Finance Trends Letter

In his latest statement before the U.S. House of Representatives, Representative Ron Paul of Texas poses the question, "Why Are Americans So Angry?" . In this essay, Paul attempts to pinpoint what's behind the widespread anger and frustration in our society, while offering his view of the problems we must face up to in order to turn things around.

I saw mention of this topic in Richard Russell's newsletter recently. The Demilitarized Zone that seperates North and South Korea is something of a treacherous no-man's-land, dotted with land mines and fenced in with barbed wire. But the largely uninhabited boundry within has become something of a nature preserve. From "War and Wildlife" , by reporter Michael Casey: Hundreds of bird species winter here, among them at least two endangered types of crane — white-naped and red-crowned. Fifty types of mammals live here, including the rare Asiatic black bear, Amur leopard and, some believe, the Siberian tiger, based on traces of footprints and droppings. More than 1,000 different plant species thrive. Now the worry is that an eventual peace will bring about the end of a DMZ, and development will be introduced where nature now flourishes. Interesting.

Here's a BusinessWeek online article that discusses the lowering age/experience threshold for those looking to start up a hedge fund. Entitled, "Hedge Fund Toddlers" , the piece points out that barriers to entry are low, but long-term success is far from certain.

From the Reuters UK article : As widely expected, the central bank's policy-setting Federal Open Market Committee voted unanimously to lift the benchmark federal funds rate target a quarter-percentage point to 5.25 percent, its highest since March 2001. In a statement announcing its action, the Fed said moderating growth should help ease price pressures, even though it held out the possibility it could extend a two-year credit tightening campaign. Notice the emphasis on economic growth as a source of inflation. What they don't talk about is the role that money creation has in bringing about inflation. You will not hear a US central banker allude to money supply growth as the cause of inflation, although this is the classical definition. Tally up some broad money supply measure using the available statistics (now that M3 is no longer reported by the Fed) and then tell me where inflation is heading. We can focus on "price inflation" as measured by core CPI or we can l...

The Financial Times is running an article series on Russia and its emerging political structure, described as a corporate state in an earlier article by Neil Buckley. Here is the latest article in the series, "The pull of power: how nothing is left to chance in Putin's 'managed democracy'" . The focus on Russia comes at an interesting time. The upcoming G8 summit in St. Petersburg has been prefaced by verbal sparring between American and Russian leaders over the state of democracy in Russia. This week, former Russian prime minister Mikhail Kasyanov appealed to G8 nations to confront Russia on its drift from representative democracy. Meanwhile, preparation for Rosneft's IPO has refocused attention on how the Russian oil company snatched its main asset, Yuganskneftgaz, from the wreckage of Yukos' tax battle with Russian authorities. From the Toronto Star : In a filing to the U.K. Financial Services Authority released yesterday, Yukos said its Yugansknefteg...

In "A Conversation with Warren Buffett" , long time Buffett chronicler and friend Carol Loomis talks with the billionaire investor about his recent philanthropic funding of the Gates Foundation and his philosophy on giving. Buffett's businesslike approach to all endeavors is well noted, and his ideas on philanthropy have shown no departure from this personality streak. He is probably one of the early proponents of the now fashionable view that charitable giving should be judged by indicators of effectiveness. There should concrete terms laid out for measuring the efficiency of charitable organizations and return on money donated. In Roger Lowenstein's 1995 biography, Buffett: The Making of an American Capitalist , the author concluded that Buffett's charitable interests were "aimed at alleviating or preventing future sources of grief, such as a future war or a future oversupply of people" (Buffett was long concerned with problems arising out of overpopu...

Yesterday's Wall St. Journal carried a front page article on the privatization of water utilities and municipal water systems. The piece focused on the problems that some companies are experiencing with their entry into the water business. RWE AG, the large German utility, thought that the water delivery business would be a natural complement to its electricity, gas, and waste disposal services. Now RWE plans to exit the US market as protests against its ownership of a California town's water system serves as a template for widespread outcry over corporate water buyouts. Companies like RWE have found that regulation is never predictable. The Journal reports that RWE found itself fighting in town referendums and state legislatures across the country. The company is planning to divest its American Water subsidiary in an IPO. Similar plans are in place for the Thames Water unit, which it bought in 2000. Suez and RWE have had to pull out of markets across the globe as problems aro...