LSE won't dance with the NASDAQ

The London Stock Exchange rejected the $5 Billion bid by the NASDAQ to buy it outright and create the across the pond alliance that NASDAQ wanted. CNNmoney.com reports it here.

Why is this important? Two reasons.

1. Twenty years after the "Big Bang" (London's massive financial markets deregulation), the LSE realizes that merging with the NASDAQ could result in Sarbannes-Oxley rearing its ugly head in Britain. This has led to London becoming the true financial capital of the world and New York coming second. Sarbannes-Oxley has made it more difficult, more tedious, and more expensive to list in the United States, and the competition is taking away business.

2. The big exchanges are feeling pressure to become more global and offer better trading opportunities. Unfortunately, banks and other large institutions are annoyed that the exchanges are dragging their feet to create the liquidity that is desperately needed due to undue beauracracy and jostling for position. Recently seven banks decided to come together to create the exchange and trade in the cross border shares. See the information below:

"The move comes as the world's stock markets are rushing to consolidate under pressure from customers to cut fees and offer global services. A group of banks added to the pressure last week by announcing plans to create their own pan-European equity trading platform next year." (CNNMoney.com)

The politicians and even the beauracratic exchanges don't get it. People are not looking for more regulation, they are looking for lower cost, technology driven trading platforms so that they can execute their trades and make more money.

The sooner that the regulators and exchanges understand that the barriers to entry and success are being eliminated, the sooner they will be able to react. The United States needs to follow the example of London's Big Bang twenty years ago and roll back Sarbannes-Oxley and make it easierer to raise money in the US. Unfortunately, with the Dems in office, and protectionism on the docket, this may be a pipe dream and have to wait two more years.

See Reuters article here.

Keep out those high skilled workers...

Let this guy in our country...click to see his website, he's awesome...

Congress is set to begin arguing over increasing the number of H1-B visas. This is a piece of legislation of monumental importance, something that the President and the Dems agree on. We need more skilled engineers and science people in this country. There is a talent war going on around the world and by restricting entry to the most sought after skilled people, we are only shooting ourselves in the foot.

The United States is the most hated country in the world and the country where most people want to live. We have the advantage of being the best place in the world to live right now and we have to leverage that as much as possible. That advantage may not last.

Bill Gates was recently quoted saying that he would rather be a smart middle class kid in China than a poor not intelligent kid in the US. He said that ten years he thought that even the poor kid in the US would be better off. The world is changing and the only types of currency are knowledge, intelligence, hard work and entrepreneurship.

I find the anti immigration arguments in this country incredibly ridiculous.

ARGUMENT #1. Politicians and border nazis bring up the issue of terrorists entering our countries under the guise of these programs, whether H1-visas or other illegal immigrants crossing our border, but I think the more people we get under the scope of law, the more difficult it will be for the few to hide among the many. There is no question that the US should be concerned about letting Iranian and other nuclear seeking countries send the engineers and scientist to MIT to study nuclear physics, but those H1-B visas are already unlimited at Universities and the FBI is already on those guys like crazy...We have to worry about the terrorists that are hiding among the undocumented workers, not the ones that are trying to build software in Silicone Valley.

ARGUMENT #2.
Other politicians and left wing hypocrites say that these people are being brought over to take the jobs of highly qualified American engineers and scientists for a lower price and point to a ridiculous statistic that the salary of tech workers hasn't gone up since 1999. Wait, you mean at the height of the tech bubble...I hope it hasn't gone up since then...those numbers were crazy. Norman Matloff a Prof from the University of California on Marketplace on NPR who made this argument, check out the story here.

As a disclaimer, I have to mention that my parents are Russian Jewish immigrants to this country, and my father is a small business owner who built his business from scratch, so there is some bias here...but come on, I think Americans are out of their mind to keep their borders closed. Not only do immigrants come to America seeking better jobs, better employment, and a better way of life, they are willing to work for it, something that other people don't always do. Granted there is not the same sense of entitlement as in European social democracies, but some of the same arguments are rearing their ugly heads into our lives as well. Let's remember something very important...

"The H-1B visa category is controversial. Advocates say the program (and similar ones operated by other technologically-advanced countries)helps the host country maintain its technological as well as economic superiority by providing a steady flow of highly skilled professionals who may be short in supply domestically. It also provides an incentive for companies not to move their operations abroad.(http://en.wikipedia.org/wiki/H1B_visa)"

Wow that sounds horrible. Please, right your congressman or do whatever, scream from the rooftops, keep these people into our country. Who knows they may help us maintain our techonological or economic superiority and that would be just awful.

The Big Three Go To Washington

So the dems win and the Big 3 finally get the meeting with the White House they've been waiting for. Hank Paulson, Cheney, and Bush sit down and talk about what it means to make a car in America. It means an extra $1000 per car in health care for General Motors. I think they boiled it down to three things:


1. You have got to do some thing about the health care crisis in this country.

2. You have to throw some (aka a lot of) money at ethanol gas stations so that we can use our existing technology to look clean and helpful to the environment.

3. You have to talk tough to Japan, Korea, and China to get them to stop propping up their currencies and closing their borders to American products.

I think there is no chance that the White House will be able to tackle the first issue. Our health care in this country is a mess and business shares an unfair burden. We can't even offer a health care package to our empoyees yet, and the Aflac just didn't cut it. The main issue that I see wrong with the American auto industry is health care, and until something drastically different is done, they will continue to lose potential R&D and design money to prior obligations. This again falls into the argument of this generation being impoverished by the baby boomers...another whole post...sorry.

The second issue is just pork barrel politics that may move the alternative energy engine along, but 80% of the money is just going to go to waste, but the 20% may give the Big Three some time to develop better ethanol engines, eventually better hybrids and maybe even hydrogen, meanwhile, they can use this as a hook to sell cars.

The last issue is another bit of protectionist politics, although there is no question China is doing it, the Dems will probably push this brand of protectionist politics to cater to a disenfranchised unemployed manufacturing base, but that's the nature of the political beast. The Chinese should loosen their control on the currency, and the Japanese and Koreans should open up their markets more as well.

Mainly, I think that if the Japanese can make good cars here in the United States than the Americans can too. The only difference between the Japanese & Koreans and the Americans is health care and legacy costs. One problem can be eventually solved by the US Government, but both problems can be solved by bankruptcy.

For more info on the subject...

http://biz.yahoo.com/ap/061114/bush_automakers.html?.v=14

The Democrats Take Control

People are writing at long length about the recent take over of both houses of congress (even if by a slim margin in the Senate) by the Democrats and what this means for the economy. Consensus has pretty much decided that due to a Republican White House, we are looking at two years of gridlock. There goes reforming social security.


Well at least some policy could be decided that may have a long term positive effect on the economy. Hopefully, the first of these policies may be the Temporary/guest worker program and an immigration policy that works. Bullheaded okie congressman were playing protectionist politics trying to keep the Latino immigrants out. There maybe a homeland security argument to be made here, but I think that that risk can be mitigated. People aren't dying crossing the Rio Grande to commit terrorist acts, they just want a job and a better life for their family. This illegal immigration will continue. However, by monitoring and tracking these people, i.e. making them legal, we may have a better chance to spot the terrorist that may try to come through. Basically, immigration is almost always a net gain for the country. Our workforce gets beefed up with new workers, keeping labor costs down, performing services that most Americans don't want to do at the current market price, and these people have children that contribute further to our economy.

On the other side of the scale, the H1-B visa system needs to be changed to a point system that mimics the Australians and Canadians. America always needs more engineers and scientists. We need to be bringing them in any way we can, considering that there is a worldwide competition for talent. The more we beef up our talent ranks, universities, and companies with the best quality people, the better we will compete with the rest of the world.

Another thing "The Economist" also mentions as a potential benefit from the democrats taking congress is more work on the environment, improving building codes, green materials, energy efficiency and alternative energy subsidies, and more funding and subsidizing of research and development for the automakers. Maybe in conjuction with raising the CAFE standards which need to be adjusted. The market may need some nudging along to get the auto companies to act, but the high oil price had already pushed them into more cars and less trucks. I see the possibility for nuclear technology flourishing and becoming the preferred electricity source. This may hurt the oil companies as their subsidies will surely be cut, but who should be subsidizing $50 oil anyway? There is definately enough incentive to explore.

In summation, the economy could benefit from some policy changes made by the Democrats and President Bush working together, and hopefully some things will get done, because this President could still do some things that may not absolve him of the Iraq mess in some people's eyes, but will at least dampen their hatred.