Post your comments and questions for March, 2015.

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31 Comments

  1. Will the new blog support a podcast feed for Solari audio reports? This would make it easier to automatically sync the latest MP3 audio report to a mobile phone, for convenient listening in a car or on headphones during commutes.

    A small VC is experimenting with an instrument called “Cashflow Notes” which combines debt and equity, developed by Cooley:
    http://pando.com/2015/02/17/while-other-vcs-seek-unicorns-indie-vc-is-all-about-that-cashflow/
    http://bryce.vc/post/110818407170/an-update-on-indie-vc
    http://bryce.vc/post/112803622220/how-indie-vc-cash-distributions-work

    “[It’s an] instrument that has elements of both debt and equity. Debt in that we will not be purchasing equity initially, but, unlike debt, there is no maturity date, no collateralization of assets and no recourse if it’s never paid back. The equity element will only become a factor if the participating company chooses to raise a round of financing or sell out to an acquiring company.”

    A couple of stories from Minnesota and Alberta on neighbors buying and developing unwanted buildings:
    http://www.yesmagazine.org/new-economy/neighbors-got-together-buy-vacant-buildings-renting-bike-shop-brewer

    “NEIC created a structure where any Minnesota resident could join the co-op for $1,000, and invest more through the purchase of different classes of nonvoting stock… One year later, NEIC had enough members to buy the two buildings on Central Avenue for cash… Today, NEIC’s impact spreads beyond the intersection of Central and Lowry. It’s catalyzed the creation of new jobs, engaged its more than 200 members in reimagining their neighborhood, and given residents a way to put their capital to work in their local economy. “Collectively, that wealth will stay in our community,” says Watson. “If you want to take the long view, that’s the goal.”

    1. Rich:

      Will check into podcast feed.

      Posting the other articles. Good stuff!

      Catherine

  2. Mark Armstrong predicts a sovereign debt crisis which might begin in Sept/October 2015. On a practical level what
    is sovereign debt?…Government bonds, Treasuries, FDIC, bank CD’s, Money markets? Government bond money markets?

    ..what exactly is he referring to and how would one hedge against such a prediction?

    1. Elinor:

      Take a look at the McKinsey study I posted last week on the blog. This will be part of the discussion that Dr. Farrell and I have in Planet Debt at the end of the month.

      Catherine

  5. Would Catherine please explain the concept “U.S. dollar bear trap ” Thanks, TF

    1. If you look at the technical definition of the term “bear trap,” I am somewhat misusing it. I am referring to setting a trap for the investors and constituents who are planning on the dollar staying low or falling. Instead, they find themselves trapped in a scenario where the dollar rises and, as a result, are financially or politically in a tight spot or cornered.

      For example, a large emerging market financial institutions borrows in dollars and reinvests in the local currency. As the economy slows, the amount of dollars that the local economy is making falls. QE ends, interest rates rise. Suddenly, it takes a lot more work to earn a dollar and it is more expensive to borrow dollars. But the institution has to pay whatever it costs – because the money is owned. Add up enough such institutions and sovereign governments and you get significant momentum behind the growing fears.

      The US is in the enviable position of being able to print dollars – in good times and bad.

  6. Apologies if this was already posted.

    http://business.financialpost.com/2014/07/14/secret-path-revealed-that-allows-wealthy-chinese-to-transfer-billions-overseas-buying-pricey-property-in-vancouver-new-york-and-sydney/

    “HSBC Holdings Plc, which runs the largest branch network among foreign banks in China, offers its Chinese clients another way to access offshore mortgages while avoiding the cap on foreign-exchange conversion … Customers deposit yuan with HSBC’s mainland unit or purchase its wealth-management products, and the bank’s overseas branch then issues a foreign-currency denominated mortgage using the China deposits as collateral, the person said.”

    http://www.theprovince.com/business/Will+cancellation+Immigrant+Investor+Program+spark+flight+Chinese+money/9886021/story.html

    “in March 2014, just weeks after the federal government announced cancellation of the Immigrant Investor Program (IIP), average prices for detached homes in Greater Vancouver dropped by a monthly record of 11 per cent from February 2014. Young says the IIP was “the most popular scheme in the world for millionaire migrants” from China to protect their wealth against fears of social and political upheaval at home. It provided a cheap, risk-free, and almost guaranteed path to citizenship.”

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