First as Tragedy, Next as Farce

By | 2014-09-05T17:32:11+00:00 November 30th, 2010|Global Market Update|

Is history repeating itself? After Greece accepted a bailout and then imposed austerity measures, to European approbation but to domestic riots, is Ireland doing the same thing? Greece needs to restructure its debt because it borrowed way more than anyone thought it did to pay for an economy where everyone is cheating the system and expects to retire at age 50 or 55. Germans understandably objected to supporting this, so Greece adopted austerity measures in exchange for European support. Ireland needs support for its [...]

First as Tragedy, Next as Farce

By | 2014-09-12T10:52:24+00:00 November 29th, 2010|Global Market Update|

Is history repeating itself? After Greece accepted a bailout and then imposed austerity measures, to European approbation but to domestic riots, is Ireland doing the same thing? Greece needs to restructure its debt because it borrowed way more than anyone thought it did to pay for an economy where everyone is cheating the system and expects to retire at age 50 or 55. Germans understandably objected to supporting this, so Greece adopted austerity measures in exchange for European support. Ireland needs support for its [...]

All Grown Up (Part 2)

By | 2014-09-12T10:52:16+00:00 November 28th, 2010|Uncategorized|

Another sign emerges of Google’s maturity. The company that popularized “Don’t Be Evil” as a corporate slogan has learned of another way that it is “one of the crowd.” Innovative engineers are leaving for newer start-ups. Google now has 23 thousand employees—4 and a half times more than the 5 thousand it had five years ago. Every day some of its legendary engineers are wooed by Facebook or some start-up that offers simplicity, autonomy, and a chance to get into a new company before [...]

Giving Thanks

By | 2017-07-17T12:35:18+00:00 November 24th, 2010|Global Market Update|

On the eve of the Thanksgiving Holiday, I have a lot to be thankful for. I’m thankful that Ben Bernanke is running the Fed. The Chairman had made The Great Depression the focus of his academic career. Who knew in February 2006 when he was selected to succeed Alan Greenspan that he would be presiding over a financial crisis that would threaten to create Depression 2.0? Clearly he was the right man for the job. I’m thankful that New Hampshire’s economy is the strongest [...]

The Bonds and the Banks

By | 2014-01-08T15:55:18+00:00 November 22nd, 2010|Global Market Update|

Greece isn't Ireland. That's clear. Six months ago the global equity markets fell by almost 20% in the wake of the Greek debt crisis. Now, with Irish banks threatening to take down another EU government, the markets have declined maybe 5%. What's the difference? One big difference is the nature of the debt. Bank debt is private. It's never enjoyed the assumption of being risk-free. There's an implicit assumption that government debt is the perfect credit. Even though tax-evasion is a Greek national sport, [...]

“Not In Front of the Kids!”

By | 2014-09-05T15:24:09+00:00 November 21st, 2010|Global Market Update|

Who are the grown-ups? When I was a child, we knew that any uncertain situation would be resolved by the grown-ups. Moving, job-loss, school: they would all be decided by the adults in the room and presented to the kids as a done deal. The same thing is happening in the world right now. I've written before how the global economy will be resolved by China and the US. The other countries can look on if they want to, but the world's economy really [...]

Ramblings on Risk (Part 3)

By | 2014-09-05T15:21:43+00:00 November 19th, 2010|Global Market Update|

So what are the different kinds of risk do we face? Financial risk comes in many varieties, but it boils down to not being able to get your money when you need it. If an asset can’t be easily converted into cash, that’s liquidity risk. For example, a home may be a great place to live, but it takes a while to sell one. By contrast bank deposits are usually available the same day. We know about credit risk. That’s the risk that a [...]

Ramblings on Risk (Part 2)

By | 2014-09-12T09:50:03+00:00 November 18th, 2010|Global Market Update|

So how do you control your investment risk? When you don’t know the future, how do you structure your investments? After all, investing is a bet on the future. The essence of risk management is the admission that we don’t know what the future holds. The first tool is diversification. By placing small sums in different types of assets in different industries with different payout structures you minimize the chances that a single mishap will overtake your entire nest-egg. Some might cite the financial [...]

Ramblings on Risk (Part 1)

By | 2014-09-05T15:17:58+00:00 November 17th, 2010|Global Market Update|

What is risk? Inquiring minds want to know! The second line is not misplaced. It is, of course, the tagline from the National Enquirer, the flagship publication of American Media. American Media plans to file for bankruptcy later this month in a prepackaged Chapter 11 filing. The risks of publishing in the era of the internet, iPad, and smart-phone news caught up with the tabloid producer. So what is risk? Many economists have tried to define it as the volatility of return. Certainly American [...]

Ramblings on Risk (Part 2)

By | 2014-01-08T15:43:38+00:00 November 17th, 2010|Global Market Update|

So how do you control your investment risk? When you don’t know the future, how do you structure your investments? After all, investing is a bet on the future. The essence of risk management is the admission that we don’t know what the future holds. The first tool is diversification. By placing small sums in different types of assets in different industries with different payout structures you minimize the chances that a single mishap will overtake your entire nest-egg. Some might cite the financial [...]