Tuesday, December 25, 2007

You need willpower.

You need willpower.

Willpower is to do something that must be done but you don't feel like doing it.

The most important factor to do things is sheer willpower.

There is no substitute for will.

You need self-confidence and persistence, the feeling that is right to do what you plan to do and you can certenly do it.







Wednesday, December 19, 2007

Why I am betting a recession will happen.

The Fed's actions will not help.

Strong global growth that is propping up the U.S. economy is based on irrational indebtedness.

The economy is still creating jobs but they are low-paying jobs.

The housing downturn's pain has not damaged much yet.

Unfortunately government spending remains strong.




Monday, December 17, 2007

How to solve the subprime mess?

The best move to solve the subprime mess is to do nothing at all.

The government must be careful about anything that props up home prices because
it would delay the point at which investors -- in both real estate and mortgage-backed securities – believe prices have touched bottom.

It is common sense that the financial erosion will come to an end when the prices of homes and equity in homes stabilize.




Thursday, December 13, 2007

It stands to be a big question mark until 2009

Mortgage securities typically consist of 10 or more different slices -- from highly rated slices for conservative investors all the way down to low-rated, riskier slices for investorslooking for bigger returns.

Each slice has its own set of rules governing when and how investors will get paid or suffer losses.

Rising defaults can actually be good for some highly rated slices, which get paid off faster as a result.

Many lower-rated slices, though, pay back the original investment only after three years, and only on the condition that defaults remain low.

That means the value of a security issued in 2006 stands to be a big question mark until 2009.

Wednesday, December 12, 2007

Relocating jobs to the U.S.

European businesses struggling to stay competitive in global markets as the euro and pound hit new highs against the dollar, are shifting more of their cost into dollars by rising their purchases from America suppliers and relocating jobs to the U.S.

Sunday, December 9, 2007

In a free market competition is the rule.

Mexican telephone and retail magnate Carlos Slim, in a normal defeat,(because
outside US few entrepreneurs know what competition is) will exit the U.S. Consumer
electronics market, shutting the last 100 CompUSA Inc. stores after
sinking about $2 billion into the business.

He doesn't know how to play in a free market field.
In a free market competition is the rule.

Tuesday, December 4, 2007

Subprime mortgages available to Americans

Lenders who made subprime mortgages available to Americans with poor credit also gave more and more of the the high interest loans to those with relatively good histories.

The findings could hold implications for how banks and regulators address the meltdown in those loans.

Saturday, December 1, 2007

Foreign-born students

Foreign-born students holding temporary visas received 33% of all research doctorates
awarded by U.S. universities in 2006, according to an annual survey by the
National Opinion Research Center at the University of Chicago.

But more to the point of business competitiveness, foreign students comprised 44% of science and engineering doctorates last year.

Friday, November 30, 2007

Education

Kids who compete individually put themselves in stronger positions as individuals.

When kids are rewarded for participation rather than achievement, they don't have a strong sense of what they are good at and what they are not.

Thursday, November 29, 2007

Capitalism only works when those who make bad decisions are allowed to fail

A combined Citigroup and Bank of America would have had to shed most of Citigroup's 1,000 U.S. branches and its $249.34 billion in consumer deposits, to stay under a regulatory cap that bars any U.S. bank from an acquisition that would give it more than 10% of the nation's total bank deposits.

Together Citigroup and Bank of America, with its $598.21 billion in deposits as of June 30, would have had nearly 13% of the U.S. total. Bank of America alone holds 9%.

Capitalism only works when those who make bad decisions are allowed to fail or to get out of trouble on their own . Socialism doesn't work because it tries to save people from themselves, thus prolonging the effects of bad decisions and encouraging more bad decisions.

Tuesday, November 27, 2007

Married people with children

Married people with children tend to be both successful and motivated, precisely the people who make economies go.

They are twice as likely to be in the top 20% of income earners, according to the Census, and their incomes have been rising considerably faster than the national average.

Saturday, November 24, 2007

How to resolve the subprime mess?

Establishing partnerships with the borrowers is for the lenders the best way to resolve the subprime mess.

It would stop the constant decline of the real estate market and it would keep assets value.

Wednesday, November 21, 2007

Alternative energy

There's no shortage of new capital pouring into alternative energy projects these days.

Some experts believe that the word alternative means stuff that nobody actually uses.

If that turns out to be true, then alternative energy companies could struggle for market share without government assistance.

Tuesday, November 20, 2007

The weak dollar and inflation

Why the weak dollar is not the inflation driver it once was?

Because foreign exporters are so keen to keep U.S. market share that when the dollar weakens, they often lower their prices to keep them constant after the currency effect.

That's especially true when the economy is slowing and consumers are less willing to pay higher prices.

Saturday, November 17, 2007

U.S. remains a dynamic society

A new study of income mobility by the Treasury Department shows that the U.S. remains a dynamic society marked by rapid and mostly upward income mobility.

Americans on the bottom rungs of the economic ladder continue to climb into the middle and sometimes upper classes in remarkably short periods of time.

The key point is that the study shows that income mobility in the U.S. works down as well as up-another sign that opportunity and merit continue to drive American success, not accidents of birth.

The "rich" are not the same people over time,

As the Treasury data show, we shouldn't worry about inequality.
We should worry about the people who use inequality as a political club to promote policies that reduce opportunity.

Friday, November 16, 2007

Profits and market push innovation

Universal health care would undermine U.S. leadership in medical innovation.

Innovation outside of the private sector doesn't work , it has never worked and will never work .

Health care is about innovation and the U.S.'s world leadership in medical innovation rest in the big amount of money spent on health care in the country.

Profits and market push innovation not boards , government or national foundations.

Thursday, November 15, 2007

Successful people

Successful people hook people in the fifteen first seconds.
Successful people have tenacity and self confidence.
Successful people are obsessive.
Successful people show what they are passionate about.
Successful people leave something for people to figure out.

Wednesday, November 14, 2007

Invisible competition

Competitiveness was always the American mantra, but today we are racing too hard.

Competition was face to face , but today is invisible.

Invisible competition favors people who can see a new future and want to get there first.

The greatest gains are likely to go to people who love the game of competition for its own sake.

Monday, November 12, 2007

It will be not enough.

The three biggest financial groups in the country have agreed on the structure of a $100 billion fund to help thaw portions of the frozen credit markets.

It will be not enough.

Sunday, November 11, 2007

The trade gap

The trade gap narrowed 0.6% to $56.45 billion in September amid strong foreign demand and a lower bill for imported oil.

Saturday, November 10, 2007

Very exclusive club

Catholic bihhops from cotton-producing West African nations Burkina Faso, Senegal and Mali lobby Congress and White House to cut subsides for U.S. cotton.

Ex-Congressman Vin Weber calls them part of a "very exclusive club...people who visit Washington asking them not to spend money."

Thursday, November 8, 2007

Is that a recession?

Dollar is falling . Gold is above $800 an ounce. Oil is pushing toward $100 and stock market is going nowhere.

Is that a recession?

Wednesday, November 7, 2007

Additional write-downs

Investors think that the largest bank in the U.S. by assets, Citigroup, will need much mor than one year to clean up the mess.

The bank's problems have deepened and it have announced the possibility of additional write-downs.

How big is the mess?

Is it alone?

Saturday, November 3, 2007

Skilled immigrants

Senator Chuck Grassley, the Iowa Republican, slipped an amendment into a spending bill that would tax businesses that hire skilled immigrants an additional $3,500 per visa to a total of $5,000 each.

Friday, November 2, 2007

GDP growth

Gross domestic product, the value of goods and services produced in the country,
expanded by a seasonally adjusted 3.9% annual rate in the third quarter, the Commerce Department said.

That bested second-quarter growth of 3.8% and first-quarter growth of 0.6%.
Morgan Stanley economists predict GDP growth of 1.1% in fourth quarter.

Thursday, November 1, 2007

They have a great business but difficult to sell.

Why don't successful web sites go public?

Because their success was cultivating third-party software developers and
they have little, if any, control over these third-party platforms.

This creates the risk that,as they become part of the Web site's fabric, the owner of the web site loses the ability to chart its own destiny.

They have a great business but difficult to sell.

Wednesday, October 31, 2007

One difference between Wall Street and Washington

There's less damage to the capitalist system when individuals and companies are held accountable for their mistakes than when politicians decide that every financial "crisis" is an opportunity to shoot the wounded and change the rules.

One difference between Wall Street and Washington is that in the latter no one ever admits a mistake, much less suffers for it.

Tuesday, October 30, 2007

Or most likely both.

All insurance systems impose limits on consumption, but a government-financed health care would remove any hint of the price mechanism.

That it will either vastly inflate health spending and lead to tax hikes or otherwise lead to government rationing.

Or most likely both.

Monday, October 29, 2007

Riskier people

In the same way that in order to be rich you have to take risk, countries where people don't use to take risk they use to be less wealthy than countries with riskier people.

But in today's winner-take-all economy, rich countries and rich people are especially drawn to bold gambles.

Sunday, October 28, 2007

Low level of housing demand over the next several years

The percentage of homes that are owner occupied -- the homeownership rate -- dropped to the lowest point since the second quarter of 2003, according to the Census report.

This year, as many as 900,000 households moved from owning homes to renting them.

It implies a very low level of housing demand over the next several years.

Saturday, October 27, 2007

Two virtues

Greed and selfishness are two virtues of the rich societies .

Friday, October 26, 2007

Two different stories.

Google's revenue, excluding commissions paid to marketing partners, totaled $3.01 billion,in the third quarter. It is 23% of partners work, it is up from 21%.in the second quarter.
International operations accounted for 48% of revenue during the third quarter
Google handled 53.6% of U.S. Web-search queries in August, compared with 52.7% in June,
The rate of revenue growth from partner sites(money taken from its partners) that carry advertising brokered by Google picked up during the quarter to 40% from 36% during the second quarter.

The $8.4 billion write down of Merrill Lynch is nearly one fifth of its $42 billion net worth.
Merrill recorded a $2.24 billion loss for the quarter, making it one of the biggest losses in Wall Street history.

Thursday, October 25, 2007

One big factor is the shrinking dollar.

A broad group of developing countries face upward pressure on their currencies.

A decade ago some of these countries battled currencies crisis.

One big factor is the shrinking dollar.

The response by central banks to fight inflation has been to buy dollars.

Developing countries are sitting on massive U.S. dollars assets that they may not need.

Why do they do that?. Because they don't have real free markets and don't have modern financial systems.

Wednesday, October 24, 2007

Downward pressure in already weak markets.

Lenders in softening housing markets states are cutting the amount borrowers can finance and are also taking a tougher look at appraisals.

These tighter standards could add to downward pressure on home values in already weak markets.

Tuesday, October 23, 2007

To be alive when your time comes to play.

Technology and globalization make a great deal of brick and mortar business to pass away .

The global world demand created space for the few that kept alive and became very profitable business.

Two examples are ocean freighters ans ship builders.

Everything in economics has its cycle . The key of the game is to be alive when your time comes to play.

Monday, October 22, 2007

Logical fear

In the past places like China and Russia, where don't know what freedom is, used to spend their money on guns and butter.

Nowadays they have government controlled investment funds and envision to use these sovereign wealth funds to buy local companies in US and Europe.

They has led to fear in the US and Europe that such funds would be used to take over key domestic industries.

Logical fear.

Sunday, October 21, 2007

The floodgates of fear are open

Important banks , Europeans included, and financial firms are expressing more interest than expected in putting billions of dollars , more than 60, toward a big fund to prop up parts of the mortgage security market.

What it seemed as bailout for Citigroup is becoming a necessity for a lot of institution in the financial market.

The floodgates of fear are open.

Saturday, October 20, 2007

There is only a way to improve people's live

There is only a way to improve people's live: Taking risk , realizing that it is OK to fail once or twice, wanting to strike out on your own and make something happen.

Because that is very hard to do it is difficult to find those attitudes.

Friday, October 19, 2007

The SIV game is dangerous.

There are perils involved in borrowing money short term and investing it long term, but nobody thought that it could threat the stability of global financial markets.

The biggest bank in the world is the largest player in the SIV market and banks that didn't have exposure to SIVs will involve in the the biggest bail-out of history without forgetting governments.

Thursday, October 18, 2007

How much houses prices will fall in the next two years?

How much houses prices will fall in the next two years?

In the same way investors with subprime holdings have difficulty figuring out what the investment worth, to know how much house prices will fall in the next two years is not easy.

It is easy to know that prices will fall because investors know that their subprime holdings are going to be worth less and less.

Wednesday, October 17, 2007

Are American Banks strong enough?

Tier I ratio reflects how much of a financial cushion a banks has to protect it from unexpected problems.

Federal regulators require a bank to have a Tier I ratio of 4%. A bank with a ratio of 6% or higher is considered to be well capitalized.

As June 30, Bank of America's Tier I ratio was 8.5%, J.P. Morgan was 8.4% and Citigroup fell to 7.4% down from 8.6% .

Tuesday, October 16, 2007

There is no real money

The riskier investments that the banks made with structured investment vehicles, or SIVs are not in their balance sheet.
It shows how the financial engineering is based on air. There is not real money.

Monday, October 15, 2007

Inequality

Inequality is good for poor people.

Inequality is a Growth-Enhancing Policy.

It is only Growth what gives poor people the opportunity to trade their way out of poverty.

Sunday, October 14, 2007

Who will pay?

The big boys (Banks) are discussing a plan to bailout their big mistakes in the mortgages business . The little boy (ordinary people) will pay for the plan with inflation.

Saturday, October 13, 2007

What affect the American economy today.

Subprime borrowers are not low-income residents of inner cities.The high-rate lending also rose sharply in middle-class and wealthier communities.

The wealthiest 1% of Americans earned 21.2% of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19% in 2004, and surpasses the previous high of 20.8% set in 2000, at the peak of the previous bull market in stocks.

The bottom 50% earned 12.8% of all income, down from 13.4% in 2004 and a bit less than their 13% share in 2000.

In 2004 there were more than twice as many such Wall Street professionals in the top 0.5% of all earners as there are executives from nonfinancial companies.

Friday, October 12, 2007

Technology and foreign investment are making income inequality worse around the world, the International Monetary Fund said in a new report, handing critics of globalization a powerful argument to use in their political battles.

U.S. strip-mall vacancies hit 7.4% in the third quarter, a 5½-year high.

There is uncertainty in the market, we are in a time of particularly high uncertainty.

Thursday, October 11, 2007

What affect the American economy today.

What affect the American economy today.

Wednesday 10, 2007

European finance ministers called on China to untether the yuan to help rebalance global exchange rates.With the euro hovering above $1.41, many in Europe have been calling for strong language, particularly focusing on China's currency.

Some office landlords in Silicon Valley are again accepting stock in still-private start-ups in lieu of rent.PlaySpan Inc., a Web-gaming outfit that raised $6.5 million, boasted on its Web site that it had been founded by a fifth-grader.But some start-ups are trying to tone down the hype.

The majority of business executives in an assortment of non-financial industries suggest that they plan to maintain employment levels or increase them in the next year, with most of the planned increases in export and international-related activities.

The Russell 2000 is up 6.7% year-to-date, while the S&P 500 is ahead by 9.5%. The Dow Jones Industrial Average of 30 megacap stocks is up 12.7. One reason: Large stocks are better positioned to benefit from strong growth overseas and a weak dollar, which makes it cheaper to export.



Tuesday 9, 2007

Japan's foreign reserves rose to a record in September from August, thanks to a stronger euro against the dollar and a rise in short-term U.S. Treasury prices.
value of Japan's euro-denominated bonds increases as the euro climbs against the U.S. dollar, since Japan calculates the value of the reserves in dollars.
Another contributor was a drop in short-term U.S. Treasury yields, which move inversely to prices. Yields on the two-year notes fell to 3.992% in September from 4.14% in August, the official said. Japan parks the bulk of its reserves in U.S. Treasurys.

It is good news whenever a group of American businesses enjoys growth and prosperity. It is far better, however, when this success is earned through market-leading innovation, quality and value -- not through a sinking dollar that happens to make U.S. exports cheap.

Some firms will grow accustomed to their macroeconomic free lunch and be unprepared to compete on the fundamentals should the dollar change direction.

Financial firms are more difficult for investors to accurately value than other businesses, which explains why several large banks saw their stocks jump last week after delivering bad news

Monday 8, 2007

Companies are taking multibillion-dollar write-downs
Credit crunch keeps tied to questionable home mortgages
Oil traders and speculators unload crude inventory. Storage levels have fallen.
The euro's climbing against the U.S. dollar.
Employers added 110,000 jobs in September it is a healthy report for the economy.
Banks in Europe are tightening credit standards.
The dollar is weak and commodity prices in record territory.
The jobless rate keeps stable at 4.7% and increase for real wage after inflation es 2.2% in the last 12 months.
Costs of tackling global warming are going to be high.
Corporate profits are expected to post a third-quarter decline
The stock market is a strong and the world's wealth grew 7.5% in 2006 reaching 97.9 trillion. There are a more than 10 millions of households with 1 million or more in assets and 50% of them are in the USA.