Outside the Box, February 2009


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Saving Capitalist Banking and a Speech by Paul Volker

February 23, 2009

This week I came across two items that I think are worthy of being in Outside the Box, so I am going to give you both. The first is an essay by good friend Paul McCulley, Managing Director of PIMCO, called "Saving Capitalist Banking from Itself." The second is a recent speech by Paul Volker, former Fed Chairman and a (hopefully very) influential member of President Obama's economic advisory team. This speech is a must read. Taken together they provide a cautionary tale of what the world of...

Obama’s Energy Plan: Trying to Kill 3 Birds With 1 Stone

February 19, 2009

Dear Friends:

As a boy with a slingshot, killing two birds with one stone meant I was either the best shot in the land or the luckiest -- and rewarded by neighborhood fame and the good fortune of the affection of the girl next door.

As I read a piece sent to me by George Friedman, founder of STRATFOR, entitled 'Obama's Energy Plan: Trying to Kill 3 Birds With 1 Stone,' it dawned on me that reading STRATFOR is the same maximization of my opportunities: not only am I getting information about...

Weakness Unmatched in 35 Years

February 16, 2009

One of the best gauges of an economy is tax collections. No one pays taxes unless they have to, so collections are a real-world, real-time analysis of the US economy. And the best source I know of for tracking taxes is The Liscio Report, by Philippa Dunne & Doug Henwood.

Tax collections are down. Philippa and Doug give us the actual numbers, which are not pretty. Bottom line? "What does this all mean? It suggests that the consumer retrenchment in this recession will be deep and long, and will...

Where Will the Growth Come From?

February 9, 2009

One of my most significant learning experiences came from a basic forecasting mistake. Back in 1998, I looked at 40 years of documented evidence that 50% of all large programming projects ended up coming in late. That set of data was consistent over all industries and over decades. I checked it out with industry experts. I really did my homework. And thus I said that the Y2K bug would be a problem, as a sufficient number of corporations around the world would have bugs that would create supply...

Global Trend: The Russian Resurgence

February 5, 2009

If the Russian Bear has indeed emerged from its post-Soviet hibernation to regain global prominence, that means big things for your portfolio. From the punishingly obvious war with Georgia last summer, to the more subtle - but equally powerful - shut off of natural gas to Ukraine and Europe, Russia is making it abundantly clear that they want to be global players again. To get a read on how this is all going to play out, I turn to my friend George Friedman, the founder of global intelligence...

Can The Euro Survive?

February 2, 2009

Milton Friedman famously predicted that the euro would not last past their first economic crisis. This week we look at commentary by Niels Jensen that explores the news from Euroland. Can the euro survive? He explores a number of options which are most definitely not on the radar screen for most investors. It is good to get a perspective from those outside of our own back yard. Note that when he says "our country" he is referring to Great Britain.

Niels is the Managing Partner of Absolute...