Thanks for the mention! I think of it as “vendor financing” because of the report that:Bear Stearns can convert Citic’s trust securities into equity in the five years after the transaction closes. After 40 years, they’ll automatically convert to Bear Stearns stock.

The Citic debt that Bear Stearns is acquiring will mature in six years. The U.S. firm can recoup its cash at that point if it decides not to convert the debt into shares.

So the deal will make Bear’s balance sheet ratios look better, although not providing any immediate liquidity.

The net flow of funds may occur in six years. As far as the official statistics – or even unofficial statistics – you look at are concerned, will such a flow come out of nowhere, or will the potential for such a flow be recorded immediately?

this breaks henry ford’s principle – because the auto workers can no longer afford the model T.
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inflation spikes – but deflation wins. in a steadily contracting global economy most of our assumptions are reversed.

the dollar strengthens.

- the dollar ?
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Be intereste din your thoughts on the following dilemma. TAs we are seeing across the world with food price caps (FT today) and pernicious inflation in all “critical” asset classes, the fed has but two options deflation or inflation. Yet it is actually a hobsen’s choice no (?)because all the rate cutting in the world will not inflate wages (the essential component of the equation that greases the wheel) owing to the overseas enduring labor arbitrage, so the “critical” differential which governs US ability to live simply grows wider. The more the Fed nflates the worse the problem grows here and abroad. That leaves deflation and yet the Fed is deathly afraid of the skeletons that will float up from the bottom, especially when there are so many government initiatives that need funding? The white house econ braintrust was on CNBC today claining they wished the banks would just take the writedown and clear the decks, but which I guess is code to the Fed to cut hard and cut fast.

A commentator on a smart finaincal site breached the Wall Street Blue wall today and called into question the veracity of the supposed “free market” with Paulsen and the Fed all but screaming they are manipulating the markets. Another commentator mentioned that the biggest bubble of all is quite possibly – though not ignored if ou read this site – in US government bonds.

Seems like the Fed is totally helpless and will be steamrolled by history. Question is what is the asset class most likley to hold its value in a period of prolonged deflation? Thinking Japan?

So they are free to buy if they want to. However BoA is considering getting out of investment banking altogether Buffet realized long ago that investment banking is not a good business to own.

“A Chinese court sentenced a former food and drug agency official to 15 years in prison on Tuesday for embezzling public funds… called a “typical case”…” http://www.reuters.com/article/latestCrisis/idUSPEK167510

“…”Often German companies realize too late that their investments in, let’s say China have been embezzled.”…” http://www.dw-world.de/dw/article/0,2144,2830229,00.html

I know that it is an uncertain concept, but it is the cyclically adjusted budget deficit that matters, and I suspect that that is no better in the US.

I recall Mrs Thatcher in the late 1980s looking forward to eliminating the UK national debt…..just before the housing bust set in and made it balloon!

“…Middle-income countries accounted for more than half of the $23 billion in World Bank aid last year. World Bank President Robert Zoellick reiterated today that he favors continuing such lending… Countries such as China and India still account for 70% of the world’s poor..” http://www.bloomberg.com/apps/news?pid=20601087&sid=auD5doJTjaAE&refer=home

“…China pursues its space project despite the fact it is still a developing country. Its per capita gross domestic product last year was just $2,010 compared with $44,970 in the US…” http://news.bbc.co.uk/2/hi/asia-pacific/7060347.stm