Randomly Noted

Something odd happened in China today – the government wanted to sell $4.09 billion of debt securities but couldn’t find enough buyers. So, it settled on selling $4.03 billion. It’s not a huge failure – it sold 98.5% of what it had planned – but the development is an interesting one, especially if it is repeated Thursday when three-month bills are slated for sale.

The word out of Shanghai earlier was that investors were concerned that the one-year bills with a coupon of 1.06% didn’t offer enough yield for those worried about inflation. That may be true but China has reported four straight months of a decline in its consumer price index, a barometer used to measure inflationary pressures.

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In terms of size, this one is but a $140 million fraud (alleged, of course) and certainly doesn’t rank up there with the Bernie Madoff kind of schemes. But in terms of brazenness, it’s pretty close. The Securities and Exchange Commission and U.S. Attorney in Manhattan charged six individuals with running a boiler-room  operation that allegedly scammed investors in the U.S. and United Kingdom.

The company they ran and worked for was called Sky Capital and what they did, according to the Feds, was sell stock and convertible securities in two companies related to Sky that eventually became publicly traded. Principals of the firm were said to direct brokers to make material representations about the two companies – like make up “baseless price predictions” about the future values of the securities. This was for two companies with no operating history.

And it gets better.

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All the talk on both sides of the Atlantic Ocean about the need to curb speculators in oil is part of a larger trend we’ve seen since the onset of the credit crisis and this deep recession: governments want to control more aspects of economies and markets.

The elected leaders of France and the United Kingdom teamed up on an op-ed piece in The Wall Street Journal today to decry oil price volatility. The argument of Gordon Brown and Nicolas Sarkozy is that oil is too important to be left to the short-term profit seekers who inhabit markets.

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