Ravi Nagarajan's  Instablog

James Grant Comments on Fed Policy and Interest Rate Outlook

By Ravi Nagarajan
Published on June 10, 2009 at 5:31 pm

In my investment activities, I avoid making commitments based on macroeconomic forecasts alone.  As Warren Buffett has said many times, macro factors do not influence his decisions when it comes to investing in a high quality business.  At the same time, it seems obvious that an investor needs to at least be aware of the condition of the overall economy to understand the climate in which his or her portfolio businesses are operating.  Also, for many investors, following economic developments is a fascinating endeavor even if it has no immediate bearing on investment results.

James Grant, publisher of Grant’s Interest Rate Observer, appeared on CNBC today and commented on Federal Reserve policy and his outlook for interest rates and inflation.  I found the following quote to be particularly interesting.  I highly recommend viewing the video below or, for those reading this via the RSS Feed, click on this link to view the video on CNBC’s site.

“If the Fed examiners were set upon the Fed’s own documents—unlabeled documents—to pass judgment on the Fed’s capacity to survive the difficulties it faces in credit, it would shut this institution down,” he said. “The Fed is undercapitalized in a way that Citicorp is undercapitalized.”

 Join the forum discussion on this post - (1) Posts

Related posts:

1. Series I Bond Composite Rate Falls to Zero  The Bureau of the Public Debt has announced an earnings...
   
2. Inflation Expectations  One of the interesting effects of the turmoil in financial...
3. SIFMA Municipal Bond Summit: Lessons and Outlook for Recovery  The Securities Industry and Financial Markets Association (SIFMA) held a...
   

MidAmerican’s David Sokol: Cap and Trade to Add $120/month to Electric Bills

By Ravi Nagarajan
Published on June 9, 2009 at 9:19 pm

MidAmerican Chairman David Sokol was interviewed by Bloomberg today in Washington and the video appears at the end of this article.  Mr. Sokol has been advocating for the elimination of the concept of trading carbon credits which is a central feature of the “cap and trade” system that is currently being debated in Congress.  Mr. Sokol believes that the government should simply mandate a cap and public utilities and other carbon emitters should be forced to adhere to that cap.  In his opinion, the concept of trading carbon credits would simply amount to an additional tax on consumers which he estimates at $120 per month for a typical family.

The Obama Administration and “Cap and Trade” advocates in Congress often promise to use funds raised by auctioning emission permits to offset the higher electric costs to lower income households.  However, Mr. Sokol would prefer to have a system where this additional layer of costs are not imposed to begin with and attention is instead focused on the massive investments required to retrofit power plants to reduce emissions to meet the prescribed caps by the ultimate 2050 deadline.

MidAmerican is a subsidiary of Berkshire Hathaway and a frequent subject on this website.  An article appeared here last week regarding Mr. Sokol’s views on the housing market and the limited effectiveness of government actions intended to return the economy to prosperity.

A Bloomberg article has been published regarding this interview and the video can be seen below or, for those viewing this article via an RSS feed, by clicking on this link.

Disclosure:  The author owns shares of Berkshire Hathaway.  MidAmerican is a subsidiary of Berkshire Hathaway.

Join the forum discussion on this post

Related posts:

MidAmerican’s David Sokol on Housing Market: No “Green S......It appears that MidAmerican Energy's Chairman David Sokol is taking...

MidAmerican Energy and BYD Partner on Battery Storage Ini......Most of the excitement related to BYD has centered on...

Electric Car Initiatives Heat Up Despite gasoline prices that have fallen precipitously since the record...

Climate Change Impacts Insurers The National Association of Insurance Commissioners voted to require insurance...

BYD’s Revolutionary e6 Electric Car  Last month, I wrote about the increased interest in electric...

Coca Cola CEO Muhtar Kent on Moody’s Upgrade and Future Prospects

By Ravi Nagarajan
Published on June 9, 2009 at 8:49 pm

Muhtar Kent was named CEO of Coca Cola in 2008 and was recently named Chairman of the Board of Directors.  I have not had an opportunity to listen to Mr. Kent speak about the company in the past and found his comments on Coca Cola’s future prospects and general economic conditions quite interesting.  Mr. Kent’s comments on the Obama Administration’s proposal related to the taxation of profits earned in foreign subsidiaries are particularly important not only for Coca Cola but for the economy in general.

The video may be viewed by clicking on this link .

Disclosure:  The author does not own shares of Coca Cola directly.  However, the author owns shares of Berkshire Hathaway which has significant holdings of Coca Cola stock.