Bicameral Legislature

General map and information:

• All ideas and thoughts have to be passed by both Senate and House of Representative in order to become a new policy
• Only the House of Representative has the right to imply policies that involve Government Revenue Bills
• The House of Representative is more powerful in altering economical policies relative to the Senate
• After the vote on 4^th November, 2010, Obama’s Democratic got 183 seats in the House of Representative while the Republican got 239 seats in the House of Representative

Thanks

Paul

Think deeper about the QE2

QE2 is finally out on Thursday, November 4th. Here are some quick points for it:

1. The total QE2 amount is 600Billion, separated into 8 proportions, with each equal to 75Billion
2. Starting from November in 2010, FED will purchase 2-5 years bill, notes and bonds from the US Government
3. The aim for the QE2 is to increase the " Expectation Inflation " in US by keeping the 2-5 years interest rate in a certain range
4. Separating the QE2 into 8 different proportions shall increase the " Expectation Inflation " in the market of US
5. Yet, this is not the end of the story
6. Obama should have known that his party will lose seats in the House of Representative
7. In the coming days, it will be harsh for Obama and his party to make up policies that involve spending money or printing money
8. Personally, I predict that the US Government will cut off some spending in the coming months
9. It may not involve the money that printed in the QE2 plan, but there must be some plans that will be adopted by the US government to reduce spending
10. While " Expected Inflation " keep on increasing, US Government will keep on reducing spending
11. Government will not increase interest rate in the coming 8 months, otherwise, the QE2 plan is a failure

For general investors, I suggest:

1. Buy real estate stocks in US, hold it until May of 2012
2. Buy real estate stocks in HK, hold it until May of 2012
3. Buy commodity stocks, especially oil and natural gas, hold it until March of 2012
4. Include gold stocks in your portfolio, hold it until May of 2012

Thanks

Paul

Photo: http://www.wretch.cc/blog/makoto771/22365264

Paul Krugman

November 5, 2010, 1:30 PM

QE Madness

It has been really interesting to watch some of the commentary over quantitative easing by the Fed: while people like me see the Fed’s actions as way too timid, there’s a substantial faction out there that sees them as the end of Western civilization. Right now the most popular story on Bloomberg is Jim Rogers saying that Bernanke doesn’t understand economics, that he’s “debasing the currency.”

I’ve seen Rogers in action; he seemed to me to be confused about issues like the difference between assets and liabilities. And please note that inflationistas like Rogers have been wrong about absolutely everything this cycle (and the last cycle, and the cycle before that).

But they have their devotees. And this means that monetary policy, our only real hope at this point, must climb a wall of stupidity.

Link: http://krugman.blogs.nytimes.com/2010/11/05/qe-madness/

I am a little worried

Hi

QE 1 was introduced when Dow Jones is near 6600 points. Right now, QE2 was introduced while Dow Jones is at 11200. This is already in the two year high. Do people still believe that the stock market will continue to soar while the unemployment rate remains at this high level? I am a little worried. I personally think QE2 is a good move but the market is just too optimistic. I think the stock market will rise to 11500, then it will start to drop at that point. There's good news in the industries but the rally has started since August, 2010 when Dow is below 10000. Thus, I suggest investors should be careful in this rally. The market might shift position anytime.

Thanks

MC

Paul Krugman

November 3, 2010, 3:59 PM

QE2: Meh

Seconding Brad DeLong here.

Conventional monetary policy involves buying short-term government debt; it has no traction now because interest rates on short-term debt are near zero.

So now the Fed is buying longer-term debt — but still only 5-year debt, with a current interest rate of slightly over 1 percent. How much more effective is that likely to be?

And $600 billion really isn’t a lot when you’re trying to move a $15 trillion economy.

One more thing: the Fed statement basically reaffirms the existing inflation target, it doesn’t raise it. So not much traction on the expectations side either.

In short: meh.

Quote from: http://krugman.blogs.nytimes.com/2010/11/03/qe2-meh/

QE2

Thanks

Paul

What can the Hong Kong government do to help the poor?

Dear all:

House price is soaring. The currency is depreciating and inflation is going to happen soon. Even university graduates cannot afford to owe a house. There is no minimum wage yet. What can the government do to help this unstable society? I personally thing widening the income gap will not be a problem. I encourage the top 1% of the richest to compete with the richest people in the world. This means that Hong Kong needs to innovate. It needs to design and invent high technology products and sell to the rest of the world. Doing this requires a lot of research and development.

What I really want to suggest is that Hong Kong needs a better University. It needs a private institute to do a research. Hong Kong is a rich city and I think that it can pay and hire the top professors around the world and work in the private university. For example, Steve Jobs' Apple products benefited lots of jobs for the Americans. Hong Kong needs this kind of genius and innovation. Thus, I encourage the government to fund and build a new University. We need to focus on LONG TERM.

Thanks

MC

More information about 李錄 from wikipedia

Li Lu (simplified Chinese: 李录; traditional Chinese: 李錄 or 李祿; pinyin: Lǐ Lù; born 1966^[1]) is a Chinese-American fund manager and investor, founder and Chairman of Himalaya Capital Management.

Li Lu was born and grew up in Tangshan, China. He was a survivor of 1976 Tangshan earthquake. In 1985, he went to Nanjing University, majored in Physics and later transferred to Economics. In 1989, he participated in the Tiananmen Square student protests and became one of the student leaders. He helped organize the students and participated in a hunger strike

After the crackdown of the movement, he left China and went to study at Columbia University. In 1990, he published a book about his experience in China titled “Moving the Mountain: My Life in China” (ISBN 0-399-13545-6). In 1996, he graduated from Columbia and became one of the first students in the history of the university to receive three degrees simultaneously: a B.A. in Economics from Columbia College, a J.D. from Columbia Law School, and an M.B.A. from Columbia Business School.^[2] Li was inspired to get into banking after hearing Warren Buffett, a Columbia alumnus, give a lecture at Columbia in 1993.

Upon graduation, Li Lu worked in an investment bank until late 1997, when he founded Himalaya Capital Management. From 1998 to 2004, he managed both a hedge fund and a venture capital fund. His fund suffered a 19% percent loss in 1998 from the Asian Financial Crisis. In late 2004, he transformed the hedge fund into a long only investment vehicle, LL Investment Partners, LP, which is currently focused on global investment opportunities. Charlie Munger, Vice-Chairman of Berkshire Hathaway and a long-time partner of legendary investor Warren Buffett, is an investor of his fund, and a “mentor and good friend” (in Li Lu’s own words).^[3]

Li Lu has been known as the man who introduced the Chinese battery and auto maker BYD Company to Charlie Munger and Warren Buffett. He is an informal advisor to BYD. His LL Investment Partners owns about 2.5% of BYD.^[4]

In May 2010, Li Lu helped to translate and publish the Chinese version of “Poor Charlie’s Almanack, The Wit and Wisdom of Charles T. Munger” (ISBN 978-7-208-08994-5) in China and wrote a foreword for the book.^[5]

Li was named a global leader for tomorrow by the World Economic Forum in 2001, and a Henry Crown fellow by the Aspen Institute in 1998. He is a member of Council on Foreign Relations and Young Presidents' Organization.

Li is rumored to be the front runner to manage a large portion of Berkshire Hathaway's investment portfolio once Warren Buffett steps down. According to The Wall Street Journal, Charlie Munger once said "it is a foregone decision" that Li Lu is going to be a member of Berkshire's top investors team after Warren Buffett retires. This was also hinted several times in some conversations with Buffett.^[6]

^{Link in English: http://en.wikipedia.org/wiki/Li_Lu}

^{Link in Chinese: http://zh.wikipedia.org/zh-tw/李錄}

^Thanks

^Paul

Will it be a Chinese to take over Berkshire?

Dear All

I guess everyone is in the debate of who 李錄 Li Lu is and how important this person is to Warren Buffet. Firstly, he is the person who introduced the car company "Build Your Dream" to Charlie Munger and then Charlie to Warren Buffet. This is the only company that broke Buffet's investment strategy which he invested in a company that he does not fully understand. Secondly, Li Lu traveled along with Buffet for his 4 days China tour. This can tell this person is pretty important in Buffet's mind. Will he be the next CEO of Berkshire Hathaway? I personally think there's a high chance. Stay focus to this guy. He might be very influential to the economy in the next 10 years.

Thanks

MC

The Risng of Groupon

Hi

Today I would like to talk about the company "Groupon". Even though this company is still not on the public stock exchange yet, I really appreciate the concept and idea of the company. This company does not manufacture goods, it manufactures coupons. We can call them the coupon giant. In less than two years since the start of Groupon, they have expanded from United States to over 25 countries around the world. Hundreds of coupons are sold every minute. How does this work? This company just goes around city and deals with companies that are interested to give out coupons. Not only this could help companies to boost up their revenue, this could also promote their companies. On the other hand, Groupon will create coupons for those companies and make profit by receiving some commissions off those sold coupons. This is a win win situation for both companies by Groupon gaining profits from selling coupons and promoting companies receiving free advertisements. Consumers love to use coupons especially the owner of "IKEA" Ingvar Kamprad. Will Ingvar Kamprad be a big fan of Groupon?

Check out their webiste: www.groupon.com

Thanks

MC