Warren Buffett's $3 Billion Goldman Anniversary

By: Alex Crippen
Executive Producer

CNBC

Warren Buffett and Goldman Sachs: Golden Anniversary
It's 12 months later and Warren Buffett's Berkshire Hathaway is $3 billion richer.
One year ago today, on September 23, 2008, with the financial world still reeling from the collapse of Lehman Brothers just days before, Buffett stunned Wall Street with a massive vote of confidence for Goldman Sachs.
In a late-day news release, Goldman announced a private deal to sell Berkshire $5 billion of perpetual preferred stock. In effect, Berkshire was giving Goldman a massive loan. And you don't loan that kind of money to a firm you think could follow Lehman down the drain.

Rogers: We Need More Lehmans

By: Dan Weil

Money News

Investor extraordinaire Jim Rogers says the financial system needs more failures like Lehman Brothers to restore a functioning free market.
The chairman of Rogers Holding wrote in the Financial Times, “We need some more Lehmans so we can get out of this.”
During the last 20 years, “Greenspan and Bernanke introduced crony capitalism to the West, which is leading to a lost decade(s),” Rogers writes.
“Market fundamentals are that failures should collapse and be replaced by creative new forces rather than being propped up as zombies. Financial institutions have been failing for centuries and the world has survived.”

Bill Gross: Sell Equities, Buy Treasuries

Edward Harrison

Seeking Alpha

Bill Gross is a bond man. In fact, he is often called the “Bond King” because Pimco, the organization where he is founder and Co-Chief Investment Officer, is the largest bond fund in the world. In Bondland, what Gross says has a lot of weight.
And Gross has been talking about a “new normal” of deleveraging, deglobalization and reregulation. In his view, this means weak consumer demand counterbalanced only by heavier government intervention, leading to slow growth for the foreseeable future (See my post ‘Gross: The new normal for “the next 10 years and maybe even the next 20 years”’). In essence, he sees a scenario that is bullish for bonds (especially longer duration types like the 10-year and the 30-year) but not particularly bullish for shares.

Future of Polish-US relations

The shape of Polish-US relations and what the future holds in store for Polish culture.

Polish-US relations is the topic taken up by several papers. Analysts wonder if Washington’s decision to abandon plans for a missile shield installation in Poland will prove to be a setback in these relations. US analyst George Friedman claims in the tabloid FAKT that nothing has changed so far. ‘From the tactical point of view, the anti-missile shield was not that important for Poland’, he writes. It was more of a symbolic significance. What is really important is the shape of US-Russian relations. Moscow will most probably ask for more gestures from Washington and will want to have a final say on affairs with Ukraine and Georgia.

The BMD Decision and the Global System

By Stratfor

he United States announced late Sept. 17 that it would abandon a plan for placing ballistic missile defense (BMD) installations in Poland and the Czech Republic. Instead of the planned system, which was intended to defend primarily against a potential crude intercontinental ballistic missile (ICBM) threat from Iran against the United States, the administration chose a restructured system that will begin by providing some protection to Europe using U.S. Navy ships based on either the North or Mediterranean seas. The Obama administration has argued that this system will be online sooner than the previously planned system and that follow-on systems will protect the United States. It was also revealed that the latest National Intelligence Estimate finds that Iran is further away from having a true intercontinental missile capability than previously thought, meaning protecting Europe is a more pressing concern than protecting the United States.

Shiller Says We Need More Research On Economic Bubbles

With the failure of current economic models to give adequate warning of the current financial crisis, Robert Shiller says we need more research of bubbles and what their role should be in economic models. If we had a better understanding of bubbles, could we prevent them from reaching dangerous levels or detect trouble much sooner? The following article summarized by the Economist's View discusses this topic.
Robert Shiller says economists and their models need to take bubbles seriously (compare Dani Rodrik's "Blame Economists, not Economics"):

Meredith Whitney: At Least 300 More Banks To Fail

The Daily Bail

I stumbled across this clip from Friday's Good Morning America with Diane Sawyer and Meredith Whitney. It's a good opportunity to talk about Sawyer's intelligence. She has none. (Editor's Note: I got stories but I'm not talking.) Whitney reiterates her thesis that home prices have 25% further to fall and that consumer credit contraction will keep the recovery weak. Sawyer seems almost shocked by the pessimism, as though her assistant never explained to Meredith that you're not supposed to tell the truth on morning TV. She recovers in time to ask MW for one piece of 'advise' for everyone out there.

Finding the Policy Exit

By Nouriel Roubini

There is a general consensus that the massive monetary easing, fiscal stimulus, and support of the financial system undertaken by governments and central banks around the world prevented the deep recession of 2008-2009 from devolving into Great Depression II. Policymakers were able to avoid a depression because they had learned from the policy mistakes made during the Great Depression of the 1930’s and Japan’s near depression of the 1990’s.

Gross: Stock Market Due for Pullback

By: Dan Weil

Money News

Bond guru Bill Gross says stocks have far outrun the economy and are thus overvalued.
He compared the market over the past 12 months to a choice between historical comedians Will Rogers and Barney Fife.
Fife, of course, was the hapless deputy on the 1960s comedy "The Andy Griffith Show." And Gross opted for him.
“We've got a Barney Fife market,” he told CNBC.

Extraordinary Popular Delusions . . .

. . . and the madness of politicians pitching banker pay curbs.

Meetings like the G-20 summit this week in Pittsburgh aren't famous for their accomplishments, but this one bids to be different in at least one area: Cementing the notion that banker paychecks were the financial weapons of mass destruction that blew up the markets last year.

Stiglitz, Sen, and the End of Recession

by: Michael Mandel

Most forecasters expect third quarter real GDP growth to be positive, perhaps as much as 3%. This will be widely hailed as a sign that the nasty recession of 2008-2009 has come to an end. Indeed, the Fed’s statement today that “economic activity has picked up” seems to fuel the belief that the recovery has started.

Top Five IPOs of 2009 (Part I)

Tate Dwinnell

Seeking Alpha

The first half of 2009 brought us some memorable IPOs, but for the most part it was forgettable. As we approach the final quarter of the year with a flurry of IPOs expected to price in the coming days, I thought I’d rank what I think are the top IPOs of 2009. Please note that these are not ranked solely on performance, but rather on fundamentals such as earnings and sales growth, ROE and margins. No, this is not an extremely scientific ranking. You data junkies can crunch the numbers and run through your algorithms elsewhere.

South Africa’s Stocks Rally ‘Not a False Start,’ Says Sanlam

By Janice Kew

Sept. 22 (Bloomberg) -- South African stocks, which have rallied 41 percent since this year’s low on March 3, are likely to rise further, even as the pace may moderate, according to Sanlam Private Investments.

“This is not a false start,” said Alwyn van der Merwe, who helps manage the equivalent of about $4.3 billion as director of investments at the unit of Sanlam Ltd., the largest South African-owned insurer. Even so, the momentum of the FTSE/JSE Africa All Share Index’s rally now depends on companies’ improved earnings outlook, he said.

African Development Bank’s Kaberuka Calls for Global Stimulus

By Tian Huang and Margaret Brennan

Sept. 22 (Bloomberg) -- The African Development Bank, the Tunis-based lender, is pushing for global economic stimulus to help pull African countries out of the financial crisis, bank president Donald Kaberuka said.

“What we are saying to governments around the world is let us work together,” Kaberuka said in an interview with Bloomberg Television.

The global financial crisis triggered South Africa’s first recession in 17 years while demand for commodities slumped in countries such as Nigeria, Africa’s biggest oil producer, and Zambia, the continent’s largest copper producer.

A “synchronized global approach that doesn’t leave out any part of the world” and investing in African infrastructure would be a boon for poor countries in the region, Kaberuka said.

A fragile rebound for Asia

Bank raises growth forecast, but long-term health requires renewed demand in export markets

BRIAN MILNER

Asia's emerging economies have rebounded from the global recession faster than anyone expected, even though their major export markets continue to languish.
But much of the growth spurt that began in earnest in the second quarter stems from heavy government spending and other temporary initiatives to stimulate domestic demand, and the region has yet to shake its dependence on the exhausted consumers of the more advanced economies.

The more of us the merrier

Arthur Sinodinos

Article from: The Australian

LAST week's announcement of revised population projections for Australia is good news on economic, social and strategic grounds. Rather than focus on potential downsides, we should speculate on the exciting possibilities that can flow from such a development.
First and foremost, a larger population will enhance our capacity to exercise more influence in what is likely to be a volatile international environment over coming decades.

Rosenberg: Stocks Are Overvalued And "Tremendously Risky"

Henry Blodget

David Rosenberg has been wrong about the market since March, but he isn't backing down. Here he is in the FT, as bearish as ever: Usually at bear market troughs, the S&P 500 goes to silly cheap levels. It did not this time round and, six months and 60 per cent later, there is yet again, in 2007 style, tremendous risk in this market. Never before has the stock market surged this far, this fast, between the time of the low and the time the recession (supposedly) ended. What is “normal” is that the rally ahead of the recovery is 20 per cent. This market is now trading as if we were in the second half of a recovery phase, yet it has not even been fully ascertained the downturn is over...