Tonight’s TV, get Rosenberg for free, and low default emerging market loans

There are a couple of interesting things on TV this evening, both on More4.  At 10pm it’s True Stories: The Shock Doctrine, a film based on Naomi Klein’s book which looks at the way far right economists have used disasters around the world to impose extreme free market “solutions” (Milton Friedman and the Chicago School of Economics) on society.  After this at 11.45pm it’s Enron: The Smartest Guys In The Room about the 2001 fraud at the US energy giant.  On the same theme, (and you’ll only get tickets on eBay now), Enron, the play by Lucy Prebble has had fantastic reviews, and opens in London at the Royal Court Theatre on 17th September.  Tickets are still available however for David Hare’s new play, The Power of Yes at the National Theatre, a quickly written piece about the collapse of the banks, and how only the rich were bailed out.

Changing topics, you may remember that one of our favourite economists over the course of the past decade was David Rosenberg, who headed up Merrill Lynch’s US economics team.  He called the deflation wave very well and, like Robert Peston, had a “good war” as the credit crisis developed.  David has since left Merrill to head back to his native Canada where he’s Chief Economist at Gluskin Sheff; but the good news is that you can now sign up for his excellent daily emailed views on the US economy for free, here.

Finally, I present to you an emerging markets investment opportunity.  You can make loans to sub-investment grade issuers in low income economies, and the average default rate experienced so far is below 2%, compared with around 10% currently for US high yield companies.  The default rate I’ve experienced so far is even better, at 0%, although I’m starting to sweat on a $25 loan I made to an Azerbaijan farmers cooperative.  The catch of course is that this is micro-finance lending through Kiva.org, a US not for profit organisation, and the interest rate is zero (the yield on the emerging market government bond index is about 9% at the moment).  Have a look at the website – you can choose entrepreneurs from all over the world, in many different industries, and lend as little as $25 each time.

Discuss Article

  1. Mark says:

    I am going to bite. It isnt 'extreme' free market economics that have got the World in this position. Name me anything that is truly free market priced. Money isnt. It is the command and control economics of 'Government' that is gradually screwing up on a scale that history teaches us normally leads to a War.

    This programme will be bastardising free market economics to excuse the monumental screw ups of Governments so that they can essentially gain even greater control. Its enough to make you weep and for Hayak and others to turn in their grave.

    good health

    mark

     

    Posted on: 01/09/09 | 12:00 am
  2. longodds says:

    If you haven't seen it  " The Smartest Guys in the Room " is well worth watching.

    If retail investors spent more time brushing up on financial history, especially when it's presented in such an entertaining watchable format, they would be much less likely to be suckered into financial scams and asset bubbles – there's more to be learned from watching this than from any text book, although text books obviously have their part to play.

    The regulators failed to learn from Enron and yet much which happened there eg structured finance, off balance sheet reporting etc was a fundamental part of the credit boom and bust, 

    While the regulators appear to have learned nothing those at the top of the too big to fail banks certainly did.  Questioning Enron's CEO Jeff Skilling senator Byron Dorgan said….

    "… in the Titanic the captain went down with the ship. And Enron looks to me like the captain first gave himself and his friends a bonus, then lowered himself and the top folks down into the lifeboat before hollowering up ' by the way everything is going to be just fine '  "

    can you think of any corporate names that could be substituted for Enron ?

    Ah  plus ça change, plus c'est la même chose.

    Posted on: 01/09/09 | 12:00 am

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