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Monthly Archives: April 2010

Repo 105 (Banks Behaving Badly)

This sounds like the name of a low-budget Hollywood blood & guts / smash-up movie.  Would that it were true. Repo 105 is a reference to an arcane accounting rule that permits banks to misrepresent the state of their health (balance sheet). This subject is beginning to catch some press because we recently learned that this is one of the tactics Lehman Brothers was […] Read the rest of this entry »

India looks better than China

When people consider investment opportunities in Asia, China is frequently at the top of the list. Those not paying attention to Japan’s debt and demographics may additionally be attracted to Japan. But India does not usually come up until 3rd, 4th or 5th position. I have written extensively about Japan over the previous few years –about why it is an accident waiting to happen — so […] Read the rest of this entry »

Japan Update

Having lost 2 decades to economic stagnation after a spectacular real estate and stock market bubble, Japan’s day of reckoning approaches. The train has been a long time coming, but approach it does.   In order to prevent a depression, Japan opted to have its federal government spend to support their economy and in the process issue a pile of bonds. It has racked up […] Read the rest of this entry »

Exit China

China has been a place where we’ve invested in the past, and it will likely be a place where we invest in the future. But right now, I think the downside risk outweighs the upside potential in the near to intermediate timeframe. There are 3 core areas of concern:   Banking & Finance: In 2008 & 2009, the central Chinese government told Chinese banks to […] Read the rest of this entry »

US Economic Recovery Update

Here are some updated stats on our economic recovery: The US trade deficit is falling to the 3% of GDP range (from over 6%). This is good news. It means our cheaper dollar is helping exports and making imports more expensive. This in turn reduces our need to borrow from foreigners (other things being equal). 20% of national personal income is a gift from […] Read the rest of this entry »

US Employment Update

  Employment increases from small business is the key to a sustainable economic recovery in the US. Traditionally, employment has not been a leading economic indicator because since WWII we’ve always been in a credit and banking expansion. Now that is no longer true, and in fact banking and credit are contracting. Because of this, the some of the previous economic recovery indicators don’t apply. Employment is […] Read the rest of this entry »