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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Cogito Ergo Sum who wrote (66062)	9/15/2010 5:24:29 AM
From: TobagoJack	Respond to of 218118

funny businessweek.com Bloomberg Hedge-Fund Man Finds Inner Lion in Outer Space: Michael Lewis September 13, 2010, 11:02 PM EDT By Michael Lewis Sept. 14 (Bloomberg) -- To: The Loyal Investors of The Fund From: The Manager Like a lot of hedge-fund guys, I’ve recently endured what might be misconstrued as a nervous breakdown. Before CNBC or the New York Times or some other rag grabs the story and distorts it, I want to tell you about it myself -- and explain not only my disappointing returns but also my prolonged absence. Just so you get it straight. Anyone who runs several billion dollars of other people’s money, and one hundred million of his own, is likely to having moments of self-doubt. I don’t recall experiencing any myself, but I concede that others have. My personal crisis was different: a single moment, earlier this year, when I doubted not myself, but the world we inhabit. If I was a different kind of guy or (God forbid) a chick, I might easily have gone all “Eat Pray Love” on you. Had I succumbed to the feelings of that moment I might have vanished in a puff like Andrew Lahde to devote my remaining days on Earth to the smoking of what is no doubt some very fine weed, or run off like Stanley Druckenmiller to feed the poor and cure some lepers. Like Guy Hands, I could have gone into hiding on a Channel Island; or, like dozens of hedge-fund guys in the past year, I could have just folded, without offering you any explanation. My crisis struck one morning early this year, as I stared at my Bloomberg screens. Nothing had happened and that was the scary thing. For no reason in particular I was overcome by this eerie conviction that markets would never again be free. They’d become traps, run by politicians and bureaucrats, designed to ensnare the superior man. Jungle Law What had happened, in a word, was socialism. The law of the jungle, suspended since the fall of 2008, had been permanently revoked. Park rangers would forever more feed and protect all the animals, even the fat slow ones that deserved to die. In this new environment the apex predator --the lion with the gift for spotting the wounded antelope -- was doomed. My sixth sense for the kill was now irrelevant. It goes without saying that, to a lion, feelings of doom are especially painful. To my credit, I resisted hiring a shrink, or rethinking my priorities, or searching for any more meaning in my life. Instead, I shot you that note, reminding you that all of you have the same two-year lock-up, then I cut a check to the Russian government for a seat on its new Soyuz TMA- 19 rocket. Russian Shorting For those of you who have never had the experience, getting launched into outer space by the Russians sounds weirder and more offbeat than it actually is. It’s not expensive -- at least not in the context of my net worth -- or even complicated, unless they find out you’ve been shorting Russian stocks. Mainly, you show up wherever some Russian tells you to, and refrain from making unreasonable demands, or offering them too many of your own ideas how to improve their operation. Anyway, orbit turned out to be the perfect place for a hedge-fund manager to reconsider his place in the universe. Floating around the capsule providing financial advice to my fellow astronauts and getting to know some of the ladies on board, the disturbing turn of events back on Earth came into sharper focus. Your constant demands that I explain my strategy to you; the systematic extermination of some truly badass hedge-fund guys; the rumors that Goldman Sachs might shut its prop-trading desk rather than simply evade the new laws; the drumbeat that Wall Street is no longer a land of opportunity; Craigslist shutting down its sex ads -- all news points in the same direction: big-time returns for me in the future. Rising Lion Prices The price of being a lion is rising; the weaker lions are slinking away from the jungle. The stronger lion, the lion who survives, will have the jungle to himself. Inside the space capsule I had an epiphany: I am that lion. Clawing my way along the wall to the capsule’s latrine, I passed a window. For the first time I really looked at the planet we live on -- the planet on which I still think I can generate returns in excess of 18 percent per annum. In that moment I realized how small it is. No bigger than my wallet, when I held it up to the window. A lot of people, including some of you, have described me as “larger than life,” but no one has ever called me “larger than Earth.” Yet in comparison, from that distance, I was huge. Then it struck me: so long as I keep my distance from my planet, I will be able to keep myself in the proper perspective. So long as I remain able to visualize my relative size, it doesn’t matter if others seek to shrink me. The socialists thought they could force me to violate my own nature. I’d found the way to stay true to myself. Take Me Back Thus reassured, I told the guys up front to cut the engines and get us back down on the ground, preferably somewhere near midtown Manhattan. I was itching to trade; poised for a few quick kills. Alas, it took the better part of three months and some serious change to persuade the Russian government to ferry me back earlier than planned. When you are in space it’s sometimes hard to explain the value of your time. But in retrospect this was a lucky break, as it gave me the leisure to begin my memoir of the financial crisis, “Outer Space, Inner Lion.” Rumor has it that those of you who have given up on me assume you have heard the last of me. Trust me: you haven’t. (Michael Lewis, most recently author of the best-selling “The Big Short,” is the fictional hedge-fund man and columnist for Bloomberg News. The opinions expressed are his own.) (Michael Lewis, most recently author of the best-selling “The Big Short,” is a columnist for Bloomberg News. The opinions expressed are his own.) --Editors: Marty Schenker, James Greiff. Click on “Send Comment” button in sidebar display to send a letter to the editor. To contact the writer of this column: Michael Lewis at mlewis1@bloomberg.net To contact the editor responsible for this story: James Greiff at jgreiff@bloomberg.ne

To: Cogito Ergo Sum who wrote (66062)	9/15/2010 5:49:00 AM
From: elmatador	Read Replies (1) \| Respond to of 218118

Germans show signs of taking the risk-averse route of Japan By Ad van Tiggelen Published: September 1 2010 17:44 \| Last updated: September 1 2010 17:44 I am a bit of a control freak. As such, I love to visit countries where life is well organised and where high quality is taken for granted. No wonder Japan and Germany rank high on my list of favourite destinations. In the cultures of both countries, “control” tends to be seen as a virtue rather than a vice. I used to visit Japan frequently in the 1990s, when I was head of Far Eastern equities at ING Investment Management. Afterwards, as head of European equities, Germany became an important focus. The similarities between the two countries never failed to amaze me. Recently, I read one broker report that warned of a potential Japan-style outcome for the eurozone economy and one that argued that such an outcome was highly unlikely. Both reports made sense and both were based on sound economic assumptions. But what I missed was a reflection on cultural similarities. Why? Well, Germany is the most important economy in the eurozone and I would argue that spending patterns of German consumers will provide a déjà vu experience for global investors. After all, real growth in consumption in Germany has been stagnant for 10 years (although it showed some improvement recently), a development that appears to be echoing the Japanese experience. Also, the Germans share quite a few behavioural characteristics with the Japanese. Both are people who – more than average – want to be in control of their lives. Both are disciplined and well organised, and they produce products of a very high quality. It is no coincidence that many of the top car brands in the world originate from these two countries. And neither is it a coincidence that both are successful exporters of high-end goods. “Being in control” also determines the extent to which people feel a need to plan their (financial) futures. Germans tend to be planners, more than most. The Japanese are also planners. Twenty years ago, Japanese consumers were hit by a financial shock; the collapse of the equity and the real estate markets. This provided them with a wake-up call, underlining the need to prepare well for the future. This short-term shock was followed by a longer one: the effects of an ageing society. An ageing society gradually needs fewer new houses and new cars, and fewer labour/commodity-intensive products (which tend to be major drivers of inflation). Conversely, an ageing society needs to own huge amounts of low-risk investments in order to secure a steady income for all its pensioners. Therefore, the Japanese are still happily buying their local government bonds, even if they yield barely 1 per cent. Similarities to the developments in Japan in the 1990s can be seen now in what is happening in Germany (and most other eurozone countries). They have just faced a financial shock and the demographics are starting to mirror those of Japan in the early 1990s. This brings the danger that German consumers will react in the same way as the Japanese have done, by “digging in”, postponing consumption and saving more. There is nothing wrong with such financial prudence, but in Japan it has proved to be a recipe for disinflation and, finally, outright deflation. Many economists believe there is no need for Germany to follow the Japan route. For example, the country has not faced an asset price bubble. German housing is even very affordable. But the Germans have had to deal with the consequences of bursting bubbles in the financial sector and also feel burdened by the aid they have to provide to the southern eurozone countries. So they have had their short-term shock. And recent discussions about the expected erosion of pension plans highlight the long-term problems associated with an ageing society. Furthermore, German consumers are unlikely to be stimulated by their budget-conscious government or by a European Central Bank that has to be mindful of the German inflation trauma from the 1920s, which means it limits its use of unconventional policy. This year we have witnessed the yields of German 10-year government bonds falling to almost 2 per cent. These low yields are not just the result of haven status. The Japanese experience has showed that investors who have been “shocked” into risk aversion, and who realise that they need to beef up their pensions, are willing to accept very low risk-free yields indeed. Of course there are differences between Japan in the 1990s and Germany in the present – big differences. However, my guess would be that demographic and behavioural similarities will weigh more heavily and that inflation and interest rates in Germany and its neighbours will remain low for a very long time. Ad van Tiggelen is senior investment specialist at ING Investment Management Europe

To: Cogito Ergo Sum who wrote (66062)	9/15/2010 5:49:00 AM
From: elmatador	Respond to of 218118

Argentina doesn’t care much about being best in class September 14, 2010 4:11pmby Jude Webber \| Share Room for improvement. If Standard & Poor’s credit rating upgrade of Argentina this week had been a school report, that would have been the message. Like that rebel student who gets higher-than-expected grades but refuses to study the book, Argentina has significantly reduced its debt - in part through a successful swap of most of the debt still unpaid since its 2001 default on nearly $100bn. It has also cut the amount that will mature in the coming years, in order to ease liquidity pressures. That has earned the country extra points in the classroom, specifically an upgrade to B from B minus for its long-term foreign-currency debt. As Standard & Poor’s says: The government of Argentina has been able to reduce debt levels in terms of GDP and improve its debt maturity profile in recent years. Standard & Poor’s expects net general government debt to come down to 44% of GDP by year-end 2010 from about 75% at the end of 2005. Argentina has based its debt management strategy in recent years on replacing market debt by intragovernmental debt… This debt management strategy has reduced rollover risk in the coming two years and eased liquidity pressures, although it does not address longer-term pressures that could arise from the social security system and other public sector agencies. And yet, Argentina’s new rating is the same as that of Bolivia, an economy it dwarfs, and Argentines see themselves as the black sheep of the big league, not peers of the small, poor, underdeveloped countries like Bolivia. Last month, Standard & Poor’s upgraded Paraguay to B plus from B, putting it ahead of Argentina - another comparison Argentines would eschew. Argentina has strong growth - the central bank says this year the economy could expand up to 9.5 per cent, and Standard & Poor’s itself has penciled in 7 per cent. Central bank reserves will end the year higher than they started, despite the government earmarking $6.5bn to cream off for debt repayments. But growth is not everything. As Standard & Poor’s notes, a “polarised political and economic environment, lack of predictability in government policies and high inflation” are factors that continue to hold Argentina back from a more respectable credit rating. The fiscal surplus on which Argentina has prided itself is fraying. Economist Miguel Kiguel notes that until 2009 the Treasury and ANSES (the public institution of social security in Argentina) had demonstrated fiscal surplus in their accounts: However, the 2009 recession affected revenues just at a time when the Government increased expenditures on public works -by around 1.0% of GDP- to run some sort of “countercyclical” fiscal policy and the Treasury had to rely on the ANSES to show a positive fiscal result, since the Treasury was (and still continues to be) in fiscal deficit. What’s more, it doesn’t look like the government is going to be wheeling out the heavy guns to fight inflation anytime soon. Argentina’s inflation data has been hiding under a cloud since 2007, when the government is widely believed to have begun manipulating the data to conceal increases. It is still given a wide berth by everyone except the government and the pro-government central bank, which recently relaxed its monetary programme (it was badly overshooting the existing targets). If Argentina wants to graduate from its B grade, it needs to address all such issues. But given the government’s low opinion of anyone who takes issue with its heterodox methods (it appears to believe that the end justifies the means), and of ratings agencies in particular (it says they lost credibility by getting things so wrong in the global financial crisis), the changes that would spur such an upgrade would probably need the kind of policy shift the government has shown itself unwilling to make. That’s especially true because it operates on a very short-term horizon: currently the October 2011 elections. For the moment, the elections count more than any report card.