Monday, September 09, 2013
Financial Sarcasm Roundup for 09/09/13
Another gala week has opened the annual social calendar of San Francisco. I performed my public duty by attending some high-profile black tie functions so the hot women of this town can marvel at my extreme manliness. I tone down my sarcasm at social functions. I turn it back up when I'm online.
The Mexican government has a fiscal reform plan. The government's assumptions for the costs of subsidizing a new social security regime need more transparency. It looks like a good try at getting control of the gray-market economy if small businesses accept the new tax regime. The narco-warlords won't like that at all. I hope there's a budget line in there for subsidizing more hot Mexican actresses to make movies up here in the US.
China's banks will sell preferred stock. It will have the same accounting treatment and liquidation preference as preferred stock available in the West. This is good long-term news for the transparency of China's capital markets. It's also good Basel regime capital for banks as long as they can pay the preferred dividends. It's only bad for Chinese investors if and when inflation gets out of control. Collecting a 7% preferred dividend at par means nothing if inflation degrades that par value to nothing in real terms.
NYSE Euronext is investing in an online private placement market. I have been wondering since late 2012 when the big securities exchanges were going to recognize the listing potential of companies whose securities trade in secondary markets. Partnerships with other crowdfunding portals won't be far behind. The crowdfunding revolution is reaching the public capital markets with or without guidance from the SEC.
The Affordable Care Act isn't going to cover everyone. Well, no kidding. I don't think it was ever intended to provide universal health insurance coverage. It has too many moving pieces and allows for too many exemptions to cover everyone. Its designers from the managed care sector wanted to lock in a guaranteed customer base and its public policy advocates wanted something attractive enough to win elections. The hybrid result is a mandate of cash flows from the pockets of taxpayers into politically favored sectors.
Tourism is booming in Greece. Foreigners love bargains in a devastated economy and Greeks love hard currency that isn't inflating. Here's real confirmation that investors holding currency from financially sound countries preserve their lifestyles when other countries hit hard times. I'd like to be rich enough to afford dates with a bunch of hot Greek women.
The Economist is spewing total garbage about how the world's financial sector is safer now than in 2008. It errs in fact by saying the US has reduced its excess debt; no such thing has happened. It errs in logic by ignoring how the bond bubble has inflated the value of Treasury bonds banks own, regardless of risk-weighted capital. I am dismayed that the Economist has sunk to this level of ignorance. I console myself by realizing that some very sophisticated investors are going to take this false picture seriously and invest accordingly. I won't miss them when they're bankrupt.