Monday, July 13, 2015


Back from vacation with some links...

Memo to China: You Are Doomed to Fail - by Jason Zweig (LINK)


Wilbur Ross: Here's the real goal of Greek deal (LINK)

Barry Ritholtz talks to Leon Cooperman (LINK)

A Dozen Things Learned from Leon Cooperman About Investing (LINK)

A Dozen Things Learned from Ben Horowitz about Management, Investing and Business (LINK)
Related book: The Hard Thing About Hard Things
Lessons Learned from A History of Oil (LINK) [I listened to the podcast mentioned last year, and also highly recommend it. For some related books, see HERE. And a related DVD:The Prize - An Epic Quest for Oil; Money & Power.]

A London Hedge Fund Lost $1.2 Million in a Friday Afternoon Phone Scam [H/T Will] (LINK)

Hussman Weekly Market Comment: Greece and the King of Asteroid 325 (and The One Lesson to Learn Before a Market Crash) (LINK)
Last week, the price of Greek government debt soared on hopes of an 11th hour stick-save bailout by the European Union. Unfortunately, that price jump still left Greek bonds priced to reflect a default probability of 100% at every maturity. The jump only reflected an increase in the amount that bondholders evidently expect to recover in default, raising the implied recovery rate from the recent low near 30% to something closer to 50%. Put another way, the bond market has fully priced in the likelihood of a default coupled with a major haircut on Greek debt. What prices may not reflect is that the style of the haircut Greece wants may be modeled after former finance minister Yanis Varoufakis. 
While a can-kicking bailout is still possible, it’s not at all clear that it would be desirable for anyone in the longer-run. Meanwhile, in my view, the blame and finger-pointing being aimed at Greece is not only unfortunate but unjust. In Antoine de Saint Exupery’s The Little Prince, the King of Asteroid 325 asks, “If I ordered a general to change himself into a sea bird, and the general did not obey me… which of us would be in the wrong?” 
The fact is that the entire structure of the euro itself is wrong – flawed – because it demands exactly that sort of transformation by any country that is not sufficiently similar to stronger European countries such as Germany, France and Finland. One of the first things that international economists learn to appreciate is the idea of an “adjustment variable.” When two countries differ significantly in their growth, productivity, tax structure, demographics, and other factors, the relative differences are typically resolved by changes in exchange rates, interest rates, and price levels. Those adjustment variables provide a buffer for each country that allows them to adapt individually to economic differences and shocks. 
The problem with the euro is that the treaty that allowed each country entry into the system was much like an errant request by the King of Asteroid 325: transform yourself into a sea bird.