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We usually Zig when other’s Zag, as such, we decided to itemize a few GOOD THINGS that happened in the financial world this week, as those who have been Zagging of late, are mostly of negative items:

1. The Debt Ceiling was lifted and a plan was established: Most compromises or agreements are a form of give and take. While parties from different sides of the fence may view the Debt Ceiling agreement uniquely, an agreement and compromise is just that, and we now have one in place.

2. According to the latest BEA report, personal income was up and personal spending down from the prior month. This bodes well for the balance sheets of many who have been drowned in negative rhetoric for not saving enough.

3. Spain Successfully Auctioned almost $5 Billion in 3 and 4 year bonds: Easing some of the default fears, the Spanish government was able to float almost $5 Billion of new bonds, as just a few weeks ago, many thought this would be impossible. The rates issued where higher than earlier 2011 year issues (4.9%) but well below the made up, but followed, 6% frightening new issue float rate.

4. Interest Rates Fell: Mortgage rates, credit lines, and various other forms of debt have seen their rates fall. Many, present party included, have been watchful for higher rates. As rates fall, financing costs get easier, providing wind for our economic sail’s.

5. Gasoline Prices dropped this week: Just as interest rates have fallen, so have prices at the pump. Lower pump prices allows for a few extra dollars to stay in our pockets at “fill up” time, and also helps with prices on the items we pull off the shelf in our grocery store.

While there are certainly a few not-good things that happened this week, we will let those Zaggers tell us repeatedly about those items. We hope you enjoyed our good things as you head into your weekend.

Have A Great Day!

JK

PS. I will be out of town today and Monday, but back in the office on Tuesday.

About four hundred of my closest friends (kidding of course) and Michael Lewis,  Author of “The Big Short” sat down for lunch yesterday (March 30, 2010) at a Dallas World Affairs meeting here in Dallas.

Michael Lewis

Michael Lewis, a former Wall Street Salomon employee, now turned author, was interesting to me because he has some experience in the trenches of the financial world, mainly due to his stent at Salomon.  Much to my happy surprise, the majority of Mr. Lewis’ discussion centered around Economics and the Financial happenings of the last two years, with only one question concerning Sandra Bullock’s role in his more glamorous, non-financial related book “The Blind Side.”

Here are a few of Michael’s thoughts that I found interesting:

“The winners who were correct in capitalizing on the shortcomings of the latest financial situation were rewarded, BUT, so were the losers.”  Michael uses a Morgan broker example who was paid handsomely and is currently retired, who made a strategic bet with $15 billion in company capital and turned it into $5 billion in nine months time.

Michael reiterated the fact that Henry Paulson, former Goldman Sachs CEO, had a great objectivity problem with his position as Treasury Secretary while his former firm was in the cross hairs of the financial situation.     

Concerning the AIG bailout and the misplaced insurance sold to other financial firms which ultimately was the undoing of AIG, Michael brought up a unique thought that with all the compromises, it was interesting that the government did not ask for a partial insurance payout to the counter parties of  AIG, rather than a full 100% pay out which required considerable help by the US Government and ultimately tax payers.

“Change and regulation is coming”, which we have echoed before, but Michael added, “Much to many Wall Street Firm’s dismay”

And lastly, a thought that we keep in mind as professional investors, Michael through his experience at Salomon added, “If the financial companies at issue had been private, and owners held personally liable, I doubt much of the aggressive bets would have been made”

From Michael’s standpoint, I guess the event was a success, as I have added two of his books to my reading list and will tackle them shortly. I always try to remember that many times items may be Hollywood-ized in order to make them more interesting, but may still garner a few interesting facts for future reference.

Have a Good day!

JK