americanincanada

The Trouble with China

China's market is not all export driven. The recent economic performance shows that. A currency re-evaluation will introduce new unpleasant problems. The US should focus on the fundamentals. In particular, countries such as China have a strong interest in the "war on terror"., particularly Muslim terror This Bush/Cheney idea of essentially going it alone and squandering the good will and sympathy the US enjoyed in the world after 09/11/2001 has cost the country and weakened it as well.

Mortgage Fraud - The Root of America's Economic Malaise

Many years ago, the university I got hired at had a program to help new staff buy a house. When I asked about it I was told it was not for single people. I then toured the banks and was given the same answer, they were not interested in lending to single people without a really stiff down payment, in the case of an older house as high as 50%. Then when I did find someone who was willing to lend to me they insisted on applying the same standard of percentage of income to allocate to house mortgage they applied to everyone else, in spite of the fact that I had no other responsibilities and a relatively high paying job with tenure I could not be fired from. I had to rent for many more years as house prices inflated rapidly. Fast forward forty or fifty years to 2004. I was able to get a mortgage to buy a house in New Jersey. I couldn't believe it, nobody bothered to check on any of the information I supplied on my application, the process was as easy as could be with very little money down. It was great. Please, in your suggestions of "reform" don't send us back to the days when mortgages were hard to get, single people need not apply, a family that wanted to make special sacrifices to get into the home of their dreams were not allowed to, they had to stick to the same budget as everyone else. Parents historically would silently help provide capital for the initial down payment - would new rules require that such off the record loans be listed as a liability on an application, otherwise a fraud occurs? There has to be some leeway, not just rigid numbers, to determine if someone gets a mortgage. Whoever makes the mortgage decision should be rewarded if a mortgage is approved, and penalized if an approved mortgage goes bad. What went wrong in the system was that those who approved mortgages were rewarded but did not face any consequences for bad decisions. Fix that and the system is fixed, no need for rules such as "must have 20% down".

Fannie / Freddie - What Does Treasury Know?

Supposedly the high salaries and bonuses are there to attract and keep "talent". One comment I have seen is that "the average bonus at Goldman Sachs is $7 million, so what is the problem with FRE and FNM paying what they are paying?" The problem is that there are many people who would be happy doing the FRE or FNM executive jobs at a fraction of what the present leaders are being paid. At this stage in the lives of these institutions what is needed are the basic people and communication skills any successful manager has and a lot of common sense.

How Microsoft's Windows 7 Is Impacting Corporate Computer Market

Large corporations pay substantially less for operating systems and software than individual or small business buyers. For these corporations it is the total cost of implementation that is considered, and given the invested training they have in Microsoft products they are unlikely to switch any time soon. Smaller users are finding plenty of reasons to use their PCs beyond the office products, particularly music and video. I use Linux and I use Windows software as well. Usually I default to Windows - most of the software available for it that I use is still a step ahead of what is available elsewhere, and software cost is only a small part of overall cost of the technology. Not sure why everybody gets so emotional about operating systems. I remember a meeting in which we were trying to decide on a course of action, and two of the participants did not want to choose particular software because "we don't want to make Bill Gates any richer". The fact that at that time there was no other comparable software that did what we wanted to do didn't matter, and they could not come up with any other reasons. Naturally they were outvoted.

China Acts to Calm Its Overheated Real Estate Sector - and Misdiagnoses the Problem

If a bubble forms because people are borrowing money to purchase nonproductive assets, then sure, a price drop of those assets will precipitate major disruptions. But if there is no borrowing going on, what is the problem that has to be solved with a tax? If real estate prices (not supported by debt) collapse a lot of high end luxury buildings end up being affordable. That could be a good thing, as often these buildings are built to higher standards than (initially) affordable housing and thus have longer lives, are more comfortable and probably look a lot better too. If the prices do not rapidly collapse, then in the future, as China's economy develops, people faced with the burdens of owning a lot of real estate will find other investments and the housing will open up.

Is the Dollar Too Big to Fail?

It seems to me that even something as apparently simple as the concept of "inflation" has to be examined more carefully. In many cases at least some of price increases reflect better product. Cars for example handle better, are more comfortable, are safer and are environmentally more benign than they were when they were lower priced. While it would not be legal to sell a car with all the attributes of a 1941 Chevrolet, it would be cheap if it did not have to carry all the modern overheads imposed on manufacturers. So how much of the price rises we see are "inflation" and how much is not really inflation but better inherent product? Some product prices are more easily compared. Does anyone know of studies that attempt to identify components of price rises over the years? Yes, house prices had a run up. But when was the last time you saw a new house that did not have a dishwasher?

Friday Outlook: Scroogy Swap Prices Darken Christmas

The arguments here are too shallow. Inflation in China? How will it happen if, for example, their currency is strengthened? I particularly liked this comment ".... allow bonuses that removes that many billions from the market it has to have a negative effect." Doesn't this depend on what the managers do with their bonuses? Average American going deeper and deeper into debt? Not the average Americans I know, who are doing their best to cut down credit card debt, in particular. There has been a spike this holiday season in the use of debit cards, cash, PayPal bank debit payments, as many consumers have adopted a policy of trying to pay as they go.

U.S. Forfeiting Billions in Future Taxes So Citi Can Exit TARP

I have invested in many small startup companies in both the US and Canada. My experience is the same as most others, a few winners, a few losers, and a large number of mediocre survivors. The loss of the ability to use past years' losses to offset taxation on future earnings is demoralizing when one has to give up control to a new investor. The taxation laws were invented to thwart "predators", but as usual catch many ordinary business people doing ordinary transactions. Governments are happy to be your partner and take money when you succeed, but if you lose they make your efforts to survive painful. Unless of course you are a giant bank.

Volcker's Wake Up Call: Spread the Word

There are financial innovations that do indeed do good. Take the concept of bundling mortgages or junk bonds or credit card debt and selling them as investment units. These were and are great products that ease financing. The difficulties they created were due to the implementation: the due diligence that was lacking on the side of the investors, who did not want to do much work, and the sloppiness on the part of the creators, who wanted to produce as much product as possible. The effects of a lot of the other financial innovations, which basically are supposed to transfer risk among participants with different tolerances, does indeed remain to be seen, but the value must be there to those who think they are reducing their exposure. It is the gamblers who are taking on the increased risk that have to be policed more carefully, as well as those in the middle who create the products, promote them, and earn substantial fees for their services. It is hard to do this given the backgrounds of the people who are creating and administering the rules. We need fresh ideas from the rare person who comes in from the outside yet has a good grasp of how the present systems operate.

Matt Taibbi: Obama's Big Sellout

Obama campaigned on "change we can believe in", but that is not why he got elected. He got elected because people in the middle were tired of the divisive politics of the previous 16 years. Obama said the right things. If you recall, when he was battling for the nomination he said some soothing things about periods in the nation's recent history during which Republicans had better ideas. He was vilified by his Democratic opponents for saying this, but he was establishing credentials as someone from the distant left who would listen to all. Once he got into office we learned that in spite of his ability to garner crowds and votes, he really is not very powerful. The people he appointed did represent change, a change from the Bush era. He shares the values of the extreme liberals in the government, but I am sure is intelligent enough to know that by following them he is dooming his position to one term. He just does not have the personality, experience, and plain muscle to lead. Let us see how he reacts when he is presented with the change that the 2010 elections will bring.

How Buying a Home Is Gambling

I understand that in some countries, Germany, for example, the rate of home ownership is low compared with that in the US. More people rent, and severe laws protect renters. In some places in the US rent controls make it foolish to give up renting an apartment, ever. There are other risks in home ownership, and I suppose one could always turn them into financial risks. A house has to be maintained. But as an overall cultural value it is great for a country to have a very high rate of home ownership. It exposes more of the citizens to economic activity. Far more people will own their own houses than will own small businesses, or will actively keep an investment portfolio. More economic involvement means more participation in political affairs, more responsibility for the shelter part of the essential "food, shelter and clothing".

10 Reasons the Equity Rally Is Over

I can see 10 reasons the market will go down, and 10 that it will go up, as a previous note said. There is something to be said for fund managers who are up right now and don't want to tarnish their records for bonuses this year. Maybe they will come back strong from their cash positions in January. I only can judge from the small private businesses I am involved in. Every single one, from internet retail selling, to pharmaceutical instrument manufacturing, to distributor of laboratory equipment, to contract microbiology research is showing signs of an upswing in business. That means 2009 for most will be a horrible year, but not the last quarter, and everyone is optimistic about 2010. So where does this fit into your statistics?

4 Deep Value Stocks Worth a Second Look

PTIE is better than a lottery pick. First "trials" are not an adequate description of the situation they are in with that one drug. My understanding is that they and their partner are working through some FDA questions regarding whether the anti abuse feature really works. Their partner already sells anti abuse formulations so is very experienced in this. Second, they have another horse, namely a gene therapy approach to treatment of hemophilia.
How much better than a lottery pick I do not know, but it is comforting to know they have the cash on hand.

"This stock's future depends on one drug -- trials are not due until next year. It's trading for cash value for a reason -- may never be profitable. "

Our Current Economic Illusions

The advise from several commentators is that I should only judge from what I can see. I am involved with several companies. An internet sales company ( a variety of different sites ) is doing well. A manufacturer of equipment for the pharmaceutical industry was desperately hanging on to life until October. Then the end of year orders started coming in and now we are scrambling to produce with the skeleton staff we have remaining. Our customers needed our products throughout the past year, but purchasing departments responded to the economic uncertainty by delaying capital purchases. Now these companies have accumulated some cash, made their operations more productive, and are ready to buy. The weak US dollar no doubt helps as well. We are too scared to hire anybody back yet. So my interpretation is that the worse is indeed over and things are slowly recovering. Many consumers I know though, all with steady and secure jobs, are still cautious, saving and reluctant to take on any new debt. Any recovery in spending by them is going to be slow for two reasons: 1) uncertainty, in economic, political and military spheres, and 2) certainty, that the actions of the government in power will hold back the economy.

Janco Partners' Arenson Resumes Sirius Coverage, Discusses Pros and Cons

I don't own any Sirius stock, but I like the product. I canceled when I sold my truck but will get it again when I replace it with a new vehicle in the spring. Is a bet on Sirius basically a bet on where the automotive market is going to be three or four years from now?
Vehicles wear out, and once they are replaced and new happy subscribers like me come on board, will the debt appear so important?


On Dec 01 09:49 PM mlongj wrote:

> It is significant that Janco is resuming coverage with a price targe
> above todays closing price. At the very least it is a vote of confidence
> in the future potential being above what is presently being demonstrated
> from the p/s at this time. It is unfortunate that the debate concerning
> the viability of this business model continues unabated. It is easy
> to be an "armchair" quarterback, but it is much more difficult to
> participate in the "real thing". Sirius is a valuable commodity.
> It is showing that debt can be pushed back indefinitely. It has potential
> for new subscribers around the world. It is a big money operation.
> It is showing improvements in each successive quarter. So, regardless
> of what the p/s is today, it would not be going out on a limb to
> suggest that this company is going to be just fine going forward.
> Maybe a reverse split is what will happen. 10 to 1 would be 6.30
> a share. It would be a respectable number. Suggesting that 1.00 is
> the mark to cross simply translates into 10.00 after the split. Either
> way it grows from here. And if Sirius could ever penetrate the global
> markets...the sky would truly be the limit for this company.
>
> Long SiriusXM