Notes Mar 9
March 10, 2009 § Leave a comment
Can Obama bring some initiatives out of this? The combination of democrats and demoplutocrats in our kleptocracy won’t allow it? Then, real trouble.. The banks are in control of politics. Not good. World wide despair and no leverage to change. It always strikes me that kleptocracy does not pass the Microsoft spell checker.
Martin Wolf looks at some of the ways the world may change in response to the crisis:
Seeds of its own destruction, by Martin Wolf , Commentary, Financial Times: …In the west, the pro-market ideology of the past three decades was a reaction to the perceived failure of the mixed-economy, Keynesian model of the 1950s, 1960s and 1970s. The move to the market was associated with the election of Reagan … in 1980 and the ascent to the British prime ministership of Margaret Thatcher the year before. …
Today, with a huge global financial crisis and a synchronised slump in economic activity, the world is changing again. … If the financial system has failed, what remains of confidence in markets? It is impossible at such a turning point to know where we are going. … We are witnessing the deepest, broadest and most dangerous financial crisis since the 1930s. …
Among the possible outcomes of this shock are: massive and prolonged fiscal deficits…; a prolonged world recession; a brutal adjustment of the global balance of payments; a collapse of the dollar; soaring inflation; and a resort to protectionism. The transformation will surely go deepest in the financial sector itself. … After the crisis, we will surely “see finance less proud”, as Winston Churchill desired back in 1925. Markets will impose a brutal, if temporary, discipline. Regulation will also tighten. …
In fact, Obama is making things worse, establishing a principle that the democratic process should have no oversight role in the consequences of scientific and technological developments. He would have us believe that scientists, presumably high-minded folks, will now be able to pursue the truth unhampered by bureaucracy. In fact what he’s doing is turning the decisions over to corporations and investors — the funders of most research today — whose only motivation is profits.
Among Wolf’s solutions: fix the housing market by breaking “every mortgage contract.” Good beginning.But too late for so many whose homes are now being bought by those with spare cash to speculate.
Sometime in the 1970′s, th Dow went ove 1,000, and it was a big deal.
Before the recent crash, it was over 12,000.
Question: Does ANYBODY in their right mind believe that the value of American companies increased, by 12-fold, in their INTRINSIC value, over the past 30 or so years?
On June 19 2007, I concluded an article on the “new capitalism” with the observation that it remained “untested”. The test has come: it failed. The era of financial liberalisation has ended. Yet, unlike in the 1930s, no credible alternative to the market economy exists and the habits of international co-operation are deep. … The world of the past three decades has gone. Where we end up, after this financial tornado, is for us to seek to determine.
As merger mania plays out among the pharmaceutical giants, a different sort of financial frenzy has seized some small, struggling drug makers. Investors are demanding that stragglers close up shop and hand over any remaining cash.
Taking a Chance on a Reverse Merger (March 10, 2009)
Merck to Buy Schering-Plough for $41.1 Billion (March 10, 2009)
That is what happened to a company called Avigen, after its most promising drug failed in a clinical trial last October. Avigen said it would do what countless other biotechnology companies had done in similar circumstances: move on to the next product in its pipeline.
Not so fast, said its biggest shareholder, the Biotechnology Value Fund. The fund demanded that Avigen, after 16 years of trial and error, immediately liquidate itself and return its remaining cash to shareholders.
So much for the traditional model of patience in biotechnology investing, in which companies may burn through more than a decade and hundreds of millions of venture capital or shareholder dollars before reaching profitability — if they ever get there
In some cases, however, the investors asking for their money back are not long-suffering shareholders. They are speculators who bought in only after the stock price collapsed, hoping to make a quick killing.
Henry George is best known for his argument that the