Sunday, October 5, 2008 0 comments ++[ CLICK TO COMMENT ]++

Articles of Potential Interest

There is no rhyme or reason to any of this but hopefully some of you can find some insight in one or more of these articles:

(note that the bullet point headings are mine and have nothing to do with the linked article's title.)

  • End of an era (The New York Times): "It’s the beginning of the end of the era of infatuation with the free market,” said Steve Fraser, author of “Wall Street: America’s Dream Palace,” and a historian. “It’s the end of the era where Wall Street carries high degrees of power and prestige. And it’s the end of the era of conspicuous displays of wealth. We are entering a new chapter in our history.” I had been commenting on such a shift for a while. Politics--and we are talking about the whole world, not just the US--is going to shift left over the next 10 or 20 years. As a liberal, there is good and bad in all this. The bad is that the so-called 'free market' is going to come under attack and we may see weakening of trade, slowing of free capital flow, higher taxes, and greater regulation. The good for me is that political freedoms (often supported strongly by the left) will strengthen, discrepancy in wealth will narrow, and there is likely to be a shift towards savings in over-indebted countries like USA and Canada.
  • Regulatory agencies in the US (The New York Times): An interactive graphic (click on graphic with the mouse) from NYT depicting the various US government agencies and what they actually regulate. Good information for foreigners like me or those not familiar with the regulatory framework in the US. I was criticial a few weeks ago of the proposal to merge the CFTC and the SEC but now I can see some merit in that.
  • Junk bonds seem cheap (Barron's): Average junk bonds are supposedly yielding 15%, double of last year. Barron's mentions some that have even higher yields: Harrah's at 30.7% and GM convertibles at 28.2%. Even the TXU bonds that Buffett bought last year have tumbled slightly and are yielding 14.3%. One needs to be careful. Junk bond defaults are projected to triple due to the slowing economy but also partly because of the questionable LBOs in the last few years. I personally am looking at the Sears Roebuck Assurance Corp bond that trades on the Grey Market.
  • Has China been regressing over the last decade? (The Economist): The Economist summarizes a book that actually claims that, contrary the general consensus, Chinese entrepreneurism has declined in the last decade.
  • What is Ken Lewis of Bank of America thinking? (Fortune): Pretty good article from an insider of the financial services industry. Not only talks about why BAC paid so much for Merrill Lynch but also has some thoughts about the future. BAC could blow up--trying to stabilize Countrywide alone is a huge undertaking--but if it survives through this, it will likely become the undisputed #1 superbank in America. On top of its old self, it will totally dominate mortgage servicing (through Countrywide) and brokering (Merrill Lynch.)

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