Deregulation is often positive

        As we swing into an election which is sometimes being fought against deregulation, I feel impelled to inform you all that sometimes deregulation is A Good Thing. Moreover, speculation is an old habit of the human race.

     Let's start with the latter:

     "New houses were built in every direction, and an illusory prosperity shown over the land, and so dazzled the eyes of the whole nation, that none could see the dark cloud on the horizon announcing the storm that was too rapidly approaching."

       That is not a report on the sub-prime debacle. It is from Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds, published in 1841. His subject was the early 18th century bubble in Louis XV's Paris over John Law's Cie. du Mississippi.

        Bubbles and speculation are traits of the human race. Even getting excited about a faraway place with assets you know nothing about (Mississippi in the 18th century, for example) is what people do. 

        Now about the benefits of removing regulations. Over the past couple of days we have seen the arrival of more than 200 new American Depositary Receipts to U.S. trading. The depositary banks are rushing to offer Americans the opportunity of trading stocks regularly listed on foreign exchanges through new ADRs, mainly because these unsponsored ADRs can generate nice fees for the banks.

        And as we know, banks are hard up. They get fees when the foreign stock pays a dividend or begins a corporate action which involves shareholders.

        The new offerings, which boost the size of the U.S. ADR market by more than 10% in one fell swoop, result from the Securities and Exchange Commission removing the requirement that foreign ADR companies produce reports in U.S. Generally Accepted Accounting Principles terms, converting from whatever they do in their homeland. Now all they have to do is translate the text into English.

      *While I said I was not going to blog more than weekly, I cannot resist quoting a new report from Canada's Peters & Co.'s Dan Grager. He lowered his target for Niko Resources, the Canadian firm producing oil and gas in the Indian subcontinent from C$120 to C$115. This I can stand.

       He forecasts that NKO.Toronto will begin to produce 500 barrels of oil daily in D6 MA soon and eventually bring production to 40,000 bpd by Feb. 2009. Natural gas from the same field will begin in Jan. and hit 280 mn cubic ft/day by midsummer.

       Mr. Grager cut his target based on his new reading of the Net Asset Value based on risks linked to the brokerage's calculation of risk premiums over the national bond rate in places like India, Kurdistand, Pakistan, and Bangladesh where Niko operates. Great stuff but ultimately the price commanded for the oil and gas will be set by the world market, I think.

      *Charles Carlson of www.DRIPInvestor.Com tips the common stock of Barclays PLC, which he thinks did well out of the Lehman bankruptcy. He calls it "a tremendous deal" with the LEH NY real estate alone worth a billion bucks. He thinks boldness can pay. Carlson's newsletter costs $109 for 12 issues/year. You can start a BCS DRIP with $250 and reinvest dividends which are currently about 14%.