Li Lu watch & Balance Sheet Recession!

We had posted about Li Lu and his efforts to gather data from China with observations on the Covid issue (here) Li Lu is largely credited with bringing BYD to the attention of Charlie Munger, Sokol and then Warren Buffett following which Berkshire bought a stake in BYD.

In nov 2019, Li Lu published an essay in Mandarin on China. A couple of bloggers recently translated that article and you can find it here. It is quite a fascinating read.  It prominently refers a book that I had read earlier this year and it made quite an impression on me. The article refers to the work to Richard C. Koo, who is a strong proponent of balance sheet recessions. Using this concept, he explains the lost decades in Japan and the lack of inflation & growth even though the government and the central bank has been injecting enormous stimulus & liquidity into the economy.  Richard argues that since the recession in 2008, the similarities to Japan have magnified in the western economies and tries to correlate the lack of inflation in EU and US to Japan despite massive interventions. He further lays the groundwork explaining that fiscal stimulus during times of deleverage of the private sector can be offset by fiscal intervention through government spending to keep the economy afloat without going through a depression type environment.

Another article along similar lines came from LT3000 here.

Li Lu’s essays, LT3000 lucid thoughts and Richard Koo’s work gives investors a perspective or a framework on how the government fiscal intervention in times like the Covid crisis  might pan out for inflation & growth.

 

 

What are we reading?

  1. Bankers are sitting on a mountain of risky bets (here)
  2. Covid19: Can negative supply shocks cause demand shortages (here)
  3. Black swan events (here)
  4. How the Black Death radically change the course of history (here)
  5. How epidemics of the past have changed the way Americans lived (here)
  6. What has changed and what has not (here)
  7. The new reality for marketing under Covid-19 (here)
  8. Covid-19 unmasked an essential weakness in finance (here)
  9. Will cash be worth anything (here)
  10. Berkshire has America’s oldest board (here) (Paywall)

What are we reading?

  1. Covid long term economic impact less than 2008 (here)
  2. The world after coronavirus (here)
  3. Saudi Arabia, Russia push U.S. to coordinate cuts (here)
  4. Asset light businesses faces an awful future (here)
  5. They all retired before hit 40 and this happened (here)
  6. Buffett’s bet on Occidental is looking more dicey (here)

What are we reading?

  1. Facebook, Google could lose over $44B of ad revenues in 2020 (here)
  2. Airlines are getting bailout money — but there are strings attached (here)
  3. Google and Facebook can’t save the advertising industry this time (here)
  4. America’s largest trucking companies won’t reveal how or if they will get sick drivers back home if they get infected (here)
  5. Berkshire Hathaway sold $390M of Delta and Southwest stock (here)
  6. Bare necessities you need for a bear market (here)
  7. Risk to jobs now unprecedented since the Great Depression (here)
  8. Delta airlines is losing $60M a day as Covid rages on (here)
  9. United airlines no longer counting on snapping back (here)
  10. The month Covid felled American business (here)

What are we reading?

  1. National Coronavirus response: a roadmap to reopening (here)
  2. 3 months of no EMI but why you should pay if you can (here)
  3. Outrage in Germany as Adidas and H&M stop rent payments (here)
  4. Planes will fly with new owners: NT urges UK to let Virgin Airlines go bust (here)
  5. The road back to normal (here)
  6. How Kotak Mahindra has averted all the crisis so far (here)
  7. The man who predicted the Indian banking crisis warns of a new danger (here)
  8. ITC – is capital misallocation a narrative fallacy or reality (here)
  9. My first decade as a full time investor (here)
  10. What clark street has been buying – Coronavirus edition (here)

Covid: Interesting data from hospitals in China

Most of us remember Li Lu, the man who bought the original BYD idea to Charlie Munger and then to Berkshire, as a value investor who was up significantly up in 2008/9 (without any shorts). He recently organised a number of doctors from China to share their experiences on fighting Covid on the frontlines. This included the ICU head in a hospital in Wuhan, a doctor who leading the effectiveness of various treatments, and head of an infectious disease in Shanghai.

  1. What we learnt from the Covid-19 outbreak in Wuhan here
  2. From bedside to bench: here
  3. Megacity and public health policy for Covid-19: here

Additional links here including videos, Q&A etc.

 

What are we reading?

  1. As Coronavirus infection slows, South Korea prepared for life after social distancing (here)
  2. Bill Ackman clarifies on his CNBC comments (here)
  3. Where does the $2T in the U.S. stimulus bill go (here) from reddit
  4. Covid impact on restaurants in the U.S. (here) and (here)
  5. State by state shutdown won’t work – Bill Gates (here)
  6. Investing in healthcare: threat and opportunity of the decade ahead (here)
  7. Trump orders GM to make ventilators under the Defense Production Act (here)
  8. Miss the worst days, miss the best days (here)
  9. Corona, Cheesecake & testing the mirage of lease-debt equivalence (here)
  10. I became a disciplined investor over 40 years. The virus broke me in 40 days (here)

What are we reading?

  1. The surreal weekend (here)
  2. Fliers coming in from abroad (to the U.S) face long, crowded lines at airports (here)
  3. Stock futures slide after Fed slashes rate to zero (here)
  4. The Yes Bank rescue: Banks chip in, shareholders locked (here)
  5. In the end, it took a whole village to rescue Yes Bank (here)
  6. Paddling through the storm: lessons in 2019 (here)
  7. For airlines, a week that went from bad to worse (here)