Distressed Debt Analysis, MBOs, Corporate Restructuring

A generous reader from India, Saran, has donated five books to the VALUE VAULT. On Monday, I will send out an email with the key to that folder (DISTRESSED) to all who have received keys before.  I will post an announcement when the keys have been emailed. Thanks again SARAN.

Hanging Threads

Part 3 in analyzing Mr. Yachtman–is it luck or skill will be forthcoming. I plan on not reading the many intelligent comments from readers on this subject until I post part 3 so I am not influenced. Then if readers have comments or questions, I will post replies.

Another post on ROIC is needed to complete the circle on that subject.

Then I will post the analysis of Fox Broadcasting Company for our ongoing study of Competition Demystified.

A folder is being built for a course on Mises’ Theory of Money and Credit. The folder in the Value Vault will contain Power Point slides and audio lectures on 8 weeks of key readings from the book. Also, there will be the book, a study guide, and quizzes to test your comprehension. The Theory of Money and Credit is the seminal work on the subject. It is a challenging read, but you will have a solid understanding of how the fractional reserve banking system creates the business cycle through its creation of fiduciary media. Understanding money can be like grasping Jello, but this work makes it possible.

Thanks for your patience.

8 responses to “Housekeeping

  1. Hi John,
    Sorry to add another stone to the already heavy pile, but don’t forget one more: Your discussion/input of Balchem using the Value Line.


  2. John, would you recommend reading the first few books previously discussed here: for beginners, then go through The Theory of Money and Credit?


    • From post on How to start–
      If you want instant enlightenment, Henry Hazlitt’s Economics in One Lesson is still the desired text. If you want enlightenment in great depth, there is Mises’s Human Action. But if you are looking for something in the “in between” category, Faustino Ballve’s Essentials of Economics: A Brief Survey of Principles and Policies, translated from the Spanish by Arthur Goddard, is your meat.
      Dr. Ballvé was a Spaniard born in Catalonia. He became disillusioned with his country in the 1930s when the life choices of anyone who wanted to stay home in Spain seemed to be narrowed down to the either/or of fascism or communism. Having studied economics in England, where he managed to resist the Fabians, Dr. Ballvé had had some acquaintance with the idea of libertarianism-under-law that one used to think of as peculiarly Anglo-Saxon.
      He took his philosophy with him to Mexico in 1943, where he wrote Diez lecciones de economia, or, as it was translated for the French edition, L’Economie vivante. The English language edition, which was first published by Van Nostrand in 1963, includes some substantive changes made for the French public.
      Dr. Ballvé must have had his Catalonian brothers in mind when he wrote his book, for his clear distinctions seem directed to the emotional libertarian, particularly common in Latin countries, who tends to think of freedom as a synonym for anarchy. The emotional libertarian goes in for syndicalism. But syndicalism, as Dr. Ballvé saw it, resulted in group interferences with the market, and pushed an economy in the direction of corporativism, which demands state control of the syndicates and so negates the original impulses of anarchistic individualists. Having forsworn the aberration of his countrymen, who seem to have a genius for turning things into their polar opposites, Dr. Ballvé was in an exceptionally good position to bring the principles of classical liberalism to a Latin audience.
      Freedom of Choice
      Classical liberalism presupposes rights that must be guaranteed by law and protected by the courts. In economics, the right to life, which is fundamental, becomes the right to own and to exchange what one owns in the free market if one so chooses. (How else is one to support life as a right, not as something that one lives on sufferance of a tyrant?)
      In translating his liberalism into the terms of economics, Dr. Ballvé refuses to talk about that unreal abstraction, the “economic man.” Like Mises, Dr. Ballvé thinks that all choices, whether economic or not, vie for an individual’s time and energy. Any choice of any kind affects the market. As Dr. Ballvé puts it,
      the retirement of an entrepreneur of genial disposition can bring fortune or misfortune to many other entrepreneurs, just as the indifference of a truth seeker to monetary considerations can, at a given moment, make both him and others wealthy.
      Thus there is a competition
      not only among vendible goods, but also among things that are, as we commonly say, “beyond price.”
      The choices of men cannot be predicted; moreover, they cannot even be averaged. So there cannot be any “mathematical economics” apart from the science of statistics, which tells you what has happened, not what is going to happen. The future is unknown; it can be pushed into utterly unforeseeable forms by invention, imagination, the spirit of adventure, and the willingness to take chances.
      Value is a subjective matter that becomes objectified in price as people trade “disutilities” (for them) for “utilities” (which are the other fellow’s “disutility”). You get rid of something you value less in order to pick up something you value more. And your judgment may or may not reckon with the “labor hours” it takes to make something, or with “intrinsic” value. The higgling of a whole slew of subjective desires takes place within the context of the available purchasing power (money and credit), and it is the “market” that makes the prices.

  3. Economics in One Lesson–read a chapter then listen to a corresponding lecture. Murphy’s book is more structured. Don’t be put off by the kids label.

    In a few days, I will have Murphy’s book along with the teacher’s guide in a
    folder with a course on Mises’ Theory of Money and Credit.

    Once you understand money in the broader sense–how fiduciary meda (uncovered bank notes and deposits) influence the quantity of money and
    thus the purchasing power of money, you will be on your way to REALLY understanding Austrian business cycle theory and thus booms and busts.

    You should not be surprised right now that stocks are rising in general, interest rates are low and prices are starting to rise.

  4. ilikethebreeze

    Hi John,

    Thank you for introducing Austrian Economics to us readers.
    Like value investing, it really makes sense, and you get that feeling of excitement when you read about it (like you have found the truth about how things really work).

    Over the weekend, I have been listening to a bunch of lectures from the Mises podcasts on iTunes U (it is an amazing app that has great resources for learning and it is free. eg, there is a whole course on Game Theory from Yale). Anyway, I came across this series of talks from a Mises 2005 conference held in Las Vegas, and what really struck me was that they were talking about Gold and the Housing Bubble with such conviction like they knew what was going to happen, it felt like they were talking about the topics on hindsight; but they weren’t.

  5. Thanks for the heads up.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.