Can Turtles Fly?

As some may get the feelilng from my posts, I find Japan a paradox of sorts. So many good things yet so wrong on many fronts. I am curious to see how it will adapt over the next few decades. Older generations may have lived a life experiencing the ascent of Japan. Generation X and younger ones will live a life seeing its descent. But the future is not written in a stone so they have control over their future. All that is a prelude to news that S&P is contemplating cutting Japan's credit rating : Standard & Poor's Ratings Services said Tuesday that it may downgrade Japan's sovereign credit ratings if data don't improve or if the government doesn't get its fiscal and economic house in order. The ratings agency said it's placed a negative outlook on Japan's AA sovereign long-term credit rating, saying it could issue a downgrade to AA- "if economic data remain weak and measures to boost medium-term growth are not forthcoming, given the countr...

(source: The Economist) Yay... Got a job offer :) I'm accepting it... Kind of nervous, as I'm sure everyon is with a new job but a new chapter in my life... funny how life turns out.

As usual, this post will review my investment performance for the year. A bit late this year and I was kind of confused with some calculations but finally wrapped up things. I did a lot of preliminary research and hunting around in 2009 but ended up doing almost nothing. I actually had zero purchases, if you ignore special situations. I likely missed the greatest buy opportunity in 25 years (since 1974 I'm guessing) but oh well. I feel the market was not cheap and many securities survived only due to government support. My concern last year was not so much that the valuations were sky-high but that they may overshoot to the downside. Even now, I have a feeling that the market will decline or go sideways for a while. Given how I did almost nothing, I severely underperformed the markets this year. I'm actually satisfied with the performance. Although posting way-below-market returns is not a good sign of investment skill, I am more dissatisfied with losses. I was more dissapo...

hmm... the market is starting to sell off but not sure if it's anyting political (taxes on banking...also some suggest that Ben Bernanke won't be re-appointed but I don't think so; but if he does not get re-appointed, the next best canadidate appears to Lawrence Summers. Some of the "back-benchers" on the Fed also have a shot.) Last year's inflation vs deflation debate—which is not yet resolved—appears to have been sidelined, in favour of the China bubble debate. Here are some articles I found interesting:

When wokers are laid off, it's very painful but, if you are a capitalist, you should accept it as an important element of capitalism. One of the beauties of a capitalist system is that the free market destroys useless and uneconomic industries and, hopefully, replaces them with more productive ones. This is not limited to uneconomic industries subsidized by short-term factors (such as government spending, fads in clothing, hype over some unknown useless product, and the like); this also means that established industries that used to thrive once may need to be done away with. It's painful for anyone caught in the cross-hairs but that's the reality and society is better off in the long run. A lot of people on the left—I consider myself left-leaning—don't understand this. They see companies laying off people and think it is some greedy executive or owner trying to make more money. Well, in many cases, the capitalists themselves are losing a fortune and it comes down to s...

I never heard of Richard Duncan but, after reading this article on MarketWatch , his thinking is quite similar to mine. He is quoted for bearish views on China but the reality is that the scenario is much larger than that. The problems are global in nature and everyone will be affected one way or another. I don't think many will agree with Duncan's outlook but it's worth contemplating. Before someone dismisses him do note that, at least going by what's said in the article, his 2003 "The Dollar Crisis," appears to explain many of the problems we are facing now. I have excerpted some key points from the article. For what's its worth he is far more bearish than me. Also, no one bat 100% so many predictions will turn out to be wrong. The key is to avoid getting blown up by major mistakes.

Henry Ford is a controversial character. He is widely accused of being anti-Semitic and he may even have been a fascist but he did contribute positively in one major way. Although the ultimate impact was never clear, his policy of paying way-above-average wages for his employees radically altered the economic landscape—at least in the North-East, particularly New York and Michigan. It's possible that Henry Ford's compensation policy made Detroit into the powerful and influential city* it was in the early part of the 20th century. It is a well-worn cliche but Bloomberg has a nice article suggesting that China should do what Henry Ford did. Namely, pay higher salaries for its workforce: Higher wages for people like Xie would help resolve China’s biggest economic challenge: shifting away from growth fueled by exports and investment and moving toward an economy driven more by domestic consumers. China’s communist leaders might learn a lesson about how to create a more prosper...