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Most severe crisis since the great depression

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and here is President Bush has to say this morning (source: yahoo):

“We are working to reduce disruptions and minimize the impact of these financial market developments on the broader economy,” Bush said in the Rose Garden, choosing to address the market turmoil at the top of an appearance with visiting Ghanian President John Kufuor. “The policymakers will focus on the health of the financial system as a whole,” Bush said.

In the weekend, the No. 4 US invesetment bank Lehman Brothers went under, the No. 3. US investment bank Merrill Lynch was bought by Bank of America under recommendation by Fed (Bloomberg news). The goal was to make the buck stop at the Merrill. No one wants to see the No. 1 Goldman and No. 2 Morgan Stanley go under.

But they only got a temporary break. The focus now is on AIG and Washington Mutual. The problem for GS and MS, with BoA got Merrill, no company in the world has the resource to buy GS/MS without any goverment help. And the US goverment set a precedent they are not going to bail out anyone (Lehman, for example).

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Weekend thoughts w/e Apr 19 2008

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Currency effects
While we are heading to $4 gas (partly thanks the weak dollar), not all are victims of this trend. Think Google or IBM. Google (GOOG) and IBM reported blow out earning, while cell phone maker Nokia (NOK) reported so-so earning (or outlook) last week. One key difference is the reported currency, Google and IBM reported results in USD, while NOK reported in Euro. We all know Dollar lost a lot ground to Euro in past year, since GOOG and IBM did a lot business in Europe (and internationally), their earning and earning growth is exaggerated by the depreciation of dollar. Nokia is hit by the opposite force. A more important question to ask is: can the dollar continue to slide vs. other currencies? Personally I would not bet on GOOG or IBM if their growth is mostly from the currency effect

ICBC, Goldman Sachs, China Invest Co. and Blackstone

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Goldman Sachs failed Chinese test

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Week in review 09/16 to 09/22

0) Sept 22 is “no car day” in many Chinese cities. Individual car owners are encouraged to take public transportation. I saw some volunteers on Zhongshan park metro station.

1) According to China Capital week, 中文难倒高盛, Goldman Sachs senior executive, Malysian Chinese Richard Ong, failed the Chinese test administrated by CSRC. Because of that Mr. Ong can not take the top postion of Goldman China.

2) US federal reserve hikes interest rate by 50 points. Higher than many people expected. The more important question investor should ask: is Mr. Bernanke trying to rescue the market, or the economy?

3) You got the RMB, we got the IPOs. To contain the excessive liquidity in China, the CSRC recently approved the Haigui IPO of 3 big state owned companies: China construction bank, Sheng Hua Coal, and Petro China.

The reason people called it Haigui is, those stocks have been listed in Hongkong Stock Exchange for a while. Now they are returning to the Shanghai A share market, at a much higher price compared to the price listed in HK a few years ago.