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View Full Version : are swf's buying the "right" assets? whither the fire economy?



jk
12-19-07, 09:38 PM
in the last few months we've had swf investments in blackstone, citi, ubs and now morgan stanley. i know we're only talking $5-10billion a pop here, but there's a pattern. i'm aware that the swf's are also making other kinds of investments, and there's a rumor about blackstone orchestrating a chinese bid for rio tinto. but the big news has been the investments in financial entities. these entities have needed infusions because of financial structure rumblings, however, that bring into question the value of these very investments.

we have been living in the age of finance. but, in light of unfolding events, how long will it be before you can hear the phrase "financial innovation" without wincing or rolling your eyes?

i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?

whither the fire economy? or is it wither the fire economy?

FRED
12-19-07, 10:13 PM
in the last few months we've had swf investments in blackstone, citi, ubs and now morgan stanley. i know we're only talking $5-10billion a pop here, but there's a pattern. i'm aware that the swf's are also making other kinds of investments, and there's a rumor about blackstone orchestrating a chinese bid for rio tinto. but the big news has been the investments in financial entities. these entities have needed infusions because of financial structure rumblings, however, that bring into question the value of these very investments.

we have been living in the age of finance. but, in light of unfolding events, how long will it be before you can hear the phrase "financial innovation" without wincing or rolling your eyes?

i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?

whither the fire economy? or is it wither the fire economy?

Shortcut: EJ picked this book up at a little bookstore on Newbury Street in Boston in 1999. He showed the little green book to us today. Holding out. The whole story is here, sadly.

The Bubble that Broke the World - 1932 (PDF) (http://www.itulip.com/images/bubblethatbroketheworld.pdf)

Sapiens
12-20-07, 08:38 AM
Shortcut: EJ picked this book up at a little bookstore on Newbury Street in Boston in 1999. He showed the little green book to us today. Holding out. The whole story is here, sadly.

The Bubble that Broke the World - 1932 (PDF) (http://www.itulip.com/images/bubblethatbroketheworld.pdf)


Thanks for the e-book FRED!

Andreuccio
12-20-07, 11:25 AM
in the last few months we've had swf investments in blackstone, citi, ubs and now morgan stanley.

When I saw the title, I thought, "What assets are single white females buying? Is Macy's having a huge sale or something?"

But after reading the post, that clearly isn't right. What is SWF in this context? :)

jk
12-20-07, 11:40 AM
When I saw the title, I thought, "What assets are single white females buying? Is Macy's having a huge sale or something?"

But after reading the post, that clearly isn't right. What is SWF in this context? :)
sovereign wealth funds. this isn't the personals page, andreuccio!
let's see, swf seeks iib [insolvent investment bank] with cdo habit.... siv's no problem. object: long walks on the beach and lingering capital infusions.

Andreuccio
12-20-07, 12:06 PM
i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?



My confusion over the meaning of SWF aside, I was wondering this, too, when I read this post yesterday:

http://www.dailykos.com/story/2007/12/16/171624/11/115/422951

The post deals with the difference between liquidity and solvency, but also discusses the purchase of financial institutions by foreign investors.



One sign that cannot be spinned away is the sheer number of banks that have had to get emergency capital injections from the outside to improve their balance sheets:

Abu Dhabi buys Citi stake (http://money.cnn.com/2007/11/27/news/international/citi_abu_dhabi.ap/index.htm) (27 November)
NEW YORK (AP) -- The Abu Dhabi Investment Authority will invest $7.5 billion in Citigroup, offering the nation's largest bank needed capital to offset big losses from mortgages and other investments.

Chinese Firm To Buy Big Stake In Bear Stearns (http://www.washingtonpost.com/wp-dyn/content/article/2007/10/22/AR2007102200429.html)
NEW YORK, Oct. 22 -- China's Citic Securities would acquire up to a 9.9 percent stake in Bear Stearns under a joint venture that marks the first time an entity controlled by the Beijing government has obtained a significant stake in a major Wall Street investment bank.

China's Ping An buys Fortis stake for $2.7 billion (http://www.reuters.com/article/bankingfinancial-SP/idUSHKG33401720071129) (29 November)
HONG KONG (Reuters) - Ping An Insurance (Group) Co, China's No.2 life insurer, bought a 4.2 percent stake in Dutch-Belgian financial services firm Fortis for $2.7 billion, the latest in a spate of overseas investments by Chinese financial firms.

Singapore Investment Arm To Sink Billions Into UBS (http://www.forbes.com/2007/12/10/ubs-gic-singapore-markets-equity-cx_jc_1210markets03.html) (10 December)
The Swiss bank is raising a total of 13 billion Swiss francs ($11.48 billion) in fresh capital from two investors. The Government of Singapore Investment Corp., which invests the city-state’s foreign-exchange reserves, will contribute 11 billion Swiss francs ($9.75 billion); the other investor was not identified, but was said by Reuters to be the government of Oman, which has been attempting to diversify its economy away from reliance on oil production.
What these sales have in common is that they take place at pretty lowish valuations for the banks (whose market values have been hammered over the past few months), and that they are desperately needed to tide the banks over, and in particular to allow them to fulfill their capital adequacy requirements, ie their obligations to have enough capital to cover the risks they are taking.


The author, Jerome a Paris, (who I've mentioned here before), concludes that it's an open question whether the buyers will make any money, but that there is at least some chance they will.



The only open question is whether the new investors, who are buying into our banks at this delicate point in time, will make any money. There are two reasons they might: the first is that we have indeed reached the bottom of the market, after a lot of panicky selling, and that things will perk up (that's the optimistic scenario). The other is that we will not let our banks fail, because they play too important a role in our economy, and public authorities (ie taxpayers, us) will bail them out and save the shareholders to some extent - in hich case the most recent buyers are those with the best chance of breaking even.

But given that these investors have the money to acquire these stakes because they've been accumulating that wealth by selling us stuff on credit and thus being forced to save a good chunk of the proceeds (in the form of IOUs), it is only fair that they get a chunk of the wreckage of our economies, whatever it's worth today.


At a minimum, clearly these buyers are not buying in at "peak", like the Japanese did, but getting these assets at a substantial discount.

Andreuccio
12-20-07, 12:08 PM
sovereign wealth funds. this isn't the personals page, andreuccio!
let's see, swf seeks iib [insolvent investment bank] with cdo habit.... siv's no problem. object: long walks on the beach and lingering capital infusions.

LOL.

(Did I mention I really hate the 10 character minimum requirement for posts?)

Tulpen
12-20-07, 12:14 PM
i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?

Different cases, they are not buying at the peak and the loan conditions seem to be favorable.

Jim Nickerson
12-20-07, 12:17 PM
LOL.

(Did I mention I really hate the 10 character minimum requirement for posts?)

Intelligble written English does not include "LOL." Just try to bring yourself to write in intelligble English and you should be okay.

Andreuccio
12-20-07, 12:24 PM
Intelligble written English does not include "LOL." Just try to bring yourself to write in intelligble English and you should be okay.

LOL.:D Intelligible written English doesn't include SWF, either, so there!:)

Andreuccio
12-20-07, 12:28 PM
LOL.:D Intelligible written English doesn't include SWF, either, so there!:)

I was going to comment that Intelligible written English doesn't include "Intelligble", either, but then thought better of it, since it's just a typo and I didn't want to be mean.

Then I noticed you did it twice. Hmmm. Did you do it on purpose just to invite the jab?

Jim Nickerson
12-20-07, 12:45 PM
I was going to comment that Intelligible written English doesn't include "Intelligble", either, but then thought better of it, since it's just a typo and I didn't want to be mean.

Then I noticed you did it twice. Hmmm. Did you do it on purpose just to invite the jab?

I can't explain it. Just wasn't being careful. I raed soemthnig recntly htat suggseted thta oru brians coudl figrue out wodrs evne wehn the lettesr are misplaced. But with LOL and all similar shit, understanding depends on one's fluency with texting--I guess that is where all the shit originated.

Also, I am truly beginning to wonder about whether or not my brain function is lessening. I placed an order for renewal of an investment letter last week and then placed it again and I had and still have no recall of having completed the first submission of the renewal.

Andreuccio
12-20-07, 01:05 PM
I raed soemthnig recntly htat suggseted thta oru brians coudl figrue out wodrs evne wehn the lettesr are misplaced.

I love that stuff. Isn't it amazing. What I don't get is how you can type like that. (At least on purpose. It's easy to do by mistake.)


But with LOL and all similar shit, understanding depends on one's fluency with texting--I guess that is where all the shit originated.

Understanding any abbreviation or acronym is dependent upon one's fluency. Understanding any word, really. In that sense, "LOL" isn't really different from SWF, "The Fed", or "currency depreciation based reflation efforts". It's just a question of one's willingness to learn the language.


Also, I am truly beginning to wonder about whether or not my brain function is lessening. I placed an order for renewal of an investment letter last week and then placed it again and I had and still have no recall of having completed the first submission of the renewal.

We all have moments like this, no matter our age. I hope that's all this is for you. I watched my grandmother deteriorate and it wasn't pretty. I'm sure you're up on all the things you need to do to keep up brain function, though. GL. (Good luck.:))

BTW, (by the way:)), I wouldn't worry about my mental functioning based on a repeated typo. I'm forever capitalizing the first two letters of my first name, for example, because I don't get my finger off the shift button fast enough. Yet my brain is firing on at least 7 out of eight cylinders, no problem.

Jim Nickerson
12-20-07, 01:33 PM
I love that stuff. Isn't it amazing. What I don't get is how you can type like that. (At least on purpose. It's easy to do by mistake.)



Understanding any abbreviation or acronym is dependent upon one's fluency. Understanding any word, really. In that sense, "LOL" isn't really different from SWF, "The Fed", or "currency depreciation based reflation efforts". It's just a question of one's willingness to learn the language.



We all have moments like this, no matter our age. I hope that's all this is for you. I watched my grandmother deteriorate and it wasn't pretty. I'm sure you're up on all the things you need to do to keep up brain function, though. GL. (Good luck.:))

BTW, (by the way:)), I wouldn't worry about my mental functioning based on a repeated typo. I'm forever capitalizing the first two letters of my first name, for example, because I don't get my finger off the shift button fast enough. Yet my brain is firing on at least 7 out of eight cylinders, no problem.

The best I can do is to believe that things as LOL, FWIW, SWF, CDO, ABCP, MBS, CMBS, etc., etceteras, and so forth are forms of vernacular.

Being a doctor once, and young and inexperienced when entering practice, I insisted on talking "doctor talk" to patients--until, until it dawned on me that I was failing to communicate. Remember the problem with there being a failure to communicate in Cool Hand Luke. I think a person who takes time whether oral or written to communicate should ask himself whether the words chosen are ones that are likely to be understood by the greatest number of readers or listeners. Is it most important to put up posts that are most efficient to the poster's time, or to put up posts that clearly convey what the writer wishes to convey in an understandable fashion.

I'd bet a lot of money, if the answer could be determined, that well over 50% of people who visit iTulip are not 75% as fluent in derivative conversation as is jk. Actually it strikes me that when he writes about this stuff of alphabetical derivatives he actually understands what he is writing.

Back to your original post: LOL, and then probably 50 letters and spaces to state your opinion, it might have been "cheaper" word-wise to write: "Very clever, jk." or something similar, which by the way, jk, it was quite clever.

Andreuccio
12-20-07, 01:55 PM
The best I can do is to believe that things as LOL, FWIW, SWF, CDO, ABCP, MBS, CMBS, etc., etceteras, and so forth are forms of vernacular.

Being a doctor once, and young and inexperienced when entering practice, I insisted on talking "doctor talk" to patients--until, until it dawned on me that I was failing to communicate. Remember the problem with there being a failure to communicate in Cool Hand Luke. I think a person who takes time whether oral or written to communicate should ask himself whether the words chosen are ones that are likely to be understood by the greatest number of readers or listeners. Is it most important to put up posts that are most efficient to the poster's time, or to put up posts that clearly convey what the writer wishes to convey in an understandable fashion.

Good question. It's probably important to think who one's audience is and direct one's communication to that level. Did I overshoot with "LOL"?


I'd bet a lot of money, if the answer could be determined, that well over 50% of people who visit iTulip are not 75% as fluent in derivative conversation as is jk. Actually it strikes me that when he writes about this stuff of alphabetical derivatives he actually understands what he is writing.

True. I remember when I first arrived here on iTulip I asked for a glossary to help with some of the acronyms and economic concepts.


Back to your original post: LOL, and then probably 50 letters and spaces to state your opinion, it might have been "cheaper" word-wise to write: "Very clever, jk." or something similar, which by the way, jk, it was quite clever.

Also true, at least in the short term. My 50 letters and spaces was a bit of hyperbole, put in in the hope that the 10 letter minimum rule might be changed. Thus the hope is that it will save me words in the long run. Although maybe EJ and Fred, like you, don't want a lot of posts consisting only of "LOL", etc.

And it sure would have been " 'cheaper' word-wise" if one factors in this dialogue you and I have been having. :p

Sorry for hijacking your thread, JK.

c1ue
12-20-07, 03:12 PM
i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?

From a financial perspective - if the US rights the ship then the SWFs will look like geniuses.

If, on the other hand, the systemic problems are too large, then they will look like idiots.

I'm voting for the latter.

While the assets bought have been at a discount, they are discounted from the peak only 30% to 50%.

I remember the last major fiasco - I bought Citibank for (not split adjusted) $20 and change vs. their peak of $100 - 3 years earlier.

And Citi's financial situation was not as ugly as now - thought plenty ugly.

As BofA showed - it is never too late to buy assets in a sinking ship.

touchring
12-20-07, 07:57 PM
Soveriegn funds are different from the usual private investors.

With trade surpluses, and so much printing of money by western central banks, their funds keep on increasing. They will be fools if they don't buy concrete assets using the free money, when given a chance.

If stock prices drop further, they can always average down later.



Different cases, they are not buying at the peak and the loan conditions seem to be favorable.

dbarberic
12-21-07, 09:46 AM
The acronym SWF drives me nuts; I keep wanting to substitute Single White Female.

jk
12-21-07, 09:55 AM
The acronym SWF drives me nuts; I keep wanting to substitute Single White Female.
we know what you spend your time reading, dbarberic!

c1ue
12-21-07, 12:01 PM
They will be fools if they don't buy concrete assets using the free money, when given a chance.

They have been trying, but have been prevented by the US government.

Thus they are trying the route open for them.

But bank stocks now are NOT a concrete asset, except in the shoe sense.

Jim Nickerson
12-22-07, 12:08 PM
I don't know that Alan Abelson's opinions are better than anyone else's, but here is what he wrote in Barron's 12/24/07 http://online.barrons.com/article/SB119808618135539831.html?mod=9_0031_b_this_weeks_ magazine_columns



FURNISHING SOME JOLLIES TO THE market were the enormous wads of dough being tossed about by the central banks, conspicuously including the Fed, and monster infusions into the likes of Bear Stearns and Merrill Lynch from so-called sovereign funds. As that generic name strongly suggests, these are investment entities, created by the governments of various Asian and sundry Middle Eastern countries.

Perhaps we were born with an overly dominant cynical gene, but the rescue rush being put on by the central banks (the money is officially short-term borrowings that presumably will have to be repaid by somebody, hopefully the borrowing bank, but who knows?) strikes us as an indication that they think things are worse in the tangled global credit markets than they're letting on publicly.

As for the sovereign funds, no question they're loaded, but there is some question, certainly, as to their investment acumen.You may recall that when Blackstone Group went public in June, the Chinese bought a 10% stake, for which they shelled out $3 billion. For about 24 hours they looked like investing whizzes, but that image faded with Blackstone's stock. And their investment now is down some half a billion, which is a lot of smackers in any language.

Obviously, one bad play doesn't mean the end of the game. Nor is it necessarily an indication of how other commitments by the Chinese and other sovereign funds will fare. The conventional Street wisdom is that they're in for the long haul. But, as intimated, investing in the financials, as they're doing with some gusto, may turn out to be a considerably longer haul than they're bargaining for.

touchring
12-23-07, 05:11 AM
Obviously, one bad play doesn't mean the end of the game. Nor is it necessarily an indication of how other commitments by the Chinese and other sovereign funds will fare. The conventional Street wisdom is that they're in for the long haul. But, as intimated, investing in the financials, as they're doing with some gusto, may turn out to be a considerably longer haul than they're bargaining for.


Long haul has different meanings to different cultures. Long haul might mean 8-10 years in a Western culture context, but to these Chinese, it means 30-50 years.

touchring
12-23-07, 06:55 AM
They have been trying, but have been prevented by the US government.

Thus they are trying the route open for them.

But bank stocks now are NOT a concrete asset, except in the shoe sense.


Sure, trying out the route? The investments made to this date is just a drop in the bucket.

GRG55
12-23-07, 11:07 AM
in the last few months we've had swf investments in blackstone, citi, ubs and now morgan stanley. i know we're only talking $5-10billion a pop here, but there's a pattern. i'm aware that the swf's are also making other kinds of investments, and there's a rumor about blackstone orchestrating a chinese bid for rio tinto. but the big news has been the investments in financial entities. these entities have needed infusions because of financial structure rumblings, however, that bring into question the value of these very investments.

we have been living in the age of finance. but, in light of unfolding events, how long will it be before you can hear the phrase "financial innovation" without wincing or rolling your eyes?

i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?

whither the fire economy? or is it wither the fire economy?

WIth the exception of Blackstone, it would not appear they are paying peak prices for financials. Unlike Blackstone, Citi and UBS et al are global franchises that would be difficult to replicate starting from scratch - there is real scarcity value in these names. Aggressive Asian banks, like India's ICICI, are working hard to develop global positions of their own, but they may never achieve the status of a Citi or a UBS. Singapore's Temasek SWF holds a material position in Standard Chartered, another European bank with a long history in Asia and the Middle East (BTW, if you want to see how a bank should be managed compare the stock price performance of London listed Standard Chartered against virtually any other European bank).

It's not often that foreign governments would be able to buy a position in a firm like Citi or Morgan Stanley without a serious political backlash from Washington (a la Dubai Ports). A reasonable argument can be made that they are being astute and opportunistic by seizing this moment, and also creating the goodwill, at a time of severe US financial sector stress, to improve and expand their ownership positions in these firms if additional capital is needed, as seems likely.

Excerpt from a post of mine earlier yesterday responding to a post of Finster's:


...And it's troubled banks (Citi), brokers (Bear and Morgan Stanley), chip makers (AMD), and so forth.

I see this as the "third phase" of globalization - a process that really got underway with the money printing wave during Burns' tenure at the Fed.

How long will it be that these purchases are limited to only distressed companies? Will the SWF's become more assertive in time, and reject the limitations currently being imposed (capital infusions without Board seats, etc)? Is a real transfer of wealth from west to east underway, and are these bank capital infusions a harbinger of a remarkable shift in control of the global financial system away from Americans on Wall St? ...

The "first phase" started in the late '60's and lasted nearly 20 years. This was the beginning of the end of the post-war Amercan industrial economy, as inflation drove up US labour rates, house prices and domestic raw material inputs, thus making the manufacturing sector increasingly less competitive. For example, this was the real start of (four decades) the decline for US automakers who gave way first to Japanese, and then Korean competitors. By the end of the 70's the USA could no longer manufacture common household appliances like television sets competitively, its cost structure was so bloated from the Fed's inflationary policies. Volcker's much admired "smashing of inflation" drove the US $ exchange rate up, which led to the mass extinction of what was left of conventional US manufacturing and ushering in the Rust Belt era. In my view phase one of post-WWII globalization ended with the Plaza Accord in 1985, an event that clearly signalled to the world that the pain of sound money, anti-inflationary policies was far too great for US politicians and voters to bear. By that point the foundation for the mess we are dealing with today had already been laid - a time when Greenspan, who's taking all the flack now, was still "in training" for his role at the Fed.

c1ue
12-23-07, 12:04 PM
Unlike Blackstone, Citi and UBS et al are global franchises that would be difficult to replicate starting from scratch - there is real scarcity value in these names. Aggressive Asian banks, like India's ICICI, are working hard to develop global positions of their own, but they may never achieve the status of a Citi or a UBS.

I understand what you're saying, I'm just not sure I agree with it.

Sure, these names are globally recognized.

But as Samsung (and before, Sony and Toyota) has shown, all you need is sufficient marketing money spent over a sufficiently long time.

I haven't seen a resurgence of IBM Thinkpad, Zenith, RCA, Maytag, or any of the other 'marquee' brands bought by China in the past 10 years.

Secondly what had been bought by the SWFs thus far are just minority stakes.

Sure, it is possible to increase the stakes at some point, but at present all that's happened is that existing management of these firms has just been given some extra play money.

Lastly I also question the 'global' nature of Citi and Blackstone, if not necessarily UBS. These companies have tried to expand outside of the US, but are 2nd and 3rd rate in pretty much every one of these new markets.

From a financial standpoint, I would think that the nations associated with the SWFs would recognize that having a national champion bank is in many ways safer than having a stake in a multi-national bank.

Certainly any bank with the billions potentially available via SWFs would become a major local player pretty much overnight.

Then the question becomes expertise - is the human and institutional expertise of Citi and Blackstone replicable independently?

This is harder to answer - but given that a lot of the employees of these institutions are international in background, it is not inconceivable that these people might be open to changing venues back to their origin.

Unlike your industry (oil) where the last 2 decades have seen very little human capital development, in the financial industry it is quite crowded with new and old players.

DemonD
12-24-07, 06:07 AM
I think i'm in agreement with clue, although I will be more blunt with my opinion:

These investments are basically knife-catchers writ large. Just because you have billions of dollars doesn't mean you make all the right investment choices.

The classic example i can think of is Bill Miller of Legg Mason fame investing heavily in home builders in summer and fall of 2006. His fund had beaten the S&P 500 something like 15 straight years before 2006, and it's certainly not outperforming this year either.

So yes, I believe this is almost exactly like the japanese buying rockefeller and pebble, just this is with stock in companies instead of real estate.

grapejelly
12-24-07, 08:13 AM
Yes, I agree...these funds are doomed to make the very worst investments because they are politically driven.

And the "Pebble Beach" syndrome is an apt analogy.

The FIRE sector has boomed in recent years and ballooned to dwarf other parts of the economy. It's rear-view-mirror investing...because this part of the economy will be shrinking as a percentage, say, of US corporate earnings and the S&P. Tangibles will be where it's at.

touchring
12-24-07, 11:05 AM
I can't see the logic of SWF investing at this stage unless the intention is to average down when further new losses require more capital injections.

Contemptuous
12-25-07, 05:03 PM
GRG55 wrote -

<< The "first phase" started in the late '60's and lasted nearly 20 years. This was the beginning of the end of the post-war Amercan industrial economy, as inflation drove up US labour rates, house prices and domestic raw material inputs, thus making the manufacturing sector increasingly less competitive. For example, this was the real start of (four decades) the decline for US automakers who gave way first to Japanese, and then Korean competitors. By the end of the 70's the USA could no longer manufacture common household appliances like television sets competitively, its cost structure was so bloated from the Fed's inflationary policies.

Volcker's much admired "smashing of inflation" drove the US $ exchange rate up, which led to the mass extinction of what was left of conventional US manufacturing and ushering in the Rust Belt era. In my view phase one of post-WWII globalization ended with the Plaza Accord in 1985, an event that clearly signalled to the world that the pain of sound money, anti-inflationary policies was far too great for US politicians and voters to bear. By that point the foundation for the mess we are dealing with today had already been laid - a time when Greenspan, who's taking all the flack now, was still "in training" for his role at the Fed. >>
Last edited by GRG55 : 12-23-07 at 11:24 AM.


IMHO a quite accurate summary of US economic decline.

Rajiv
12-25-07, 08:55 PM
Shouldn't the pdf be behind a fire wall? Just from looking at the google books entry, and the fact that mises.org is selling the book for $18. Still appears to be in print - or is available.

Spartacus
12-25-07, 09:50 PM
Shouldn't the pdf be behind a fire wall? Just from looking at the google books entry, and the fact that mises.org is selling the book for $18. Still appears to be in print - or is available.


they want to spread the word, so they're making a lot of stuff available for free.


They criticize the Ayn Rand folks for using DRM - the Randians may make a little money but the information stays relatively sequestered.

http://www.mises.org/studyguide.aspx?action=source&source=Online%20Books

I can't find it right this moment but they were making a ton of Rothbard audio available as free mp3 a while back

Tulpen
12-25-07, 10:44 PM
i'm wondering if, like the japanese buying rockefeller center and the pebble beach golf club at the peak, only to sell them back years later for a lower price, are the petro-countries and chinese buying finance at the peak?

I think their getting a deal, provided they pay for it with US dollars.

touchring
12-26-07, 07:46 AM
I think their getting a deal, provided they pay for it with US dollars.

Perhaps this will provide a clue.

http://www.ibtimes.com/articles/20071204/temasek-singapore-banks.htm

Rajiv
12-28-07, 01:33 AM
From the very first chapter of the book -- Does it sound familiar??? This was written in 1932


Mass delusions are not rare. They salt the human story. The hallucinatory types are well known; so also is the sudden variation called mania, generally localized, like the tulip mania in Holland many years ago or the common-stock mania of a recent time in Wall Street. But a delusion affecting the mentality of the entire world at one time was hitherto unknown. All our experience with it is original.

This is a delusion about credit. And whereas from the nature of credit it is to be expected that a certain line will divide the view between creditor and debtor, the irrational fact in this case is that for more than ten years debtors and creditors together have pursued the same deceptions.

In many ways, as will appear, the folly of the lender has exceeded the extravagance of the borrower.

The general shape of this universal delusion may be indicated by three of its familiar features.

First, the idea that the panacea for debt is credit.

Debt in the present order of magnitude began with the World War. Without credit, the war could not have continued above four months; with benefit of credit it went more than four years. Victory followed the credit. The price was appalling debt. In Europe the war debt was both internal and external. The American war debt was internal only. This was the one country that borrowed nothing; not only did it borrow nothing, but parallel to its own war exertions it loaned to its European associates more than ten billions of dollars. This the European governments owed to the United States Treasury, besides what they owed to one another and to their own people. Europe's attack upon her debt, both internal and external, was a resort to credit. She called upon this country for immense sums of private credit—sums which before the war had been unimaginable—saying that unless American credit provided her with the ways and means to begin moving her burden of debt she would be unable to move it at all.

Result: The burden of Europe's private debt to this country now is greater than the burden of her war debt; and the war debt, with arrears of interest, is greater than it was the day the peace was signed. And it is not Europe alone. Debt was the economic terror of the world when the war ended. How to pay it was the colossal problem. Yet you will find hardly a nation, hardly any subdivision of a nation, state, city, town or region that has not multiplied its debt since the war. The aggregate of this increase is prodigious, and a very high proportion of it represents recourse to credit to avoid payment of debt.

Second, a social and political doctrine, now widely accepted, beginning with the premise that people are entitled to certain betterments of life. If they cannot immediately afford them, that is, if out of their own resources these betterments cannot be provided, nevertheless people are entitled to them, and credit must provide them. And lest it should sound unreasonable, the conclusion is annexed that if the standard of living be raised by credit, as of course it may be for a while, then people will be better creditors, better customers, better to live with and able at last to pay their debts willingly.

Result: Probably one half of all government, national and civic, in the area of western civilization is either bankrupt or in acute distress from having over-borrowed according to this doctrine. It has ruined the credit of countries that had no war debts to begin with, countries that were enormously enriched by the war trade, and countries that were created new out of the war. Now as credit fails and the standards of living tend to fall from the planes on which credit for a while sustained them, there is political dismay. You will hear that government itself is in jeopardy. How shall government avert social chaos, how shall it survive, without benefit of credit? How shall people live as they have learned to live, and as they are entitled to live, without benefit of credit? Shall they be told to go back? They will not go back. They will rise first. Thus rhetoric, indicating the emotional position. It does not say that what people are threatening to rise against is the payment of debt for credit devoured. When they have been living on credit beyond their means the debt overtakes them. If they tax themselves to pay it, that means going back a little. If they repudiate their debt, that is the end of their credit. In this dilemma the ideal solution, so recommended even to the creditor, is more credit, more debt.