Month: September 2008

Categories
Stocks

Lehman is NOT too big to fail

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Last Updated on September 12, 2008 by stlplace

This is the message Paulson sent to the street this morning. In other words, Paulson was saying “speculators, you should know this coming in last 6 months, sorry but I can not help you out this time, because in doing so I could lose my job too”. Pauslon gave two reasons he won’t bail out Lehman Brothers: 1) Since the Bear Stearns crisis, Lehman has been in the news for almost 6 months, the partites should have taken steps in the case of “go under” of Lehman; 2) Since the Bear Stearns Crisis, Fed has opened the discount windows to investment banks. Lehman should have done its own job to raise capital, keep its house in order.

No cofffee for reporters of Lehman
(Obviously, the reporters are not welcomed in the Lehman building)

Categories
Economy

The declining of world only super-power: I

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Last Updated on September 11, 2008 by stlplace

Today is a special day, the seven anniversary of 9-11. I still remember that morning, when I watch the morning TV as usual, I saw the smoke coming out of World Trader Center Tower, and wondering “what absent-minded pilot fly his/her plane into the tower”?

We all know what happened after that. The war against Talian in Afganistan, the war for “weapon of mass distruction” in Iraq. More importantly, the gas price went from around $1.50 (I still remember some gas stations price gauging in the evening of 9-11) to $3.50, the US federal deficit and trade deficit grew significantly, and last but not least, the housing and credit crisis in the last year. Since my interest is mainly in economy and finance, let me go there for a minute.

This week (last Sunday) marks another hard-working weekend for US treasury secratery Henry Paulson, because of the goverment take over of Fannie Mac and Freddie Mac. The two Goverment Sponsored Entities have $5 trillion of US mortgages, half of US mortage size. Interestingly, roughly $1.5 trillion of that $5 trillion was purchased by the foreign goverments: China, Korea, Japan and Russia etc. This is the direct reason for the US goverment take over, because the foreign goverment lost confidence on the Fannie and Freddie. On the surface, with the take over, now the mortgage has the full faith of US goverment, now things are goody and dandy again. But wait a minute, the US goverment itself has $10 trillion deficit, what if the US goverment fails to pay its own debt? Well, there are two ways out of it:

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Categories
Investing

Fannie Freddie and the market

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Last Updated on September 9, 2008 by stlplace

Fannie/Freddie
Short term I think it’s a deal for fed. But long term (it seems nobody is caring about long term these days), why should China continue to buy the Fannie/Freddie debt, for some premium over the US treasuries with substantial mortgage market risk (liquidity). I agree the US treasuries and Fannie/Freddie debt are co-related. It seems the greenback will continue to be a large part of China foreign exchange holdings.

But think a minute, if the United States can not sort out this mortage thing, why should China/Japan mess with it? I think the implication of this mortage crisis will be much greater than many peoeple (convention wisdom) think. The house will NOT always go up. The housing sector and homeownership are good thing, but sometimes too much of a good thing could be a bad thing. I think the people in China state investment Cos. should seriously think about their strategy.

The Market

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Categories
Stocks

The great bailout of Fannie Freddie

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Last Updated on September 9, 2008 by stlplace

(Update, according to WSJ) The deal in summary: the US treasury dept. will put up to 200 billion ($100 billion each) to support the mortgages loss from Fannie and Freddie; the treasury will buy $1 billlon of preferred shares for 10% divivend, the preferred are senior to all other preferred previously issued (I believe all the other preferred holders won’t have much left); the treasury will have warrant to buy FNM and FRE up to 79.9% of company common stock for a nonimal (i.e. the current shareholders such as Legg Mason, Dodge Cox mutual funds will be diluted 1:5 after recent big stock price drop).

(Source: Yahoo Tech-ticker)

It appears the direct cause of the bailout is Chinese and Russian goverments are no longer willing to buy the debt of Fannie/Freddie. So what US goverment did is “all right, we will eat our own dog food”, and hopefully Chinese and Russians will follow.

Did China got a deal?

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Categories
401k and Personal Finance

Contact IRS: mail, phone, or local office?

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Last Updated on September 5, 2008 by stlplace

This year I have used all the three appoaches to communicate with IRS for my (our joint) federal income tax matter. Things have been mostly resolved now. But looking back I think I could use the IRS local office more often. Each appoach has its pros and cons, here are my takes on each appoach.

Mail
Probablly the slowest. But it is also prudent. By “prudent” I mean it usually takes couple rounds of back and forth to get things right, I learned the mistakes along the way, but eventually I got it right and they got it right too. One needs a lot of patience though as I suspect IRS service centers are swamped by the stimulus checks this year.

Phone
I heard it very difficult to dial in. Luckily I got handfree headset so I tried: one failure, one success. I was just querying one thing, and they gave me an answer.

Local office
Here is the list. Basically the representatives can provides lots of services:

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Categories
China

Ross Perot: why China will succeed

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Last Updated on September 5, 2008 by stlplace

Ross Perot is a fun guy. He was known for founding the IT service giant EDS, sending in team to rescue EDS employee kidnapped in Iran, and his presidential bid in 1992, among other things. Here is his Wiki entry.

I found his opinion on China economy growth when I searched “Ross Perot McCain” and found this article on Newsweek. The China quote is in page 3.

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Categories
Fun

Poor Korean kids

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Last Updated on September 4, 2008 by stlplace

(Source: Yahoo Tech-ticker)

or may I add Chinese kids, for that matter. One reason the New Oriental (NYSE:EDU), the China based private education company which specialized in TOEFL, GRE, SAT, ACT, College and Graduate entrance exams, has been so successful.

Categories
Fun

This crazy presidential election

Reading Time: 2 minutes

Last Updated on September 4, 2008 by stlplace

Normally I don’t talk about politics or religion in my blog. But I was indeed excited by the John McCain interesting VP pick (last Friday) shortly following Barack Obama’s historical nomination last week. I am not talking just from gender or race point of view. I am talking about the excitment this election generates from the ordinary people. This noon when I was at lunch at “Jack in the Box”, I heard people talking about election.

I also noticed the intense emotional discussion on some of the Chinese bbs board. But I was not happy when I saw words like “McSame”, or more insulting ones like “Hussain”, “Osama” (to label Barack). Although I could not vote, I do have my own point of view, but I would not try to disparage someone just because I don’t agree with him/her. Also, I felt either president McCain or Obama will do better than president Bush, because they are centrist in heart, and they have a low bar for comparison.

There are lots of mis-information on the web, to smear the candidates from people with an agenda. I found this factcheck is a refreshing one because it lists the fact, and let voters to decide.

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Categories
IPO

Coca Cola bought Huiyuan Juice

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Last Updated on March 22, 2009 by stlplace

(Update Sept 5) It seems there are anti-trust concern about this acquisition. Some source says if this merge approved, Coca Cola will have 40% of juice market share in China. Another concern is, like many Chinese companies (Sohu, Netease), Huiyuan is actually registered in Cayman Island, theoritically it is M&A between two foreign companies. It seems the recently approved Chinese Anti-trust law did not say clearly how to treat such cases. Maybe my wife (China licensed attorney) will know.

(Update Sept 3) More analysis at 21cbh in Chinese. Coke paid about a PE of 42 for Huiyuan, not surprisingly high considering the huge potential in Chinese juice market.

(Original) It was not too long ago Huiyuan Juice, one of the largest juice producer in China, went public in Hongkong Stock Exchange. Now Coca Cola (NYSE: KO) is buying it for 17.9 billion HKD, at more 200% premium of the stock closing price (4.14 HKD) as of August 29. Coke is paying 12.20 HKD per share.

Chinese story at 21cbh. English story at Bloomberg.

Huiyuan Juice factory pic
(source: the standard)

The ticker symbol for Huiyuan is 1886.HK.

Categories
Fun Web

Labor day weekend

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Last Updated on September 1, 2008 by stlplace

Install software (web hosting)
Drupal, WordPress and phpBB. Had problems with the Chinese input (display). Found the solution to WordPress problem from web. Re-install the phpBB with Chinese langugage pack manualy, because I could not add Chinese langugage after the fantastico automatic installation. I will fight the Drupal problem later on (with the confidence installing phpBB manually).

John McCain event
Attended John McCain road to convention Rally at O’Fallon. Don’t get me wrong. I am not endorsing any candidate in this election, nor can I vote because I am not US citizen. I am interested in the election politics and have my own opinion though.

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