Brian McM

The Demise of Japan as an Economic Power?

Well said JudeJin. You must have some personal experience in Japan. the Snacku did not go unnoticed. You are right, America must be able to compete on labor cost with other countries to be effective in the world. Now I ask a question that I don't mean to offend my Chinese friends: how do you feel about the Chinese Yuan indexed to the dollar? This will create inflation in China while it attempts to keep American labor from becoming more competitive with Chinese.

On Nov 06 01:07 AM JudeJin wrote:

> the real problem underpinning any economic problem is there's not
> enough work for everyone because the labor can't clear on the current
> price! !

The Demise of Japan as an Economic Power?

I agree with this analysis. It is the other side of the same coin. In Japan, the group is more important than the individual which creates the organizational dynamics you describe, but also discourages consumption as selfish. The individual who consumes is taking capital from the larger entity and the common good.

The rugged individualism of America is a product of generations of immigrants escaping some tyranny and wanting to lead an life indepedent of rule or oppression. This individualism is expressed as selfishness or greed by the outliers of the population distribution. They may also be the most successful as this greed in the American society can result in great wealth. But there is a bell curve and most people are in the middle, both indvidualistic but at the same time concerned about society. Japan lacks that balance from my perspective. And because it is so insular, it has no way to import an individualism ethos.

Nagano Jim is in the same camp as ZagrebZagreb. And I definitely agree that state managed business has this downside. This is really the lesson for American politicians. Limit entrepreneurship and control major industries with a heavily socialized economic system and you get Japan. And I doubt American society can do this form of economy nearly as well as the Japanese. So, a socialized and centrally controlled economy in America would be a complete disaster. But consumerism is very important in an entrepreurial economy. America needs consumerism to drive innovation.


On Nov 05 02:07 PM zagrebzagreb wrote:

> The major problem with Japan is their reluctance to consume?
>
> Nope... You would then find the same issue with all northern European
> and Scandinavian countries, which operate with large trade surpluses
> and conservative domestic consumer behaviors. These are the most
> robust economies in the world.......
>

The Demise of Japan as an Economic Power?

The Japanese consider the Koreans to be racial brethren, so Koreans are embraced in Japanese society. There is of course a racial bridge. The ancestral majorities of both countries came from the Chinese mainland and both countries have had to defend themselves against much larger China (and its allies) through the centuries. (there is an aboriginal race in Japan, the Ainu, mostly on the northern island of Hokkaido, that do not share the racial characteristics of the majority Japanese).

But I don't think the limited immigration between Korea and Japan is sufficient ot infuse Japan with the youth and alternate thinking needed for economic success in the 21st century. This will be their greatest challenge.

On Nov 05 12:21 PM spald_fr wrote:

> Thank you for your article. I conduct business in Japan often and
> agree with everything you write.
>
> You may also want to further explore the Japanese agricultural base.
> As many younger people (read men) gravitate into the cities for opportunity,
> the farms are losing manpower and are ageing quickly. Increasing
> hybrid yields are masking this personnel effect.
>
> Immigration of Korean men into the farming communities is becoming
> common, with Japanese women taking Korean men as spouses.

Bullish Option Ideas in Energy and Financials

That will be fine. I have a $6.50 premium in my pocket, so I am good down to $11.50. If it ends up at $13, I make $1.50 per share ($150 per contract). But I think it will go higher than that between now and then. This is a trade, not an investment. You should understand options before taking on this trade.


On Sep 21 10:17 AM ika wrote:

> Rough call on UNG. You might have to buy it in October for $18 while
> it will still be trading below $12.

Adam Smith, David Ricardo Had It Right

This article has attracted much well-thought discussion. I am pleased! I agree that theories, especially those from the late 18th century, may not be totally applicable in today's world. Still, such general theories, like that of democracy, should be understood and considered.

There is nothing absolute about the idea of comparative advantage: it is an ideal. What is the alternative if we are looking at absolutes: imperialism? This is what your line of reasoning suggests. Either the developed world agrees to trade freely with the less developed world and give up jobs to lower cost sources, or the developed world freezes out the LDCs and leaves them to their frustrations.

This concept is the source of anger and hatred that infects the populations of LDCs and fosters extremism, borne of envy. Opening our borders, and allowing our goods and services to be freely traded, even if sometimes there is not equal reciprocity, is much better than the alternative.


On Aug 02 06:33 PM untrusting investor wrote:

> According to Ricardo's theory, even if a country could produce everything
> more efficiently than another country, it would reap gains from specializing
> in what it was best at producing and trading with other nations.
>
>
> I would add a corollary: If a country is less efficient than another
> at producing a good, then most certainly it will reap gains by trading
> with other nations who are better (lower cost) at that task (China
> and India).
> ======================...
> Theories are always interesting, but one has to question the practicality
> and actual implementation of them. They rarely work in the real world
> as the theory suggests they should. All one needs to do is look at
> some real world examples.
> 1. US software and entertainment products - There is little doubt
> that the US is probably the world leader in software (eg, MSFT) and
> entertainment (eg, Hollywood). Yet China, Indonesia, and many other
> countries ignore copyrights and pirate and reproduce much of these
> thus negating much of the US advantage in these areas. Losses are
> estimated in the hundreds of billions of dollars annually.
> 2. Healthcare products - US pharma companies have developed many
> leading edge products. They can and have been pirated, copied, etc
> by other countires. For example, Brazil desparately needed the latest
> AIDS drugs, yet they would not pay the lowest costs negotiated by
> drug companies. Subsequently Brazil effectively copied them and used
> local production to mass produce them with little if any benefit
> to US pharma companies.
> 3. Taxation and special interests - taxation and special interests
> significantly distort the whole production/trade/effic... arguements.
> If one looks at the US computer programming, offshoring, Hb1 visa,
> etc debates and results .... with the resulting massive declines
> in US computer and programming jobs over the past years .. one has
> to question the premise of Ricardo.
>
> Further to the above examples, most of these theories implicitly
> assume that "conditions" are roughly the same in countries regarding
> these trade theories. That is hardly a reasonable assumption. For
> example, as has been demonstrated India might well be using child
> labor, paying them 10-cents an hour, and producing clothing for import
> to the US. Which is then compared to US sweatshops (if any exist
> anymore) paying even minimal wages by US standards. One would hardly
> think that the US would want to support this type of exploitation
> despite the fact that trade would result in cost advantages.
>
> In short, trade is a hughly complex issue with many dimensions and
> considerations. Simplistic theories simply do not cover much of the
> complex issues that result from actual practice. It is pretty apparent
> that the US trades at significant disadvantages on many different
> levels with many countries in the world today.

High Frequency Trading Glitsch

Was there world peace during the Middle Ages which were bereft of cars and nuclear arms? Ever hear of The Crusades? Hannibal? Genghis Khan?...Hmmmm, back at you. Don't be so naive.


On Jul 31 11:57 AM Doh! wrote:

> BTW, We can't compete with Toyota's robots when it comes to making
> cars either. Damn the machines! Time for a blacksmith renaissance!
> Think of the savings in petro dollars if we did away with cars! I
> know a few horse traders (and granola crunchers) who would be very
> happy indeed.
>
> In fact, if we got rid of our dependence on foreign oil, we could
> eliminate nuclear arms and there would be world peace. Hmmmm...

A CRE Deal: Implications for General Growth Properties

Good post, Todd. I also discovered that "Buck's Rebound" post on SCRIBD.COM and have referenced it in my own blog post on GGP as of last Saturday (wealth-ed.com).

People, especially Brian O, should really read the entire presentation by Pershing Square to investors back in May. It is a very compelling presentation: well thought out and presented. I also speculate that this presentation material, especially the legal precendents cited, will find their way in front of the court. Bill Ackman has been added to the GGP Board of Directors and will have the opportunity to influence (if not direct) the legal team representing GGP. I think the "cram down" scenario is very likely given this influence, which could mean no dilution at all for shareholders, but forebearance for the lenders until the debt markets re-liquify and the properties in tech default can be refinanced.

The other thing time buys is an improved economy. Two years out, I expect to see a very strong retail economy given the pent-up demand from the past couple years, declining unemployment and the lagged effects of two years of fiscal stimulus (yes, we will see a 2nd round late this year and it always lags due to the political process and time to implement). The improved economy will also improve the NOI. This is where Brian O is most wrong. The properties will be valued by potential bidders on future NOI, not past (everyone will see 2007-10 as the aberration it is).

I just purchased more shares last week since the stock pulled back into the $1.60 range and the news flow has been nothing but positive since the bankruptcy court filing in April.

Dow Ag's Sale Looking Unlikely

Todd, what you are talking about is a tracking stock. That is one way to get some value (cash) out of subsidiary that is not core to a company's long term strategy, but has very good appreciation potential.

Dow was aggressively trying to raise cash late last year and early this year to pay for the off-again, on-again acquisition of Rohm and Haas (after the aborted partnership with PetroChemical Industries of Kuwait). Dow was finally able to raise enough capital to ease the debt burden by selling equity in Dow to BRK-A, the Haas family trust and the government of Kuwait (who ironically nixed the deal with its own chemical company).

I agree with you that DOW should stay in the Ag market. Ag, especially the genetic engineering portion of ag, offers a very good long term profile. The Asian and Indian economies are advancing rapidly and with their development comes a taste for Western style diet with lots of protein-based products. Whether it is wheat, corn, or soy, all those cultivated products require improved seeds and more chemicals. This is the same reason that Dupont and Monsanto are good long term prospects, along with the fertilizer plays like Agrium, Potash and Mosaic.

This would not be a first for DOW which formed a joint venture with Corning Glass in 1943 and spun out half the ownership in return for cash. They still own a large share (50%) of the resulting specialty chemicals / silicon products company Dow Corning.

Gold Takes a (Dollar) Drubbing

Kohalakid, I agree with your premise. It is fundamental to trading that when everyone thinks something should continue going up, it goes down, and vice versa. But I disagree with your target of $870. That is much too small a move to wash out gold speculation. $700 is a different story. A drop below that level would really panic the gold market, and then we might be able to set a longer term floor. I wouldn't own any gold until we get down to that level. Inflation to pay for money supply growth is much further off. You will know when we are close to significant inflation when housing prices stop dropping and move up by 10% off the bottom, and when the DOW passes 12,000. Not until then.


On Jul 15 01:08 AM kohalakid wrote:

> You figured it out!! It's the metal everyone loves, you said so yourself.
>
> So that means that everyone who wants it should have already bought
> it, figuring it will go higher.
>
> Now who is left to buy all the secondary scrap and fresh mine supply???
>
>
> We need a washout of the weak spec longs before we go past $1000.
> Figure a seasonal end of August low and load the truck up at anywhere
> under 870.

Gold Takes a (Dollar) Drubbing

Sorry all you gold bugs, when the world looks for safety, they look for the US Dollar, not gold. Many of you are dead wrong on this point and have been for more than a year. I repeat: Gold does not provide ANY protection during weak economic times / a recession. It only provides benefit during a period of inflation, and we aren't there yet and won't be for some time given the size of the asset holes created by the housing and banking crashes. Sell Gold Now

Google: The Next Ponzi Scheme to Fail?

Insightful comment, Wil

General Growth Properties: What Will Bill Ackman Have to Say?

Because GGP has positive cash flow and positive net worth. Almost all bankrutpcies are because the business model is broken and that is shown by negative cash flow and negative net worth. But every once and a while, a good business gets caught in a vortex, but remains undamaged. Such is this case.

For a much more detailed analysis, see Bill Ackman's presentation to an investor conference: www.docstoc.com/docs/6...


On May 11 08:25 AM biomedlives wrote:

> "It is typical for debt to be converted to common to alleviate excess
> debt and improve the balance sheet and reduce interest payments."
>
>
> As I recall, it's also typical for existing common shares to be wiped
> out completely. Why would the GGP situation be different?

Natural Gas: The Next Big Thing

Andy, you got it. Industry insiders who have to do the E&P are now saying $70 is the floor. They won't drill under that price. So, $40 oil is a pipe dream (pun intended). There is no more cheap oil to be found on the planet. It is all 10,000 feet under the ocean, in politically hostile locations or in the arctic.

Gas, as an alternative fuel, must maintain its relationship to oil, though may have its ups and downs along the way


On Jun 15 08:05 AM Andy1234 wrote:

> I think the guys above are looking at the demand side....the supply
> side looks horrible when oil is $50/barrel.
>
> I think people in the market are looking forward and saying....damn
> we won't have any new projects coming online if oil is under $70-60
> a barrel.....we might not even have anything coming online at $80/barrel.
>
>
> Then the look the other way and see this massive pile of cash being
> created.....I dunno.
>
> Its all about demand/supply and the cost to replace the supply when
> used. The price cannot eclipse the majority of new oil coming online
> for a very long period....otherwise shortages occur. NG and oil are
> too low for new projects to come online in the mass....and if new
> projects are cut.....the natural decline of 7-9% of supply (new oil
> isn't coming online) will eclipse the demand pretty quickly if oil
> remains low.
>
> I do see we significantly rose the production of NG when prices were
> high....so the relationship between oil and NG may change in the
> future if we find significant amounts and are able to produce them
> at a reasonable price (the shales).

Are Oil ETFs Showing Us How Natural Gas ETFs Will Trade?

Anyone trading index funds based on futures contracts (most, if not all commodity ETFs and most if not all inverse index stock funds like Proshares) should understand the problem with rolling contracts and the possible challenges faced by indexes in contango. But if used for short term trading, contango and rolling contracts do not affect performance. Commodity Index ETFs are not for buy and hold.


On Jun 14 11:40 AM energytrader wrote:

> There are serious problems with UNG, that the author fails to discuss.
> 1) The negative effects of the roll of the contracts related to these
> ETFs, with the current contango in the nat gas market they will lose
> anywhere from 2-5% as they sell the current front month and move
> in the next front month as the next month's contract are more expensive.
> 2) UNG is the gorrilla in the nat gas market (basically they are
> the largest buyer by a long shot!) as such they are responsible for
> nat gas not trading in the $2-3 range since they are supporting the
> entire market with their buying. The combination of losing value
> due to the roll and then being the main buyer the ETF will eventually
> no longer be able to support the nat gas market.

Are Oil ETFs Showing Us How Natural Gas ETFs Will Trade?

Industrial demand does not follow supply, supply follows industrial demand. Gas prices will firm when demand picks up later this year and into 2010. Drilling and Production have been curtailed the past 6-12 months, so when demand does pick up and draws down stock, it will be hard to replenish which will cause prices to increase.


On Jun 14 08:57 AM Gigem77 wrote:

> The U.S. is about two months away from reaching full storage for
> natgas. That will happen at different times in different districts.
> Once that happens, production must be curtailed. Curtailment will
> drive spot prices lower and hit the earnings of natgas producers.
> Spot prices in the west and mid-continent are already in the 2.50-2.75
> range, intelligencepress.com/.../
> There is no indication that industrial demand is increasing despite
> the historically low prices. Companies like CHK have already cut
> production by several hundred million cubic feet per day. This gas
> can easily be brought back to the market should demand increase and
> is thus an overhang weight on prices.
>
> The rig count is misleading because the shale plays are so incredibly
> productive. Watch production, not the rig count.
>
> UNG and other etfs represent speculation in futures and swaps. They
> do not and can not take delivery of natural gas. Thus they cannot
> take gas off of the market. If these vehicles diverge from the reality
> of the physical market, the shorts will sell them into the dirt.