Cui Bono?

The Wall Street Journal reports this morning that the China Investment Corporation - China's Sovereign Wealth Fund - has selected Morgan Stanley and Blackrock (with which it has a colorful, if not depressing history) to manage a portion of its $200 billion portfolio.

Elsewhere, Bloomberg reports that Warren Buffett made two lucrative decisions last September. First was Berkshire Hathaway's investment in Chinese carmaker BYD Co., whose Hong Kong-listed stock has increased five-fold since Buffett's investment. Paper profits to Berkshire: $1 billion.

As if that wasn't sweet enough, Buffett's capital injections for Goldman Sachs - for which he received favorable warrant terms - have netted Berkshire $2 billion in paper profits.

Not bad for a week's work.

And if you're one of the countless Americans who snagged a new car through the Cash for Clunkers program, congratulations! It turns out that the $1 billion program ran out of money after six days. Assuming each participant received the maximum $4500 subsidy to purchase a new car, that means auto inventories shrunk by more than 200,000 cars. Chalk up a "W" for the American auto industry and the 200,000+ Americans who bought new SUV's with taxpayer money. The American taxpayer continues its losing streak - a trendline that looks set to continue through the next decade.

Is Lloyd Christmas Running California?

The Financial Times reported this morning that California's budget deficit has forced it to issue IOUs:

"California is preparing to issue IOUs to its creditors this week as it prepares to begin its new fiscal year deep in the red.

"Once the richest US state, California now has the dubious distinction of having the worst credit rating in the country.

"It faces a budget deficit of $24bn yet Arnold Schwarzenegger, its governor, and the state assembly cannot agree on a budget to address the shortfall."

The first thing that comes to mind is the scene at the end of the movie Dumb and Dumber (spoiler alert!), where Lloyd Christmas (Jim Carrey) tells the kidnapper that the suitcase once full of cash is now full of IOUs.

I'm sure there's a lesson somewhere about Lloyd and Harry's profligacy - among the things they buy with the cash is a Lamborghini Diablo - and California's inability either to raise taxes or cut expenditures.

If you think you've got what it takes to rectify California's shortfall, you can give it a whirl with the LA Times' State Budget Balancer.