Euro debts


The graph above is from the WSJ.

It’s interesting to see that the total debt level of the euro zone is only 87%, somewhat less than America. It seems like euro bond is the only way out.


Not sure what to think of it

Facebook IPO, for me, is a success. Yes, the price tanked and most likely won’t back up to it initial IPO value for some time but why do we care so much about it’s price? Facebook has successfully moved a lot of stocks within a short period of time and it alone is a success.

I did not buy Facebook shares.

This morning, shares are trading at $27.70 range. It’s still many times (perhaps too many) of its earnings.

Green Party is killing the Green Movement

I am an advocate for a revenue neutral carbon tax to help to keep environmental impacts in check.  Naturally, I look for party platforms that promote green.  (I use the term “green” loosely here.)

The Green Party of Canada, which is led by Ms. Elizabeth May, is facing tough battles in this election.  I argue, for whatever noble causes the party may have, the mere existence of the party is slowly killing the green movement.  The party’s narrowly focused economic and social platforms appeals only to die-hard environmentalists, literally making the party unelectable and irrelevant to majority of Canadians.

To force all other electable parties to reintroduce environmental issues into their election platforms, the Green Party of Canada must go.

Reverse Takeover

In today’s Calgary Herald, the newspaper reports a Calgary based company uses a financial trick to raise capital without issuing an Initial Public Offering (IPO).

The link to the article is here.

I intent to comment not on this specific deal, but the practice of reverse takeover.

Reverse takeover comes with different names such as “reverse merger”.  The practice is better known as “back-door registration” in the financial world.  The concept is fairly simple: a private equity firm takes over a public listed “shell” company.  There is nothing groundbreaking on the surface, but careful examination of why the practice is widely exercised reviews some troubling questions.  Again, I’m not commenting on this deal specifically.

Why back-door registration?  Because it is a cheap way to raise capital.  First, the private equity firm which initiates the reverse-merger benefits greatly from avoid paying hefty underwriting fees to investment banks.  Second, the private firm involved does not have to disclose its financial sources fully.  It could cook up its books in his home country with less stringent accounting standards and business laws to quickly snap up legitimate assets to strengthen their position, making illegitimate firms become legitimate overnight avoiding the often truth reviewing IPO process.

In 2009, one single case took the spotlight.  Chinese MediaExpress tried to reverse-merged its way onto NASDAQ.  During the preliminary listing process, its appointed auditing firm Deloitte, quit after it learned many of the private firm’s sales were manufactured and contracts were untraceable.

Unless more stringent auditing standards are applied to close the loopholes, many small private equity firms will try to crash the back-doors.

In theory, China could solve the euro zone debt crisis by …

Read on

Nuclear – the future is Unclear

Recent earthquake in Japan triggers Tsunami that caused massive devastation and crippled a nuclear power plant.  The possible partial meltdown (I must admit I had no idea what constitute a meltdown) caused widespread panic among the international community.  Notably Germany, China and United States both issued some levels of moratorium towards retrofitting and/or commissioning new power plant.

I am no nuclear scientist.  However, I would like to bring out two points to share with you.

First, to a large extend, increasing reliance on nuclear energy is an integral part of the ongoing green movement.  At present, nuclear is a form of energy and arguably the only reliable source of clean (carbon free) energy that can be produced in such quantity to replace fossil fuel based energy sources.  Taking nuclear out of the equation would make the uphill battle against global warming become seemingly impossible.

Second, nuclear energy is relatively safe.  An article from Slate magazine compares the tolls of different types of energy sources.  All types of energy extractions carry risks.  People are generally extremely risk adverse when it comes to events with low probability and yet high expected lost, such as a nuclear disaster.  Conversely, we are much more willing accept that miners dying in the process of extraction.  Thus, as long as someone else take the risks (i.e. coal miners and oil workers), we are (collectively) willing to accept the risks on their behalves.  How selfish are we.

If Japan decides to move away from nuclear as their main source of energy, the prices of traditional alternatives such as natural gas, coal and oil would definitely soar.

CPI calculation debate. How timely!

Although I have not read the original article from C.D.Howe, I still find the claims put forth by the newspaper article laughable.

Here is the link to the article in Globe and Mail.