Kerkorian To Cut GM Stake
Investor Failed To Get His Way
By Sholnn Freeman
Washington Post Staff Writer

http://tinyurl.com/yeln58

Good riddance. When rats abandon a supposedly sinking ship (GM), the mere off loading of this excess weight may in fact keep the ship afloat.

Happy American Thanksgiving from this old snow bird, contentedly relaxing in beautiful South Central Florida.

Democrats' Victory Is Felt On K Street
By Jeffrey H. Birnbaum
Washington Post Staff Writer

http://tinyurl.com/y8lrkr

In between working out the logistics of getting everything on the table in time for 6 p.m dinner, I did have a look at this ML report. Pithy! (You can say that in print. I said this on a conference call with a NY client with our account executive on their end of the line. Unfortunately my AE did not know what pithy meant and thought I said pi$$y--though I have no lisp, but I do have a Southern accent--which is language I do not reserve for client calls. She was embarrassed, and I found myself having to call the client back to ensure that they did not misunderstand me. Thankfully, their vocab was a bit more expanded and found it funny.)

It appears, then, that lack of investment opportunities means lack of overall growth to corporate bottom lines. I say that because I believe that investing in your business creates real value. However, because (1) we have so much mula floating around anxious to find and flop on the couch in a yield-producing home coupled with (2) a paucity of investment opportunities, that we should not be surprised (we should expect even) to see p/e ratios expand (like my waist this T-G).

What the report did not mention as a risk to their thesis is reduced barriers to investment in China (Chris Dialynas' at Pimco's point). Should those barriers be reduced and the climate become more hospitable (and are not the HB's plowing that field?) it will result in reduced investment risk and serve as a vortex to suck capital out of all of the other "just-increasing-in-price-not-creating-value" asset classes as represented by expanding p/e's. I hope that makes sense.

Latin Americans Wonder If Democrats Are Traders
Anxiety High Over Stance of Incoming Congress
By Sibylla Brodzinsky and Peter S. Goodman
Washington Post Foreign Service

http://tinyurl.com/y8pfwn

My, my, my...how quickly the debate shifts. When the US Republican Party controlled Congress, the debate (especially by the gloom and doomers) centered on the pending collapse of the US economy due to excessive consumerism and the "printing of paper money".

Now with the Democrats on track to assume control,
the "debaters" are now concerned with free trade and the possibility that the Americans may curtail spending (no need to continue "printing paper money")and thus severely impact some world economies...we shall see.

Coming back to a debate some days ago about copper. The immense investment of the Chinese governement into public infrastructure, especially an extended railway network, will keep demand for copper up.

----> China plans expansion of road, rails

Associated Press, Thu Nov 23, 3:18 AM ET

China plans to spend about $250 billion extending the country's expressways to deal with a surge in car ownership over the next three decades, state media said Thursday.

The government also plans to put about $190 billion into improving and extending rail networks by 2010, the official Xinhua News Agency and China Daily newspaper said in two separate reports.

The roadways plan devised by the Ministry of Communications will more than double the existing expressway network, bringing it to 53,000 miles within 30 years, Xinhua said.

China, once known as the kingdom of bicycles, has been transformed over the last two decades into a car culture, with vehicle ownership up 30 percent between 1985 and 2004. The car revolution has brought convenience to many but also huge environmental headaches and traffic snarls.

Most of the roadways budget — $138 billion — has been earmarked for projects in the impoverished western region, it said. The government has been spending massive amounts of money on infrastructure projects in Tibet, Xinjiang, Qinghai and other remote regions of the west that have been left behind in China's economic boom.

The report said $39 billion would be spent in eastern China and $66 billion in central areas.

Li Guoyong, transportation director of the National Development and Reform Commission, was quoted by the China Daily as saying the rail plan would be the biggest in China's history and would increase the country's rail network by 20 percent.

The money will be spent on new trains, new lines and civil engineering, it said. The current rail system is outdated, overloaded and cannot deal with the growing passenger and cargo demand, it said.

This article dovetails with ML report above

http://www.slate.com/id/2154159

Food for thought on this turkey day.

In the spirit of the holiday, I am thankful for Bill's blog.

The Plunge Protection Team soon at work in China:

http://www.nytimes.com/2006/11/23/business/worldbusiness/23trip.html?ex=1164949200&en=8af84e6f881e8284&ei=5070&emc=eta1

China, Global Markets etc...

As I have been suggesting.

All these US dollar bears, dooms dayer's, and 'the financial system is going to collapse' crowd - have it all wrong.

What the US is doing with regards to China is the mother of all Marshall Plans.

It will setup a huge 2-way trade between the two countries.

The current trade imbalances don't matter and are trivial compared to the benefits to come in the future.

China is joining the modern world.
This means stable prices, it means the Chinese controlling their money supply - and an end to commodity speculation.

The US is also pumping liquidity and taking part ownership control of the bankrupt Chinese banking system - they are true partners now.

The price of oil has (and still is) being manipulated down - as I suggested several months ago.

Next the global planners will be moving in to bring the metals prices in line and keep them stable.

These planners are also consolidating all the equity and commodity exchanges around the world - this tightens their control.

If there is a problem anywhere in the system - the global planners have set up working groups (ie:PPT's) to feed liquidity into the affected market.
They obviously have agreements to buy each others assets in the event of dislocations (ie: terrorism, US housing market collapse, Thai Coup, Australian drought, Oil infrastructure attacks...)

The message is clear - keep the global markets afloat at all costs:
Corrections are limited to 8-10%.

There is no guarantee of course that this will work - as it is a form of central planning and in some cases manipulation - but they are trying - and it is happening.
To try to trade against this is insane IMO.

Also take a look at the Middle East:
It has been reported by many that the Isreal currency has been rising quite a bit - is peace in the Middle East being discounted too?

What would happen if the US and Iran reconcile?

Expect the unexpected - right?

All IHMO.

Hope everyone is enjoying their Thanksgiving...

I tend to agree with Tradesman: Since Hank Paulson took ever last summer, he is clearly in command of the US economic agenda. The equation with the rest of the world changed fundamentally.

Paulson knows China better than almost anybody else in the US, he visited China at least 50 times (for Goldman Sachs) even before Wall Street, eh Bush put him at the helm of the Treasury, he has built an excellent network among the political elite in Beijing. The US needs China as much as China needs the US, and nobody understands the necessity of mutual fruitful relations with as little economic and social disturbances as possible then him. To bet against Paulson over the long term will not make you money. He in my opinion is the hidden, but true president of this country.

And now let's attack the turkey. Happy Thanksgiving.

ALOHA !!

Tinman and Tradesman ...

You guys have a totally flawed vision of China and Iran and relations between the USA. On almost every historical political and ideological military event China and Russia have been against the USA 90% of the time. Ever since Marco Polo the Chinese have a deep mistrust of foreigners and especially Americans. With my inside sources in both China and Russia the tide is against America and its foreign policy. I can tell you that Iran and China have closely partnered for over thirty years now and the Iranians will never forget how the USA backed Hussein and Iraq during the Iran/Iraq War in the 80's and the Russians will always remember how the USA supplied training and missiles to Bin Laden to use against Russia during their invasion of Afghanistan. Before Russia it was the British in the 1920s so Persia has a long and storied history of foreign invaders going back to the Cursades, just as China does and Russia, so is it any wonder just how deep the generational mistrust goes? You guys actually think the Chinese will bow down to some US banker who visits China fifty times? So what ... I guarantee you the Chinese are using Paulson and the US economy for as long as it works for the Chinese ... then they'll dump us like yesterday's garbage! Paulson or not ... and it won't matter a hill of beans if its the Dems or Reps who are in power. This US foreign policy equivalent of "three card monty" over the past four decades has cemented our reputation as the global used car salesman of "free trade". Just how much trust can you give a country with a military presence in 133 countries worldwide? You cannot fight eternal wars eternally ... the Romans tried that with much more resources than we'll ever have.

To actually believe that the USA trade imbalances and huge debt does not matter is the height of financial folly. To devalue your way out of debt is one step away from believing default is a viable solution to our economic ills. Which one of you would want to wish a weak dollar on the future of your kids? If you truly believe it is a viable solution then go live in the countries like Mexico, Argentina and Turkey who have suffered such devaluations of currency in recent times. For the vast majority of the citizens who live in those countries monetary devaluation has made poverty a permanent reality. As you may understand reserve currency status depends more on a strong dollar than a weak and consistantly devalued US dollar. Why hold a currency if it buys less and less each year that passes?

The tide is turning against the USA and all any US administration or appointed Treasury goon can do at this point is buy time and pray! Fundamentally this country has not changed its course and has violated practically ever edict the Founding Fathers set up in the US Constitution as well as every economic law of sound business practice ever created. We are now in the two-book-twilight-zone-of-Enron accounting ... The foreigners know that and so does Paulson.

Its all about buying time ... If you want to play that lottery then have at it!

ALOHA !!

Happy Turkey Day !!!

Eat it while you can ...