Comments on: "Post credit bubble wealth transfer will beggar belief" http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will.html Sun, 22 Nov 2009 07:56:24 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: foesskewered http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will.html#comment-2863 foesskewered Sat, 05 Jan 2008 03:07:00 +0000 http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will-beggar-belief/#comment-2863 Suffice to say, the world is very different from that in 1989, the most worrying factor is the interconnectivity, a US recession is going to feed into the system and further raise volatility. A Chinese implosion is not going to leave everyone else unscathed either, the question is can anyone fgind a way out of the spiral should it start and how to stay globalised whilst disconnecting from the spiral. Suffice to say, the world is very different from that in 1989, the most worrying factor is the interconnectivity, a US recession is going to feed into the system and further raise volatility. A Chinese implosion is not going to leave everyone else unscathed either, the question is can anyone fgind a way out of the spiral should it start and how to stay globalised whilst disconnecting from the spiral.

]]> By: mike http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will.html#comment-2824 mike Thu, 03 Jan 2008 17:38:00 +0000 http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will-beggar-belief/#comment-2824 The sale of income producing assets should be of concern to individuals and nations alike. But regarding Citigroup, it is really unclear whether it will be an income producing asset or not. It was probably a fair deal. Better buys will be available.<br/><br/><br/>The following was quoted as having come from the NY Times in 1989,<br/>"But some participants in the financial markets are not so sanguine. Some fear that the United States is losing its economic and political leadership, and that the consequences will be grave. At a recent seminar of the Friedrich Naumann Foundation in New York, George Soros, president of the Soros Management Fund Inc., said the October 1987 stock market crash marked ''the transfer of economic and financial power from the United States to Japan.''<br/><br/>IMO, Soros should have been right. What he didn't foresee was Japan squandering its wealth through Keynesian low interest rates to save the world economy. <br/><br/>Here we are again. Will China & oil producers squander their wealth? Or will they buy income producing assets? The sale of income producing assets should be of concern to individuals and nations alike. But regarding Citigroup, it is really unclear whether it will be an income producing asset or not. It was probably a fair deal. Better buys will be available.

The following was quoted as having come from the NY Times in 1989,
“But some participants in the financial markets are not so sanguine. Some fear that the United States is losing its economic and political leadership, and that the consequences will be grave. At a recent seminar of the Friedrich Naumann Foundation in New York, George Soros, president of the Soros Management Fund Inc., said the October 1987 stock market crash marked ”the transfer of economic and financial power from the United States to Japan.”

IMO, Soros should have been right. What he didn’t foresee was Japan squandering its wealth through Keynesian low interest rates to save the world economy.

Here we are again. Will China & oil producers squander their wealth? Or will they buy income producing assets?

]]> By: Steve http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will.html#comment-2816 Steve Thu, 03 Jan 2008 07:55:00 +0000 http://www.nakedcapitalism.com/2008/01/post-credit-bubble-wealth-transfer-will-beggar-belief/#comment-2816 I dunno. The implication is that domestic capital can't be found. So far, the US and Euro banks that have done SWF deals have claimed that speed was the main factor. But I think there's a bit of management self-interest at work: thus far, only the shareholders of UBS have complained about dilution, while US shareholders seem barely conscious of dilution and of common dividends being absorbed potentially by the new preferred issues. So it could be argued that at least for the present US management has snuck in dilutive capital without seeing a significant price adjustment in common shares. But if management brings new issues into domestic markets, that's likely to be priced into the common shares immediately, with nasty consequences for current management. The cost and availability of capital here looks to me more like an agency problem than a wealth problem. I dunno. The implication is that domestic capital can’t be found. So far, the US and Euro banks that have done SWF deals have claimed that speed was the main factor. But I think there’s a bit of management self-interest at work: thus far, only the shareholders of UBS have complained about dilution, while US shareholders seem barely conscious of dilution and of common dividends being absorbed potentially by the new preferred issues. So it could be argued that at least for the present US management has snuck in dilutive capital without seeing a significant price adjustment in common shares. But if management brings new issues into domestic markets, that’s likely to be priced into the common shares immediately, with nasty consequences for current management. The cost and availability of capital here looks to me more like an agency problem than a wealth problem.

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