Thank Europe For Friday's Market Upheaval [View article]
It's highly unlikely the Jobs program will pass and the uber liberal NYT ran a piece today saying reductions in payroll taxes would not spur job growth as the math is not compelling. And the idea the program would be paid for by cuts is laughable as any cuts would be largely illusory and in future years, increasing the deficits and debt in the short term because of asymmetry between spending and savings.
As the author notes, the real problem is in Europe where Greece is not implementing measures approved by parliament in the face of widespread opposition to spending cuts and labor market reforms. Resultantly, there is now open talk about Greece leaving the euro area and fending for itself.
Wolfgang Schäuble, the German finance minister, said if Greece does not meet the conditions it agreed to, as assessed by monitors from the International Monetary Fund, European Central Bank and European Commission, then payments will stop. He then added, Greece would then need to determine how to access financial markets without help from the troika.
The prime minister of the Netherlands on Wednesday said that countries receiving aid should either cede control over their budgets or leave the euro zone. “Countries which are not prepared to be placed under administratorship can choose to use the possibility to leave the euro zone."
There are fissures all across Europe with little support for transfers to profligate and reluctant states. It's only a matter of time before Greece, and perhaps others, leave the zone. And when this happens the markets will shudder as the costs will be staggering.
Cramer's Mad Money (1/6/09) China Saves the World [View article]
I watched the show and noted Cramer's comments about China. In thinking about investment themes for the new year, China shows up on the radar screen because it's size and the fact that it is still growing.........maybe 5% down from 10%. Wireless and other consumer sectors appear interesting.
With respect to the stimulus package and China fueling exports, I would urge caution. Reuters quoted Shanghai Citigroup Ken Peng as saying, “The stimulus package is big, but it’s actually a combination of a lot of things that have already been announced.”
A glaring example of China’s PR machine in action is that the $600-billion package included nearly $3 billion that Beijing had already earmarked for rebuilding in Sichuan province and other regions devastated by the earthquake earlier this year.
The stimulus plan also called for some $292 billion on the railway system. But Ting Lu, a Merrill Lynch analyst, reported that most of it had been previously allocated. He pegged the real number at $58 billion of new funds — still a sizeable number but far short of what China led the world to believe.
Thank Europe For Friday's Market Upheaval [View article]
As the author notes, the real problem is in Europe where Greece is not implementing measures approved by parliament in the face of widespread opposition to spending cuts and labor market reforms. Resultantly, there is now open talk about Greece leaving the euro area and fending for itself.
Wolfgang Schäuble, the German finance minister, said if Greece does not meet the conditions it agreed to, as assessed by monitors from the International Monetary Fund, European Central Bank and European Commission, then payments will stop. He then added, Greece would then need to determine how to access financial markets without help from the troika.
The prime minister of the Netherlands on Wednesday said that countries receiving aid should either cede control over their budgets or leave the euro zone. “Countries which are not prepared to be placed under administratorship can choose to use the possibility to leave the euro zone."
There are fissures all across Europe with little support for transfers to profligate and reluctant states. It's only a matter of time before Greece, and perhaps others, leave the zone. And when this happens the markets will shudder as the costs will be staggering.
Why Return on Capital Is So Important to Investors [View article]
Others may find it interesting that over the long run and with a fixed capital structure, ROC is the limiting factor on growth.
Holding debt to equity constant, the rate of growth in capital cannot exceed ROC.
Cramer's Mad Money (1/6/09) China Saves the World [View article]
With respect to the stimulus package and China fueling exports, I would urge caution. Reuters quoted Shanghai Citigroup Ken Peng as saying, “The stimulus package is big, but it’s actually a combination of a lot of things that have already been announced.”
A glaring example of China’s PR machine in action is that the $600-billion package included nearly $3 billion that Beijing had already earmarked for rebuilding in Sichuan province and other regions devastated by the earthquake earlier this year.
The stimulus plan also called for some $292 billion on the railway system. But Ting Lu, a Merrill Lynch analyst, reported that most of it had been previously allocated. He pegged the real number at $58 billion of new funds — still a sizeable number but far short of what China led the world to believe.