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Emerging Market Liquidity

Posted in Uncategorized by teslik on September 3, 2007

At least thus far, investors worried over the prospects of a global credit squeeze have afforded emerging market funds a bit more leeway than their developed-market counterparts. Things may be getting a bit frothy, says FT’s Alphaville, citing data from Standard & Poor’s new “Liquidity Vulnerability Index.” The measure rates Latvia, Iceland, and Bulgaria as the emerging market countries most susceptible to a broad evaporation of liquidity. Most “sheltered” is Russia, followed by Egypt, the Ukraine, and the Czech Republic.

Should an emerging debt-market shakeout come along, the Economist isolates Turkey as particularly vulnerable, given its large current account deficit, but also notes that today’s emerging markets don’t much resemble the markets that got whacked during the financial crises of the ’90s, given that many have restructured their borrowing and built up large foreign currency reserves.

Before Gawker Beats Me to the Punch

Posted in Uncategorized by teslik on August 30, 2007

, Apr. 9, 2007. And the Economist, Sept. 1-7, 2007:

Just sayin’


Posted in Uncategorized by teslik on August 21, 2007

Harvard’s endowment jumped 23 percent this year, up to $34.9 billion.

Just for kicks I compared that $5.7 billion rise to the nominal GDPs of IMF-member countries (not really a fair comparison, I admit, though if anything it would be Harvard getting handicapped — the “goods and services” it creates yearly would actually exceed its endowment increase, factoring in what it produces via Harvard University Press, the sale of all manner of other Harvardiana, etc.).

At any rate, factoring out all that extra money and looking just at the endowment increase, Harvard did better last year than 50 of the 181 members of the IMF.

War Chest

Posted in Uncategorized by teslik on August 21, 2007

Following up on my last post: If all this turmoil is, in fact, a buying opportunity, looks like Warren Buffett is well poised to swoop in.

Parsing the Debt Markets

Posted in Uncategorized by teslik on August 17, 2007

I interviewed Sebastian Mallaby about the credit crunch (see here).

Sure seems investment banks and ratings agencies both played a not-totally-savory role propping up the debt markets, even after it was clear that there were some fundamental weaknesses there.

I have no idea if the market dip is close to over–though I would guess quite a few funds are still hiding some major problems from the markets. Nonetheless, I’m impressed by how many people are focusing on the silver lining of all the current turmoil (Mallaby’s latest from the Washington Post; the Economist‘s Matthew Bishop, podcasting last week with my boss, Mike Moran; and the leader from the current Economist).

Maybe there are some buying opportunities out there?

The Abe Economy

Posted in Uncategorized by teslik on August 1, 2007

I recently wrote an article on the LDP’s thumping in Japan’s July 29 upper-house elections.

I didn’t get into the economic side of things, but it’s worth a look. Bloomberg said market analysts faced “paralysis” following the vote, worrying that a lame-duck Abe might prove unable to press through the economic reforms he has targeted since taking helm.

Abe described his ambitious economic priorities in an interview with Lally Weymouth, published this April in the Washington Post:

We have expounded two basic pillars to enable Japan to grow in the future. We will deregulate to promote innovation, and we plan on establishing free trade arrangements and economic partnership arrangements with various countries.

We’d also like to facilitate foreign direct investment in Japan. Our plan is to double FDI over a five-year period. We will start implementing rules in May that will enable triangular mergers to be implemented in Japan. It’s been said that the government in general has been active in impeding economic activity. My administration — the [previous] administration also worked on this — will present to the parliament a bill for reform of the civil service.

Needless to say, this kind of talk is music to the ears of international investors. As Abe himself notes, it’s the same economic scheme implemented by his LDP predecessor, Junichiro Koizumi. A couple years ago, the Economist published a survey arguing that Japan’s economic outlook was looking fairly bright under Koizumi’s LDP leadership. This optimism was “not based on any notion that Mr Koizumi’s victory represents the start of radical change…[but] the view that Mr Koizumi’s victory is the culmination of a long period of incremental change, bringing welcome confirmation that that change is not likely to be reversed.”

Now Abe’s shaky start appears to have had precisely the opposite effect, spooking the bulls.

Degree Pricing

Posted in Uncategorized by teslik on August 1, 2007

The New York Times examines sliding-scale degree pricing schemes and the Economist scoffs at the idea:

It seems that institutions of higher learning have begun to adopt differential tuition schemes in which more is charged to students majoring in business or engineering—degrees which tend to confer high salaries after college. . . . One of the main problems with this approach seems to be that it can hardly be efficient. By entering one of the fields subject to the increases, students are in all probability increasing their future wages, but the increase in tuition acts to reduce current income—hardly compatible with consumption smoothing.

Obviously, this is already happening among graduate programs. Nobody’s forking over $70k a year for a masters in art history. MBA programs are a different story.

This is all well and good, in theory. In an efficient world, students should be willing to borrow against future earnings to pay for the education that gets them those earnings.

My question is: What about the folks who would like to attend a specialized-degree program yet whose future earnings, even with the degree, aren’t looking so hot. Like, say, somebody who wants to learn about business management theory so they can write about it from an informed perspective. Where do they factor into this marketplace?

The FT’s Futures Game

Posted in Uncategorized by teslik on July 29, 2007

The Financial Times is hosting a free futures-trading game called FT Predict on its website. It’s fairly easy to get the hang of, and I have to admit I found it interesting to see how this limited market assesses the likelihood of different events–from whether the U.S. will launch air strikes on Iran by a certain date, to whether Fred Thompson stands much of a chance at winning the GOP nomination.