IMF Group

Sub Prime - where we are we now and how do we move forward..

I had a similar entry yesterday – but it didn’t do it for me – so lets have another look at it.

The Sub-Prime is not the cause of this world wide financial disaster – the originators of the CDO’s are responsible. We are in a mess – we feel out of our depth, big time, in a deep dark place. Some are feeling anxious, panic and hopefully, some are feeling regret (though I doubt it) for past actions which has amounted to gambling by playing roulette with the whole World’s economy and loosing. We think there is no way out..but there is – well I think there is.

Here is what I am going to suggest:-

1. All of these problems keep on coming back to what is called the Sub Prime paper – but is really a collateralized debt obligations (CDOs) which are an unregulated type of asset-backed security and structured credit product.  See here for a full and complete definition of these types of “investments” We will come back to this.
   
   To stop the rot – what we need to do is somehow isolate these CDO’s which is particular are related to the Sub-Prime Mortgage markets, but also can apply to other risky paper.
   
   Perhaps the Central Banks in each country can transfer these CDO’s and other of the same ilk into a trust perhaps – in isolation from the mainstream financial market – the “owners” of these CDO’s would then be compensated with a cash equivalent – of their value at the time of entry into the trust – we are of course assuming here that these CDO’s do have a cash vale – some of course may been to be written off in total.
   
   In the future, how these CDO’s are transferred back to the original owners has it issues – after all who would want them back, nevertheless there has to be a process to value or even combining several into one to give the current market value at the time of their return – if of course they have a value.
2. Large sums of cash in the area of trillions of dollars over time will need to be injected into the markets by their various Central Banks to imporve liquidty.
3. To ensure various companies long term viability – they will need to be re–capitalised, this may need to be a medium term goal, because essentially we know that these funds will need to come from the market – and their may be considerable reticence to do this in the short term – perhaps companies that are viable and need funds could be injected by the Central Banks with the necessary equity. When market confidence has returned which maybe a long term goal, these funds that were provided by the Central Banks could then be repaid, by the stock market. The good thing is that at this time – the company (assuming it is still in business) would have a track record of profitability – which would add credibility and hence for the limited market recapitalisation of these companies into the wider stock market. I am here assuming we will have one –  I think we will – this has been a huge wakeup call – and at least for the next ten to twenty years of so, in may engender some amount of care and responsibility about the deals that are done.
4. China – has to be involved in the “repair and rebuilding” process – they have as much, actually ,considerably more to lose than anyone country – the result of the huge trade surplus is a lot of cash, Treasury bonds, companies and other hard and soft assets to protect – they also are relatively uninjured so far in the world wide process. They maybe able to help in other ways.  The only other county that could help, a former major driving force in the Pacific is currently having its own problems and I don’t believe that they will be able to help – I am obviously speaking of Japan here.
5. We need a systematic program to fight this disease in the financial system, we have identified the cause – so as in (1) above lets nullify the effects by withdrawing this “virus, cancer – whatever” from the body of the worlds financial system, The current actions – appear like we are all running around “putting out bush fires” – a bit here a bit there. Hence my suggestion is that we – sorry not me – the powers across World finance system – broker the best way for a World wide expedited and “prompt” response to this situation. Put aside your agendas, your egos and other negative feelings and work together to come up with a systematic response to this situation – please.
   
   Whatever is the outcome – the effect will be that billions of dollars will be lost and written off the assets not only of countries, companies, but the most important what this does to the perception around the world of the mystery of the Worlds Financial Markets – this will affect the finances of ten of millions of families around the world impinging on the hopes and dreams, their children’s education, their homes and retirement nest eggs.  I am sure that time will help us move on – however I can never see the hysteria and hype that we have seen in the last few years occur again – as I hope that there will be some kind of improved regulatory framework in place including legislations to make companies, employees or individuals accountable for any actions of any dubious nature in the future. I am sure that there will be changes in laws from the SCC, Treasury, Stock Markets and the Central Banks about how business will be done in the future, particularly in the areas for banking especially regarding increases in the reserves that will be necessary to be kept with the Central Banks, the Rating services, and accountability for these cowboys.  So these news laws should be laid down under the legislations name of the WILD WEST IS DEAD .. Gambling is illegal with our money
   
   Whatever the short to mid term outcome is – one thing is for sure that this financial disaster that has been created by corporate greed and therefore originally by someone – perhaps someone who’s payment package was all about a small retainer and large amount of bonus or performance income – we need to re-look at this and frankly I will be thinking about it over the weekend.
   
   When this is over and so long as no one panics – with some level of political honesty and collaboration across party lines, but most of all political competency in the rebuilding process – we have a chance.  However the USA will loose probably trillions of dollars – and with this crippling ongoing war the recovery will be further delayed – however at least with Iraq, the USA is looking as though it might be soon placed for a honourable withdrawal, retreat (call it what you like) – the healing process can then begin in earnest.
   
   I believe America can come back from this – it has the energy in its people and so long as it has the political will, support and most of all competency it will recover , to again return leaner, stronger, wiser and a more accountable player in the financial world.

  

Tags: Sub+Prime+Fix, Fix+Sub+Prime, SUb+Prime+move+forward

Internet Content - There is no one in charge..

Further to my previous blog entry – here

One day the content producers will start treating the Internet as an ally and not the enemy. Life is about change and the Internet is and has been challenging the old business models of the Multi-national content producers – the thing is the Internet cannot be controlled or governed.  Forgot the old ideas that you have to control all avenues of distribution – work with – and eliminate the problem.

The trouble with and at the same time the beauty of the Internet is that no one is in charge and therefore no one is responsible, so no one to sue. So in this case Viacom in their hunt for income – they say they are loosing – how they can quantify this I don’t know, so the content producers are going after the portal itself.  Which is owned by Google – sounds like it will be easy - a walk in the park - No I don't think so.

The Internet is all about forming communities and the provision of information, normally free, we pay for this in our connection charges to our ISP & Telco’s for access, and the corporate world reaps its income through the results of paid online advertising

Viacom obviously does own the content and yes they have a right to control its presentation by licensing in the Media whether it be the old Cinema or monopolistic media, or by download via the Internet. But you cannot win this fight - does this mean you will attempt to take to court every single portal accessing the internet that uses content such as video, audio or even script.

What they should consider – is to use the Internet and provide all of their content at give away prices, or funded by say advertising either within the content or via a YouTube type of control (where you cannot download). 

Some ideas…

For instance, what if you said to your audience on the Internet, I will give you the content for free on the basis that you sign up an account where I can target you with relevant advertising for you interests. This is TV on the net, I know that there are several companies that provide this type of technology for such a portal now.  There are a number of other business models as well.

What about digital control – where someone can download the content from the original providers site – and get to view it for say 30 days – after that it would no longer play – and they pay a  nominal amount to re-activate it or why not have advertising built into the downloaded content and you can get rid of the advertising by again paying a nominal fee. You could encrypt a license into the video content itself – therefore if someone then uploaded the content as above – you would have someone to hold accountable.  But whatever you decide to do,keep the operations and admin, automatic and the biggest of all - KEEP IT SIMPLE $%%^$#. Administration on-line would be a breeze.

After all your business is the creation, production, distribution and licensing of content – so sell it – how, it doesn’t really matter, after all, your are used to dealing in quantity - in this case you are in a large numbers game – 10 or 100 million downloads at $1 or $2 cash or payment by licensing advertising still is serious money. After all what are your costs then for distribution per download, a couple of cents?

Please send all job offers to this address - 7fnmail@gmail.com – guys and gals grow up – law suits in this case are counter productive – but they do benefit one industry – the lawyers – they are basically the only people who win.

Tags: Internet, Content+over+the+internet, Internet+is+a+ally

Obama - nothing lasts for ever

Since the first time that I ever saw Barrack Obama – there has been an uneasiness in my mind – it was very hard to articulate – but what I guess it came down to was is this guy for real – he has had a absolute rise from obscurity to a pretender to the highest office in the land and if the Democrats have anything to do with it – he will make it – but in this surface society of celebrity worship is there anything to him – any substance?

So far as policies are concerned there is almost no difference between Obama and Hilary – she lost , I think that is what happened – he did not win – as well the machine decided not to support her – and then the machine again wouldn’t unite the country behind the democrats – with the citing of Hilary as his running mate – a severe tactical error with resounding long term strategic consequences.  McCain capitalised on this – appointing a young bright woman . After being slapped twice – Hilary with all the dignity and integrity stood up and for the good of the party endorsed him – like I said there is some strange about him – but what else is it – he is confident – too confident perhaps – he is eloquent, with charisma a hint of Kennedy wishfulness. I looked into his past – I came across the following – in the year 2000, he was enormously proud of his work at the Chicago Annenberg Challenge, in less than two years, it was dissolved after having spent over $100 million with nothing to show towards its stated goals of improving Chicago's schools. He was tremendously proud of his 20-year history as a member of the Trinity United Church of Christ, until the years of race-baiting and anger from its head, Reverend Jeremiah Wright, came out – could this chink be hubris ? Herewith is the definition , Now he distances himself from both of these.

Obama was the absolute topic of conversation growing over time and expanding in a unbelievable capacity – then the Republicans announced Sarah Palin and almost overnight – it was almost “Obama Who”?  To me she appears as a real person – somewhat small town with small town values, but I go to think that she is bright and so long as she has the best of advisors from the real world, not the world of short term expedience – and in the event that she does make it to the highest office in the land – she will act in concert with this office – note – it’s fine for her to believe that America is the greatest country in the world – I think Australia is – but America has to learn one thing above all others if she want to leave any kind of legacy – what happens mostly outside of the borders of the USA is not their business, unless it directly – not maybe might effect the USA.

I am sure that every possible member of the Democratic machine is scouring every aspect of Palin’s life and every friendship from every possible angle – to try and dig up the dirt on her – such is the ethics of Politics – sadly not only in America.  Such is the fact that politics seems to attract the lowest common denominator at the top of the party machines.

Palin adulation is such a paradox – she is basically a no one politically – a Governor of a State of the Union – with a total population of around 700,000 – small when you consider Governor Schwarzenegger – of California with over 30 million – so there seems to a real a grand canyon size gap between what she has achieved in life and the adulation she is receiving.

So what has she got going for her – she is quintessentially normal – a normal woman – a honest woman – a woman – one who will toughen up with exposure to the rough and tumbles of Washington – but me thinks she will always retain her small town values – essentially very good – but its the small town innocence that concerns me.

The Democrats have to ask themselves a question – how can it be that one moment Obama is everything and then nothing – that I think is because he is an illusion with no real content.  You cannot sell a Presidential candidate like a brand – like a box of biscuits – there actually has to be something inside the box.  Now we hear that Obama has received up to $80 million in donations which he is spending on a TV campaign – but guys there still has to be something in the box.

It will be tough – but at the moment and as they say a day is a long time in Politics – McCain has a better chance of winning than Obama.

This is hard for me a I do not agree with the majority of Republicans policies and certainly not have they run down America – the dubious deals done – fighting a war – they shouldn’t be in to start with – I end with a quotation by George Orwell (Writer 1903–1950)  “The quickest way of ending a war is to lose it.” – but sadly even though America and many other countries do not learn from history – they will lose this war – but they are still fighting it anyway.  Grow up guys and girls – go home, love and work hard to make your country great again.

Tags: McCain+Palin, Obama, Hilary+Clinton

Fannie Mae and Freddie Mac

Well its happened – as I thought in my previous blog back in July – see here , the U.S. Federal Government has taken control of these two Mortgage giants to stop them from failing – see the original story here from Sam Zuckerman of the San Francisco Chronicle.

Henry Paulsen, US Treasury Secretary – said the following a the time of the announcement.  Quote: "Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe" continuing he said "A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance."  Here is Paulsen’s actual Press Release of the Takeover..  http://news.bbc.co.uk/1/hi/business_world/7603998.stm

Back on July 18^th, I said the following:-

The damage to the perception and hence the stock price of Fannie Mae and Freddie Mac in the USA, also the IndyMac Bank where the fallout has prompted investors to dump the stocks of many mortgage lenders, precipitating the steepest one-day decline in banking shares since the late 1980’s, these are just symptoms of the bad paper, and a total lack of confidence.  Fannie Mae and Freddie Mac have to wear the huge losses brought about by the failures brought about by the sub-prime.  The US federal government has to bail them out – if they went down the losses would be in effect a six time multiplier of the Australian GDP – no small amount.  Fannie Mae and Freddie Mac, which own or guarantee about half the $US12 trillion in home loans in the USA, but is this bail out the only one for these companies and others – how about the rest of the Finance and Banking sector.  What happened for instance if these 2 critical organisations, Fannie Mae and Freddie Mac were nationalised?  If this situation continues they will have to be - as although they the US Federal Government will have to have some control over the companies, as well such a move, which has not happened since the depression would be the first constructive move telling the world that the US Government guarantees and has faith in the future of the US economy - they will have no choice. So long as these two enterprises continue to bleed money at this rate.  Such a move would have flow on effects into the Stock Exchanges as well as the strength of the US dollar.

This move has been so obvious as to be painful – aside from the gaping hole that it will add to an already astronomical debt in the US budget forecast, for years to come – it is a very good move – aside from the obvious assistance that it gives to the two companies in question – and literally 50% of the $12 Trillion US mortgage market – to me it proves that the US Government still does have faith in America – and is prepared to put its money where its mouth is – even if it has to print the money.

This will have immediate positive effects not only in the domestic economy of the USA but will strengthen the US exchange rate and increase confidence in the ability of this so far inept executive and its (words fail me) President to do its job, that is manage an economy.  The only negative effects I can see are perhaps an effect on inflation – but fairly small – and for crying out loud – stop fiddling and let the economy – which is a truly dynamic macro concept come to its own level.

This is a positive and courageous step – about time.

To those in the US economy who said they should fail – I feel for you guys and girls – aside from the dramatic financial turmoil – where in this time of credit crunch are you going to be able to source that sort of money – but there are more important considerations here – and that is a political and a “face” if you like – what the US Government has done – will be the best single act in this disastrous Bush administration to support the US and the US economy…

If President Bush is looking for a legacy this may well be it.

 

 

Tags: Fannie+Mae+Fredie+Mac+Takeover, US+economy+positive+step

Beijing Olympics 2008

      

Pictures to show the closing ceremony, some might say was better than the Opening ceremony.  I would truly congratulate China for their magnificent effort in holding these games. Many congratulations for the tremendous result.

It was almost as good as Sydney ! Mind you I might be biased there.

The photo below – seems to be the only dark cloud (even the air quality was pretty good) hanging over the Olympics – a reminder of the real China, where there is no freedom of speech, expression, religion or demonstration as we know it – and no law for all citizens as we know it.  I know that this doesn’t only happen in China – it happens in the West as well where all people are not treated with equal justice for all.

 

 

Tags: Olympics+closing+ceremony, Beijing+2008

Age of Uncertainty

Yesterday I was killing some time and walked into a second hand book shop – I love exploring book shops – you never know what you will find..I found a book..It was meant to happen.

 

It has the following foreword..

 

“This is the age of uncertainty. This is the time of emotional upset and nervous instability. This is the era when man surveying the Universe from atop the heap of his material accomplishments sees his insignificance in comparison to the stars, understands how puny is his strength in comparison to atomic power. This is a time when man, in his headlong rush to master the elements and harness natures energies, has come far enough to know that he treads the wrong path to his own security. For there is no security in machines, or electricity, electronics or nuclear power.

 

What am I? What caused me? Why am I here? Where am I going? These are the questions of the human soul that demand an answer. Their resounding echoes are in the offices of our psychiatrists, in our prisons and our homes for the insane and wicked. Their anguished cries are on our battlefields, in our uprooted families, in every charred ember of every burned village and pillaged town that exists in the wake of humanity who have cut off their ties with God (the Universe) and from hope...”

 

Can you relate to this ?  I can!!

 

It seems that our anguish and needs have not changed much – this was written by U.S. Anderson in 1954!

 

 

 

 

 

Tags: Age+of+Uncertainty, Uncertainty, U.S.Anderson

Media - Branding & Debt Issues

Further to my previous entry here about the market valuation of PBL Media as of July 1, 2008

CONSOLIDATED Media Holdings will consider tipping more money into debt-laden PBL Media if asked by private equity partner CVC Asia Pacific, see the original article here

The potential for an equity injection into PBL Media, owner of Channel Nine, was tackled by CMH executive chairman John Alexander at the annual results announcement, following investor concern about the joint ventures $4.2 billion debt.

Together this is placing the viability of the normally cash rich 9 network in an insecure tricky position – the pressure on David Gyngell must be immense – specially when I read that he has said he doesn’t want Nine to be the number one TV Network, he wants to have the most profitable – there was a time not that long ago when there weren’t the restrictions financially that there are now when one without the other was inconceivable, as the number one TV network he would be a long way down the road to being the most profitable.

With the lag between ratings and income (and the recent spurt in Nine ratings) I cannot see advertisers voluntarily handing more money to Nine until more time has past – being that we are in a retail recession won’t help either – there will be great pressure on the media buyers to get better value for the advertising dollar –  I hope Nine has in place a strategy for the new level playing field period – that is the time without the Olympics. However with the promotions I have seen on Nine they do not seem to be appealing to a wide demographic – good luck to them – I think they need it.

I do not consider than 7 has handled the Olympics well this time – especially concerning the integration with the Internet – what is it with 7 – they have given away their entire brand on the Internet to Yahoo – when you type in http://www.yahoo7.com.au you actually end up with the Australian Yahoo – namely http://au.yahoo.com/ – I don’t know why they bother, the lack of real branding is not doing the Strategic brand development for the seven network much good at all. I can see why Yahoo want the connection – namely content and search engine hits – but why does Seven want the connection ? I have my thoughts none of which are very positive for the Seven Networks image.

What would have happened if Yahoo had been bought by Microsoft? It would have meant that Channel Nine (through ninemsn) would have had a connection directly with the Channel 7 website – great I don’t think.

The idea of a web presence is all about extending the brand – unless they realise that they won’t excel, they (TV and Publishing) must accept that changes in their brand strategy are needed – the Internet is about information and forming communities – not to throw information without a Strategy, you end up treating your viewers like fodder – this is arrogance or incompetence – no communication and no relationship is formed – this is unfortunately what all of the networks are doing except for the ABC which has the best Internet presence and strategy in Australia with SBS in second place.

What I don’t understand is that advertisers in the Australian market spent more that a Billion dollars advertising on the Internet – where is the strategy for the TV and Publishing networks where in their business plan – (except for ninemsn.com) do we see them getting their share of the pie?

 

 

Peter Costello - is he a pretender to the throne

I don’t understand Costello’s total lack of input into the buzz that is surrounding his possible return to the Liberal leadership.

Its almost as if he wants to induce anarchy in the party but perhaps he knows something that we don’t – perhaps this is all about the best kind of publicity – the free kind – prior to the release for sale of his upcoming book.  I wonder if he will treat the people in his book, namely those with a political history with the honour and integrity that one would expect from his “Statesman” like demeanour – no he probably won’t.  He seems to be greatly amused with the uncertainty surrounding his future.

Personally – I cannot believe that he is interested in returning except to glory and success. The Labor party is there for at least two terms unless something happens to Kevin Rudd – at which time the whole Labor party leadership will disintegrate through lack of direction, leadership and political in-fighting – it is only Rudd himself that is keeping the credibility, goals and leadership of the Labor Political Government alive.

I have said before that Costello has a inflated view of his own importance – he said that if he had been leading the Liberal party at the last election, they would have won – this is rubbish – firstly he didn’t have the guts or the numbers to go for the leadership – that sort of response makes him sound as if he is still a child, although history is written by the victors – he cannot and does not fall into this category.

Costello is basically enjoying the moment – however the likely hood of he having the patience to sustain the leadership of the opposition for another two perhaps more terms is very unlikely, there not enough in it for him – especially with Malcolm Turnbull in the wings – but Turnbull has something that few others have – a first class brain, a strategic plan and patience – he knows he has time on his side.

Tags: Costello+return, Costello+liberal+leadership

Abundant, Sustainable, Renewable & Green source of hydrogen

I came across this article in my travels – an international team of researchers led by Monash University (Australia) has used chemicals found in plants to replicate a key process in photo synthesis, paving the way to a new approach that uses sunlight to split water into hydrogen and oxygen. The breakthrough could revolutionise the renewable energy industry by making hydrogen — touted as the clean, green fuel of the future — cheaper and easier to produce on a commercial scale." This was a laboratory demonstration only and the researchers say they need to bring up the efficiency. 

I know its only in its early stages – but isn’t it interesting to think of the possibilities – an abundant, sustainable energy source that is portable, green (no pun here)  and renewable.  That the path that humanity has discovered is to such an abundant energy source that nature has perfected over 3 billion years of evolution.

It would be a tremendous help in the long term Carbon Credits and Emissions Trading program – a real green sustainable alternative.

I would congratulate Professor Leone Spiccia, Mr Robin Brimblecombe and Dr Annette Koo from Monash University teamed with Dr Gerhard Swiegers at the CSIRO and Professor Charles Dismukes at Princeton University.  They have developed a system comprising a coating that can be impregnated with a form of manganese, a chemical essential to sustaining photo synthesis in plant life.

See the link press release from Monash here

Great News – what was it Einstein said – The significant problems we have cannot be solved at the same level of thinking with which we created them.

 

 

Tags: Hydrogen, abundant+energy, green+energy+source, Hydrogen+from+plants, renewable+energy, green+energy

Jill Bolte Taylor - an insightful experience of life

This is worth listening to – if you are at all interested in how our cognitive brain works..  

I was very interested and motivated to find out more..

This is truly a very insightful and enlightening recounting of her life – she suffered a stroke – which she was able to experience – this gives us a look into this skeletal being, with two cognitive minds – call the human being – as she says a right brain – thinking only in the here in now – thinks as a parallel computer might, only in pictures – joining us to the Universe – then the left hand brain – thinks in language – an works as a serial processor might in a time line – it separates us from the Universe – but it joins with the right brain through the corpus colossum – it take the experience of the right hand brain and minutely exams the information from it – and applies it to our experience of the past and to the future.

You know that little voice in your head – it comes from the Left brain – I wonder if we can retrofit a switch to turn off the left hand brain when we want to – for instance when we want to meditate.

A very unique experience – thank you for sharing it Jill – I think the Right Brain – until I want to leave the house, or anything that needs me to remember or interpret this world.

Thank you Jill.

Tags: cognitive+minds, insight+into+the+mind, Jill+BolteTaylor