Friday, February 27, 2009

Berkshire, Buffett bear brunt of bear market

Berkshire Hathaway and its chairman, Warren Buffett, are certainly bearing the brunt of this bear market in shares.

Last week, Bloomberg reported that Berkshire Hathaway shares had fallen to a five-year low on concern about possible losses and writedowns from "bets the billionaire chairman has taken on world stock markets."

Berkshire won't have to pay out on the contracts until "at least" 2019, but falling stock market prices and increased volatility in the interim require the company to take quarterly writedowns on those positions.

Today, Bloomberg reports that writedowns from those derivative bets, along with losses in the company's stock portfolio, may cause Berkshire to report its worst results ever, according to the gauge most touted by Buffett: the company's book value per share.

"Berkshire Hathaway Inc. may report its worst results since Warren Buffett took over in 1965, based on a measure the billionaire chairman cites on the first page of his firm’s annual letter to shareholders.

Losses in Berkshire’s stock portfolio and writedowns on derivative bets tied to equity markets may have caused book value per share, a measure of assets minus liabilities, to fall by 8.5 percent, according to Gary Ransom, an analyst with Fox- Pitt Kelton Cochran Caronia Waller. That ratio declined only once before on Buffett’s watch, falling 6.2 percent in 2001.

Berkshire suffered as the benchmark Standard & Poor’s 500 Index turned in its worst year since 1937. The expected writedown on derivatives may reflect both that decline and the increasing volatility of equity markets, though the $35.5 billion in derivative contracts don’t require Omaha, Nebraska- based Berkshire to pay out until at least 2019, if at all..."

The article goes on to explain the importance that this book value per share measure has to Berkshire shareholders:

"...If Buffett’s 2008 report, expected tomorrow, follows the template from past years, the first sentence of the letter to shareholders will disclose the change in book value. In his “owner’s manual” for Berkshire shareholders, Buffett says he considers the figure to be an objective substitute for the best, albeit subjective, measure of a firm’s success: a metric he calls intrinsic value."

Read on for more on Berkshire and the importance of this intrinsic value measurement.

You can also check out the links below to find the upcoming (8 a.m. Saturday) Berkshire Hathaway annual report, and a 2008 discussion with investor Warren Buffett.

Related items and posts:

1. Berkshire Hathaway annual & interim reports - Berkshire Hathaway.

2. Buffett watchers await annual report - Daily Finance.

3. Lessons from Warren Buffett - Finance Trends Matter.

Thursday, February 26, 2009

Rock n' Roll for traders and investors

New music has been added to the Trader Rock blog. Rock n' roll fans, rejoice!

This week's offerings in the rock n' roll jukebox include the Small Faces, Rolling Stones, The Kinks, T. Rex, and much more.

So head on over and check out some cool tunes, find new music blogs and listening resources in our recent music news linkfest, or subscribe to the Trader Rock feed to keep up with all the latest hits.

We'll see you back here tomorrow for more news from the markets!

Wednesday, February 25, 2009

Marc Andreessen on Charlie Rose



There are a lot of different things I could be posting about today (bank nationalization, the stock market, the wondrous things Obama said, etc.).

What I am posting today is this recent interview with Marc Andreessen on the Charlie Rose show. I'd seen the interview posted at a couple of different blogs this week, but finally got a chance to watch it yesterday while checking in with Howard Lindzon's blog. I'm glad that I did.

As you'll see right from the beginning of this interview, Charlie Rose engages the fast-speaking Andreessen on a number of subjects, from advances in technology (Twitter, Facebook, Ning, social networking and more) to entrepreneurship and venture capital and the current state of the economy.

Their rapid-fire exchange hardly lets up througout the interview, so that by the end of the program, you might find yourself trying to remember and sort out all the information and opinions that were just thrown your way within a 53 minute timespan.

But it's a very engaging discussion, one that will probably lead you to reflect on the rapid changes that are occuring in our world today, thanks in large part to the accelerating pace of technological advancement.

Tuesday, February 24, 2009

Home prices continue to slide

US home prices continue to slide, dropping at a record pace in December. Here are the latest details from Bloomberg's story:

"Home prices in 20 U.S. cities declined 18.5 percent in December from a year earlier, the fastest drop on record, as foreclosures climbed and sales sank.

The decrease in the S&P/Case-Shiller index was more than forecast and followed an 18.2 percent drop in November. The gauge has fallen every month since January 2007, and year-over-year records began in 2001. Separately, the Federal Housing Finance Board said prices in 2008 fell a record 8.2 percent.

Record foreclosures are contributing to declining property values and household wealth, crippling the consumer spending that makes up about 70 percent of the economy. The Obama administration has pledged to spend $275 billion to help stabilize the housing market, including $75 billion to bring down mortgage rates and encourage loan modifications.

“The massive inventory overhang in the market and the surge in foreclosures mean prices will continue to fall rapidly,” Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, said today in a note to clients. “The administration’s rescue plan will, in time, slow the rate of decline, but it won’t happen immediately.” "

Speaking of inventory, I'm also hearing that the banks are loaded down with foreclosed properties and are taking their sweet time to add these listings to the MLS database. A new report from Deutsche Bank analysts warns of the "shadow inventory" of bank-owned REO properties hanging over the residential real estate market.

Looks like the supply of unsold homes is still far outweighing demand, and it may stay that way for the next year or so, barring an unexpected explosion of real estate investment group buying. That should provide the backdrop for home prices reverting back towards their historical mean.

Related articles and posts:

1. Shiller: stocks and houses still expensive - Pragmatic Capitalist.

2. Home price projections - Pragmatic Capitalist.

3. Manhattan on Sale (NYC luxury real estate market) - Barron's

Monday, February 23, 2009

The Dow, S&P, Marc Faber, and Gold

As mentioned in last Friday's "Features" post, now that the Dow Jones Industrial Average has sunk below its November lows, all eyes are on the S&P 500 charts.

Will the S&P hold its support at the November lows, or will we see a breakthrough to the downside, confirming the new lows in the Dow?

Well, it seems that the S&P 500 has not only broken through those November lows, it has gone below its lowest close since April 1997. Bloomberg has the details:

"The S&P 500 lost 2.4 percent to 751.44 at 12:56 p.m. in New York, below its lowest close since April 1997. The Dow Jones Industrial Average decreased 157.14 points, or 2.1 percent, to 7,208.53, below its lowest close since October 1997. The Russell 2000 Index lost 2.8 percent. "

Bloomberg also notes that the S&P 500 is down 17 percent on the year, the worst start to a year on record. And given that dividends are falling at the fastest rate since 1955, the S&P 500 is still expensive even after its recent 50% decline.

We've got a few more items to share with you today. Check out these related articles and posts below for Biiwii's charts of the Dow, gold, and $USD index (US dollar).

There's also a great article from Tim Wood on the Dow Theory and the significance of the recent new lows in the Dow Transports and Dow Industrials.

Plus, a new Bloomberg interview with Marc Faber, discussing bank nationalizations, commodities, and the possibility of a stock market rally going forward (which took place before today's open and the subsequent new lows in the Dow and S&P 500).

Friday, February 20, 2009

Features of the week

Get set for our, "Features of the week".

1. European stocks fall to nearly six-year lows.

2. Roubini says Europe's banking system faces growing risks.

3. Fear of US bank nationalization drives debt insurance higher.

4. Dow breaks through its November lows; all eyes on S&P 500.

5. Comment: The end of Swiss banking secrecy?

6. Buffet's Berkshire hits five-year low on derivatives worries.

7. Gold hits record against Euro on fears of Zimbabwe-nomics.

8. Frank Barbera charts discretionary spending and the art market.

9. Banks' latest writedown woe - their art.

10. Ron Paul on reinstating the draft and forced "volunteerism".

11. Home loans in the US: the biggest racket since Capone?

12. Rick Santelli calls for a "Chicago Tea Party" in July.

13. Baseball and the financial markets have a lot in common.

14. Roma bear brunt of Hungary's downturn.

15. Judge orders new probe into Russian journalist's death.

16. Niall Ferguson on "The Axis of Upheaval".

Have a great weekend, and thanks for checking in with Finance Trends Matter (click to subscribe to our RSS feed). We'll see you all next week!

Thursday, February 19, 2009

Commodity currencies: follow that ship!

Commodity currencies, those reflecting the commodity exporting character of their host economies, may prove a worthwhile bet over the coming year, according to some traders who gauge the action of the currencies against a leading index of shipping costs.

Bloomberg reports that the recent jump in the Baltic Dry Index (BDI) is signalling a possible follow-through in the strength of major commodity currencies:

"Shipping costs have more than doubled this year, so it may be time to buy kroner, Aussies and loonies.
The 147 percent jump in ocean-transport prices is evidence that China’s $580 billion stimulus plan will lift raw materials, said Ihab Salib, who oversees $3 billion at Federated Investments Inc. in Pittsburgh. That would benefit countries exporting them, so Salib is “actively trading” Norway’s krone and Australian and Canadian dollars, nicknamed Aussies and loonies.
Salib and other currency traders have started using the Baltic Dry Index’s global gauge of raw-material shipping costs to help make such decisions. The index and the value of a basket of those three resource-rich countries’ currencies are increasingly moving in tandem -- 96 percent of the time in the past year, up from 84 percent in the past decade, data compiled by Bloomberg show.
“Historically, the Baltic Dry Index is a good leading indicator for commodity prices,” said Salib, who declined to detail his investments. “Commodities are very depressed right now, and they offer good long-term value. Once they come back, these currencies should do well.”"

We noted the seemingly close correlation between the Baltic Dry Index and Shanghai Composite index some time ago. Maybe our resident currency market watchers have some added insight here as well.

Related articles and posts:

1. Canada's dollar gains on weak greenback - Bloomberg.

2. Commodity currencies and copper prices - Distressed Volatility.

3. John Authers on the bounce in Chinese shares and BDI - FT.com.

Wednesday, February 18, 2009

Marc Faber is everywhere today

Our main man, Marc Faber is everywhere today.

He phoned in to chat with Bloomberg this morning about the financial health of the European nations and their currencies, as well as the importance of US stock market indices (S&P 500) approaching their November lows.

Marc also penned an interesting opinion piece for the Journal today entitled, "Synchronized Boom, Synchronized Bust". Here's an excerpt:

"The world has gone from the greatest synchronized global economic boom in history to the first synchronized global bust since the Great Depression. How we got here is not a cautionary tale of free markets gone wild. Rather, it's the story of what can happen when governments ignore market signals and central bankers believe in endless booms..."

"...Sadly, government policy responses -- not only in the U.S. -- are plainly wrong. It is not that the free market failed. The mistake was constant interventions in the free market by the Fed and the U.S. Treasury that addressed symptoms and postponed problems instead of solving them."

Food for thought. Check out the full piece at the link above (Hat tip to Bear Mountain Bull and The Big Picture).

A short history of the national debt

John Steele Gordon offers up, "A Short History of the National Debt", in today's Wall St. Journal. Here's a look at what's inside:

"At 8.3% of GDP, this year's deficit is by far the largest since World War II. But the total debt is, as of now, still under 75% of GDP. It was almost 130% following World War II. (Japan's national debt right now is not far from 180% of that nation's GDP.)

Still, it's the trend that is worrisome, to put it mildly. There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled."

However, persistent deficits and a growing national debt did not always loom so large over the country. At one time in our nation's history, steadily growing debts and deficits were the exception, rather than the rule.

Read on for more historical perspective on the US' finances and president Andrew Jackson's views on the national debt.

Monday, February 16, 2009

Notes: Everybody wants to rule the world

Monday's notes: what's happening in the markets and the world.

1. Bill Fleckenstein - "Treasury's strategy: 'what elephant?'".

Fleck is muy skeptical of the government's plan to take over the banking sector's bad assets. As he sees it, "the real sticking point continues to be discovering the prices at which these various assets can be sold", a point the Treasury seems unwilling to acknowledge.

He also calls attention to the Fed's role in pumping up the credit/real-estate bubble that led us to this inevitable bust and its aftermath.

Fleckenstein feels that public attention should be centered on this fact, and that a serious discussion about the Federal Reserve's role in our monetary system should take place, so that our country might put itself and its future on a sounder footing. (H/T: Bear Mountain Bull).

2. Obama nominates Geithner, Summers to head auto team.

So when I looked at Google News this morning and saw Timothy Geithner's head hovering next to a headline about Detroit's troubled auto industry, I had to ask myself, "why is the Treasury Secretary now involved in reorganizing the car industry?".

Bloomberg had the reminder note:

"After Congress failed to approve a bailout for the automakers, former President George W. Bush’s administration authorized loans Dec. 19. That effectively made the Treasury secretary the car czar, with responsibility for making sure the companies meet deadlines and authority to revoke the loans.

Geithner will remain Obama’s official “designee” to oversee the restructuring. The Treasury secretary will have authority to recall the aid if the automakers fail to show they have a plan by March 31 to become profitable."

The one thing about this that really makes me laugh more than anything is the idea of Congress and the US government judging a bankrupt industry's (or any industry's) "business plan" and overseeing spending limits. Mm-hmm, they should be really good at that...

3. Hugo Chavez for life? - CSMonitor.

"With a clear popular victory Sunday in his bid to end term limits, Venezuelan President Hugo Chávez has injected new vigor into his controversial "21st-century socialism" movement and secured his role at a time when the economy is starting to falter.

His win has roused consternation among his critics, who accuse him of single-handedly focusing on maintaining power, and dashed the hopes of a political opposition that had gained ground in recent elections and were beginning to focus beyond 2013, when Mr. Chávez would have had to step down had he lost the referendum. "

Well done, Venezuela. The country has just legitimized (through the blessed democratic process) a potential path to lifelong dictatorship for Chavez.

And the best part is that further down in the article, we see the old canard about the wonders of democracy representing "the people's will". Tell that to his rivals.

4. Bill Clinton: I should have better regulated derivatives - CNN.

Thoughts on this one?

5. Trichet cautions against laying the ground for future crises.

"European Central Bank President Jean- Claude Trichet said policy makers must ensure that their response to the global recession doesn’t lay the ground for future crises.

“It is of the utmost importance that policy makers do not merely focus on short-term solutions and instead adopt a longer- term perspective, with the objective of ensuring a sustained recovery,” Trichet said in a speech at the European Parliament in Brussels today. “We also need to make sure that our decisions today do not lay the ground for similar disorder in the future.”"


See the video clip attached in this Bloomberg story.

Sunday, February 15, 2009

Marc Faber interview - Financial Sense Newshour

Marc Faber joins the Financial Sense Newshour broadcast as this weekend's guest expert interview. "The Grand Illusion", is theme for this weekend's interview segment.

Marc speaks with FSN host Jim Puplava about a range of subjects including; the "second half recovery" theory, corporate earnings, Keynesian economic theories and policies, inflation and deflation, the illusion of wealth, and some important future investment themes.

Enjoy the interview, and if you'd like to hear more at this forum, check out some of Marc's previous FSN interviews at the guest expert link above.

Related articles and posts:

1. Marc Faber - 2009 to be "catastrophic" - Finance Trends Matter.

2. Marc Faber speaks with Bloomberg TV about bailouts - YouTube.

Friday, February 13, 2009

Features of the week

We're debating the stimulus package, corporate earnings and fair value on the S&P 500, as well as America's economic and political future.

Plus, you'll hear from Nouriel Roubini on the economy, Donald Coxe on commodities, and Martin Fridson on investing in corporate debt. All in this Friday's star-studded edition of "Features of the week".

1. House passes Obama's $787 billion stimulus plan.

See also: Stimulating consumers? What you get vs. what you owe.

2. John Authers on the bounce in Chinese shares and Baltic Dry Index.

3. Half of all CDOs built from ABS have now defaulted.

4. Financial crisis called top security threat to US.

5. Fair value for the S&P 500 = 440.

See also: Why fair value for the S&P 500 is not 440.

6. Stop listening to Suze Orman (caution: photo included).

7. Stimulus: because all economies have performance issues.

8. Gary Tanashian on Geithner's "comprehensive" attack.

9. FT Markets Q&A: Nouriel Roubini on prospects for 2009.

10. Interview: Martin Fridson on corporate debt and default rates.

11. Donald Coxe - have commodities started to outperform?

12. We're all socialists now: America's growing welfare state.

13. Pulling up stakes: some Americans are fed up with the USA.

14. Tweet this: The Kirk Report's latest linkfest.

15. Will the "cure" of bailouts kill off capitalism?

You can keep up with all our latest posts in your RSS feed reader, or bookmark Finance Trends Matter for future visits. Thanks for reading, and have a nice weekend!

Wednesday, February 11, 2009

Jim Rogers: Geithner clueless (Bloomberg TV)

Jim Rogers joined Bloomberg TV to discuss the Treasury's bank rescue plan, confirming the Wall Street consensus that Tim Geithner's proposal is a bomb.

Rogers heaps scorn on Treasury Secretary Geithner, citing Geithner's role in fostering the financial crisis in the first place, and his efforts in crafting TARP and other "absurd bailouts" last year. He says Geithner "has never known what he's doing", and this is something that everyone (including President Obama) will soon find out.

Once again, Jim points out that America is making the same mistakes Japan made in the 1990s, and that efforts to prop up the banks with "government money" will prove disastrous. Press play and we'll let JR tell the rest.

Related articles and posts:

1. Marc Faber speaks with Bloomberg TV about bailouts - YouTube.

Bank rescue: a plan with no details

On Tuesday, US Treasury Secretary Tim Geithner introduced a $1.5 trillion bank rescue plan that aims to recapitalize the banking sector and spur increased lending to individuals and businesses.

The market's reaction to the plan (S&P 500 down 5% Tuesday) is the subject of some debate today. Did traders and investors show their disapproval of the rescue plan by selling shares, or was yesterday's decline simply a "sell the news" event?

Whatever the verdict on yesterday's action turns out to be, one thing seems clear. In the long run, some market participants are doubtful that the plan will achieve any good at all.

Another sticking point: when looking over some of the criticism of the Treasury's "Financial Stability Plan", complaints over a lack of detail seem to be a recurring theme.

From Breakingviews.com, "A plan with no details":

"After months of ad hoc bank rescue efforts, the markets hoped the new U.S. administration would deliver on its promise of a coherent, detailed plan for mending the financial system.

So when the Treasury secretary, Timothy Geithner, offered only a bare-bones outline, leaving crucial questions unanswered, investors were not amused. The S&P 500-stock index fell some 5 percent on Tuesday, while some banks' shares declined multiples of that. The disappointment squandered precious market confidence in the administration.

Treasury's outline of its now-renamed "Financial Stability Plan" sounds reasonable as far as it goes. The government will subject banks asking for more support to stress tests and more scrutiny.

It will purchase preferred shares that can be converted into common stock. It will establish a vehicle to co-invest with private investors in banks' troubled assets. It will boost the purchase of certain asset-backed securities. And it will offer greater assistance to hard-pressed mortgage holders.

But missing from the package are crucial details on how each of these initiatives will work. How will the stress tests improve on banks' own, and how are they going to be used - will they dictate which banks are saved and which are allowed to fail? How will the preferred shares be priced? How much of a subsidy must the government offer private investors to lure them to buy shaky assets? And so on..."

In recent days, noted investors and market observers such as Nouriel Roubini, Nassim Taleb, and Jim Rogers were interviewed by CNBC, where they all openly expressed doubts about the rescue plan. So we know how they feel about all this.

What's the average American's take on the issue? The huge comment thread at MarketWatch might provide some clues, and we're keeping an ear open for more.

Related articles and posts:

1. Geithner defends lack of details in financial plan - Bloomberg.

2. Jim Rogers says Geithner caused crisis - Bloomberg.

3. Geithner's first test is a disaster - MSN Money.

Tuesday, February 10, 2009

Trading hits: Trader Rock linkfest

The latest "Trading hits" linkfest has been posted at Trader Rock. It's a sampling of recent news and featured posts from the trading & investing blogosphere.

We've got news on the US stimulus bill vote (and the market's early reaction to it), the Treasury Secretary's $1 trillion "bad bank" plan, notes on the bond bubble, some thoughts on the resource ETFs, new interviews with Marc Faber and Jim Rogers, and more.

Check it out, and enjoy some rock n' roll hits while you're there. You can even leave your requests (I'm trying to figure out what to play today).

Monday, February 09, 2009

Ray Dalio in Barron's: it's a "D-process"

Hedge fund manager and Bridgewater Associates founder, Ray Dalio talks to Barron's this week about the global economic downturn and ongoing deleveraging process (H/T: Paul Kedrosky).

Here's an excerpt from the Barron's interview:

"Barron's: I can't think of anyone who was earlier in describing the deleveraging and deflationary process that has been happening around the world.

Dalio: Let's call it a "D-process," which is different than a recession, and the only reason that people really don't understand this process is because it happens rarely. Everybody should, at this point, try to understand the depression process by reading about the Great Depression or the Latin American debt crisis or the Japanese experience so that it becomes part of their frame of reference.

Most people didn't live through any of those experiences, and what they have gotten used to is the recession dynamic, and so they are quick to presume the recession dynamic. It is very clear to me that we are in a D-process..."

Dalio is careful to use the "D-process" term to describe what's happening, but judging by what he says later on in the interview, it's pretty clear that we're facing something more than your run of the mill post-World War II recession. Meanwhile, there are some who are not shying away from using the term "depression".

Check out the rest of the interview at the link above and see our post, "Ray Dalio in FT", for more background on Dalio's investing methods and how he got his start in the business.

Sunday, February 08, 2009

Ron Paul: End the Fed (at Mises Circle)

Ron Paul gives a talk entitled, "End the Fed" at the 2009 Mises Circle in Houston, TX.

To use a phrase from back in the day, Ron Paul is punk rock. Yes, in certain tribes, this is just about the highest form of compliment one can give.

Related articles and posts:

1. End the Fed (Ron Paul before the US House) - Lew Rockwell.

2. Ron Paul on stimulus and the economy - Finance Trends.

3. Ron Paul visits Google - YouTube via Finance Trends.

Friday, February 06, 2009

Features of the week

Plenty to read and hear in our latest, "Features of the week".

1. US economy: jobless rate soars and payrolls plunge by 598,000.

2. TARP robs $78 billion in taxpayer cash (at least).

3. Faber Friday: Bloomberg interview clips with investor Marc Faber.

(a) Faber says US stimulus may lead to dire consequences (video).

(b) Faber favors US tech stocks: Cisco, Intel (audio).

(c) Marc Faber says stocks will fall after mid-year bounce (video).

4. The "bad bank" proposal: even worse than you imagined.

5. Dividends are forecast to decline in Europe and in the S&P 500.

6. Should you follow Buffett and be greedy now?

7. In Daschle's tax woes, a peek into how Washington works.

8. Corn ethanol takes another hit.

9. Downturn ends boom in wind and solar power.

10. Clean Money is a useful guide for clean-tech investors.

11. Uncle Sam takes salary, leaves allowance.

12. The History of Money: Peru.

13. Chart spotlight: January forecasts a down year - Carl Swenlin.

14. Drivers for natural resources in 2009 - Frank Holmes.

15. Credit crisis watch: some positive developments.

16. Don't take economic stimulus measures into your own hands.

Thanks for reading Finance Trends Matter. Enjoy your weekend!

Thursday, February 05, 2009

Clean Money - John Rubino: Book review

Clean Money
by John Rubino
274 pages.
Hoboken, New Jersey
John Wiley & Sons.

2009. 1st Edition.

The bouyant stock market environment of the past several years is gone, and the financial wreckage of 2008 is still sharp in our minds as a new year starts to unfold.

Given the recent across-the-board-declines in global stock markets (and most asset classes) that have left many investors shell-shocked, you might wonder if there is any good reason to consider the merits of a hot new investment theme, such as clean energy.

However, we shouldn't be too hasty to write off all future stock investments. After all, the market declines of 2008 may continue into 2009, but they may also leave interesting investment opportunities in their wake. Which brings us to the subject of this review.

John Rubino, author and editor of GreenStockInvesting.com, recently released a new book on renewable energy and clean-tech investing entitled, Clean Money: Picking Winners in the Green Tech Boom.

In Clean Money, Rubino introduces readers to the fundamentals driving the rise in clean technology and tells us how to invest along with this trend. But it's not a "close your eyes and pick the winners" type propositions. As the author explains in the book's opening chapters, hot markets (such as clean-tech) are dangerous markets. Hype, con-jobs, and failed promises are sure to accompany this boom.

Rubino explains: "When something seems to have unlimited potential, it becomes, by definition, hard to measure and therefore hard to value. Tools for distinguishing fantasy from reality are crucial, and that's what this book attempts to provide".

From its early chapters on, Clean Money does an admirable job of providing this kind of background information and guidance to the would-be clean-tech investor.

The book gets rolling with some fascinating summary accounts of how environmental problems and resource depletion led to civilization collapse in ancient cultures, relating these lessons of the past to our current problems.

This brings us to some important questions. Will we be able to recognize the environmental constraints facing us and meet these problems head on with clean energy and resource saving technologies? And how can we invest intelligently along with this theme?

That's where the main focus of this book lies, and Rubino provides us with some very reasoned and worthwhile overviews of the numerous renewable energy resources, the importance of energy storage, scientific advancements that will help us boost energy efficiencies and conserve our material resources, and other clean-tech investing themes, such as "green building" and pollution control.

Throughout the book, the author does a commendable job of honestly appraising the likely benefits and shortcomings of the potential energy resources and clean technologies. There is little in the way of "pie-in-the-sky" forecasting here; in fact, Rubino provides a much-needed service in his frank appraisals of other well-hyped and overrated energy panaceas such as corn ethanol and the "hydrogen economy".

The money-making side of the book also follows through on its promise. Investment ideas and company ticker symbols relating to each investment theme are well organized and included in every chapter. Another helpful feature are the occasional "object lessons" that warn of the pitfalls of buying into stocks and new technologies that are long on promise and short on tangible results.

If there are criticisms to be made, they are slight and tend towards errors of omission. For example, the writing on water desalination technology is informative, but it makes no mention of the potential drawbacks of desalination.

Also, while traditional hydropower is ruled out as an environmentally unsound energy source early on in the book, there was no mention of tidal energy and its potential benefits or pitfalls (possibly due to space constraints?).

On a more positive note, the author does a very good job of appraising the bear market conditions of 2008 (the book was written in early 2008) and the resulting difficulties that could arise for clean tech investors over the next few years.

The book's closing chapters provide a fine overview of the green investing options (mutual funds, ETFs, shares) that are easily available to most individual investors, along with some thoughts on the industries and companies that are likely to be winners and losers in the wake of clean-tech's rise.

So does Clean Money meet its stated goal of providing value to clean-tech investors?

Overall, the book's positives far outweigh the negatives, and Rubino succeeds in delivering a useful guide for the clean energy investor or those who are simply curious about the true potential of upcoming renewable energy resources and clean technologies. Recommended.

Related articles and posts:

1. Review: Profit from the Peak - Finance Trends Matter.

2. The Future of Energy - Financial Sense Online.

3. The Next Bubble - Eric Janszen via Harper's.

Wednesday, February 04, 2009

Clean-tech investing and Friday Features

Quick update on what I'm working on for tomorrow and Friday's posts.

I'm currently making my way to the end of John Rubino's new book on clean-tech investing. It's called, Clean Money: Picking Winners in the Green Tech Boom, and we'll try to have a review of the book posted here tomorrow. Be sure to catch this one, especially if you have any interest in alternative energy and "green" investing.

In the meantime check out John's new site, GreenStockInvesting.com, for the latest news and original articles on this investing theme.

In addition to that, I'll also be compiling material for our next "Features of the week" post. We missed out on our "Features" post last Friday due to our wrap-up coverage of the Barron's Roundtable, so get set for an awesome Friday linkfest post this week.

As always, your suggestions for linkfest articles and posts are most welcome and appreciated. Thanks for checking in, and we'll see you then!

Tuesday, February 03, 2009

Can countries really go bankrupt?

"Can countries really go bankrupt?".

That's the question Der Speigel is asking in an article that examines the lengths national governments are going to in order to try and "prevent the financial system from collapse".

Here's more from the Speigel Online article:

"The bailout packages aimed at shoring up financial markets in Europe are getting increasingly expensive. A creeping depreciation of currency is inevitable and state bankruptcies can no longer be ruled out. Could the euro zone also fall victim to the global financial crisis?

"There's a rumor going around that states cannot go bankrupt," German Chancellor Angela Merkel said recently at a private bank event in Frankfurt. "This rumor is not true."

Of course she's right. Countries can go bankrupt if they allow their deficit spending to spin out of control and are no longer able to service their interest payments. Merkel's comments can be read as a warning that countries need to keep their deficit spending in check. The message is: If governments go too far in trying to bail out companies and the economy, they could face insolvency themselves. "

Well, that last part on the possibility of governments facing insolvency is just common sense, isn't it? Funny how little mention was made of this danger when the whole international bailout bonanza and reliquification frenzy started in earnest last summer and fall.

Anyway, it's nice to get the European view on these events. Note that the article refers to England as "Iceland on the Thames". Just one of those charming little touches you don't get in most of the US mainstream press.

Plus, you'll find lots of commentary here on the finances of European nations, the much talked about "potential collapse of the euro zone", and the history of (nation) state bankruptices.

You better believe this discussion applies to us here in the US as well, given the amount of debt and "stimulus" spending we've taken on lately.

We've talked a bit about sovereign risk and the financial condition of England and other European nations recently. For a quick review of these themes, please see the related articles and posts below.

Related articles and posts:

1. Sovereign risk and UK credit ratings - Finance Trends.

2. Davos: George Soros on the pound, bad bank - Finance Trends.

3. Ron Paul: Cures for our economic disease - Safehaven.

Monday, February 02, 2009

Pay your taxes! Or not...

Tom Daschle, former Senate majority leader and current nominee for secretary of Health and Human Services, is the latest Obama pick to suffer public disclosure of tax problems. Will this hurt his chances for confirmation?

From ABC News - "Daschle Apologizes for Failing to Pay Taxes":

"...Tom Daschle, President Barack Obama's choice to head the Health and Human Services Department, apologized Monday to the Senate panel that will decide his fate, saying he was "deeply embarrassed and disappointed" about failing to pay more than $120,000 in taxes.

Determined to salvage his nomination, Daschle wrote a letter to the top leaders of the Senate Finance Committee in which he sought to explain how he overlooked taxes on additional income for consulting work, the use of a car service and paperwork to support claims for charitable contributions.

Daschle recently filed amended tax returns for 2005-07 to report $128,203 in back taxes and $11,964 in interest.

"I am deeply embarrassed and disappointed by the errors that required me to amend my tax returns," said Daschle, the former Senate Democratic leader. "I apologize for the errors and profoundly regret that you have had to devote time to them."

Shouldn't be too much of a problem for Daschle though, right? Timothy Geithner (or, "that idiot Geithner", as Jim Rogers likes to call him) was confirmed as Treasury Secretary despite having similar tax problems, which only recently came to light.

But it's not like these guys won't have to pay back taxes and interest. They will. Plus, they must also face a media spectacle surrounding their actions, which can't be pleasant.

Still, you have to wonder how the average American feels about this, given the treatment they'd likely face if they were in Daschle's or Geithner's place. Would the IRS hear their humble apologies or would they instead be reamed out for their failure to pay?

Sunday, February 01, 2009

Jukebox

Welcome to the "Super/Lazy Sunday" edition of the jukebox.

1. Pretty Things - Rosalyn.

2. Fleur De Lys - Circles.

3. Small Faces - Lazy Sunday.

4. The Kinks - Lincoln County.

5. Led Zeppelin - Ramble On.

6. Jimi Hendrix - Wind Cries Mary.

Cross posted at Trader Rock, the full time rock n' roll jukebox.