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If the Supreme Court tosses out Obamacare, the United States may have a unique opportunity to think about a framework for a rational health care industry. The framework should begin with the free market. The guiding principle should be that individuals pay for their own health care. Without that guiding principle, health care provision will always be too expensive, inadequate for many, and absurdly inefficient. Check out the health care programs in Europe. None of them are any good because they all have too much government involvement. Let us all admit that the free market isn't perfect. No question about it. The free market provision of health care will inevitably end up with situations that none of us like. No denying that. But all policy decisions are a question of choosing among alternatives. No solution is perfect and government solutions almost always tend to be the worst available. Should the government really be delivering the mail? We now have a completely absurd...

Iran's nuclear program seems to making a lot of news lately. Israel is strongly considering preemptive strikes on Iran, claiming that Iran is closer to obtaining a nuclear weapon than most countries think. The United States is not pushing towards war as much but will still support Israel in its efforts. Even more frustrating for Iran is that more sanctions seem to be piling up on them. What does this mean for Iran? They will buy more wheat. Traders have been watching Iran's wheat imports closely, and they have seen a robust increase in recent imports. Iran has been stockpiling tons of wheat from the US, Brazil, Kazakhstan, and India in what seems to be in preparation for more sanctions which will prevent access to wheat and possible war. Access to wheat is vital for the nation, as it prevent spikes in the cost of bread. This move can be seen as a preparation for war. Stockpiling more wheat than necessary means that Iran does not see these tensions dying down. Instead they see ...

The mainstream political parties are losing their support in Greece, as one would expect, given the imposition of austerity. The communist party and neo-nazi parties are on the rise and threaten political chaos and civil unrest. Sound familiar? This was the Germany of 1922-23 as the German government faced a mountain of reparation payments from the aftermath of the Treaty of Versailles and an enforced austerity program. Now Germany is the enforcer and Greece may well become the new Germany. This is the predictable outcome of the Merkel-Sarcozy-IMF bailout scheme. There is no way that this solution will hold. It will come apart and Greece will become a different country, unrecognizable from the rest of Europe. Portugal, Spain, and Italy will eventually be on that path as well, unless the Merkel-Sarcozy-IMF plans are abandoned. Europe needs a reality test, not austerity. The sovereign debts in Europe are unsustainable and unpayable. This is a pretty harsh reality, but it is the ...

BATS Global Markets, the Kansas based alternative trading platform planned its IPO for last Friday. BATS is the third largest trading platform in the US behind the NASDAQ Euronext and NYSE OMX Group accounting for 10.3% of equity trading in the US. However, their IPO went horribly wrong. Due to a software bug, BATS internal systems failed which affected trades of stocks with tickers ranging from A to BF. Investors, realizing what was going on decided to sell their allotment of BATS shares, further placing downward pressure on the new stock. Within a span of 3 seconds, the stock fell from trading at $15.25 to 3 cents. BATS thought about restarting their IPO in the afternoon, but feared it would fall below $16 threshold which is lower bound of their prospective offering. Instead they decided against it since investors could sue the company for not adequately marketing the risks associated with the firm and its business if the stock tanked again. The good news out of the whole fia...

In general, banks define dormant account (sometimes referred as inactive) when an account does not have any transaction (deposit or withdrawal) for a continuous period of at least 12 months. When your account becomes dormant, the bank would send you a notice letter to the registered mailing address to remind you to activate your account. You may be required to withdrawal or deposit some money over the counter to re-activate your account. What are the charges? In addition, should your account balances be RM10 or less , the bank would also inform you of its intention to close the account. The bank will send you a 2nd reminder when it does not receive any response from you (i.e. for activation of account or objection to the closure) within 3 months after the 1st notice. If there is still no response after 2 notices, the bank may proceed to close the account and absorb the balances as service fee. For account with balances of more than RM10 , the account will usually be charged with a dor...

With Apple’s stock recently touching $600 per share and posting gains in approach of 50% through 2012 alone, investors are beginning to wonder if the Cupertino based tech behemoth can keep its stock price soaring. Just last week, after sitting on its $98 billion “war chest” for some time, Apple announced plans to issue a $2.65 dividend and to repurchase $10 billion worth of shares. By market capitalization, Apple has become the largest company in the world, and it has a lot to show for it. Markedly, Apple’s record sales seem to continue indefinitely. Soon after its announcement earlier this year, the third generation of the iPad tablet sold more than 3,000,000 units over its first weekend available. Additionally, the firm had reported nearly doubled revenue of $46.3 billion for its holiday quarter. Record numbers like the previous are what keep both institutional and individual investors excited about Apple’s potential growth. Moreover, updates to the Mac, the Apple TV and the iPhone a...

Professor Series: Aswath Damodaran - Valuation Date: Tuesday, March 27th, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 201 Come and check out the next in our Professor Series as Professor Aswath Damodaran discusses Valuation. Professor Damodaran is one of the most highly regarded faculty at Stern. He teaches two classes at the MBA level, so this is a great chance to get a glimpse of what goes on in his highly regarded lectures. Professor Damodaran also teaches Valuation workshops to many of the Wall Street banks analyst classes, so this is one event you don't want to miss! Margin Call: Screening Date: Wednesday, March 28th, 2012 Time: 6:30 pm - 8:30 pm Location: Tisch UC-01 For those who have yet to see it, we will be showing a screening of Margin Call this Wednesday. Next week we will be bringing in J.C. Chandor, director of the film, for a Q&A session. Even if you have seen it, this will be a good refresher. Popcorn will be served! Professor Series: Thomas Cooley,...

Myanmar, one of two Asian countries (along with North Korea) that have not yet opened up its banking industry to foreign firms, could open its market as late as the year 2015. The Myanmarian government has lately been executing several attempts of reform: the first national election in 20 years was held in 2010; the country has recently begun to use ATMs; it hopes to adopt a new foreign-investment law soon. But the country's financial system is still rudimentary in international standards. Only a few people use credit cards, a confusing multiple-exchange-rate system is used, and the central bank is too weak to sustain itself. I believe that with multiple reforms such as employing a single-exchange-rate system and amending its banking laws, allowing foreign banks to operate in the country can uplift the Myanmarian financial system. I suspect the process to be competitive and chaotic, as attacking an opening market is always in the interest of business, not to mention the acquisition...

Robert Zoellick’s five year term as head of the World Bank comes to a conclusion this June as expected and nominations are coming in for who is to be the new leader. The debate for who should replace Zoellick is heating up as of late as developing nations are poised to mount another challenge on the U.S.-EU hold over the position. While it has been clear that the U.S. has significant influence over who is elected, President Barack Obama made a smart decision today to counter criticisms by nominating the prestigious Jim Young Kim of Dartmouth College to be the successor. Kim is a global health expert and has put years of effort into aiding developing nations. He recently launched an initiated to assist over 3 million patients suffering from aids in African countries. It is rare to see a non-politician or financial expert nominated but Obama believes that “It’s time for a developmental professional to lead the world’s largest developmental agency.” It i...

It seems that the crude oil market is destined to be the market of this year. Since NATO's proposal of a series of actions against Iran's nuclear experiment carried out later last year, the issue considering oil price has never lost the attention of mainstream media. We've already seen that in last two months shot up over nearly 20 percent as EU announced its freezing of various transactions with Iran among its members. Iranian governors counterattacked immediately by cutting its oil supply to Britain and France and threatned further ban on oil exports to other "unfriendly" European countries. And this morning the oil price spiked on global market to $108.25 (the three-week high) but soon pulled back. Some experts anticipated that Iran's oil export might drop by 300,000 barrels per day this month. This little variation may not be quite considerable yet it is delivering out some messages. Recently Iranian government stated publicly a breakthrough on producing ...

German bonds are beginning to sink. A national strike has been called in Portugal to shut down the economic life of the country to protest the government's austerity measures. Bond yields in Spain and Italy have resumed their upward march. There is a growing awareness that Greek reforms will never take place. No surprises here, unless your name is Merkel, Sarcozy, Bernanke or Geithner. The European debt explosion marches on to its inevitable conclusion. The forces that drive sovereign debt expansion in Europe, in Japan, in the US, are alive and well. Politicians can huff and puff all they want, but it won't matter. The unraveling process is well under way. Check out the trend in US bond yields. We're going the same route. In case you didn't see it, Ben Bernanke and Tim Geithner weighed in yesterday on how things are going in Europe. Bernanke (to a House Oversight Committee): "In the past few months, financial stresses in Europe have lessened, which has con...

The global economy grew at a more moderate pace in 2011 after the strong rebound in 2010. The growth momentum was weighed down by continued structural weaknesses and fiscal issues in the advanced economies, geopolitical developments in the Middle East and North Africa region and the disruptive impact of natural disasters on global manufacturing production. These developments reverberated onto international financial markets and contributed to heightened market volatility throughout the year. Despite the less favourable external environment, emerging economies continued to record firm domestic-driven economic growth. At the same time, emerging economies faced increasing challenges from volatile capital flows and rising inflationary pressures. Amidst this environment, the Malaysian economy continued to grow steadily underpinned by the expansion in domestic activity and firm regional demand. The Malaysian Economy in 2011 The Malaysian economy recorded a steady pace of growth of 5.1% in ...

Hedge funds spend endless time and money strategizing and actively managing portfolios to get the highest return for their investors, who in turn pay them a 2% management and 20% performance fee. Hedge fund of funds spend even more resources on top of that on manager selection and other things. But is all their effort really worth it? Perhaps not. Back in 2008 Warren Buffet made a bet with Ted Seides and Jeffrey Tarrant of Protégé Partners LLC, a fund of hedge funds. He bet that funds that invest in hedge funds couldn’t beat the stock market over 10 years. The Protégé co-founders took him on and made an index of five hedge fund of funds to put up against Vanguard’s low-cost Admiral mutual fund, which tracks the S&P 500. For those of us looking to start investing our own money into these kinds of funds within the next 5-10 years, this may be a worthwhile bet to follow until its conclusion on December 31 st , 2017. Protégé’s reasoning was that hedge funds’ ability to hold securities ...

Turns out investors need Apple’s money more than Tim Cook after all. In a press conference Tuesday morning, Apple announced its first dividend since 1995 and will pay shareholders $2.65 per share in the coming quarter. This is approximately equivalent to a 1.8% dividend yield, slightly lower than the 2.1% average for the S&P500. In conjunction with a $10bn share buyback program, the company expects to return $45bn in the next three years. This makes it the largest annual dividend payer in the S&P500 after AT&T, which expects to pay close to $10bn in the year. Apple’s near $100bn war-chest is a relic of its leaner days in the mid-90’s, when it is said to have been 90 days from bankruptcy and had to get support from Microsoft in form of platform development support and a $150mn infusion. Since then, Steve Jobs had been running the company with tight purse strings despite the enormous and stable cash flow in recent years. Indeed, his biography included comments indicating he...

Public Mutual today launched two new funds, namely Public Strategic SmallCap Fund (PSSCF) and Public Enterprises Bond Fund (PENTBF), and categorized as equity growth and bond fund respectively. Public Strategic SmallCap Fund seeks to achieve capital appreciation over the medium to long term period through investments primarily in companies with small market capitalization, by investing in stocks with market capitalization of up to RM1.25bn at the point of purchase. The fund may also invest in companies which at the point of purchase form the bottom 15% of the cumulative market capitalization of the market which the stock is listed on, although the fund will focus its investments in the domestic market. Funds' key data were shown at the end of this post... To achieve increased diversification, the fund may invest up to 30% of its NAV in selected foreign markets if the returns are assessed to be promising. The fund generally maintains equity exposures within a range of 70% to 98%...

Elections are coming up in Greece and guess what? Greeks don't care for the austerity plans and economic reforms foisted upon them by the terms of the recent bailout. Surprise, surprise! Merkel, Sarcozy, the ECB and the IMF are a ship of fools. There is no way the Greek population, or any population, would agree to these terms. It won't happen. So, why are the politicians putting us through this ruse? The same reason that American politicians are going through the charade that higher taxes on the rich can fund the American welfare state. This is all ridiculous. The Greeks will never abide by the agreements. All that has happened is that the debts of Greece have been assumed by Germany (and, to some extent the, US through the IMF backing). "Extend and pretend" continues to be the policy of the Eurozone, enthusiastically supported by the Obama-Geithner team. It won't work. Give it up. These sovereigns debts are unpayable and the sooner that this truth is ...

Professor Series: Thomas Sargent, Nobel Laureate Date: Tuesday, March 20th, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 201 **Please note the room change!** Join Finance Society and EHS this week as we host Stern's very own Professor Thomas Sargent. He will discuss elements of his Nobel prize winning work and how it links to current events unfolding in the world today, with a focus on the European sovereign debt crisis. His presentation will also expand on an article he authored in the Wall Street Journal entitled "An American History Lesson for Europe." This is one event you don't want to miss! Citi Summer Analyst Panel Date: Thursday, March 22nd, 2012 Time: 12:30 pm - 1:45 pm Location: Tisch 200 Join the Finance Society this Thursday, March 22nd, as we invite a panel of Summer Analysts from Citi Group to speak about the "Life of an Analyst." For Juniors who have a summer internship in the Financial Services Industry, this will be a great ...

The hottest talk on the Street lately is unsurprisingly the blast that Greg Smith, the London-based executive, released through an op-ed column of the New York Times upon his departing Goldman Sachs. With an explicit title, “Why I Am Leaving Goldman Sachs,” Smith shines light onto his 12-year experience with the firm to debunk the crooked morals of the famous investment bank. In the article, Smith laments the leeching nature that Goldman has developed over several years, as current business is primarily conducted to make money. With meetings that discuss mainly the amount of money earned off of clients, or “muppets,” as managing directors sometimes call them, Goldman Sachs has exhibited a profit-driven aspect sometimes at the expense of client needs. Such loss of Goldman’s original culture – the spirit of achievement, humility, diligence – is what is driving Smith to leave the firm. The article made quite an impact; not long after its release, the article caused the firm t...

The "Jobs Bill," currently under consideration by the United States Senate is a terrible piece of legislation. Nothing surprising about that. The fact that it is bi-partisan only adds to its odor. However, buried within the bill is a provision that limits some of the worst provisions of the Sarbanes-Oxley legislation of 2002 that has all but destroyed the US IPO market. Sarbanes-Oxley is the legislation that was passed in the heat of reaction to Enron and World Com and is one of the worst pieces of finance legislation that ever found its way through Congress (although Dodd-Frank is certainly even worse). Sarbanes-Oxley was a reaction to the fact that the US stock market, from 1981 until 2002, had increased 1200 percent. That, apparently, was an inadequate return, according to the political class...hence the adoption of Sarbanes-Oxley. Since Sarbanes, Oxley, the stock market has basically done nothing, which, I suppose, is more in keeping with what the political class de...

Heard about 1Care Malaysia healthcare plan? If no, then you must read this article thoroughly word by word. Because the the proposed healthcare system will drastically change the way we seek for treatment in the future. The main issue was " Is it viable to implement 1Care? ". Well, the intention is good for our community. The plan had a very beautiful definition as below: But... Concern is always there whenever Government want to implement something and that thing is managed solely by Government. Experience? Got (bad experience). Money? Got, but already drained somewhere (normally). You can't prevent Malaysians from worrying, especially when 1Care touches each and everyone of us for life. What are the concerns? Each person in different sector have different risk level . How to determine the amount of contributions of each contributor? Subsequently, how to determine the benefits package each individual entitled to? If the benefits was based on the amount of contribution...

The Eurozone Debt Crisis has been around the news for a long time, and yesterday (Friday, March 9) there was a new progress: Greece sealed a historic € 206 bn ( USD266 bn) debt restructuring deal. Over 83% private sector bond holders in Greece agreed to change their bonds to new ones at less than half their value in order to prevent a disorderly default. Once the collective action clauses (clauses that allow decisions made by majority of creditors to be binding for all creditors) are added into the bond contracts, the response rate will be increased to 95.7%, which means Greece could lower the negativities in the debt-swap plan. This restructuring is the largest sovereign-debt default in history and is the first one in Western Europe in half a century. While it is an integral part of a second, € 130 bn bailout loan for Greece, it will trigger pay outs for CDS (credit-default swaps, contracts that pay off if creditors suffer default). In any case, this I believe this debt exchang...

I am not normally a fan of plugging NYTimes stories, but this one has to be read. Danny Hakim has written a terrific article laying out the plight of cities and counties in the state of New York. He recounts one story after another of impending municipal bankruptcies. In every case, the cause is the same -- bloated public employee expenses -- mostly public employee retirement and health care. Normally in recessions, the costs of running government agencies slows down since there isn't any reason for employment costs to rise. But, not so with pension and health benefits. They rise astronomically regardless of the economy. This problem is not confined to cities and municipalities in New York. California faces the same situation for almost all of its large cities and counties. Many other states are in the same boat, especially where unions have major political clout -- Illinois, for example. So, for those who think Europe has problems, just relax. European debt problems are co...

For the first time in US history, a US official is filing corporate espionage charges against a foreign state-owned company. The two company involved in this legal scandal are Dupont, a US company, and Pangang Group, a Chinese company. The story involves an obscure chemical and an almost obsolete technology that DuPont has wanted to keep secret for years. The two employees of DuPont alleged of stealing the technology and selling it to the Chinese company are pledging not guilty of the charges. The FBI didn’t really find evidence for the case until one agent, who understood Chinese, caught a conversation between the Ms. Christina Leiws and her husband. The agent then followed Ms. Leiws and eventually found a safe deposit box containing files of a decade long documented plot for stealing DuPont’s technology. I think the fact that Pangang Group is a state-owned company adds another level of complexity to the story. Though the intent of espionage for Pangang Group may be purely for corpor...