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In a column of the FT, Ricardo Hausmann - director of Harvard University’s Center for International Development - makes a strong case against the US government plan to inject massive money into the inconomy, explaining that the US consumption needs to be adjusted lower to more sustainable levels. Full article on http://www.ft.com/cms/s/0/28b464a2-cf50-11dc-854a-0000779fd2ac.html Stop behaving as whiner of first resort By Ricardo Hausmann The same voices that supported tough macroeconomic policies to deal with the excesses of spending and borrowing in east Asia, Russia and Latin America are today pushing for a significant relaxation in the US to deal with the so-called subprime crisis. Interest rates should be slashed quickly and $150bn put into taxpayers’ pockets by April at the latest, they say. The Fed cut by another half-point on Wednesday. The goal seems to be to avoid a 2008 recession at all costs. As Larry Summers, former Treasury secretary, put it, failure to act would make Mai...

In this article James Montier shows that: Economists can’t forecast a recession Analysts earnings forecasts are doomed Dividends represent 80% of the revenues for long-term investors Full article on: http://www.investorsinsight.com/otb_va_print.aspx?EditionID=645 Extracts: 1. Economists can’t forecast a recession Economists never forecast recessions until well after they have begun - that is if they manage to forecast them at all! 2. Forward PE and inability for analysts to make good predictions The US market is currently sitting on a 12-month forward PE of 14x. This may not sound like a lot compared to the 24x reached during the excesses of the bubble years. However, judging value relative to the peak of a bubble isn't a great idea 2 . The average forward PE since IBES began collecting data is around 15x. Hence today's level of valuation can't be said to be discounting a deep recession. Additionally, the IBES data is very limited. We can have a pretty good guess w...

In this FT article, Ireland is presented as a country of -still- tremedous potential, thanks to its demographic dynamism. Full article http://www.ft.com/cms/s/0/a279b618-cdb4-11dc-9e4e-000077b07658.html The Celtic tiger can come roaring back By Marc Coleman Like a bicycle in a traffic jam, Ireland’s economy has defied every obstacle the world economy has thrown at it since the mid-1980s. In every year since 1993, gross domestic product grew by 4 per cent or more. But to many observers the lucky country now seems headed for a fall. With a quarter of its economy dependant on its property market, things look grim. But are they? In the short-term, the answer is yes. From just under 5 per cent last year, Ireland’s economy will grow by little more than 2 per cent next year. A three-year-old housing bubble is bursting, a process likely to take another nine months. More worrying is the fact that Ireland’s construction industry employs around 270,000 or 13 per cent of Ireland’s labour force. It...

As if the massive write-downs that Financial institutions had to suffer wasn't enough, Societe Generale took another hit: one of its traders made them loose €4.9bn in Equity Derivatives . Apparently, this trader had accumulated a longue position in equity derivatives in the UK, Germany and the Eurostoxx 50 worth an estimated €50bn, more than SocGen’s market value. “Every two or three days, he was changing his position. He would input a transaction that would trigger a control in three days and before that happened he would replace it with a different one,” said Mr Mustier. He said the rogue trader was managing hundreds of thousands of concealed trades and an equal number of falsified hedges to give the appearance that any loss was offset. It is interested to note that half the losses occured after the management was made aware of the position and decided to sell it. Financials are definitely a sell. The story on the FT http://www.ft.com/cms/s/0/3ac68dd2-cb7c-11dc-97ff-000077b07658...

Goldman has consistently out-performed other banks. What is their secret? Michael Lewis tells it all in this Bloomberg article. For the full, article, follow the link http://www.bloomberg.com/apps/news?pid=20601039&sid=aEXlKAu61sYU# By Michael Lewis from Bloomberg Jan. 17 (Bloomberg) -- In retrospect, the most intriguing subplot in the collapse of the subprime mortgage market has been not the size of the losses but their distribution. Wall Street firms have a talent for getting themselves into trouble together. They all were long Internet stocks when Internet stocks collapsed and they'll all be long North Korean credit-default swaps whenever North Korea gets hot and then crashes. What's odd about the subprime crash is Goldman Sachs Group Inc. A single firm took a position contrary to the rest of Wall Street. Giant Wall Street firms are designed for many things, but not, typically, to express highly idiosyncratic views in the market. Even more surprising is how little Wall ...

WIRED MAGAZINE: ISSUE 16.02 Gadgets : Wireless The Untold Story: How the iPhone Blew Up the Wireless Industry By Fred Vogelstein 01.09.08 9:00 PM http://www.wired.com/services/referral?messageKey=bb3eb8d2aa0dd8fc16434bf4c49ef3b2 Photo: Landov The demo was not going well. Again. It was a late morning in the fall of 2006. Almost a year earlier, Steve Jobs had tasked about 200 of Apple's top engineers with creating the iPhone. Yet here, in Apple's boardroom, it was clear that the prototype was still a disaster. It wasn't just buggy, it flat-out didn't work. The phone dropped calls constantly, the battery stopped charging before it was full, data and applications routinely became corrupted and unusable. The list of problems seemed endless. At the end of the demo, Jobs fixed the dozen or so people in the room with a level stare and said, "We don't have a product yet." The effect was even more terrifying than one of Jobs' trademark tantrums. When the Apple...

From The Sunday Times January 6, 2008 David Smith, Economics Editor LIVING standards in Britain are set to rise above those in America for the first time since the 19th century, according to a report by the respected Oxford Economics consultancy. The calculations suggest that, measured by gross domestic product per capita, Britain can now hold its head up high in the economic stakes after more than a century of playing second fiddle to the Americans. It says that GDP per head in Britain will be £23,500 this year, compared with £23,250 in America, reflecting not only the strength of the pound against the dollar but also the UK economy’s record run of growth and rising incomes going back to the early 1990s. In those days, according to Oxford Economics, Britain’s GDP per capita was 34% below that in America, 33% less than in Germany and 26% lower than in France. Now, not only have average incomes crept above those in America but they are more than 8% above France (£21,700) and Germany (£2...