First, bad news for China is bad news for the world economy. We are already in a bleak environment, with difficulties in Europe, Japan, the US, . . . → Read More: Uncomfortable times in real estate in store?]]> Patrick Chovanec has a fascinating article in Foreign Affairs, titled China’s Real Estate Bubble May Have Just Popped. This is interesting and important from two points of view.

First, bad news for China is bad news for the world economy. We are already in a bleak environment, with difficulties in Europe, Japan, the US, and India. It will not be pretty if China runs into trouble as well. I am reminded of the feeling of carefully watching real
estate in the United States in 2006, with a sense that the future of the world economy was going to turn on how it turned out.

Second, it made me think about real estate in India. As with China, one often sees buyers of real estate in India have the notion that
this is a safe financial asset. This is a questionable proposition. Real estate is perhaps not an asset
class with a positive expected return in the first place; and it is certainly not a convenient asset class with features like liquidity,
transparency, diversification and easy formation of low-volatility diversified portfolios. I find it hard to explain the prominence of
real estate in the portfolios of even educated people in India.

In the article, Chovanec says:

For more than a decade, they have bet on longer-term demand trends by buying up multiple units — often dozens at a time — which they then leave empty with the belief that prices will rise. Estimates of such idle holdings range anywhere from 10 million to 65 million homes; no one really knows the exact number, but the visual impression created by vast `ghost’ districts, filled with row upon row of uninhabited villas and apartment complexes, leaves one with a sense of investments with, literally, nothing inside.

This has not happened in India. So in this sense, the situation in India is not as dire. But his second key message seems uncomfortably
close:

As 2011 progressed, developers scrambled for new lines of financing to keep their overstocked inventories. They first relied on bank loans (until they were cut off), then high-yield bonds in Hong Kong (until the market soured), then private investment vehicles (sponsored by banks as an end run around lending constraints), and finally, in some
cases, loan sharks. By the end of last summer, many Chinese developers had run out of options and were forced to begin liquidating inventory. Hence, the price slashing: 30, 40, and even 50 percent discounts.

Part of this looks familiar. There is a lot of leverage in Indian real estate development and speculation. Real estate speculators and
developers are finding themselves in a bit of a scramble hunting for credit. One hears about very high interest rates being paid by
developers. Other sources of financing are also weak. This reminds me of the dark days before the global crisis, when borrowing by real estate companies was the canary in the coal mine.

If business cycle conditions and financial conditions worsen, the problems of borrowing by real estate developers and speculators will get worse. How might this turn out? Perhaps the borrowers will merely get uncomfortable. Or, a few firms could really get into trouble, and start liquidating inventory. That would have substantial repercussions.

Suppose there is a situation where there are many people who have speculative positions in real estate, but significant selling of
inventory has not yet begun. The longs would then be nervously looking at each other, wondering who would be the first one to sell, to take a better price and exit his position. The ones who sell late would get an inferior price. In such a situation, conditions could change sharply in a short time.

On a longer horizon, I would, of course, be delighted if real estate prices are lower. This would help shift the supply function of
labour, reduce the cost of setting up new businesses, etc. But that’s more about the long-term policy changes, which would remove barriers for converting land into built-up housing, while rising vertically into the sky with FSI in Indian cities ranging from 5 to 25.

Silver imports in China fell by 39% y/y and 16% m/m to 264.7 tonnes, the lowest level since February, while silver exports declined by 44% y/y to 83.5 tonnes, keeping China a . . . → Read More: Silver news you won’t get anywhere else]]> Shall we count how many bloggers pick up on this news item Chinese silver imports decline 39% y/y; exports tumble 44% y/y:

Silver imports in China fell by 39% y/y and 16% m/m to 264.7 tonnes, the lowest level since February, while silver exports declined by 44% y/y to 83.5 tonnes, keeping China a net importer of the metal for two consecutive years on a monthly basis.

On a product basis, silver powder, unwrought silver, semi-manufactured silver, and silver jewelery all declined y/y in September with the latter two products suffering the steepest decline and silver powder only falling by 4% y/y. Indeed, silver powder is the only product that has grown for the year-to-date.

And from the “Chinese love paper more than physical” department, see China’s gold frenzy gives birth to small bourses:

The emerging exchanges offer a lot size as small as one ounce, which lowers the capital needed to begin trading, even though the margin requirements can be as high as 30 percent. With lot size set at 10 ounces and margins at 20 percent, the initial capital requirement to start trading is about half the amount required by the SGE.

Emerging exchanges claim to trade physical gold, but most investors are not interested in taking physical delivery. Some exchanges make it difficult and expensive to take delivery. …

“Who would want to take physical gold? People just want to speculate on price moves and make a profit,” said a customer service representative at the exchange who gave her last name as Chen.

Analysts compared the gold investment spree to the wave of retail stock market investors in the last decade, who rushed to a bull market with little know-how, only to suffer huge losses during later market turbulence. …

Although China’s central government has vowed to open up the market, and has made progress by allowing more foreign banks access to the two Shanghai exchanges, an open market for retail investors is yet to take shape. …

But it was unlikely to happen as long as the country’s foreign currency exchange remains tightly controlled. Until foreign exchange controls are lifted, Chinese gold bugs would continue to need tables to put down their bets. “The Chinese love gambling,” said Hou.

Doesn’t sound like China’s exchanges are any different from COMEX. If the Chinese Government wanted its people to buy physical gold you’d think all this paper gold would be shut down. I suppose we will have to wait until the much hyped PAGE is up and running [sarcasm].

The specific catalyst for looking into this is naturally in part the fact that oil looks set to do a round of catch-up . . . → Read More: Inflation vs. Deflation – Which Door do you Pick?]]> As the debate between inflationistas and deflationistas appear about to rev up again, I thought that I would try to pen to virtual paper and sketch my thoughts on the matter.

The specific catalyst for looking into this is naturally in part the fact that oil looks set to do a round of catch-up with the rest of the frothy commodity space but also this piece by the Pragmatic Capitalist citing David Rosenberg on the coming deflationary shock;

David Rosenberg makes some interesting comments in his morning note regarding the price action in US Treasuries.  He cites the rally as a sign that the world is concerned about the deflationary shocks from rising oil prices:

“It is also interesting to see how government bond markets are reacting to the oil price surge — by rallying, not selling off. In other words, bond market investors are treating this latest series of events overseas as a deflationary shock.”

I think Rosey has this one spot on.  The risk of rising oil is not a hyper inflationary spiral, but rather a deflationary spiral.  Oil price increases are cost push inflation of the worst kind and for a country still mired in a balance sheet recession that means spending gets diverted which only gives the appearance of inflation in (highly visible) gas prices while creating deflationary trends in most (less visible) other assets (have a look at today’s Case Shiller housing report for instance).

Hang on for minute then. Do you mean to tell me that we have been running around worrying about QE2 leading to bubbles all over the place while the real danger is continuing and entrenched deflation? Well, yes this exactly what this means, but note the important distinction between the US (and the OECD) and emerging markets. Greed and Fear kicks off this week with the following point [1];

(…) an oil-led commodity spike would clearly cause an intensification of the current inflation scare which has been hitting Asia of late with India the most vulnerable market. Still, as occurred in 2008, such a spike is likely to have the perverse effect of short circuiting the inflation scare in terms of duration. This is because sharply higher oil and food prices will hit current growing optimism on the US recovery. For ordinary Americans are not seeing the income growth to offset such prices increases.

This point is echoed in BCA’s chief economist Martin Barnes’ recent mischief which exactly sets out to clear up the (non)-threat of inflation in the global economy.

Despite investor angst, the above analysis paints a relatively benign inflation picture for the developed countries. The policy mix of large fiscal deficits and highly stimulative monetary policies certainly appears inflationary. However, there currently is no excess monetary growth, and the pass-through from higher commodity prices is weak given ongoing slack in the economy.

(…)

The emerging economies are in a very different position [from the OECD]. All three approaches to inflation are telling the same story: There is excess money growth and the absence of slack implies that higher commodity and energy costs will push up wages and the overall prices of goods and services. Thus far, inflation is edging higher, not spiraling out of control. Nevertheless, policymakers need to get ahead of the curve by raising rates and, where necessary, allowing exchange rates to appreciate.

A large part of Barnes’ analysis is based on the notion of slack and thus the most illusive of all macroeconomic concepts, the output gap. But the argument is really quite simple. For cost push inflation to lead to higher overall inflation there must be an inbuilt tightness in the economy for this to happen. This is to say that workers must be able to pass on rising prices to larger than expected increases in wages and firms must observe strong final demand in order to be able to pass on the increase in prices to consumers. Barnes’ argument in nutshell is then that while capacity constraints might be an issue in the emerging world it isn’t in the OECD still mired by a balance sheet/deleveraging recession.

This argument is interesting in relation to the notion of unintended consequences from low interest rates in the developed world and just what output gap central bankers should look at then. Enter James Bullard, president for the St Louis Fed and the discussion (hat tip FT Alphaville) of the global output gap vis a vis the US output gap.

The argument here combines the two point made by Barnes in the sense that while the analysis of the US economy might certainly merit low interest rates for a long time given the excess slack of the economy, Bullard explicitly mentions the potential of adverse effects from ZIRP at the Fed due to an increasingly neutral to positive global output gap. Here is the FT’s John Kemp with the gist of Bullard’s speech as he sees it;

It is the first time a senior official at the U.S. central bank has acknowledged global capacity issues rather than a narrow focus on U.S. unemployment and capacity utilisation might give a better indication of where inflation is headed.

The obvious question here is whether the US should care at all here about global capacity issues, but given my endorsement of Rosenberg’s point noted above I obviously think they should. A central bank can argue up to a point that rising headline inflation should not be a reason for assuming a rise in underlying inflation pressures, but it is evidently obvious that as if an oil price rising to 120-150 USD (even for a short while) becomes a trigger for an even strong deflationary shock, then the original argument for low interest rates become very difficult to make.

And finally, just to make sure we get all sides of the argument we should never forget that stagflation is also looming as an increasingly likely outcome in parts of the global economy (hat tip: Global Macro Monitor).

(quote from the Economist)

Historically, the margins of retailers and manufacturers have been remarkably stable, says Carsten Stendevad of Citigroup’s corporate-advisory arm. If commodity prices continue to rise, they will eventually be passed on to consumers one way or another. After years of goods getting cheaper, consumers may have to start getting used to everyday higher prices.

This highlights a crucially important issue namely, the underlying trend of inflation in the global economy. It stands to reason that if the trend of global headline inflation is up due to structural capacity issues, an increased prevalence of adverse supply shocks and low interest rates, then bouts of headline price volatility may incrementally find its way into core prices and in a deleveraging world facing the effects of a balance sheet recession it is tantamount to stagflation.

What is the take then?

If the small tour above of the informed punditry serves to set the stage for general argument what is then the important points to take away? Below I offer my suggestions.

• The stronger the meltup the stronger the correction. This is a classic dictum in the world of finance and translated into the inflation v deflation debate it means that the stronger and longer the outbreak in commodity prices last, the larger is the risk of a deflationary correction and we are then talking about a re-run of 2008. It also raises important questions regarding the policy tools used by global central banks. Bernanke and co can hardly claim, ex post after the crash, that they were right not to react to rising headline inflation when it stands to reason that the low interest rates were the main source of the commodity melt-up in the first place (and indeed will also be the source of the next meltup a couple of years from now). In this sense, it almost amounts to a self-fulfilling prophecy that as the wall of lingering inflation and stagflation rise to a zenith you also know that the time is nigh for the correction.

• Where is the capacity? Bloomberg recently ran a number of stories pushing the story that while emerging markets were the strong performers in the immediate wake of the crisis, the fortunes were now turning to the US and developed markets. On the surface, this is undoubtedly true and a rotation out of emerging markets into developed markets remain the main consensus trade at the moment. Structurally however this masks a more fundamental question of the so-called emerging economies’ ability to sustainably absorb all the excess liquidity and savings which is trying to find an outlet. The evidence from 2008 and the current melt-up suggests that while the long term story of emerging markets as the new drivers of global growth remains intact, this is not a linear process. Indeed, we are presented with some grave questions as to the collateral damage from the process of global rebalancing that is bound to take place. Some part of the immediate inflation issues could perhaps be solved by allowing a more gradual appreciation of a broad basket of EM currencies to the USD, but this then pushes the problem further towards the question of just what magnitude of external borrowing the emerging world can be expected to do to transfer growth to ailing economies in the OECD. In addition, there is a real risk that higher interest rates coupled with an open capital account would lead to an exacerbation of hot money inflows.

• Volatility around a Trend? One of the most crucial questions to answer in this debate is whether the underlying trend of prices is one of inflation or deflation in the developed world. Based on the reaction by monetary and fiscal policy makers they squarely believe in the former. But volatility has a cost independent of the trend around which it operations. Given that we seem to be looking at a re-run of 2008 it must be factored in that the volatility and speed (and subsequent decline) of commodity prices are a problem in itself. The famous loss function which must then be metaphorically minimised is the one which plots the trade-off between the cost of recurrent flares of commodity prices and the need to act as a counter trend to the destructive forces of a balance sheet recession. Here, it becomes a rather serious issue if one of the main collateral effects of providing buckets of liquidity is to engender strong commodity melt-ups with a subsequent deflationary outcome. Could it be that we are then talking about two trends here? One which is the underlying structural forces of deleveraging and the second is the structural issue of too much capital chasing too little yield proxied by the fact the growth to fight deleveraging must largely come from external sources.

• Stagflation coming to a town near you? As I am currently living in the UK I think I am as good as any to talk about the spectre of stagflation. Whether or not you agree with the BOE in its rather complacent view of inflation (given its own inflation target policy mandate) it seems to me that the UK citizens may be the first in the OECD to really experience what a hike in indirect taxes as well as rising global commodity prices mean. Again, you could of course note that if this all ends in a deflationary implosion in the end it is a matter of semantics, but these are then semantics which matter. More generally and going back to the point made by the Economist, if the general trend in global headline inflation for structural reasons is up then one would find it hard to believe how this would not act as a stagflationary trend in a world where demand pull inflation and growth are kept at bay by deleveraging. I want to see entrenched prices before I believe it and I still concur that this is playing out largely as in 2008 (with a deflationary outcome), but in some economies it might be different and the UK is a good candidate.

• Inflation today, deflation tomorrow? The extent to which we are watching a rerun of 2008 this is what we are going to see but I also think that the further we get down towards the path where low interest rates become structural parts of the macro picture the risk is that inflation expectations get entrenched. I am not talking in the global economy as such, but perhaps in individual economies and this divergence between those still stuck in deflation and those experiencing stagflation is a dangerous cocktail.

• Kill the speculators!? I remember during the heaty days of 2008 how a large part of the observed punditry slowly but surely came to the uniform opinion that high commodity prices were here to stay and that obviously speculation had no hand at all in this. Apparently, if oil prices went up 100% over the course of 6 months, then it was all a question of fundamental supply and demand. Like Fischer and his famous remark on US stocks reaching a permanent plateau it lasted until it didn’t. In short; obviously speculation plays a part. I would have thought this to be blatantly clear. Commodities of all forms and kinds have been thoroughly securitised which is exactly what allows such a melt-up in the first place. But this does not mean that the speculators should be lined up and shot let alone that they are a force of evil. I any case, what speculators are you talking about here? What about China (and other sovereigns) stockpiling commodities in turn bidding up prices? Should these be regulated and how? And if you really want to have a go at the masters of the universe of Wall Street and the City, would that really change a bit? Speculation in the form of what Sarkozy et al waffle about is a phantom menace and the real issue here is more structural. But speculation … indeed, lots of it! Finally, I should note that this time around we have had a number of concurrent and severe supply shocks to especially soft commodities which clearly have exacerbated the melt-up. Further, the extent to which adverse weather phenomenon become more prevalent it will add volatility to the commodity edifice regardless of what markets and regulators do.

Which door should you pick then to get it right on the global economy? You would not be surprised if my answer here is ambiguous. At the moment, I am leaning towards a 2008 re-run but precisely because it appears to be a re-run it raises some additional important questions. Consider then the following form one of my friends;

The underlying problem is that the Emerging Markets as a group (while many of them are long term growth positives) simply cannot withstand the short term massive funding injection without food prices getting out of control. Food prices getting out of control produces, as we are seeing, political instability, and this leads investors to withdraw.

As noted above, this is then a issue of short term capacity to add as magnets of yield as well as long term capacity to rebalance the global economy. But this is the trend then, the speed and volatility matters too as another of my friends pointed out;

I think rates of change in oil price matter a lot more than the level.   People adapt, but they can’t adapt quickly. We need to watch the speed of the oil price move.  If it moves quickly, that could be a huge drag on growth like 1980, 1991, 2008.

I think these two arguments combined are very, very important. I would hold lingering deflation to be a near certainty in the European periphery and Japan where it never left. I also see many of the worst affected economies in Eastern Europe suffering a deflationary outcome. In the US, we will see and in the UK stagflation is a real threat if only because inflation may soon feed into expectations on a sustained basis. For the emerging economies as a whole they will be fighting inflation for a long time to come especially as the hunt for yield continues. In the end then, picking the door may depend as much of your time frame and unit of analysis as anything else.

—

[1] – I get G&F and a few selected of BCA’s publications through a well connected network of analysts and economists, but I cannot (obviously) reprint the whole editions here for copyright reasons.

An example of “gold blindness” from Barry Eichengreen, Professor at the University of California in his recent article on reserve currencies:

“… the view that there can be just one international and reserve currency at any point in time is inconsistent with history. Before 1914, there were three international currencies: . . . → Read More: A World Of Multiple Reserve Currencies]]> WHAT OTHERS ARE THINKING

An example of “gold blindness” from Barry Eichengreen, Professor at the University of California in his recent article on reserve currencies:

“… the view that there can be just one international and reserve currency at any point in time is inconsistent with history. Before 1914, there were three international currencies: the British pound, the French franc, and the German mark. The dollar and the pound then shared international primacy in the 1920’s and 1930’s.”

While there may have been many paper currencies, he ignores the fact that in times past the various versions of gold standard in operation meant that gold was in effect the underlying sole reserve currency.

He also has an interesting view of central bankers, stating that their “… reserve managers do not have the high-powered financial incentives of hedge fund managers to seek to maximize returns. … They have social responsibilities, and they know it.  This means that they have less incentive to herd – to buy or sell a currency just because everyone else is buying or selling it. They can adopt a longer time horizon, because, unlike private fund managers, they do not have to satisfy impatient investors. Compared to private investors, then, central-bank reserve managers are more likely to act as stabilizing speculators.”

Well, in respect to gold I think the documented switch by central banks in general from selling gold to buying it could be used to make a case that they are herding along with impatient investors. In fact, it would probably be more accurate to say they are following rather than herding, as central banks were selling all the way through gold’s 10-year bull market, only switching to net buying in 2009. Question is why the switch? For “social responsibility” reasons or as (un)stablising speculators?

Now the Fed might be able to prop up the bond market in nominal terms, but what this will do is precipitate . . . → Read More: Does Dina Titus Support Wild Speculators?]]> As I articulated in a previous commentary, if the Fed stays loose to prop up the bond market, this will only undermine the bond market.  In real terms, the bond market tanks.

Now the Fed might be able to prop up the bond market in nominal terms, but what this will do is precipitate an exodus from all dollar-denominated securities (e.g. equities and bonds), compelling speculative activity in other asset classes in order to protect themselves against a depreciating currency.

As the Fed undermines Tituslandia’s bond market in the process of trying to prop up it up, yields remain artificially low.  This compels lenders/investors to seek higher rates of return in other asset classes.  I can only conclude, then, that Dina Titus supports wild speculators.

Statements like “the move deals a significant blow to London’s . . . → Read More: Bubble Top Indicators]]> The report that Hong Kong requested the return of its 2 tonnes of gold to be stored in its new vaults and its suggestion that other Asian countries do the same and store their gold with them resulted in a wave of uninformed hype.

Statements like “the move deals a significant blow to London’s historical role as a global hub” (from the aptly named Fool.com) and this weird non-article from a Marvin Clark that is all questions and no answers or opinions are typical of the new breed of gold commentary.

With reported central bank holdings of 30,000t, how can anyone think 2t is “significant”, even if the whole lot had been short sold by whoever they had it “stored” with? As one wit commented, “I moved my BBQ from my mom’s house to my house last week. According to the vague premise of this mysterious ‘logic’, my BBQ must be going up in price soon!” They are in the running for my quote of the year.

I would also note the similarities between the Hong Kong announcement and this report on Dubai: talk of Dubai a “natural choice” for central banks in the region, Dubai to be home to gold backing an ETF. Well, they can’t all be. These attempts at cracking London’s fix (pun intended) on gold trading and settlement occurs with some regularity and is met with a yawn from experienced gold players. Every now and then a country tries to become a “bullion centre”: Shanghai, Thailand, India. They never get off the ground because the rest of the world doesn’t trust them, or trusts them less than London.

Unfortunately, I have noticed an increase in gold commentary from people who have no experience in the gold markets, and it shows. I suppose if no one wants to read your opinion on a leverage stock play, what else are you going to do but write about what is hot, even if you know sweet FA about it.

Editor to Journalist: “hey, gold seems to have passed some magic number, go write something on it for tomorrow’s paper.” Journalist searches for last newspaper article on gold, does a google search and picks up some third hand commentary which misinterpreted “Gold ETFs allowed for EFP transactions” into “Gold ETFs allowed to settle COMEX futures”, and mashes it all together with some clichés and there you have an article for consumption by the general public who believe that the financial journalist knows what they are talking about.

I am thinking of starting an index of commentaries on gold and more specifically, the number by those who have never commented on gold before. I think it would make a very good bubble top indicator to be used along with the “receiving stock tips from a shoe-shine boy” (today to be substituted with taxi drivers I suppose). The number of Kitco forum posts might also be good, particularly the occurrence of the text “to da moon”.

I said that I didn’t know his financial situation was that bad. Jim replied that he wasn’t having too much trouble paying . . . → Read More: How Much Prudential Regulation Do We Need?]]> It was a few weeks since I had seen Jim, so I made the mistake of asking him what he had been doing. He replied that he had been thinking about bankruptcy.

I said that I didn’t know his financial situation was that bad. Jim replied that he wasn’t having too much trouble paying his own bills at this stage, but he had been thinking about bankruptcy as an institution and about the role of government in bankruptcy. While he was saying that I was thinking that Jim was not the kind of person who would ever have too much trouble paying his bills. I heard him ask: “What do you think about bankruptcy?”

I said that I thought modern bankruptcy laws that wiped the slate clean when debtors had no hope of meeting their obligations were a huge advance on traditional practices such as virtual enslavement or imprisonment of people who could not pay their debts. I added that in my view there had to be a role for government in this process because you can’t allow people to hire muscle to pressure people to pay their debts. Since we have to rely ultimately on the coercive power of government to enforce contracts then we have to rely on government to devise rules about the conditions under which contracts cannot be enforced.

Jim nodded. He then asked: “What do you think about limited liability?” I said that I thought the contribution of limited liability to economic growth was often overstated because liability insurance could have arisen to serve a similar purpose in enabling individual investors to limit their liability when in investing in companies. I added, however, that I couldn’t see a problem in the owners of a firm declaring that their liability was limited to the amounts they had invested. In my view transparency is the important issue: people who lend money to the firm or provide good on credit should be aware that if the firm goes bust the liability of the owners is limited.

Jim said: “Hmm, so you are saying that if I form a company to engage in speculation there should be no limit on the amount of debt that the company can incur? Are you saying that I should be allowed to gamble with other people’s money secure in the knowledge that if the gamble doesn’t pay off then my own liability is limited to the extent of my own investment in the company?” I insisted that transparency was the important issue. If people are prepared to take the risks involved in lending money to speculators, good luck to them.

Jim said: “People who take those risks need all the luck they can get. What about systemic risks? It is one thing to accept that a few people will lose their life savings whenever some highly leveraged property speculator goes bust, but isn’t it something quite different when confidence in the whole financial system is threatened because of excessive leverage in major financial institutions?” I did my best to put the argument that the current financial crisis arose at the end of last year because central banks in major economies hadn’t established a credible commitment to maintaining a stable rate of nominal GDP growth. I suggested that the best way to deal with the deleveraging and associated decline in the velocity of circulation would have been by maintaining a monetary policy that would promote expectations of a stable rate of growth in nominal GDP.

I could see Jim’s eyes glaze over as I spoke. He said: “If you were making government policy decisions in the aftermath of the current financial crisis wouldn’t you be looking to see what could be done to avoid re-emergence of systemic risk in major financial institutions? I had to admit that if I was making government policy decisions I would probably be looking for policy levers relating to capital adequacy and things like that.

Jim said: “Ah, you sound just like one of those neo-socialists who advocates more financial regulation in order to save the capitalist system. Rather than interfering in the financial management of healthy companies, wouldn’t it be better for governments to focus on improving laws to minimize the adverse effects on the wider economy that can occur when some companies become insolvent. For example, why can’t the ownership of insolvent companies be quickly transferred to creditors?”

Jim seems to like asking me questions that I can’t answer.