Don Coxe in Barron’s:

The core investment concept of our time is that we are living through the greatest simultaneous effervescence of personal economic liberty in history. When people go from abject poverty to dwellings with indoor plumbing, electricity, basic appliances and access to motorized transportation, they have more economic liberty than 99% of humanity enjoys and we are adding 50 to 150 million people a year to that list. The gigantic investment returns are all going to be tied to companies that meet real human needs and do it better than other companies. What a great time to be an investor, because it is not just about the dwellings and the transportation, it is about the high-protein diet. When I came back from a trip two years ago, I said the biggest commodity story is going to be food, bigger than the other ones. It is high-protein food. The way to play that is through the fertilizer stocks, the genetically modified seed stocks and the farm-equipment stocks.

The Fed has started buying commercial paper. Presumably this helps account for today’s renewed enthusiasm for stocks.

Companies sold $232 billion of commercial paper yesterday, the most in five years, with 29 percent maturing in more than 80 days, according to Fed data. That’s the biggest percentage on record and compares with a previous high of 13 percent in 2002.

Fortunately, I was lightly long. The clue was the weakness in the yen, which turned into pervasive weakness for the dollar during the course of the day. This could mean that the liquidation selling is mostly over. So then, the US dollar should go lower, bonds lower as well, but stocks and commodities should go higher. Although not in a straight line. But the weakness in the Canadian dollar is not helping my numbers and some rally there would be more than welcome. By Friday, please, so the monthly exposé is not so embarrassing. All you sideline sitters who report monthly numbers, you could be helping instead of just sitting there, you know.

Well, right now, anyway. That crown tends to, shall we say, move around. “Uneasy lies the head that wears a crown” (Henry IV part 2, William Shakespeare).

The Smartest Man We Know has heard the slurs. When you make your living on Wall Street, yet hold the opinion that Wall Street is populated by incompetent fools, you’re not going to win a lot of friends at dinner parties, are you?

And when you bet millions that the American financial system is going to fall apart, that its economy will be seized with fear - and when you were doing this and saying this before there was any hint of real trouble - well, you couldn’t really expect other people to welcome the message, could you?

Been there, done that. And no, the message was not welcome outside the huddled communities of bears hanging out in chat rooms here and there. I learnt to keep my mouth shut and only provide my opinion to friends. And of course anyone who happened across my blog. Not that I expected anyone would, it is and always has been more of a personal chronicle, although I have found encouragement in readers’ comments and feedback.

You buy Canada, says Mr. Narayanan, who can’t believe the way the loonie has been savaged. “The currency is ridiculously undervalued. I can’t think of any country in the world that has no fiscal deficit, no trade deficit and no inflation - except Canada. I think the Canadian dollar should go through parity.

“I like the whole Canadian market. I don’t particularly dig the banks because I just don’t know what’s in there [on the balance sheet]. But I’d say virtually everything else is fine.”

I hope he’s right. Not only because I own a bunch of energy trusts now, but the drop in the Canadian dollar is putting a world of hurt on my Canadian fixed income position. I’m not worried from a long term point of view, besides, when you’ve seen 0.62, 0.78 looks pretty good.

Well it is not a tax haven, that’s for sure, but at least it is safe according to the World Economic Forum.

Canada has the world’s soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as financial crisis and bank failures shake world markets.

How did we get here, and how do we get out? In my view, the root problem was the Bank of Japan’s response to the collapse of its property bubble in the early 1990s. Just as the Fed is starting to do, the BoJ flooded the banks with yen, driving interest rates to zero. The excess liquidity wasn’t absorbable in Japan, so it spilled overseas as the so-called “carry trades” allowed hedge funds and others to borrow yen and swap them into dollars for a total cost of 1% or so. This cheap, easy money drove the demand for securitized debt, which Wall Street was only too willing to supply - for a fee - and Alan Greenspan went along with the plan.

Greenspan’s attempts to manage the economy through the resulting bubbles with, as James Grant says,”Low interest rates, easy money and malleable accounting rules” aggravated the situation. And now we are getting more of the same. It won’t work.

In order to recover, we need to get interest rates back up to the point where they encourage capital formation and provide a substantial return to lenders and investors. We are losing capital. If we want more, then the price has to go up. And that includes the BoJ.