Rather than begging the bankers to lend the money we taxpayers give them, why don't we set up our own bank?
Here is how it works.
1. Let's ask the government to distribute the $1 trillion new money (most likely) promised to banks or car makers to about 160 million working-age man and woman based on the taxes one paid in the last 5 years.
2. Distribution can be based on the following simple math: 100% distribution if one can match 5:1. 80% distribution if one can match 4:1 ... We can have $5 trillion new money to lend if everyone participates to the full amount!
3. The money has to be locked in a separate deposit - only account for 5 years. During the five years, one can decide who to lend to or what to invest in - it is your money!
3. Individuals have the freedom to pool money to form a community bank of 200 or less to gain scale and diversify risks. Online banking is encouraged and services can be provided on pro bono basis by federal and state government or NGOs.
4. Any lending by the community bank has to be voted on.
Moral hazard is much easier to avoid by a community bank than by a national bank like Citi or Bank of America!
Besides, we will become a much more efficient society after this!
Thursday, February 19, 2009
Friday, December 5, 2008
Bill Ackman at the Launch of Pershing Square Challenge at Columbia Business School
Yesterday, Bill Ackman was at Columbia. Here is the notes taken from that event:
On current affairs, he thinks that leverage by banks should be monitored more closely since they can taken down the world's economy.
Q. What makes a great Investor?
A. analytical skills, confidence to pull the trigger, and the humbleness to admit you are wrong.
The balance b/t confidence and humbleness is the most difficult.
Q. Opinions on CMBS.
A. Real estates values were created through access to debt financing. Since they were marked to market, in an expanding credit market, the values always go up. People can still can financing with 5% down up until to Feb 2007. Now the music has stopped.
His favourites are high quality malls, and apartments more so than office.
Q: Opinion on activism
A. By exercing our proxy fight right, we think we are capitalists rather than activists. Activists are coined by the media.
Q: How to generate investment ideas
A. Ben Graham, Warren Buffett. Turn a lot of rocks. An example would be Wendy's - Tim Horton.
He dislike mechanical methodology even though he agrees that some may be very successful (Simmons at Renaissance Technology).
Of course, there are fertile ground for good returns, i.e., litigations, management changes, spin-offs.
Q. Hedge fund redemption
A. Fund of funds cannot get out of the ones that are not liquid. They are actually selling the ones are still liquid, which is unfair.
In the long run, he think hedge funds should be tradable like closed-end funds.
Q. Most profitable idea
A. CDS. MBiA
Q. Worst idea
A. Pershing's favourites are large-cap company with great management.
Borders was the opposite; they took the position thinking that if only they can improve Borders' operations up to Barnes and Noble, the shares could be worth $34. However, the secular trend has worked against Borders that that thesis may not hold anymore.
Q. Thoughts on aligning management interest with shareholders interests
A. Public and private meetings
Valuation. Experience and track record
Q. Lessons learnt during the years.
A. Return phone calls on time and work diligently. Not afraid of calling people. You don't have to be too young to be right.
Q. Investment strategy in current environment
A. Consolidation will continue.
Treasuries are not a safe to park your money.
Equities in with pricing power are the best place.
Q. What should the new administration do?
A. US. corporations parked money worldwide. Need a tax holiday for retribution.
Fannie and freddie need to be merged and emerge as a public company.
Public work program: infrastructure, energy. On energy, Denmark was a great example.
On current affairs, he thinks that leverage by banks should be monitored more closely since they can taken down the world's economy.
Q. What makes a great Investor?
A. analytical skills, confidence to pull the trigger, and the humbleness to admit you are wrong.
The balance b/t confidence and humbleness is the most difficult.
Q. Opinions on CMBS.
A. Real estates values were created through access to debt financing. Since they were marked to market, in an expanding credit market, the values always go up. People can still can financing with 5% down up until to Feb 2007. Now the music has stopped.
His favourites are high quality malls, and apartments more so than office.
Q: Opinion on activism
A. By exercing our proxy fight right, we think we are capitalists rather than activists. Activists are coined by the media.
Q: How to generate investment ideas
A. Ben Graham, Warren Buffett. Turn a lot of rocks. An example would be Wendy's - Tim Horton.
He dislike mechanical methodology even though he agrees that some may be very successful (Simmons at Renaissance Technology).
Of course, there are fertile ground for good returns, i.e., litigations, management changes, spin-offs.
Q. Hedge fund redemption
A. Fund of funds cannot get out of the ones that are not liquid. They are actually selling the ones are still liquid, which is unfair.
In the long run, he think hedge funds should be tradable like closed-end funds.
Q. Most profitable idea
A. CDS. MBiA
Q. Worst idea
A. Pershing's favourites are large-cap company with great management.
Borders was the opposite; they took the position thinking that if only they can improve Borders' operations up to Barnes and Noble, the shares could be worth $34. However, the secular trend has worked against Borders that that thesis may not hold anymore.
Q. Thoughts on aligning management interest with shareholders interests
A. Public and private meetings
Valuation. Experience and track record
Q. Lessons learnt during the years.
A. Return phone calls on time and work diligently. Not afraid of calling people. You don't have to be too young to be right.
Q. Investment strategy in current environment
A. Consolidation will continue.
Treasuries are not a safe to park your money.
Equities in with pricing power are the best place.
Q. What should the new administration do?
A. US. corporations parked money worldwide. Need a tax holiday for retribution.
Fannie and freddie need to be merged and emerge as a public company.
Public work program: infrastructure, energy. On energy, Denmark was a great example.
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