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Biotech / Medical : Biotech Valuation

CRSP 61.97

-3.2%

9:30 AM EST

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To: kenhott who wrote (32866)	11/11/2009 8:24:39 AM
From: IRWIN JAMES FRANKEL	2 Recommendations Read Replies (1) of 52153

>> OT- I think all of us don't want another replay of this crisis ... Agree. >> unfortunately heading toward some pill taking and not the surgery that we need to cut out the risks. I am not sure what you mean. I would argue that we have not yet taken the "pill" (delevering - we just moved the leverage to the government BS) much less surgery. Clark>> Congress’ overhaul of U.S. financial regulations should include ordering banks to hold more capital, ensuring executives’ compensation is aligned with long-term profitability and banning firms that take deposits from also engaging in equities and fixed-income trading, Reed said. Prescription for banks: Raise capital, executive compensation matched to the long term, no trading. Each component of that prescription pushes banks toward risk-aversion, more like utilities. Is that what we want? Will doing that improve economic activity? Or is it a self-destructive reaction to the crisis we went through? The economy that we know in the US is a function of credit markets supporting consumer consumption which employs people. Bank lending is in decline, down about $600B. (The most recent week moved up slightly but the trend is in place.) The securitization market is still not functioning. Moving banks to a more utility-like capital structure will cut bank lending far more. It will also dramatically slow the recovery of securitization. I contend that risk-taking by the financial sector is essential to growing GDP at a rate that offers high employment and high standards of living. Every transaction has two sides. We look at one side and say we like that result. But until we can see the other side at the same time we cannot hope to evaluate the transaction. ij BTW - this is NOT intended as a criticism of either Ken or Clark - just another out-there opinion of mine.

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