through the rationalization of the steel and textile industries.
What does Mr Ross see that no one else sees? Maybe, just maybe, he can see around corners. If he can and if he is right, that would be a very good sign for the rest of us.
We are in the eye of the storm April 17, 2009
Posted by wonderingin in Banking, The Economy.add a comment
“We are in the eye of the storm. The worst is behind us for housing. For commercial real estate and corporate lending, there is still a big dark cloud.”
- GERARD CASSIDY, a banking analyst.
http://www.nytimes.com/2009/04/17/business/17bank.html?th&emc=th
Black carbon gives the lie April 16, 2009
Posted by wonderingin in Environment, Regulation.add a comment
… to the environmental left’s histrionic certainty about global warming and its causes.
According to scientists, including Dr. Veerabhadran Ramanathan, one of the world’s leading climate scientists, black carbon accounts for 18% of the planet’s warming and likely represents an even greater cause of glacial melting around the world. And black carbon arises primarily from poor cooking stoves in developing countries.
Black carbon was not even mentioned in the 2007 summary report by the UN Intergovernmental Panel on Climate Change that pronounced the evidence for global warming to be “unequivocal.”
So much for all the certainty…. Let’s get the facts straight before we wreck our economy.
A whack across the nose April 14, 2009
Posted by wonderingin in Politics, World affairs.add a comment
“North Korean dictator Kim Jong Il is said to be a film buff, so perhaps he’s familiar with the classic “Groundhog Day,” in which Bill Murray plays a TV reporter who is condemned to relive February 2 over and over again. Kim must figure the members of the U.N. Security Council have seen it too, since they insist on reliving the same hopeless diplomacy toward his nuclear provocations.”
Better yet, the diplomats are crazy. The definition – continuing to do the same thing over and over again and yet somehow expecting a different outcome.
The only two things Kim understands and which have any chance of changing his behavior are:
- tying a noose around his wallet and
- a stiff whack on the nose
Where are the 2 x 4’s?
Everyone should pay income taxes April 14, 2009
Posted by wonderingin in Politics, The Economy.add a comment
Ari Fleischer says everyone should pay taxes – my sentiments exactly.
Ratings firms are chasing the knife April 10, 2009
Posted by wonderingin in Banking, Business.add a comment
The ratings firms have created a new derivative of the old Wall Street phrase about “catching a falling knife”. Not quite able to catch it, they are chasing the knife down.
Ratings agency downgrades abound:
Hartford’s Capital Cushion Questioned
Moody’s Strips Berkshire of Top Rating
The Downside of Ratings Reform
The real problem for investors has been relying on the ratings in the first place instead of doing their own homework.
Capital is precious – investing should always be approached with fear and trepidation.
The dark cloud on the horizon April 10, 2009
Posted by wonderingin in Business, Regulation, The Economy.add a comment
… is the shadow of our coming economic decline.
U.S. Climate Envoy Warns Against High-Carbon Investments
The Financial Times (4/8/09, A1, Harvey) recently reported,
“Businesses must not sink money into high-carbon infrastructure unless they are willing to lose their investments within a few years, the US lead negotiator on climate change has warned. In the Obama administration’s starkest rebuke yet to industry over global warming, Todd Stern, special envoy for climate change at the state department, said ‘high-carbon goods and services will become untenable’ as the world negotiates a new agreement to cut carbon emissions.” The Times quotes Stern as saying, “How good will the business judgment of companies that make high-carbon choices now look in five, 10, 20 years, when it becomes clear that heavily polluting infrastructure has become deadly and must be phased out before the end of its useful life?”
President Obama’s recent remarks (the well off will still be well off after I increase their taxes) continue to confirm the strange belief of the Democrats that American business is their perpetual money tree.
Do they think the money to fund their dreams (and our nightmares) is endless?
Apparently so.
Making Banking Boring (again) April 10, 2009
Posted by wonderingin in Banking, Financial Markets, The Economy.add a comment
Paul Krugman may have it right this time.
“Thirty-plus years ago, when I was a graduate student in economics, only the least ambitious of my classmates sought careers in the financial world. Even then, investment banks paid more than teaching or public service — but not that much more, and anyway, everyone knew that banking was, well, boring.
“Strange to say, this era of boring banking was also an era of spectacular economic progress for most Americans.”
Pining for some ‘Animal Spirits’ April 9, 2009
Posted by wonderingin in Financial Markets, The Economy.add a comment
Where have all the ‘animal spirits’ gone?
John Maynard Keynes briefly used the term in one paragraph when discussing what motivates people to invest and speculate.
In a new book, Animal Spirits, George Akerlof and Robert Shiller describe five categories of spirit:
- Confidence
- Fairness
- Corruption / bad faith
- Money illusion
- Stories
None of these are easily quantified which may explain why economists and bureaucrats who just focus on the numbers so often miss the mark.
People are first led by stories about the successes of others and the possibilities for good in the world. Their eyes often glaze over when you start spouting numbers; stories they get.
The stories build confidence that they too might achieve some modicum of success assuming that:
- the rules of the game are fair,
- the bad guys will be kept in check and that
- the government will maintain a stable currency – not too much inflation and not too much deflation, but just right.
The return of ‘animal spirits’ will take some time.
Brushing up on “Rules for Radicals” April 3, 2009
Posted by wonderingin in Politics, Regulation, The Economy.add a comment
“[Saul] Alinsky’s 1971 book, ‘Rules for Radicals,’ is a favorite of the Obamas. Michele Obama quoted it at the Democratic Convention.”
- The President is ‘Keeping Score’, WSJ
By now, most people who read the papers or watch the news have realized that President Obama is fully intent on re-making the American economy and the government’s role in it as he promised during the campaign.
The velvet glove of the President’s hopeful rhetoric apparently covers an iron fist as Congressman Peter DeFazio is quickly learning after he voted against the stimulus bill.
Reasonable people will always differ on the manner and nature of government and economic policy. Democracy is a messy system and the full and open debate of important matters is essential if the country as a whole is to accept significant changes over the longer term.
The great risk to American capitalism in all of this is the growing sense of individual entitlement – everyone wants something to be paid for by someone else!
Where is the sense of personal responsibility?
Who will invest to create the needed jobs if incentive is rewarded with higher taxes and greater regulation?
Maybe the rest of us should be reading ‘Rules for Radicals’ to figure out what we are up against. I’ve ordered my copy.
