READINGS ...

AM | @agumack

"We're not making any idea that pops into his head" — Marcus Lemonis

 . Fintech & securitization. Two interesting pieces on the role that Fintech could play in terms of securitizing loans to small businesses. "The idea of securitising loans to small and medium enterprises (SMEs), many of which are heavily reliant on bank lending in Europe, is particularly appealing ...  [The] new risks have to be weighed against the desperate need for credit in Europe" (*).

(*) Thomas Haile: "Does securitisation of online loans have a future in Europe?", Financial Times, 10 May 2016 and "Funding circle to tap securitisation market", Financial Times, 14 april 2016.
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. Inventory management at micro-caps. On CNBC.com, Marcus Lemonis gives some priceless advice on managing inventories at small businesses. "If you can't track what's selling or not selling, [then] you can't do any forecasting to build inventory. You can't even monitor trends or customer behavior. You have no shot at success" (*).

(*)  Zack Guzman: "The Profit' star Marcus Lemonis: Making these inventory mistakes could be disastrous", CNBC.com, 1 September 2016.
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 . Bloomberg & Brexit. Well done Bloomberg! There is now a Bloomberg Twitter account that provides "Full coverage of Britain’s exit from the EU, by @business teams in London, Brussels and around the continent" (*). Very usefull indeed!

(*) @Brexit
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. Chouinard on Venture capitalists. "Venture capitalists are such assholes", says Yvon Chouinard, the founder of Patagonia, as he briefly discusses the case of Diamond Equipment in a captivating piece by Nick Paugartner for The New Yorker (*). By the way, Prof. Damodaran has two recent pieces on VCs: a blog post under the title "Venture capitalists don’t value companies, they price them" [see], and a VIDEO [see].

(*) Nick Paumgartner: "Patagonia's philospher-king", The New Yorker, September 19, 2016.
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. Paul Krugman: Brexit and the Pound. Paul Krugman on the weakness of the pound: "We face the prospect of seriously increased transaction costs between Britain and the rest of Europe, which creates an incentive to move those services away from the smaller economy (Britain) and into the larger (Europe). Britain therefore needs a weaker currency to offset this adverse impact" (*).

(*) Paul Krugman: "Notes on Brexit and the Pound", The Conscience of a Liberal, October 11, 2016.
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. Vladimir Putin. The Economist is out with a special report on what it calls "Putinism". The gist: "Institutions that would underpin a prosperous Russia, such as the rule of law, free media, democracy and open competition, pose an existential threat to Mr Putin’s rotten state." I think I'm going to buy this one (*).

(*) "The threat from Russia", The Economist, 22 October 2016.
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UPDATING SOME VERY IMPORTANT DATA ...

AM | @agumack

When governments and companies are able to sell bonds in their own currencies, it means that the quality of governance is improving. You can have enormous amounts of local-currency debt, but the source might be state-onwed banks (like in China). Alternatively, governments and companies can issue large amounts of bonds ... in US dollars (or euros). That is why I take the ability to issue local-currency bonds as the litmus test of the quality of governance. I want to thank Prof. John D. Burger at the Sellinger School of Business (Loyola University Maryland) for sending me the revised calculations of the stock of local currency bonds in terms of GDP for a number of countries [1]. The new calculations update the data from one of my favorite articles, published in 2006 [2].

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Speaking of local-currency bonds, there are some interesting news coming from Argentina: the government has just issued a 10-year bond in pesos. While the yield looks pretty high (15.5%), it shows the impact of renewed confidence in the ability of the Argentinean central bank to deal with the country's perennial inflation problem [3].

[1] John D. Burger, Rajeswari Sengupta, Francis E. Warnock, Vernica Cacdac Warnok: "Us Investment in Global Bonds: As the Fed Pushes, Some EMEs Pull", Economic Policy, October 2015.

[2] John D. Burger & Francis E. Warnock: “Local Currency Bond Markets”, IMF Staff Papers, Vol. 53, 2006. This is one of the most striking findings from the paper: "To gauge the importance of various factors, our estimates in column 1 of Table 3 imply that (other things being equal) if Brazil had Denmark’s rule of law, its bond market as a share of GDP would be 43 percentage points higher"

[3] Nicolás Dujovne: "Menos inflación y crédito más barato, claves del porvenir", La Nación, 17 October 2016.
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