perf_guru

The Worst Case Scenario (Someone Has to Say It)

I'm in high-tech, have been in the US for 20+ years, and am heading back to India for better growth and stability. In the US, we have spent 6% more than what we produced for the last five years and so have built an overcapacity of ~30%. Even assuming 2% real growth rates, going forward, it will take over a decade for the overcapacity to be productively utilized. So, resources are better channeled to use the machinery we have built here and redirecting that to customers / users world-wide. The world as a whole is feeling the pain from this great recession but countries with higher reserves / cushion will grow out of the pain faster.

Restoring Financial Stability: How to Repair a Failed System

Let the private / public partnership funds bid for senior security positions (above common stock, preferrred and current creditors) in the largest financial institutions via an open and transparent mechanism (e.g., Facebook, eBay)

Bank 'Stress Tests' Not So Stressful

Description / details of stress tests?

Inflation Defense: Traditional Methods Shaky, But There Are Options

How about buying stocks of companies that have strong brands, earn in excess of their cost of capital, and sell mostly to Asian customers where the economies are likely to have a higher growth rate? Inflation increases the earning power of such companies: inflation doubles --> revenue doubles, additional outlay of capital / assets is nominal.

Where Have All the Value Investments Gone?

The earnings of the companies mentioned above, Microsoft and Cisco, are pre-dominantly from international sales. So, a weak dollar will benefit these companies, no?

Bill Ackman's Letter to Paulson On Restructuring Plan

"In order to minimize risk to tax payers while being equitable to other
constituents, we suggest that the Treasury consider purchasing senior
subordinate debt in the two companies in an amount sufficient to address
their capital needs in the short to intermediate term. This senior sub
debt would be junior in right of payment to the outstanding senior
unsecured debt and senior to the outstanding sub debt, preferred stock,
and common equity. We refer to the outstanding sub debt, preferred and
common stock as “the Subordinate Securities.”
"
This senior sub
debt would be *senior* in right of payment to the outstanding senior
unsecured debt and senior to the outstanding sub debt, preferred stock,
and common equity.

Only if the newly issued debt is *senior* to all existing debt would this cash injection make sense