2009 June 16 | Capital Flow Watch

It will be hard to clean up Obama's mess. Dems won't do it & GOP will be blamed for necessary painful medicine. #tcot >>
BHO's Timid Border Security Measure Does Too Little. http://capital-flow-watch.net/q3a Napolitano thinks otherwise. #tcot >>
AZ's preemptive strike against card check http://capital-flow-watch.net/gxr #tcot Keeping the mobsters out. >>
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Financial economic theory

CFAs reject the Efficient Market Hypothesis

By John Schroy, on June 16th, 2009 |

A recent poll of members of the British Chartered Financial Analyst Institute revealed that 77% of its members disagreed that investors acted rationally.

This implicit rejection of the Efficient Market Hypothesis has far reaching implications for the structure and management of capital markets, including Modern Portfolio Theory, the use of betas, the justification for index funds, and the M&M Theories.

Will the economists that proposed these theories return their Nobel prizes?

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Market regulation

Effective financial reform unlikely in 2010

By John Schroy, on June 16th, 2009 |

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The financial reforms of the New Deal lasted for over fifty years and were based on two years of work by the US Senate Pecora Commission, spanning two administrations with bipartisan support.

In contrast, the Obama “reforms” are being concocted in secret to be rushed through the Pelosi-Reid Congress, already famous for passing substantial legislation in the dark of night, without reading the text.

Historically, slap-dash, one-party ‘reforms’ have not survived a Congress controlled by the other party.

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Deficit spending

Foreigners shun US financial assets

By John Schroy, on June 16th, 2009 |

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Foreign flows into US debt markets is down 99.2% from 2006 levels.

In reaction to the profligate behavior of the Pelosi-Reid Congress, foreigners have been moving from financial securities and bank deposits into direct investments and miscellaneous assets, such as real estate.

Continued deficit spending by the Obama administration should drive foreigners to seek safer, non-dollar havens.

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