Haav Bline

3 Things America Needs to Do to Get the Economy Back on Track

Americans have been living in paradise for many decades. Our democratically elected politians are so nice, they make laws to encourage us to enjoy more and work less, spend more and save less. If we save, we are penalized by heavy taxes, if we consume, we won;t be held responsible for not paying our debt back. We keep telling ourselves we are really willing to work hard, but definitely not for the low pay and long hours that the immigrants are willing to accept. We keep saying if only the Chinese Yuan are made to rise by 40%, then we will get all those jobs back, but most of those jobs will just migrate to India, or Vietnam, or Cambodia, or Bangladesh, or an endless list of other countries whose citizens are eager to work for even less then the Chiense do. When even our economic 'scholars' are not willing to tell us Americans the hard truth, we will not be able to prevend the eventual decline of this country.

Tax credit for those who save more than 10% of their income, and tax all consumption related debt for the rich and middle class. This is what is really necessary to turn things around, and we won;t have to sell treasury bonds to foreigners to finance our debt, and the trade deficits will be eliminated automatically no matter how other countries try to manipulate their currencies.

What Is the SEC Planning Overnight?

Chris Cos is a political animal. He is throwing this proposal arround to deflect criticism from the likes of John McCain.

China May Implode, But Broader Impact Would Be Limited

I felt the wisdom presented in this article is very CONVENTIONAL. And therefore highly suspect.

The Market's Unlikely To Take Any Fed Action Positively

Signed, sealed and delivered. This was a very bad call.

China Rebalancing ETF Pair Trade

It seems most of the commentors does not do much research.

CAF are Shanghai A shares, average P/E is much closer to 60 than 20. So even at 20% discount to NAV does not automatically make it a screaming buy. You can argue the Chinese goverment willl not allow the A share market to crash, but it can correct by 20% easily and that will not be good for CAF.

The Short FXI - Long EWH pair trade does not make much sense either. FXI cantains major state own Chinese comanies without local Hong Kong companies. Most of them wer NOT available as A-shares before this year. Those FXI members who have issued A-shares so far has seen their A-shares traded at very large (50-100%) premioum than the H-shares (FXI) of the SAME company. Since the announced scheme, H-Shares has outperformed A-Shares even though the scheme has NOT started yet (delayed by Chinese gov). Free-rider has rush to buy H-shares before the Chinese are allowed to do so. Still, FXI trades at a much lower PE than A-shares, so it is reasonable to expect the Chinese to buy the H-Share first, simply because they know those companies.

The local Hong Kong stocks that are part of the EWH are trading at a still lower PE. You can have faith that they will benefits as well because they are better value than the H-share and even much better value than the A-shares.

There are only two paroblems left in this strategy:

1. The Chinese are not value investers, most of them are momentum investors. Low PE don't mean much to them.

2. The Chinese goverment set a limit to the amount of money that can flow to Hong Kong this way. They can increase or decrease that number at any time. The objective of the scheme afterall is to let off some hot air in the A-share market.

I have been long FXI for 2 years, I am not adding to my position, but not ready to short it. I have been adding positons to EWH for 4 months. May take profit of FXI but to more patient with the EWH.