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8:30 AM EST, Thursday, September 13, 2007: I got 3.8% on triple-tax-free New York muni bond floaters yesterday. That's the equivalent of 6.3% pre-tax money. That's good for cash, sitting around, waiting for it "to be put to work."

Goldman Sachs Group Inc.'s Global Alpha hedge fund fell 22.5 percent in August, its biggest monthly decline, on losses from currency and stock trades (also called gambling). The fund has dropped by a third in 2007 and 44 percent from its peak in March 2006. Goldman Alpha's biggest loss in the month stemmed from the managers' decision to sell Japanese yen and buy Australian dollars. The so-called carry trade unraveled when the Australian dollar fell 6 percent against the yen in August. The managers' investment in equities, including stocks in the U.S., Norway and Finland, declined 4.7 percent.

Ironically the Australian dollar is up strongly against the U.S. dollar.

Two insights:

1. Goldman itself thinks its Alpha Fund losses are fine and expected. The Fund has big gains some months and big losses. That's its nature. That's how it was (theoretically) sold to its investors.

2. Not all hedge funds are alike. Few are like the Alpha Fund. Before you give money to a hedge fund, ask questions like "What do you invest in?" "How much borrowing do you do?" "How do you make buying and selling decisions?" And "how quickly can I get my money back?"

Today is Jewish New Year, a holiday for Jews worldwide.

Old Jewish stockmarket saying.

Buy Rosh Hashanah, sell Yom Kippur (ten days from now).

I have no idea if this works.

The three essences of a Jewish holiday

1. They tried to kill us.

2. They failed.

3. So, let's eat.

Banks' New Credit Austerity To Help Set Economy's Path. This well-done piece by David Wesel is from today's Wall Street Journal:

The outlook for the U.S. economy turns on two factors: One is how much worse the nation's housing market gets. That may be hard to predict, but it's easy to understand.

The other is how much of the continuing disturbance in financial markets infects the rest of the economy. That's neither easy to predict nor easy to understand.

The key is what banks will do and how much impact it will have. There's irony in that because a salient feature of 21st-century finance is that banks have become increasingly less important players.

In the old days, banks made loans carefully -- because they got burned if the borrower didn't repay. Think of this as wooden-baseball-bat finance.

Today, banks make loans, turn many of them into securities, and sell them to investors, pocketing the fees. Someone else gets burned if the borrower defaults. Think of this as composite-metal-baseball-bat finance. The game is quicker, the ball goes farther.

But, it turns out, banks may not have unloaded as much of the risk as they thought. And that's the rub.

Wall Street firms and commercial banks, according to Citigroup estimates, hold about $250 billion in bridge loans made to finance acquisitions -- loans they intended to lay off in markets that are no longer quite so interested in them. The banks may be stuck with those merger loans.

"Diminished demand for loans and bonds to finance highly leverage transactions has increased some banks' concerns that they may have to bring significant quantities of these instruments onto their balance sheets," Fed Chairman Ben Bernanke said a couple of weeks ago at the Kansas City Fed's symposium in Jackson Hole, Wyo.

Then there's the mushrooming problem -- one hardly anyone saw coming -- of entities called structured investment vehicles and conduits. Many of them hold subprime mortgages and related securities, and counted on selling more than $1 trillion in short-term IOUs called commercial paper to finance their holdings. Investors no longer want that commercial paper.

So what do these entities do now? They turn to U.S. and European banks, some of which sponsored the conduits, and remind them of the commitments the banks made to provide credit if the commercial-paper market dried up. Goodbye metal bats. Hello, old-fashioned wooden-bat-style banking.

Suddenly, banks find themselves with all sorts of unanticipated loans on their books. So what? In the antiseptic language of central bankers, Mr. Bernanke explained, "These banks" -- the ones stuck with merger loans they didn't intend to hold and those providing backup lines of credit to conduits -- "have become more protective of their liquidity and balance-sheet capacity." They are hoarding cash or buying short-term Treasurys, and that means making fewer new loans.

The result, as Citigroup's Steven Wieting puts it more bluntly: "Higher debt costs and reduced access to credit for borrowers."

Saddled with loans to finance mergers or back-stop conduits that can't sell commercial paper, banks are likely to be less willing to lend to ordinary consumers and businesses or, at the very least, will be charging more for those loans. So, consumers and businesses are likely to borrow a little less -- and spend a little less -- and a financial disturbance could be transmitted through the banking system to the rest of the economy.

No wonder there's growing worry the U.S. is going to slide into recession.

In short, even though banks are financially sturdy compared with past bouts of turmoil, there are constraints on how much unwanted lending they will do without curtailing ordinary lending. Some of those constraints are due to the intricacies of minimum capital standards and liquidity ratios and others involve the general tendency to be cautious during times of uncertainty.

As if that wasn't enough, there's another layer: Everyone knows banks have a lot of loans on their books that they'd like to sell, but can't -- or won't at today's prices. So some deep-pocketed speculators, the ones who buy when prices plummet and then help bring them back up, are waiting for prices to fall further. And that increases the risk of a prolonged period of financial market turmoil which, in turn, increases the risks to the rest of the economy which, in turn, makes bankers -- understandably -- a little more wary about lending.

The issue isn't whether all this is happening. It is. The issue is how big an impact banks' behavior will have on the economy. Some analysts say it's a sideshow compared with the housing slump. Others say it's the most important factor in whether the markets and the economy bounce back as quickly as they did in 1987, 1998 and 2000.

No doubt it will be one of the big issues on the table when Mr. Bernanke and his colleagues meet next week to ponder how much to cut interest rates to offset the markets' tightening of the credit spigot.

In praise of daily exercise: I am in my best physical condition ever. Yesterday I played 1 1/2 hours of singles tennis and biked effortlessly six miles to dinner. Serious daily exercise -- with sweating -- makes a major difference to your health.

The best health insurance is from AARP: This advice is from my lawyer friend who specializes in health insurance cases. Does anyone have any experience with them?

Why I sold my Qwest shares: This abuse of shareholder monies disgusts me. From the September 4 New York Times "DealBook":

Some high school students will be making their way back to school this week on a bus, or, if they are lucky, in their very own car. But the stepdaughter of Edward Mueller, the new chief executive of Qwest Communications, has a much fancier option.

A regulatory filing made Friday, on the eve of the holiday weekend, disclosed that Qwest has authorized Mr. Mueller’s wife and her daughter to use Qwest’s corporate jet to travel between Denver, where the telecommunications company is based, and California, where Mr. Mueller’s stepdaughter is finishing high school.

Asked about the filing by the Rocky Mountain News, a Qwest spokesman said the agreement reflects an “appreciation for his family situation as his daughter wraps up her current schooling in California.”

Paul Hodgson, a senior research associate for the Corporate Library, which studies corporate governance issues, called the arrangement “ridiculous.” Of 215 public companies that the Corporate Library examined in a recent report, he said, only 28 allowed a chief executive’s family and friends to use the corporate jet.

The Securities and Exchange Commission recently changed the rules surrounding executive compensation, requiring greater disclosure of the perks that top management receives. The changes came amid widespread concern that shareholders of public companies were not fully aware of the size and scope of the benefits that corporate chiefs were getting.

Last month, Qwest chose Mr. Mueller, a telecommunications industry veteran and a former chief executive of the retailer Williams-Sonoma, to succeed Richard Notebaert as its chief executive. The move required Mr. Mueller to relocate from California to Colorado.

Footnoted.org, which looks for interesting nuggets among corporate filings, estimated that the corporate-jet perk could be costing Qwest as much as $600,000, based on normal charter rates for the Falcon 2000. “As for me, it certainly beats the B-64 bus that I used to take to high school,” Michelle Leder wrote.

What life is like in Zimbabwe. President Robert Mugabe was popularly elected in 1980. He was a pro-independence campaigner who wrested control from a small white community and became the country's first black leader. Now he presides over a nation whose economy is in tatters, where poverty and unemployment are endemic and political strife and repression commonplace.

A friend of a friend who lives there emailed:

Eight of us went to lunch at Mama Mias (Harare, the capital) on 10 August 2007. We thought you would like see what Z$6-million looks like in Z$1,000 notes. This was the manager taking the money away to pay for our lunch. The lunch consisted of two courses each -- eating the 'last' fillet steak left in the restaurant, and even getting some beers - also running out.

You don't choose what's on the menu - you first ask "What is left on on the menu?" If this doesn't make ANY sense to you, its because you are out of touch with Zim and the price controls and hence lack of products in the shops.

We really had a great lunch. Life in Zim!

Why dogs bite people:

Today is the first day of Rosh Hashanah: The traditional greeting is "l’Shana Tova." The modern greeting is:

May your hair, your teeth, your face-lift, your abs, and your stocks not fall

And may your blood pressure, your triglycerides, your cholesterol, your white blood count and your mortgage interest not rise.

May you get a clean bill of health from your dentist, your cardiologist, your gastroenterologist,your urologist, your proctologist, your podiatrist,your psychiatrist, your plumber, and the IRS.

May you find a way to travel from anywhere to anywhere during rush hour in less than an hour, and when you get there may you find a parking space.

May this Yom Tov, find you seated around the dinner table, together with your beloved family and cherished friends, ushering in the Jewish New Year ahead.

May what you see in the mirror delight you, and what others see in you delight them.

May the telemarketers wait to make their sales calls until you finish dinner, may your checkbook and your budget balance, and may they include generous amounts for charity.

May you remember to say "I love you" at least once a day to your partner, your child, and your parent(s). You can say it to your secretary, your nurse, your butcher, your photographer, your masseuse, your seamstress, your hairdresser or your gym instructor, but not with a "twinkle" in your eye.

May we live as intended, in a world at peace with the awareness of the beauty in every sunset,every flower's unfolding petals, every baby's smile and every wonderful, astonishing, miraculous part of ourselves.

Bless you and those you love with every happiness, great health,peace and much love during the next year and all those that follow.

Irish Catholic Fidelity
A pair of Irish ditch diggers (Navvies), were repairing some road damage directly across the street from a house of prostitution.

They witnessed a Protestant Minister lurking about, then duck into the house.

"Would ye look at that, Darby!" said Pat. "What a shameful disgrace, those Protestant Reverends sinning in a house the likes of that place!"

They both shook their heads and continued working. A short time later they watched as a Rabbi looked around cautiously and then darted into the house when he was satisfied no one was looking.

"Did ya see that, Darby?" Pat asked in shock and disbelief, "Is nothing holy to those Jewish Rabbis? I just can't under-stand what the world is coming to these days. A man of the cloth indulging himself in sins of the flesh. T'is a shame, I tell ya!"

Not much later a third man, a Catholic Priest, was seen lurking about the house, looking around to see if anyone was watching, then quietly sneaked in.

"Oh no, Darby, look!" said Pat, removing his cap and crossing himself, "One of the poor girls musta died!

This column is about my personal search for the perfect investment. I don't give investment advice. For that you have to be registered with regulatory authorities, which I am not. I am a reporter and an investor. I make my daily column -- Monday through Friday -- freely available for three reasons: Writing is good for sorting things out in my brain. Second, the column is research for a book I'm writing called "In Search of the Perfect Investment." Third, I encourage my readers to send me their ideas, concerns and experiences. That way we can all learn together. My email address is . You can't click on my email address. You have to re-type it . This protects me from software scanning the Internet for email addresses to spam. I have no role in choosing the Google ads. Thus I cannot endorse any, though some look mighty interesting. If you click on a link, Google may send me money. Please note I'm not suggesting you do. That money, if there is any, may help pay Claire's law school tuition. Read more about Google AdSense, click here and here.
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