The New Dow: Risk Goes Up, Price Goes Up

In Dan Weiss' post yesterday he presciently offered Cisco (CSCO) as an alternative to GM as a member of the Dow. Well done, Dan.

He also wrote:

More concerning to me is who would be willing to lend to GM/Chrysler and potentially even Ford in the future considering the strong-arming that the Government has undertaken which has basically thrown rules of law out the window much like Italy has done in the past with companies such as Parmalat.

Political risk is alive and well (was it ever dead and gone?) and will be part of our investing landscape for, well, forever. "More regulation" is the new "less regulation" for its political potency, vacuousness notwithstanding. Here's a potential lame opening joke for a conference of political economists:

Q: When is the quantity of regulations dispositive?
A: In an election year.

But Dan's statement about future lending is less prescient, not because he lacks imagination or foresight (Dan enjoys copious amounts of both) but because the price of money has already gone up for companies Mr. Market thinks are of interest to this, or future governments.

Comments

[Dejo:]

I am sure the Government will be very glad to continue to lend GM any money they need (for a price, more ownership in the company) until they own it all. I don't see Obama letting GM or Chy getting away from his (the Governments) grasp any more than the banks will ever be free of Obama & his rules. I know they are trying to pay off the debts as soon as possible but I don't think that will ever happen in our life time the Gov. wil never let go. They are like leaches they will suck all the life blood out of anyone caught in their web.

Jun 01 02:36 PM