Archive for the ‘business’ Category

Ecuador: Looking for fools wanting to part with their money

Wednesday, April 2nd, 2014

Encumbered forever by desire and ambition
There’s a hunger still unsatisfied
Our weary eyes still stray to the horizon
Though down this road we’ve been so many times

This report is dated April 1st, but it’s no joke:

Ecuador to meet investors in non-deal roadshow

Ecuador has hired Credit Suisse to arrange meetings with fixed-income investors in the UK and the US beginning on April 4, according to two market sources.

Non-deal because Ecuador defaulted on US$3.2billion of debt in December 2008, and it’ll take quite a bit of tap dancing and some really high (pie in the sky, perhaps?) interest rates for incurably gullible optimists to buy Ecuadorian debt, and hope it doesn’t default.

Apparently Ecuador also hired Citigroup.

Sing it, guys!


#ThanksLarry: In praise of Larry Kudlow

Saturday, March 29th, 2014

“We believe that free market capitalism is the best path to prosperity!”
@larry_kudlow

I met Larry Kudlow at the Rainbow Room on Wednesday, November 16, 2005, at the Pajamas Media rollout party. Pajamas Media was having a momentary identity crisis, and we found out almost then that it was making its debut as OSM: Open Source Media instead.

There were a hundred people or so at the event, so I’m sure Mr. Kudlow doesn’t remember me, but here’s how it went:

Milton Friedman and Louis Rukeyser were instrumental in my transformation from a socialist to a capitalist, and I must partly thank PBS for that. As an economics/business major, I had read Friedman’s books, and they were pivotal to my change. (Years later, PBS aired Friedman’s Free to Choose series – which you can now watch on YouTube for free by courtesy of the Palmer R. Chitester Fund). While I was still in college, I started watching Louis Rukeyser’s Wall Street Week (W$W), which aired on PBS every Friday at 7:30PM. Friedman was a guest in the show.

I was a fan of the show for its entire run, from 1972 to 2002. There’s even a photo of me with my newborn son watching W$W on the day he was born.

In 2002 Rukeyser moved to CNBC, and he ended his show in 2004 due to his battle with cancer.

Larry Kudlow was a regular panelist in both shows, and, at the Pajamas party, I went over and introduced myself. Mr. Kudlow looks exactly as he does on TV, he’s shorter than I expected, and was (characteristically) very well dressed.

I started by asking him to tell Mr. Rukeyser, if he had a chance, that he was in my family’s prayers and convey our best wishes. Mr. Kudlow was most gracious, and he described how Mr. Rukeyser was the only person who would invite him to their show after Mr. Kudlow’s recovery following a scandalous and very public fall from grace due to his addictions. Mr. Kudlow also explained his conversion to Catholicism, as Catholics took him in during the time when he struggled to pry himself away from his disease. It was a remarkable conversation, and before we parted he mentioned again he’d convey my message to Mr. Rukeyser, whom he saw often.

CNBC started a show, Kudlow & Cramer, which I didn’t watch too often because I find Cramer annoying. Later on Kudkow got his own show, and I watched frequently (mostly while preparing dinner).

The Kudlow Report (and its earlier version, Kudlow and Company) was, without a doubt, the best moneypolitics show on the air. Differing, opposite, views were discussed civilly, and with clarity. It is entirely to Mr. Kudlow’s credit that he maintained such high standards on each and every broadcast.

Last night was The Kudlow Report’s last show. During his closing speech, Mr. Kudlow gave witness to his faith, movingly saying he “replaced addiction with faith.” He will continue as a CNBC contributor in other shows.

I wish Mr. Kudlow the best, and thank him for inspiring and encouraging Americans to prosper and grow.


Insourcing from . . . Mexico?

Thursday, March 20th, 2014

More, faster, please:
U.S. ENERGY REVOLUTION ATTRACTS MEXICAN INTEREST (emphasis added),

The media cliche is that free trade has sent U.S. jobs south to Mexico and overseas to China. But the boom in U.S. energy production, creating cheap fuel for manufacturing, has foreign investors thinking more about creating jobs in the U.S. Raul Gutierrez, who leads Mexican steel producer Deacero, tells us that, thanks to cheap energy, the U.S. is becoming more competitive as a place to manufacture. His company produces and sells on both sides of the border and he says that the U.S. is an attractive place to do business. Meanwhile, he’s urging his compatriots to end the government-enforced monopolies that have kept prices high for electricity and other industrial inputs south of the border. In urging Mexicans to embrace competitiveness reforms, he adds: “We need a free trade agreement with ourselves.”

As Don Surber says, GOOD.

UPDATE:
Linked to by Cherokee Gothic. Thank you!


Brazil’s high operating costs

Tuesday, March 18th, 2014

In the WSJ, an article on Forever 21‘s new stores, In Brazil, the Long Wait for Fast Fashion, highlights some of the issues business has to deal with (emphasis added):

Keeping prices low has been a challenge for most retailers because operating costs in Brazil are high. Apparel vendors in Brazil pay an estimated 35% in taxes on their products, compared with about 8% in the U.S., according to Alexis Frick, a São Paulo-based analyst for market researcher Euromonitor International. Retailers that ship their products in from abroad pay as much as a 35% in addition to those taxes in import taxes.

Take a look:

Price Check

Comparing prices in the U.S. versus Brazil for select items. These are website prices as of March 17.

Items U.S. price Brazil price
Mizuno New Prophecy 3 $210 $426
Mac lipstick $16 $28
Unlocked iPhone 5S (16 GB) $650 $1,190

When a friend from Brazil told me my Kitchenaid mixer (that retails for $250 on Amazon) sells in Brazil for US$1,000+, I asked that he take it when he went back, sell it, and we split the profit.

He already had bought one for himself, otherwise I would have sold him mine.

Related:
The Economist did a price comparison on Latin America iPhonomics.

UPDATE:
Linked by Dustbury. Thanks!


Puerto Rico: Hedge funds <3 the new bonds

Thursday, March 13th, 2014

Trading on hope, with junk:
Investors Flip for Puerto Rico’s Debt Offering
Hedge Funds Among Leading Buyers of Island’s $3.5 Billion Muni Deal

The smarter flipped theirs,

Then, as prices of the new bonds soared Wednesday, many investors sold at least some of their Puerto Rico debt for a quick profit. Investors and traders said buyers who got a piece of the bond sale Tuesday pocketed millions of dollars, echoing the quick winnings seen in last September’s largest-ever corporate-bond sale, a $49 billion offering by Verizon Communications Inc.

(Click for larger view)


And keep in mind,

The three major U.S. credit-rating firms this year downgraded the island’s debt to junk, or noninvestment grade, in a sign of lingering concern over its economy and governance.

Hate to be a party-pooper, but with numbers like that, someone’s going to get burned.

Argentina: Still in the hole for $185 million

Friday, March 7th, 2014

The Supreme Court on Wednesday revived a $185 million arbitration award British energy company BG Group PLC won against Argentina in 2007.

The high court, in an opinion by Justice Stephen Breyer, reversed a lower-court ruling that said the arbitration process that led to the award was invalid.

The case dates back to Argentina’s 2001-2002 economic crisis. BG alleged the Argentine government destroyed its investments in the country’s natural-gas distribution sector through a series of state actions. The company also said Argentina threatened businesses with serious penalties if they challenged the government’s crisis-era actions in that country’s courts.” target=”_blank”>The high court, in an opinion by Justice Stephen Breyer, reversed a lower-court ruling that said the arbitration process that led to the award was invalid.

The case dates back to Argentina’s 2001-2002 economic crisis. BG alleged the Argentine government destroyed its investments in the country’s natural-gas distribution sector through a series of state actions. The company also said Argentina threatened businesses with serious penalties if they challenged the government’s crisis-era actions in that country’s courts.

The BG Group case, by the way, is not the defaulted bonds case.

Panama: World-wide port expansions

Monday, February 17th, 2014

The construction delays at the Canal’s project will get sorted out, but Ports, Shipping Companies Retool Before Panama Canal Expansion
Project Delays, Cost Overruns Haven’t Halted Global Efforts

Here in the USA,

Miami is spending hundreds of millions of dollars to deepen its harbor and build an underwater tunnel for trucks carrying goods for bigger ships that would use the new canal. The shipping publication, Alphaliner, said 214 of the so-called neo-Panamax ships, as long as four football fields and 161 feet wide, were ordered with sights set on a wider, deeper canal. The booming liquefied natural gas industry in the U.S., which is counting huge ships transporting gas to energy-hungry Asia, has predicated investments on large volumes passing through the canal.

Even citrus growers in Florida are seeking to get their products to Asia and the Pacific coast of Latin America on bigger ships at lower cost, by using a refurbished canal, said Adam Putnam, Florida’s Commissioner of Agriculture.

The booming liquefied natural gas industry, for instance, has been investing heavily to build facilities in the U.S. for natural gas to be exported to Asia. Most LNG ships are today too big for the canal. But the U.S. Department of Transportation said in a November study that 90% of the tankers carrying the liquefied gas would be able to use a refurbished waterway, which connects the Caribbean with the Pacific and saves ships a 5,000 mile voyage.

Let’s hope the Canal’s expansion goes as scheduled.

Puerto Rico: Growth yes, more taxes no

Tuesday, February 11th, 2014

Says Monica Showalter of IBD, and I wholeheartedly agree:
To Avoid Becoming The Next Detroit, Puerto Rico Needs Growth, Not Taxes

Too much bureaucracy, much of it for welfare, and too much rewarding failure over success drive up costs and drive out the productive. Puerto Rico’s most talented citizens are voting with their feet. The island loses about 1% of its population a year, a deadly loss compounded over the years for any economy.
To bring these people back, the governor has to fight to cut taxes and really go after the country’s entrenched special interests with a baseball bat.

The 39% corporate tax has to go.

He [governor Alejandro García Padilla] also must fight in the U.S. Congress to reinstate Puerto Rico’s special tax break that ended in 2006 so that investment will once again return.

Finally, he must also take on Big Labor’s favorite, the Jones Act, which artificially drives up shipping costs, putting local manufacturers at a disadvantage, demanding Congress at least give Puerto Rico an exception.

Read the whole thing.


Brazil: BNDES bends the rules, gives Cuba nearly $1billion

Monday, February 10th, 2014

Yes, Cuba, one of the world’s deadbeats.

Brazil Tries to Borrow Its Way to Prosperity
A five-year credit spree by state banks threatens the country’s competitiveness.

The Brazilian government’s development bank—known by its Portuguese initials BNDES—has dumped almost $700 million in subsidized credit into Cuba to finance the renovation of the Port of Mariel. On Jan. 27, Mrs. Rousseff cut a ribbon at the project and promised another $200 million in BNDES credits for a second phase of construction. On the same day the Brazilian newspaper Valor Economico reported that Cuba is now the third top destination for BNDES loans.

And that’s only one of several bad loans:

There is also the question of quality in what is a highly politicized loan portfolio. In October the Economist magazine reported “leaked documents show that Caixa’s analysts think default rates will be 30-50%.” BNDES seems to have plenty of dogs too. It reportedly lent the companies led by smooth-talking Eike Batista some $4.7 billion. His empire collapsed last year after his oil company OGX filed for bankruptcy.

That’s Dilma’s idea of fiscal responsibility.

Argentina: Burning down the house

Friday, February 7th, 2014

Hold tight wait till the party’s over
Hold tight
We’re in for nasty weather

Argentina Warehouse Blaze Kills Nine Firefighters
The Argentine government launched an investigation into a fire that killed nine firefighters and destroyed a warehouse that stored banking and corporate documents here on Wednesday.

Investigators are looking into why the “substantial fire-prevention system” failed to control the blaze, which injured at least seven others, said Security Secretary Sergio Berni.

9 die in fire destroying Argentine bank archives

The destroyed archives included documents stored for Argentine corporations and banks, said Buenos Aires security minister Guillermo Montenegro.

Dear IMF,

We would really love to show you the documents and records of how wonderfully our economy is doing, and specifically my keen grasp of economic reality and policy, but unfortunately we can’t

Robert Menendez and Marco Rubio, Two leading US Senators anticipate an economic crisis in Argentina, soon
The current Argentine economic situation reached the US Capitol during the hearings to consider President Obama’s nomination for future ambassador in Buenos Aires, and what was said was not encouraging.

No respect shown by Obama for Argentina; but don’t worry, the new American ambassador’s going to fit right in with the ambassadors to Norway, China, and Hungary:
Obama nominee for ambassador to Argentina says he’s NEVER been to the country
- Noah Mamet bundled at least $1 million in campaign donations to President Obama’s two presidential election campaigns, and now he’s in line to be the U.S. ambassador to Argentina
- When Sen. Marco Rubio asked him during his confirmation hearing if he had ever visited the South American country, he admitted that he hadn’t
- Last month the Obama nominee for a similar post in Norway demonstrated a lack of knowledge about that nation’s political structure and said he had never been there
- Newly minted ambassador Max Baucus, now headed to Beijing, freely admitted in his own hearing that he’s ‘no real expert on China’
- The new ambassador to Hungary is a soap opera producer and prolific Democratic fundraiser who couldn’t tell senators what America’s strategic interests are in that country

Sing it, fellas!