In case you missed any of these catchy tunes last week, it's not too late to boogie down. Grab your headphones, CD player, iPod, speakers, guitar, cowbell -- whatever you need -- and let's kick it.
"The 59th Street Bridge Song (Feelin' Groovy)" by Simon and Garfunkel, featuring the new Thai government
When the Thai government was overtaken in a coup last fall, a 15-year run of democracy in the country was broken. Unfortunately for investors, the coup also ended a streak of capitalist- and investor-friendly governance. Concerned over the rising price of the Thai bhat on the international currency market, one of the first financial actions of the new government was to say "slow down, you move too fast" and put controls on what it considered speculative currency inflows. What followed was a 15% correction of Thailand's major stock index, and needless to say, investors were not left feeling very groovy.
An interview with former Thai Prime Minister Thaksin Shinawatra by The Wall Street Journal put the situation back in the spotlight last week. The former leader, not surprisingly, is very skeptical of the approach of the new government, and was quoted as saying that a capitalist approach is needed for Thailand to stay competitive in the global markets. As with any economic issue, there is more than one side to the story, and by stemming the rising value of the bhat, the government hopes to protect Thai exports from becoming too pricey.
Investors are known for being skittish when it comes to too much change and uncertainty, and the new regulations are certainly a drastic change from the pro-capitalist policies of the old government. Similar to other recent moves -- for example, Canada's income trust dividend policy and Venezuela's planned nationalization of CANTV -- the Thai currency policy is a great example of how foreign governments don't always have investors' best interests in mind. Global markets, however, have offered some of the juiciest returns over the past few years; Vietnam's Ho Chi Minh stock index, for example, was up more than 100% last year, and Indonesia's Jakarta index was up more than 50%. Of course, no one is saying you have to try to navigate these markets on your own -- The Motley Fool's own Bill Mann is blazing a worldwide trail with the Global Gains newsletter.
"Purple Haze" by Jimi Hendrix and Symantec
It could be that Symantec (NASDAQ:SYMC) is still wading through the dust kicked up by its $13.5 billion acquisition of Veritas a few years ago, or it could be that competition is just getting too hot for the one-time hands-down leader in data security. But no matter which is the case, shareholders can't be happy with the stock's performance over the past few years.
Symantec CEO John Thomson never explicitly said that the merger with storage software provider Veritas was meant to diversify the company away from the increasingly competitive security software field. But many assumed that the company was trying to broaden itself in case of a major industry upheaval -- such as Microsoft (NASDAQ:MSFT) devouring a good chunk of the consumer security market. Thomson spoke more of the synergies between the security and data management software segments, as more mission-critical data and a tougher regulatory environment would seem to make the two items complementary purchase considerations. Thus far, though, the major effect of the purchase has been to raise questions over whether Symantec had any business buying Veritas in the first place, or if it was simply a poor use of the shareholders' money.
After peaking in late 2004 at $33, just before the merger, Symantec's stock has slid just shy of 50%. This decline includes a 13% drop that came last Tuesday when the company announced that its fiscal third quarter was not going to live up to what management had projected. The high end of the new revenue range was just under the low end of the previous range ($1.31 billion), while EPS is well under the bottom end of management's previous projections. The new revenue estimates show non-GAAP revenue growing just 6% and EPS slightly declining versus the same period last year.
The company has a good cash cushion to fall back on, and though it issued $2 billion in convertible debt over the summer, it churns out a pretty impressive amount of free cash. So while Symantec may not have its back to a wall quite yet, management does have its work cut out for it convincing shareholders that making one of the largest software acquisitions of all time was a good idea, and not just another large, high-profile deal that turned out shoddy in the end.
"Help!" by The Beatles and Ben Bernanke
Federal Reserve Chairman Ben Bernanke suggested last week that the U.S. fiscal situation was in need of help. We need somebody, not just anybody, but somebody willing to take a stand to change the course of our national debt. In a Senate Budget Committee hearing, big Ben reminded committee members of the snowballing effect of our debt, and the adverse consequences that it could have for our economy if left unchecked.
If our debt snowball has been rolling down a fairly low-grade hill for a number of years, it's getting ready to hurtle down a pretty steep grade in the near future. The coming retirement of the baby boomers will start putting our Medicare and Social Security systems to a serious stress test, and it could lead to the government piling on an impressive debt load. Though running a fiscal deficit can be an effective tool to boost the economy - through either tax cuts or increased government spending -- as the debt load grows, so does the amount of money that the government has to shell out in interest.
There's nothing particularly new about what Bernanke had to say; former Fed Chairman Alan Greenspan had also lectured Congress on this topic. The situation, though, is increasing in importance as we venture further into the era of baby boomer retirement. The projections that Bernanke presented showed the national debt at 100% of GDP by the year 2030 and rising to as much as 250% of GDP by 2050. Debt levels like those would require anywhere from 4% to as much as 11% of the U.S. GDP to be spent on paying interest alone (to put that in perspective, 4% of today's GDP would be almost $500 billion).
Congress has its work cut out for it in the coming years if it wants to keep our national debt from spiraling out of control. One thing is for certain, though: With more than $8.5 trillion in debt outstanding, the U.S. does not make a particularly attractive LBO target for deal-hungry private equity firms like KKR and Blackstone!
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Fool contributor Matt Koppenheffer is currently ranked 3,012 out of 20,661 Fools participating in The Motley Fool's CAPS service, and he encourages everyone to get heard. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is always in tune.
