In the news: Tuesday


New rules allow foreign stock exchanges to attract Chinese listings  – China is now allowing major foreign stock exchanges –who have been in business for over 10 yrs– to set up representative offices in the country for the purpose of attracting listings by Chinese companies. This is China that we’re talking about, so the privilege will be bestowed only upon foreign stock exchanges with a “record of sound operational and financial conditions” that have also entered into regulatory cooperation agreements with China’s securities regulator. Chinese investments overseas are expected to top $100B, with $50B (consider, GOOG mkt. cap = $170B-ish) coming from Chinese companies between now and 2009, but global exchanges will have to stick to courting business enterprises while avoiding “any form of public advertising or private promotional activities targeted at individuals.” [Times of India]

Consumer borrowing reflects shift from cash to card-carrying culture
I use my credit card for all kinds of asinine purchases: one cookie ($1), one cup of coffee ($1.25), one banana ($.60). My credit card bills are much longer these days, but my pockets are lighter, and I haven’t been inside of a bank in at least three months. The new Visa commercials, in which cash carriers are condemned for their inconvenient ways, are just a reflection of the cultural phenomenon currently displacing paper currency with the electronic variety. According to the Federal Reserve, national borrowing increased at an annual rate of 6.4%, but when broken down reveals a 9.8% increase in revolving credit, the everyday crap that’s gaining steam and driving the growth story in credit card companies (American Express (NYSE:AXP) up 20-ish% y/y, MasterCard (NYSE:MA) up 250-ish% y/y, Visa IPO expected later this year). [WSJ]

Zimbabwe: How to deal with business(wo)men who violate price ceilings? Send armed policemen – In case some of you have been hiding under a rock and don’t already know this, Zimbabwe is facing a substantial inflation problem, and by substantial we mean the multiple thousands percent kind of inflation. With inflation at 3,700% –“one Harare resident told the BBC that a single banana now cost more than she had paid for her four-bedroom house in 2000”– the country’s officials thought it’d be a great idea to force businesses to cut their prices in half. But, because this would strip owners of the will to get out of bed in the morning, those that haven’t closed their businesses have instead opted to ignore the price ceiling altogether. Zimbabwean officials have responded by sending policemen to enforce retail prices, which translates quite directly to many business(wo)men being dragged away in handcuffs (1,328 so far). The police pledge to “sustain this operation at all costs to make sure at the end of it there is sanity in the business sector” –or to get rid of the only class of people with the fiscal resources to bring down Mugabe, who most economists agree is “to blame for ruining the economy.” [BBCNews] 

Israeli bakers still on strike: Considering bread represents such a large share of HH monthly expenses, the unsubsidized varieties are out of the question  – Israel continues to use bread as a weapon in some fight against economic inequality: the Trade Ministry refuses to raise the price ceiling, and the bakers refuse to run unprofitable businesses amid rising input costs (blurb from last week). But, class warfare has far too negative a connotation –we rather see the situation as an opportunity to let Bob Atkins reshape the nation’s BMI distribution curve. [Jerusalem Post]


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