Maybe we won't have to speak Chinese by 2010!

An interesting article in the LA Times (I know I would rather have a more reliable source too.) byWalter Russell Mead:

The great fall of China

The most important story to come out of Washington recently had nothing to do with the endless presidential campaign. And although the media largely ignored it, the story changes the world.

The story's unlikely source was the staid World Bank, which published updated statistics on the economic output of 146 countries. China's economy, said the bank, is smaller than it thought.

About 40% smaller.

China, it turns out, isn't a $10-trillion economy on the brink of catching up with the United States. It is a $6-trillion economy, less than half our size. For the foreseeable future, China will have far less money to spend on its military and will face much deeper social and economic problems at home than experts previously believed.

Thanks to the Instapundit for pointing out this link to a post at Transterrestrial Musings who offers a counterpoint to the tone of the LA Times article:

The relevant numbers for long term strategic security are the industrial production growth rate (from the CIA World Factbook on Intelligence) at 22%/year, the labor force of 800 million of which 45% do agriculture (2005) versus less than 1% for the US and the 11%/year real growth rate. This indicates that China has a lot of head room as its agricultural sector mechanizes and rationalizes farm size. It has a lot of head room because per capita GDP is either $1,900/year at official exchange rates or $4,500/year at PPP. At 8% faster GDP growth than the US, it will catch us in 10 years in PPP or by 2030 at the official exchange rate.

Dash of Insight: Recognize "Old News"

Jeff Miller at A Dash of Insight suggests

New Year's Resolutions for Investors: Recognize "Old News"

One of the biggest challenges for the investor is interpreting the constant news flow. One problem is distinguishing fresh news from information that is already widely known.

The Dash of Insight article is not long but I recommend the whole thing.

Market's discount known and expected events, so discriminating between new information and already discounted information is important. Donald Coxe puts it like this: " It isn't the front page news that causes the big problems, it the news on page 16". By page 16 he means the news that has not really grabbed anyone's attention yet. As an example I include the chart above. One year ago no one was searching for "subprime" on Google but look at it now. Now it is front page then it was page 16.

Chesler:Bhutto's Assasination As A Political Honor Killing

Dr. Phyllis Chesler posts on PajamasMedia :

In a sense, the assassination of Benazir Bhutto is a political and cultural version of an honor killing. Bhutto was the first woman Prime Minister of a Muslim nation and she symbolized an unacceptably Western form of female ambition and achievement. She had attended Harvard/Radcliffe and Oxford. She spoke English—perhaps more fluently than she spoke her native Sindi or Urdu. She once dressed as Western women do. Indeed, many Muslim women from wealthy families, including educators and feminists, have done so for a long time. They cannot do so now.

and:

Bhutto was one of the “moderate” Muslims for whom the West yearns. Muslim fanatics murdered her in cold blood and they did so in an exquisitely planned and choreographed way. Their willingness to die in order to kill, terrorize, and impose their ideology upon others is precisely what keeps other “moderate” Muslims silent.

How far are the representatives of freedom, modernity, and human rights willing to go to end such terrorism? If we are not ready to do whatever it takes for as long as it takes to free humanity from the plague of fundamentalist Islam, then we must be prepared to convert, veil, submit—or die.

Dr. Chesler's last sentence, quoted above, is the central issue of our time. People willing to die in order to kill are not open to polite negotiation or reasoned discussion. They have abandoned reason for blind faith in a cult of death and nihilism. We must oppose them such ferocious resolve that the hopelessness of their cause forces them to rethink ( or more acccurately think for the first time) their position. Trying to appease Islamic radicals is just whistling past the graveyard.
One more thing. Why aren't the women's groups and feminist leaders out front in the fight against this movement that is antithetical to everything about equality for women?

Update: Ellen R. Sheely was kind enough to comment on this post and I looked her up. Turns out Ms. Sheeley is an expert on honor killings and the author of Reclaiming Honor in Jordan: A National Public Opinion Survey on "Honor" Killings

I have not read this book but a quick read of the editorial review and reader reviews at Amazon has me interested to read it. The story of the author is remarkable as well. From Amazon:

In early 2003, Ellen R. Sheeley began to educate herself about "honor" killings, particularly those that take place in Jordan. That summer she journeyed from her home in San Francisco, California, USA to Amman, Jordan, where she learned of the needs for empirical, objective, baseline data pertaining to the Jordanian public's attitudes, opinions, and beliefs about "honor" killings and for a sustained marketing campaign to change hearts and minds. As a seasoned marketing professional, she was confident she had the ability and the qualifications to fulfill these needs. Unable to secure funding or sponsorship from the obvious and even the not-so-obvious sources and, yet, unwilling for mere lack of financial support to give up on the needs of the at-risk individuals and the victims, she quit her job, moved from her home, placed her personal effects in storage, bade adieu to her loved ones, and returned to Amman in October 2005 to perform the work pro bono, funded by her private savings. "Reclaiming Honor in Jordan" is a result of this effort and reveals a number of surprising findings about public opinion on this subject. Profits from this book will contribute to "honor" killings work.

About the Author
Ellen R. Sheeley is the Founder and CEO of Nob Hill Consulting, a San Francisco, California, USA based management and marketing consulting firm specializing in the international financial services and the technology sectors. She possesses an M.B.A. degree with a marketing concentration, a B.A. degree in psychology, and over 25 years' professional experience. Ellen has served on the boards of a number of nonprofit and technology corporations and on the faculties of four American universities. She has lived and/or worked in the United States, the CIS, Europe, Latin America, the Middle East, and the Pacific Rim and traveled to over 80 countries throughout the world. The research about which this book was written is a labor of love for Ellen and was wholly funded from her personal savings. In addition, all time and labor devoted to it were provided pro bono. Information on how to make a most welcome contribution to this effort may be received by sending an e-mail inquiry to forallwomen@gmail.com.

Credit Card Shoe Dropping?

Michelle Lederer at the wonderful Footnoted.org site points to this very good associated press article on rising deliquencies in credit card debt. Michelle adds this example of her own:

But why stop at credit cards, since just like sub-prime mortgages, it’s just another product that’s been sliced and diced? A quick skim of recent 10-Ds turns up this fascinating exhibit filed last week by BMW Vehicle Lease Trust 2007-1. Because this is a relatively new trust, there’s not enough history to go back a year. But going back one month shows a small, but potentially dangerous trend: at the end of October, there was only 1 loan in this trust that was 90 days or more late. But by the end of November, that had risen to 30. Granted, it’s a small number, but it’s still a 30-fold increase from one month to the next. And it’s presumably in a segment of the economy that’s about as far removed from sub-prime mortgages as you can get.

You know, if you read enough about subprime, cdo's, siv's, underfunded bond insurers, multi-billion dollar writedowns, bank runs in the UK etc. etc, you might begin to think there is a problem.

BuffettAgain and This Is A Brilliant Move (Again)

Warren Buffett who has repeatedly been rumored to be buying a piece of this distressed mortgage company or that distressed bond insurer has finally announced a move and as usual it is much smarter than the rumored moves.
The municipal bond market which has been suffering from collateral damage to the subprime mortgage fallout because the formerly AAA rated bond insurers are all suspect and thus the municipal bonds they insure are effectively uninsured now. This "worthless insurance" is causing all kinds of munis to be rerated downward. Some of the problem is explained clearly by Accrued Interest in this post:

What is a Tender Option Bond (TOB)?

(Alternative title for long-time readers: There's a meteorite that hit the ground near here. I want to check it out. It won't take long.)

And here is Bloomberg on the Buffett announcement:

Dec. 28 (Bloomberg) -- MBIA Inc. and Ambac Financial Group Inc., the two largest bond insurers, fell in New York Stock Exchange trading after billionaire investor Warren Buffett said he plans to start a rival company to guarantee municipal debt.

Buffett On The Prowl Again

Berkshire Hathaway buying:
from Bloomberg:
Dec. 26 (Bloomberg) -- Warren Buffett's Berkshire Hathaway Inc. will pay $4.5 billion to gain control of Marmon Holdings Inc., the Pritzker family's closely held collection of 125 companies, in what may be his biggest non-insurance acquisition.

Chart courtesy of Yahoo. Blue line is Berkshire price growth and red line is SP500

Jimmy Rogers

The always insightful and entertaining Jimmy Rogers on Bernanke, Sugar, China and more.

The Bear Flu: How it spread

Business Week article on how Bear Stearns helped to invent a fee generating, CDO pyramid scheme that is still collapsing...

Merry Christmas

I want to wish everyone who strays across this blog a very Merry and Joyous Christmas. This is the first Christmas since my father passed away and since my grnadson was born. I have been blessed with both and the timing of one's departure and the arrival of the other seems almost biblical in its symmetry.
My daughter and son in law brought the grandchildren here for Christmas and we had so much fun. I wish everyone could be as fortunate to be surrounded by a fine and loving family.
merry Christmas and Happy New year to each of you.
BBL

Looks Like Santa Is Bringing Lower Interest Rates For 2008

Except in China:
From BCA: Room To Maneuver For Bank of Canada
Bank of England Minutes: Unanimous Decision To Cut
A Change In Tone From The Bank of Japan
Inflation will remain a source of concern for the ECB but rate cuts remain likely in the first half
Bloomberg: China: The central bank has raised interest rates six times this year in a bid to curb prices and
prevent the economy from overheating.

CPI Charts not a Favorable Trend

Courtesy of Jeff Saut and the Chartstore.

Credit spreads still not giving the all clear

we cannot assume the subprime induced credit crunch is past its peak until the spread in the top chart and Libor spreads I posted here start to calm down.

Calculated Risk discusses the same charts.
John Hussman tells how to tell if the Fed is really adding money or just jawboning the press.

housing chart from Jim Stack

Great chart from Jim Stack at Investech.

A New Chinese Real Estate ETF

Index Universe writes about the new Claymore China Real Estate ETF ( TAO ).

Claymore's most recent exchange-traded fund (ETF) has been eagerly awaited. Some time ago, the fast-growing ETF company filed for an ETF covering China's real estate market. Today, the Claymore/AlphaShares China Real Estate ETF launched on the NYSE Arca platform under the symbol "TAO."

The fund is the first to combine two very hot areas of investment under one umbrella. China, of course, has been undergoing spectacular growth these past few years. At the same time, international real estate has become an area of particular interest to U.S. investors, in part because of the subprime mortgage problems in the United States.

TAO seems to combine the best of both worlds. As it develops, China's real estate markets will see more and more demand. It may be a big country, but it is also a largely rural one, with much of its business activity concentrated in some very congested cities. Real estate will therefore be at a premium as businesses struggle to gain footholds around those industrial centers.

Municipal Bonds: Time To Consider Buying ?

A week ago a very smart investment manager I met was discussing some opportunities he was considering for deploying assets. One thing he pointed out was that the municipal bond market had sustained a lot of collateral damage from the subprime driven credit crisis. Bloomberg today has this article on the same topic:

By Michael Quint and Jeremy R. Cooke

Dec. 19 (Bloomberg) -- Wall Street's three-year love affair with debt sold by U.S. states and cities is over.

Municipal bonds, whose returns trounced Treasuries and corporate debt from 2004 to 2006, are headed for their worst year since 1999, according to Merrill Lynch & Co. indexes. They may remain laggards after securities firms reduced their holdings during the third quarter by the largest amount in at least 12 years, data compiled by the Federal Reserve show.

Stephen Jen: 4 Lessons From 2007

Eoin Treacy at Fullermoney highlights Stphen Jen's commentary on lessons from 2007:

Lesson 1. This is more than a sub-prime crisis. The scale of the financial crisis we face goes beyond housing and sub-prime. In the past years, the extraordinarily low volatility environment, coupled with a healthy gap between the return on capital and the cost of capital, led to excess leverage in some sectors. The money markets froze up, reflecting not only the sub-prime crisis, but also a general 'bank run' on the capital markets in developed countries.

Lesson 2. Central banks are potent, but the private sector is critical, too. In our view, the co-ordinated liquidity action (as opposed to co-ordinated monetary action) by various central banks yesterday was very important, and potentially positive for the outlook for the financial markets and the global economy. The Fed effectively introduced a lower-cost, anonymous, variable-rate auction version of the discount window that is aimed at providing additional liquidity beyond the cash market.2 To the extent that this enhances general confidence (and it is still unclear whether banks would be marginally more willing to lend to each other, now that the relative demand and supply for term liquidity are altered), the term interest rates in the interbank market should start to decline. The corporate bond and money markets' initial reaction has been remarkably muted, and the reaction of the global equity markets has been outright negative so far. But it is perhaps correct to assume that, if this variable rate tender proves to be too modest in size (US$20 billion next Monday, December 17, 2007), the Fed will raise the amount auctioned and/or will introduce other tools to achieve its objective. In short, the willingness of the Fed to go to the extreme should not be in question, even though its ability to close the LIBOR-OIS spread requires a change in the behaviour/psychology of the private sector.

Lesson 3. Extraordinary powers of globalisation. The rise of the emerging powers (BRIC and other EM economies) has suddenly become blatantly evident this year. Their ability to withstand the multiple sell-offs in the global financial markets this year has been absolutely remarkable; a year ago few would propose the notion that EM could be a 'safe haven'. Further, this structural rise of the real economies of EM within a fundamentally asymmetric arrangement between capitalists in the West and labourers in the East is quickly evolving into a more symmetric arrangement: EM is now a source of capital flows, not just a destination of FDI from the West. This, in our view, is a historical watershed, and marks a turning point in the balance of economic power in the world.

Lesson 4. The rise of sovereign wealth funds. SWFs have indeed turned out to be a powerful driver of risky asset prices. At fire-sale prices, SWFs have been particularly active with financial institutions in the developed world, which they broadly consider as strategically important. In our view, this is not a fad, but the beginning of a long-term trend, as the SWF will form the single-most powerful new category of investors in the world, with Japan likely the next new member. Bottom line 2007 has been marked by powerful macro trends and crosscurrents. Many of the themes dominating 2007 will likely be at least as relevant in 2008.

Stephen Jen is a well respected analyst at Morgan Stanley.

BCA: Stay Constructive On Equities

The BCA :

Our U.S. Equity Strategy service advocates staying cyclically bullish on equities despite the probability of more near-term volatility.

Go read the short article for the explanation of the cash mountain.

Bespoke : 22 country range charts

Bespoke has published an update of its range charts for 22 countries using the ETF's available. Just click on the Bespoke link to see them all.

A More Positive View Of Fed Actions

I have been pounding pretty hard on the Fed recently so a colleague pointed out and article with a more positive take on Fed actions. A Dash of Insight gives his thoughts:

When so many people have the same reaction, and we think it is incorrect, it provides an unusual opportunity. Leading critics think that the Fed members are not as intelligent as they are, that they are all academics and therefore out of touch, that they are "behind the curve," that another 25 bp's of fed funds would have made the difference, and that the Fed should include trucking company executives and fund managers (to pick at random two recent comments). More on these criticisms in future articles.

The criticisms often point to the lack of reaction in current LIBOR rates (using many incorrect time periods and many irrelevant expirations), while declaring the Fed's innovative TAF as dead on arrival. Anyone thinking this through should realize that the impact on LIBOR cannot be expected to happen until the auctions take place. We shall see this week.

Fed seems to be firing blanks.

Federal Reserve policimakers continued ineptness reflected in these three charts of Libor rates to government short rates in Dollars, Sterling, and Euros. Gavin Finch at Bloomberg writes on the subject:

Dec. 14 (Bloomberg) -- The biggest concerted effort by central banks in six years to restore confidence in global money markets is showing little sign of success.

It may be some time before the banks work through their capital constraints and get back to lending and risk-seeking again.'' William O'Donnell, head of U.S. government-bond strategy in Connecticut at UBS Securities LLC, wrote in a note to clients today. ``The recession risk grows daily.'

The academically oriented Board of Governors at the Fed are addressing technical issues but the current problem has a huge psychological component that they seem incapable of understanding. The Bloomberg article addresses this several times. The Fed must slash the discount rate below market rates and act as the clearing house for interbank loans until mutual trust between the banks is restored. Banks are suffering from the Will Rogers problem: What concerns me is not so much the return on my money as the return of my money. Until the central banks solve the trust issue the problem will worsen. The Libor spreads will signal us if things improve.

Media Stocks Poor Performance Is Deserved

The Gateway Pundit explains at least one reason for the poor performance of media and publishing stocks relative to the market over the last 5 years. They cannot be trusted to report truthfully or comprehensively and thus no one on any side of an issue knows if what the media reports is even remotely factual. Go to Gateway Pundit's Post and read it if you wish to be infuriated:

Its a Quagmire!... Media Reports 6 Bogus Stories in 6 Weeks!

In roughly six and a half weeks the mainstream media reported 6 bogus stories from Iraq and Afghanistan.
There certainly could be more.
They all reflected poorly on the US and US military.

Isn't it past time that the media be held accountable for their horrible record?

And... Is it really surprising that only 29% of Americans, Germans and Brits trust their media?

For those of you who don't read the article I want to point out for all these false stories no corrections have been issued by the media outlet that erroneously spread the story.

Thanks to Instapundit for linking to this article, you won't see anything about this on your conventional meedia source. charts of Publishing industry and Broadcast and Cable relative to SP500 courtesy of Fullermoney.

Bespoke: Counry Snapshot

From Bespoke

A Group of Articles At Bloomberg

Some good review articles at Bloomberg:
U.S. Stocks Decline as Fed Fails to Assuage Recession Concern

Dollar Rises to 1-Month High Versus Euro, Yen on Inflation, Fed

U.S. Housing Crash Deepens in 2008 After Record Drop

U.S. Economy: Consumer Prices Rise More Than Forecast

India Bulls Need to Be Careful Where They Invest

Naked Shorts has a nice and thorough post on the new Barclays India ETN and the circumstances that have it trading at a 26% premium to intrinsic value. I have long been bullish on the Indian markets but this article explains why you cannot just buy any India fund. The Naked Shorts post also notes some funds no longer trading at premiums.

WSJ: Signs of Tough Times

Credit crunches in the past have sometimes coaused big economic declines and other times have not. The financial strength of corporations can make the difference. Corporations generally have good balance sheets right now but an article in the Wall Street Journal sees some negative signs:

Signs of Tough Times Ahead for Corporations

Corporations may be in for a tough year, as two new reports indicate that profits may be on the decline, while bankruptcies are expected to rise.

John Lonski, economist at Moody’s, dissects the latest data tax receipts and sees dark signs for corporate profits. Based on moving six-month totals, he says federal receipts from corporate profits were down 8.6% over last year for the six months ending in November. “Once the previous economic recovery filled out following 1992, the deepest annual decline by the moving 6-month sum of federal corporate income tax receipts was the -7.7% of April 1999,” he said. “Any recovery by profits now hinges on a recovery by business sales.

Bernanke: What I really meant was...

The Fed does a big whoops after the market urps on its shoes. (see bloomberg description) Helicopter Ben better stop leading from behind. I think maybe he has confused the Fed chairmanship with the Senate.

Bernanke: Was it something I said?

Me: Yes!

Statistical Sensationlism

Bloomberg ran the following headline today: Derivative Trades Soar to Record $681 Trillion in Third Quarter
Now this headline is accurate but misleading as are most statistics on derivatives trade in the press. The article itself is much more straight forward in its reporting.
Why is the headline number of $681 trillion misleading? Because the notional value of many of these trades is oftem misrepresentative of the amounts really at risk. I trade eurodollar future derivatives at the CME. The contract size is based on the interest rate paid for a deposit of $1,000,000 for 90 days in one of a number of prominent European banks. If I make a purchase of 100 contracts expiring in December 08 and sell a like amount of the March 09 contract expecting a change in their relative prices during the day of 1 point, the kind of trade a pit trader makes all day, and i am right I will make $25 per contract or $2500 total. But the statistics on derivatives totals traded will show I have traded $400,000,000 of derivatives on that trade. Four Hundred million of derivatives traded vastly overstates the real economic value of that trade. I was trading the amount of interest to be earned on a million dollars in one 90 day period versus another 90 day period, a considerably smaller sum. Be careful with headline statistics, they are often aimed a grabbing attention more than informing.
Twain had it right: Lies, Damned Lies, and Statistics.

Is this the real reason for the Paulsen Plan?

Bill Bonner of Rude Awakening writes about a court case involving foreclosure that has gone awry, at least from the point of view of the banks. I believe this is the reason for the urgency of passing this plan and reducing the need to go to foreclosure. I think they may not be able to foreclose because of sloppy paperwork. Go to the link and scroll down aways to find Bonner's byline. here is a small part:

…this case might be a bigger deal than people realized.

For his part, Judge Boyko showed little interest in the macro-economic
whereases. What he wanted to know was: Where are the mortgage documents? It
may be true that these people owe you money, he suggested, but we don’t take
a man’s house away from him without a valid mortgage contract. Not in the
sovereign state of Ohio anyway.

Deutsche Bank’s legal team looked at each other. Then, they looked in their
briefcases. The lawyers had plenty of documents, including some clearly
showing an “intent to convey the rights in the mortgages.” But as for the
mortgages themselves, they had none. Again, Deutsche Bank is hardly
exceptional. When a law professor studied foreclosure proceedings recently,
she found that in 40% of cases, the creditors either did not or could not
produce the vital documents, giving them the right to retake the houses.

Deutsche Bank’s legal team looked at each other. Then, they looked in their
briefcases. The lawyers had plenty of documents, including some clearly
showing an “intent to convey the rights in the mortgages.” But as for the
mortgages themselves, they had none. Again, Deutsche Bank is hardly
exceptional. When a law professor studied foreclosure proceedings recently,
she found that in 40% of cases, the creditors either did not or could not
produce the vital documents, giving them the right to retake the houses.

Apparently, the financial intermediaries who had bundled these 14 mortgages
together with thousands of others to create the Structured Investment Vehicle
(SIV) bought by Deutsche Bank had neglected to bundle in the actual mortgage
documents. Searching high and searching low, they could not be located.

I have yet to read much about this on page one though I did write about it in " Subprime the Energizer Bunny of Problems" on November 15th. Dennis Gartman wrote about this recently but it still seems to be on page 16. I suspect this issue is coming soon to a front page near you.

New Yorker: Darwin's Surprise

A truly fascinating article on retroviruses and evolution in the New Yorker,
Darwin's Surprise by Michael Specter. The article is a long one so I am not reporducing any of it here, but it is worth the time to read. If i were suddenly 20 again this is a field I would love to pursue. Then again if I were 20 again I would likely still be the idiot I was the first time I was 20.
(hat tip to the Instapundit once again)

Hutchinson: The Coming China Crash

One hears a great deal of positive commentary and bullishness about China in the financial press but here is a little different point of view from Martin Hutchinson writing on PrudentBear.com in the article titled:

The coming China crash

While the Chinese stock market, as measured by the China Securities Index 300, is down 18% since October 16, that follows a period of almost two years during which the CSI 300 had soared 535% since January 1, 2006. Chinese economic growth is currently running at over 11% and the big money is convinced that it will continue, while the country’s foreign exchange reserves are $1.4 trillion, the largest in the world.

A crash would appear to be imminent!

To see why a crash may be coming, it is worth examining the behavior of the China Investment Corporation, the $200 billion sovereign wealth fund set up by the Chinese government in September. Now $200 billion is a fair chunk of cash; you could almost buy all but three US corporations with that (at today’s prices, ExxonMobil, General Electric, Microsoft – there are 4-5 others including Google that barely top the bar.) Six weeks ago, the power of sovereign wealth funds was celebrated and China Investment’s moves into the market were awaited with bated breath.

Well, so much for that. A third of China Investment’s portfolio is to be invested in Central Huijin Investment Company, a purchaser of bad loans from the Chinese banks, and another third will recapitalize China Agricultural Bank and China Development Bank, to shape them up for privatization.

Related news on banking in China from Bloomberg today:
Dec. 8 (Bloomberg) -- China ordered banks to increase reserves by the most in four years to try to prevent the world's fastest-growing major economy from overheating.

India Stocks Overvalued?

Via Galatime and Bloomberg , chart courtesy of Fullermoney:

Biggest India Bull Duggal May Ask Holders to Cash Out

Dec. 6 (Bloomberg) -- India's biggest bull is on the verge of becoming its biggest bear. Sanjiv Duggal, who manages the world's largest holding of Indian equities, may even urge his clients to cash out.

``Investors aren't factoring in earnings and news flows, but valuing people's dreams,'' said Duggal, 43, who oversees about $11 billion in Indian equities as investment director at HSBC Holdings Plc's Halbis Capital Management in Singapore. ``The risk-reward ratio is not favorable.

Speaking as someone who has followed and been bullish on Indian markets since 2004 I found this article very interesting. India has many years of bull markets ahead but the action will include periods of extreme volatility. Knowing when one of the smartest managers of Indian equities is getting cautious is a useful bit of information.
I also found it remarkably ethical behavior by Sanjiv Duggal to be raising these issues of overvaluation about his own fund knowing it could actually reduce his business. That kind of honesty and candor is practically unheard of in fund management.
Thanks to Kaushik Gala for pointing out this article.

Paulsen's Plan

Abnormal Returns doing their usual job of finding interesting articles has links to several discussions of the administrations plan to freeze subprime resets for some borrowers.

BCA: The Fed is falling behind.

The Bank Credit Analyst has 2 articles with charts illustrating their belief that the Fed is falling behind and must ease aggressively. article 1, article 2

Hussman: A Pop Quiz

John Hussman has another great article this week titled "An Irrelevant Fed: Thimbles of Water in a Forest Fire". You should go read the whole thing but here is the opening :

Pop Quiz

How much “liquidity” has the Federal Reserve “pumped” into the $12.7 trillion U.S. banking system since March 2007?

a) $1.2 trillion, which banks have used to firm up their balance sheets

b) $600 billion, which banks can now use to make new loans

c) $16 billion, all of which has been drawn out of the banking system as currency in circulation

If you answered c, move to the head of the class. Investors who answered a or b have not only been misled by analysts and media stories, but have no idea how irrelevant the Fed's actions are likely to be, except on short-term market psychology. More charts and data below.

Updated TED spread chart from Bespoke

Bespoke has updated their TED spread chart as of today.

30-Yr Conventional Mortgage Rate

Treasury Secretary Henry Paulson recently met with congress to discuss potential solutions to the subprime crisis. The article suggests "the secretary hopes the mortgage industry will announce this week an interest-rate freeze on certain ARMs." The article does not describe the specifics of such a move, but such invasive action would surely be an indication that the crisis is much worse than expected. As far as data goes, the fear that subprime problems will bleed into the conventional mortgage rate market has yet to be realized. Though the following data has not been updated since early October, the market has significant breathing room before reaching historically high rates.

Bespoke: Counry Snapshot

Bespoke today has a positng of country charts showing overbought and oversold conditions and the ccurrent price earnings level. There are many other countries than I have shown.

ModernGraham.com: "New " Valuation Method

ModernGraham.com posted an interesting quantifiable method of applying some of Ben Graham's valuation techniques for growing companies. Looks to be a good way to find buy candidates providing valuation with a margin of safety. I would like to see some trending techniques applied to the stocks that meet ModernGraham's criteria.
Benjamin Clark is to be complimented for making this information public.