BusinessWeek’s Ben Steverman makes some good points here. Alan was making a similar point a few days ago in our conversations. I think there should be quite a few intelligent investors out there who aware of this well. But of course acting on it and getting the timing right are a completely different ballgame and way way tougher, for anyone.

Stocks: The Meltdown and the Media - BusinessWeek

Wall Street has been through crises before—1907, 1929, the 1970s, and 1987 all tested investors as much as the financial crisis of 2008. But this time, something is different: Three cable business channels and countless web sites offer 24-hour coverage of financial markets seven days a week.

The sheer quantity of information available raises the question: Could the media actually be contributing to the very crisis it is covering?

During past crises, average investors needed to wait until the evening news or the next day’s newspaper to learn how their investments had done.
A Recipe for Panic

This year, the financial panic has unfolded minute by minute in front of investors’ eyes. Meanwhile, online tools allow investors to make rash decisions, buying or selling stocks with the click of a mouse.

An interesting post at Proprietary Trader about Singapore: Rethink Singapore Economic Growth Model. I agree with the spirit of most of the text highlighted in red. However with some caveats and a pre-requisites which I feel weren’t addressed by Prof Lim.

For one, it’s a pity the article starts with “Singapore should..”, this is like the code for government speak when trying to coax people into a certain mindset/action, for example: “Singaporeans should speak proper English instead of Singlish” or “Singaporeans should make more babies”, it immediately creates a dissonance, well at least for me.

Secondly, in order for “releasing capital and talent to local entrepreneurs” to be effective you need the right kind of infrastructure and environment in place, and I’m not talking about communications hardware or low cost business registration fees and online facilities, it goes much deeper than that.

Third, making big bets on few projects has worked reasonably well for Singapore over the long run. Sure there were some hiccups with over investments in hard disks, wafer fabs etc. and maybe now in the financial sector but it’s not possible to get it right 100%, under any kind of model. I do agree though that there should be a more balanced approach and less reliance on just those big bets.

Fourth, the sentence “a national government, for example, should not use domestic savings to create employment disproportionately for foreigners simply in order to claim success in establishing a particular sector of its choosing that may not be validated by underlying market forces.” sounds a bit populistic to me. I think Sg’s flexibility in attracting foreign workers while still maintaining control over long term immigration is a strength rather than a weakness, but I may be biased :-) Also “claiming success” isn’t, I believe, the top priority of policy makers, rather it’s increasing the size of the pie for everyone.

As for the last part: “‘Don’t think of yourself as an outpost of a declining empire, or a
second Shanghai or a second Boston. Why not be a first Singapore?’” I think there’s already a shift away from that mindset and there are attempts to develop a more unique Sg. Ironically, one of the best ways to do that is through the actions Prof Lim criticises, i.e. government initiatives, making several big bets and seeing what sticks and how they develop.

Funny video. H/T to TraderGav.

Markets all around the world from Asia to Europe and America show massive declines. MSCI World index is now apparently heading to its worst year, EVER. US futures at pre-market limit down. Panic over the world economy is making everyone dump almost every financial asset they have. The problem as I see it is the vicious cycle and effects back on the real economy that this will bring.

Update: So, no armageddon (yet?), in fact quite a dull day I would say, slightly bullish but not overly so. Maybe shorts didn’t want to hold over the weekend, or some (smart / dumb ?) money being put to work very cautiously. I just sat out the action on the sidelines, there weren’t any attractive trades for my style anyway. Let’s see what next week brings.

Pretty shocking Chart of the Day today. The decline this year has been larger than that of 1929 at the beginning of the Great Depression.

Is the situation now worse than back then? Are the prospects for the future worse off? I’m not sure, I’m inclined to think not, if only because of the relatively fast action being taken around the world by governments and central banks. But you never know, history repeats itself but curved balls and black swans make sure it’s never quite in the same way.

Scarred by past woes, Japan sees U.S. bailout as a first step - International Herald Tribune

But the differences are also pointed and revealing. The United States reacted far more quickly than Japan, committing taxpayer funds just over a year after the subprime mortgage problems surfaced in summer of 2007. Japan took nearly eight years to pass a sweeping bailout, a delay that contributed to a long economic slump that Japanese call their “lost decade.”

“Japanese government and financial institutions realized there was a problem, but they tried to cover it up,” said Junichi Ujiie, chairman of Nomura Holdings, Japan’s largest investment bank. “The United States has done in months what Japan took years to do.”

Interesting comparison and comments from Japanese bankers who’ve been through a similar crisis in the 90’s. Regardless of how the markets recover, V shape, U shape, W shape etc. The damage to the banking industry and main street confidence will take a long time to heal. If the current ongoing efforts by governments worldwide fail then Iceland will be just the tip of the… couldn’t resist the pun :-).