What Stories Aren't Being Told?

Includes: AIG, FNMA
by: David Merkel, CFA

I did not start blogging in order to start a media career, but sometimes the media finds its way to my door. I received a call Thursday from a reporter for one of the major television networks, and after talking a while, she asked me, “What big stories aren’t being told? Some of my best stories come from asking this question.” I told her I needed to think, and would e-mail her back on the topic. I decided I would review my last month of posts to look for out-of-consensus ideas, and I came up with these:

  • China is overstimulating businesses through loans and they are buying up commodities that they don’t need now, leading to a possible correction in commodity prices.
  • Western European banks are in trouble because of loans to Eastern European nations denominated in Euros. With the rise in the Euro, defaults are likely.
  • Water shortages in China and India.
  • Most entities that the US Government has bailed out will have stocks that are zero eventually — GM, Chrysler, AIG, and maybe Fannie Mae (FNM) and Freddie Mac (FRE). For an opposing opinion on the GSEs, read the intelligent John Hempton at Bronte Capital.
  • With dud residential mortgage loans, modifications don’t work well unless there is a forgiveness of some of the principal.
  • The foreign funding base of the US is getting shorter in maturity — could this be a sign of trouble? Is there a lack of confidence?
  • If we marked the value of commercial real estate loans to market for banks, using data from the CMBS market, some banks would be insolvent.

That’s all for me, for now. Now, I don’t watch television, listen to radio much, and I don’t subscribe to anything aside from the WSJ. I don’t see everything. That is why I am asking my clever readers to answer the question that the reporter asked me — what significant economic stories aren’t being told? These can be small issues as well as big issues. Please let me know in the comments below. Thanks.

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