There are several good articles that you should read in today's Wall Street Journal. Even before you get to the Money and Investments section, you should find in page A12 an article describing (for the n-th time) what the carry trade is all about (I intend to write a special entry on this). The second paragraph refers to the "policy rate". This is no other than the federal funds rate. You might recall how the FRB controls this rate (not always successfully) by lending and borrowing Treasury securities through repurchase agreements (see previous posting on repos). A similar reference to the federal funds rate can be found in page C2 ("For Dollar, December Blues").
Let's move to the Market Place section. The main item is titled: "Siemens to Pay Huge Fine in Bribery Inquiry". Corruption is a major problem in international trade. The book (Bekaert and Hodrick (p. 510) provides a short analysis of this issue. The book mentioned the Transparency International Index. Table 14.1 provides a table of Legal Systems Quality. I fail to see why these measures convey any information. For example, is the U.S. legal system more efficient than Germany because it evicts tenants faster (40 vs. 331 days) or is this a reflection of the fact that capital has more say in our country?
At any rate: The book refers to the Transparency International corruption index. In its 2008, this organization ranked Germany as number 14 in the world in terms of transparency while Argentina is 109. Is a country "transparent" because it gives rather than takes bribes? Another good source is the Global Integrity organization reporting that The wealthier G8 (Investigate!!!)countries suffer from similar corruption challenges as developing countries.
And then there is the Journal Report section whose subject today is Business Insights. Why don't you look into the Global Business article titled: "In Emerging Markets, Know What Your Partner Expects". All of these expectations have something to do with thuggery. The "pleasures" of doing business in emerging markets: first you have to look for a partner who will help you with bribery and then you are pursued by the SEC for paying bribes. Usually the "partner" is the ruler's cousin (as is often the case in Saudi Arabia) isn't that some type of bribery?
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"On Tuesday, the U.S. Treasury Department sold four-week bills in an auction at a yield of zero for the first time as investors poured into what they saw as the ultimate safe haven."
I'll admit to being a little deficient in the Finance background, but I don't understand why anyone would purchase a zero-yield bond. You'd be better off just leaving the money in an interest-bearing savings account.
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