Atakan

Nothing About This Economy Is Surprising

Well written piece Paco but I can't say I agree with some of your statements. For one, I think the case for China leading the world economy in the near to mid-term is a hasty one. We are seeing the immense challenges the Chinese government is facing with drying exports and trade. They do have lots of dollars but those dollars have no place to go except back to U.S. Treasury. So the "hostage" situation continues. In addition you are contradicting yourself by singing China's praises whilst dissing central government meddling with the private economy.
I buy the argument that incentive structures when distorted can cause big headaches and system wide tremors but we can have a hybrid system with effective check and balances that are actually guess what "ENFORCED". The revolving door of Wall Street to DC has caused lax regulation by the likes of SEC that to me has been the weakest link in this monstrous mess. If you haven't yet read the book "The Demons of our Own Making". It does a nice job explaining the system wide dependencies and how most effective regulations can be those that are based on rough but simple and enforceable rules. Bring back the rules of
- 1:12 leverage and no more
- requirements to report holdings after a certain size is reached
- put in place a CDS clearing house where counter party risk can be manages
and you'll have much more perhaps even "black swan" proof system. What will be the missing? $50M dollar bonuses to the likes of Mr. Cassano of AIG. I think the society would be able cope with that much!

I'm sorry but I refuse to shed any tears for the Wall Street high flyers. Not in this life...

Rating Agencies Unfairly Give Turkey Short Shrift

Well-said Suna. The ratings agencies seem to be enjoying some sort of a "reserve currency" type of privilege perhaps b/c of the lack of a competing model/approach. From a strict resource allocation perspective it is somewhat understandable why a country making up 0.17% of the world equity market is not getting red carpet treatment. As the Turkish market matures and the major Turkish corporations float more than what on average amounts to a laughable % of ownership to the public this balance of opinion should shift favorably. Until then, for the believers there is a mid-term market inefficiency here.

Equity Asset Allocation Didn't Work in 2008

Richard-
I have a question for you. If I want to select the world (free floating) as my portfolio benchmark. 5 years down the road when China makes up twice as large a part of the world market cap do I go back and readjust my benchmark or do I leave it where it started - frozen. We talk a lot about rebalancing without mentioning the fact that the world is dynamic and so are the benchmarks. How do we manage the inherent conflict between having to find a stable bencmark and one that reflects the world we live in?
May be I am missing sth. here...

David Swensen on Funds, Distressed Securities and Investing

My take is that any instrument that is opaque will have a hard time justifying its existence in the new world order of investments. Back to basics....you don't understand how you'll make a return than DON'T INVEST for god's sake!

Turkish Shareholders Association Plans to Sue the Turkish Central Bank

I must say I throughly enjoyed the lively discussions here. It is obvious by now Mr. CuriousInvestor's arguments are put to test and failed pretty badly. That's not to say I personally do not respect his rights to voice his opinions or anything.
The merits of the export based growth model can be further discussed but IMO it represents a better alternative for Turkey that the current anemic policies that don't seem any more sustainable than the original TARP ideas in the U.S. I am hoping whatever market disruptions take place do not cause undue harm to the masses in Turkey that simply work hard and brave the conditions no matter what to make ends meet. It all starts with leadership and the upcoming local elections will be a great mid-term examination for the existing leadership roster.
Best wishes.
PS: Also hats off to Hadi for a very revealing set of comments with historical perspective, which is always illuminating.

Turkish Shareholders Association Plans to Sue the Turkish Central Bank

How comfortable is the author with this observation:
"...the pool of “hot-money” engulfing Turkish markets that is well over a hundred billion dollars and counting."
I have come across a wide variety of figures mostly revolving around 60 billion - a very big delta here.

Foreign Investors Waking Up To Turkey?

In hindsight, great insights and good analysis to back up the points made. Thanks for sharing.