Wednesday, January 18, 2006

One for the Gipper

Tokyo's exchange flunks another test
In ditching brokers for computers, the Tokyo Stock Exchange has faced a string of embarrassing glitches and shutdowns

The latest misstep came Wednesday, as software programs in the world's second-biggest stock market were unable to handle increase volumes or recognize trades that were impossible to execute.

These are problems we haven't seen, for the most part, on U.S. exchanges since 1987, almost 20 years ago. If Japan hasn't got it right yet with its supposedly well-established markets and the numerous world-leading companies and behemoth brands trading on its exchanges, how then do you think exchanges in China and India stack up? These are the things that the stock brokers don't bother tell us when they come on TV saying everyone in America should have as much as 25% of their retirement savings invested internationally.

In the past few years a heck of a lot of money has been funneled into international equity funds, much more than has gone into domestic funds. Honestly, I like seeing these problems emerge sooner rather than later. For one it means they'll have to fix the problems and the world's markets will improve. But most all, we compete for assets and I wouldn't at all mind seeing some of the money we've sent overseas come back, and more foreigners sending their money here if people get a little nervous about their money over there. And they should be. That would be good for the dollar, growth, productivity, and stocks.

It seems that rooting for the home team has recently become dirty and politically incorrect. It's been associated with ignorant protectionism. A couple of years ago our business leaders took a public relations beating on the issues of globalization, outsourcing, and sending jobs over seas when our own job growth was stagnate and everyone was crying stagflation. Somehow they've managed to turn that around on us to where we're starting to think it's not ok to say hooray for our side. It's a bunch hooey I tell you. There's a big difference between aggressively competing and protectionism. Having the best financial markets in the world and attracting foreign capital is good for our country, contrary to what Warren Buffett would have us believe.

posted at 2:25 PM