Alternatives To The Spanish Bank Bailout [View article]
Your proposal makes sense for countries that have actually tried to manage their budgets. Ireland, Italy and Spain have not been irresponsible, they just were not smart enough to see how the flaws in the Euro mechanism would affect them and act to prevent it, and in fact might have gotten push back from other Euro members if they had tried. On the other hand Greece being included in "group debt" is ridiculous. They have essentially committed fraud and the severity of this whole problem would not have been so crisis oriented if not for there irresponsible system of non-governance. Basically, they want to be members of the club, but still will not play by the rules. Including them going forward is a joke. The EU should give them bench marks in successful self-governance, e.g. as actually paying taxes, before allowing them back in the Euro. Picking a scapegoat is not fair, except when the scapegoat insists on not reforming, then it is just a goat.
The Chinese Gravy Train Powering The World Economy [View article]
Excellent article as usual, but I take exception to the IMFs argument in the sense that the question is as much about over-investment in the wrong things, mis-investment if you will, than just a quantification of the total investment.
Bob Shiller's 'Finance And The Good Society' [View article]
It's a book review! After a positive, and rational explanation of the benefits of the book, a cheap shot like this is really disappointing. It is especially disappointing since you have not read the book, and Mike has given you the benefit of the time he spent reading it. (I have not read it either, but I may.). You don't have to agree that the contributions of all of these folks are important, but I would bet most of us do not know all of the information Dr Shiller explains about their contribution to the financial system. Your comment in the context of a book review is just baying at the moon. Mike is doing you a favor, you don't have to accept it, but a little grace would be okay.
Richard Koo For Nobel Prize In Economics [View article]
Great Article SU. The argument seems consistent with the way companies and people act in recessions, and is consistent with what I have observed during recessions in a 30 year business career (including very severe ones in the early 80's). Your explanation of his theories is excellent.Daniel Gros had an article about a year ago which also attributed much of Japan's growth problems to poor demographics and also concluded they had not done badly under the circumstances. If one combines the two arguments to explain Japan, what would that mean for a country such as the US, which also has demographic issues, but still does have growth in the working population?
The Dreaded Bond Vigilantes Are Coming [View article]
The mechanism you describe seems too impervious to the constraints of bad fiscal policy for me to be comfortable with it. It seems to me that the fundamental reason the bond vigilantes have no power is that they have no where else to go. The phrase "in the land of the blind, the one eyed man is king" never seemed more appropriate than in describing current US fiscal and monetary policy. If Europe ever decides it is a country, fiscally at least, and China ever decides to diversify its economy maybe there will be alternatives in other parts of the world to worry about. At the moment, I think you win, by default.
High Yielding Equity Portfolio Studies Found Biased [View article]
No disrespect intended, but this article discusses investment alternatives in terms that imply that the management of these companies do not understand basic capital market theory. In most good companies that is simply not true. The real facts are that most companies have limits on: 1) high quality, high probability projects that will be winners, 2) how many projects their management teams can execute well (executing poorly helps no one), and 3) limits on how many projects their P&L can handle from a start up cost perspective. Shareholders are right in wanting consistent results, and financial theory that dismisses this in favor of "optimizing long term results" is extremely naive. Consistent results communicate to everyone that management has a plan and is committed to producing results regularly. Anything else winds up in speculation about whether the company really has a plan or has lost it. While this may not satisfy financial theory optimizers, practical management teams in successful companies live in a world requiring execution, not elegant equations optimizing results.
Count me a non-believer. The Fed is going to take such strong action that it will overwhelm the train wreck in Europe, and possible train wrecks in China and the other emerging market countries. They don't have that kind of fire power unless they buy stocks directly, or acquire the ECB. Seriously, they have done this twice and done Operation Twist and what we have gotten is temporary market improvements that were overwhelmed by events anyway. BB should be thinking about maybe having one more shot that has any credibility, he should keep his powder dry as long as he can. He can not solve all of the world's problems, and he needs to force the Europeans to actually do something, not engage in more compensating behavior that helps them keep kicking the can down the road. The fact is that the situation is just this ugly, and most of us have been living in never-never land about how this stuff was going to get fixed.
Eurozone Is 'Myopic' And Discord Is The Only Certainty [View article]
Good writeup as usual Carlos. I thought we were really screwed up in the US, and we are, but at least the basic mechanism could work. Europe does not appear to have that possibility.
I think you are right about Europe, they will not do anything dramatic enough to solve the imbalances long term, but it will be interesting to see what Germany and her fiscal restraint allies demand for quid pro quo for eurobonds or some form of common debt.
Showdown: General Electric Vs. Honeywell [View article]
Personally I think you wasted your time on these two companies. They have very few redeeming values from an investor, employer, supplier, or citizenship perspective. At this point, both of them get by on being big and buying their way into things they want to do. They can get away with it, but I don't think the returns to investors will be great from this type of leadership.
I think your points are very good, I guess we'll see what the outcome of this "irresistible force" (German intransigence on Eurobonds without serious strings attached) versus the historical "immovable object" (union intransigence on incredibly stiff employment and pension laws in much of southern Europe) will be. I will agree there are very different levels of employment law difficulty throughout Europe, so generalizing is not accurate.
Why General Electric's Buyback Is A Raw Deal For Shareholders [View article]
It was a rotten company before Immelt took it over, it was just hidden by their financial acquisitions until the financial crisis. They stink as a company about every way you can measure it. They are a terrible customer, they are terrible citizens, they don't pay taxes, they play the crony capitalism game more than any company in the country. Other than that they are just great.
Alternatives To The Spanish Bank Bailout [View article]
Your proposal makes sense for countries that have actually tried to manage their budgets. Ireland, Italy and Spain have not been irresponsible, they just were not smart enough to see how the flaws in the Euro mechanism would affect them and act to prevent it, and in fact might have gotten push back from other Euro members if they had tried.
On the other hand Greece being included in "group debt" is ridiculous. They have essentially committed fraud and the severity of this whole problem would not have been so crisis oriented if not for there irresponsible system of non-governance. Basically, they want to be members of the club, but still will not play by the rules. Including them going forward is a joke. The EU should give them bench marks in successful self-governance, e.g. as actually paying taxes, before allowing them back in the Euro.
Picking a scapegoat is not fair, except when the scapegoat insists on not reforming, then it is just a goat.
Euro Crisis Is Coming To A Climax [View article]
The Chinese Gravy Train Powering The World Economy [View article]
Bob Shiller's 'Finance And The Good Society' [View article]
You don't have to agree that the contributions of all of these folks are important, but I would bet most of us do not know all of the information Dr Shiller explains about their contribution to the financial system.
Your comment in the context of a book review is just baying at the moon. Mike is doing you a favor, you don't have to accept it, but a little grace would be okay.
Richard Koo For Nobel Prize In Economics [View article]
If one combines the two arguments to explain Japan, what would that mean for a country such as the US, which also has demographic issues, but still does have growth in the working population?
S&P Model Abuse [View article]
The Dreaded Bond Vigilantes Are Coming [View article]
If Europe ever decides it is a country, fiscally at least, and China ever decides to diversify its economy maybe there will be alternatives in other parts of the world to worry about. At the moment, I think you win, by default.
High Yielding Equity Portfolio Studies Found Biased [View article]
The real facts are that most companies have limits on: 1) high quality, high probability projects that will be winners, 2) how many projects their management teams can execute well (executing poorly helps no one), and 3) limits on how many projects their P&L can handle from a start up cost perspective. Shareholders are right in wanting consistent results, and financial theory that dismisses this in favor of "optimizing long term results" is extremely naive.
Consistent results communicate to everyone that management has a plan and is committed to producing results regularly. Anything else winds up in speculation about whether the company really has a plan or has lost it.
While this may not satisfy financial theory optimizers, practical management teams in successful companies live in a world requiring execution, not elegant equations optimizing results.
The Time Has Come, Mr. Bernanke! [View article]
BB should be thinking about maybe having one more shot that has any credibility, he should keep his powder dry as long as he can.
He can not solve all of the world's problems, and he needs to force the Europeans to actually do something, not engage in more compensating behavior that helps them keep kicking the can down the road.
The fact is that the situation is just this ugly, and most of us have been living in never-never land about how this stuff was going to get fixed.
Eurozone Is 'Myopic' And Discord Is The Only Certainty [View article]
The Not-Laid Plans Of Mice And Men [View article]
Showdown: General Electric Vs. Honeywell [View article]
At this point, both of them get by on being big and buying their way into things they want to do. They can get away with it, but I don't think the returns to investors will be great from this type of leadership.
Redemption Pact For The Eurozone? [View article]
Covered Bond ETFs: Everything You Need To Know [View article]
Why General Electric's Buyback Is A Raw Deal For Shareholders [View article]
Other than that they are just great.