Boon

Big Losses Are Hidden on China's Bank Balance Sheets

Very interesting observation and analysis... I think these are the sort of small and complex things that slip through the minds of many investors, partly because they really do toe the regulatory and ethical line.

The question about China has always been, when, not if, a massive bank or corporate scandal will arise, on the scale much larger than Enron, and when there will be a systematic failure. The Chinese government has so far been able to "manage" the system and keep it going, but eventually it will fall apart.

A View of the U.S. Consumer Balance Sheet

This article is forgetting something... even if consumers wanted to move money into treasuries, how do they do it? Its not like they can go down to their local Walmart and buy some. The author is forgetting that not every American is as investment-smart as he is, and that buying/selling treasury bonds really isn't that easy for the ordinary American.

China's Threat to Diversify Currency Holdings Is Real, But Manageable

There is another solution. China could slowly wind down its holdings of US treasuries over the long term, say 2-3 years. This will mean they can get better prices in the open market, and then reinvest that cash into other countries debt.

What Will Happen to the Seattle Post-Intelligencer’s Print Advertising Dollars?

The problem is that print demographic is very different from online, and also some companies hire different agencies to handle their offline and online advertising, so I am inclined to think that #3 will happen.

AIG's Not Very Transparent List of Counterparties

I agree. Even one year plus into the credit crunch, it still feels like banks, governments, and financial institutions are still trying to pull the wool over the public's eyes by not being fully transparent, admiting fault, and taking the right course of action. Instead what we have is a bunch of people whose glory days are now firmly in the past, and who are trying to revive a dead money cow for one last payday.

The Real Reason FDIC Is Going Broke

Utterly ridiculous. This shows that lawmakers do not understand the economy or economic principles at all. You should save more in the good times because obviously you won't be able to in the bad times.

Its like saying "oh I don't need to buy medical insurance or save for retirement now because I'm still young and fit". But the whole reason why you do is because you will need it later and the unexpected can happen at any time.

America to China: Stop Buying Our Dollars! And Another Thing: Please Buy Our Dollars!

I like the comic!!

The worst thing that could happen now is if the Chinese economy goes into a freefall. Then the government will have to spend more money to boost demand, which will mean selling dollars + treasuries, which will throw America's economic model of surviving on debt into chaos.

Six Reasons Why GM Should Declare Bankruptcy

I totally agree. The government has been getting the bad end of the deal with all these "loans" where there is no upside for the taxpayer.

It is clear that real change to how the business is conducted needs to be done. This includes shutting many more plants, laying off many more workers, decreasing all the benefits, closing down dealerships... all these are impossible unless GM declares bankruptcy and the court allows it to start with a clean slate.

Credit Default Swaps Market Speaks - But What Does It Say?

Could it be a liquidity issue?

In the past there were lots of market participants (i.e. banks) writing CDS and it was a rather competitive market.

Now that most banks are short on capital and forced to curb these non-vanilla trades, the number of banks offering CDS and trading in CDS is much smaller. Hence they are able to give higher prices as the high demand for CDS hasn't wavered, and has probably increased over the last few months.

A Stairway to Retail Heaven (Part 2)

Excellent article with lots of research and graphs, and well thought out argument.

Its going to be a very painful few years as America delevers and gets off the credit binge.

Meanwhile, get-rich-quick-dreamer... will be thinking of new ways to make fast money... maybe in China? I can already see a massive lending boom, construction boom, etc over the next decade there as the whole world piles into there for the next moneytree.

80 Winning Stocks That Have Nothing to Do with Gold

I disagree with kelm... I think in a recession, the most important thing is the management of the company as this is the real test if they are competent or not. In good times any Tom, Dick, or Harry can make money, but it is in the bad times where good companies are separated from the bad.

The focus should be on thoroughly researching individual stocks rather than trying to focus on the big macro economic picture.

Stress Tests: Banks vs. Bond Insurers

This goes to show how lenient the government is being with banks that it is essentially bailing out with taxpayer's money.

On the other hand, perhaps the bond insurers are being held to too high a standard?

Are 'Phoenix' Stocks Getting Ready to Rise?

No amount of past data analysis will help in trying to pick phoenix stocks, as almost every single one has its own unique circumstances. For me, the key questions when dabbling with stocks that have fallen from grace are:

1) Has management solved all the problems that caused the crisis in the first place? Is it starting with new management, or has its debt been lessened, or unprofitable aspects of the business been stripped away?
2) Are the products viable? Sometimes companies fail because their products are no longer competitive (e.g. General Motors), and no amount of restructuring or financial fixing will change its fate, it will only delay it, until its products are competitive again.

MBIA's New Structure

It all depends on the kind of ratings the credit agencies give to this "new MBIA". Anything short of a AA rating will mean that it will not be economical for the company to guarantee Muni bonds.

Another point to consider is the trust in rating agencies. They've failed us once, why should we trust them to be able to effectively evaluate companies, especially monolines? I think investors need to make up their own minds about the strength of a monoline rather than depend solely on the rating agencies.

Also, another flaw is that the bond being "wrapped" will adopt the rating of the monoline (if its higher than the underlying bond). However, what if we have a BBB bond wrapped by 3 monolines, all at AA? Current rating methodology dictates that it will only get an AA rating, but surely having 3 AA monolines guaranteeing it makes it pretty secure? A triple wrap means that the project has to fail AND all THREE monolines have to fail at the same time at the time of default in order for the bondholder not to get his money back.

Buy, Sell or Hold: Coke Still Has the Fizz

I see Coke as a beacon of light in these times. Their earnings will indeed grow as more and more consumers try their drinks in developing countries. In addition, consumption in developed countries is unlikely to decline much, because in hard times people will turn to simple, cheap, comforts.... like a can of sugar water!

Exchange rates should not matter much, as Coke isn't produced in the States and exported to other countries; it is produced locally in each country and pretty much consumed locally too. Hence the effect of moving exchange rates will only affect the amount of profits, instead of affecting the break-even price at which they will have to sell at.