International Investing

From The Daily Reckoning. This headline was the most important thing I read today. The follow with:
On the basis of credit default swaps, which are used to speculate on a government’s ability to repay debt, the 10-year note reached a record high of 16 basis points on March 12. German bonds traded at [...]

Like every other investment, this one is probably over prices and won’t beat the index in the long run. But so what? Even if it’s value goes to zero, you can still drink it:
Most wines around the world go on sale only after they are bottled. But in Bordeaux the process starts far earlier. International [...]

Remember all the criticism Enron took over doing just this (after getting permission from the SEC by the way)? Now the Bank of England is encouraging it:
While market-based estimates and the write-downs announced by firms may be unduly pessimistic, if such concerns persist there is a risk they could become self-fulfilling.
[...]
In that environment, firms may [...]

This clearly written FT article discusses why banks loved this tranche of CDO debt and why it is now such an issue:
Sometimes they did this simply to keep the CDO machine running. But there was another, far more important, incentive: regulatory arbitrage.
Most notably, because super-senior debt carried the AAA tag, banks were only required to [...]

Parallels between the current US situation and the Swedish bank crisis of the 1990’s:
“…the Swedish episode seems eerily familiar. … The first signs of trouble appeared among the finance companies that were responsible for the bulk of such investment. In September 1990, a company called Nyckeln — known as ‘The Key’ — folded when it [...]

From Gartman:
We argue that there are plenty of countries around the world that prove the superiority of flax taxes, citing the huge revenue growth in eastern Europe where it is a race amongst the countries there to flatten and lower tax rates with abandon. But now we learn that the smaller, less populated, and poorer [...]

Bloomberg’s analysis is spot on. Over time neither will survive as standalone entities:
Consumers also will find navigation systems available in more new cars, giving them little reason to pay $250 or more for units from Garmin or TomTom, said consultant Blair Swedeen.
“They are getting squeezed from both sides,” said Swedeen, a principal at Partenza Consulting [...]

FT reports that Porsche is acting more like a hedge fund than a luxury car manufacturer:
Porsche on Monday revealed it earned three times as much money from trading derivatives as it did from selling cars, prompting accusations it was acting more like a hedge fund. The German luxury sports carmaker said €3.6bn ($5.2bn) of its [...]

Soon private investors will be able to buy stakes in law firms in the UK. While not as broad as Australia’s rules, which allow for publicly traded law firms, it could be an initial step down in that direction. Besides cashing out their shares why would any law firm want to go public?
This Bloomberg article [...]

Great article about academia vs real world trading:
We learn from crisis to crisis that MPT has the empirical and scientific validity of astrology (without the aesthetics), yet the lessons are ignored in what is taught to 150,000 business school students worldwide.
Academic economists are no more self-serving than other professions. You should blame those in the real [...]