Quick news: Vector sold (for now), Biofuels, UBS and Subprime losses

I have decided to quickly post the links I collect each day, including any little comments I have, on the topics I want to cover but do not have the time or inclination to do a major post that day. So beginning today, I have 'Quick news'.

April 28 2008:

Vector sells Wellington network

• Vector sells the Wellington electricity network to a Hong Kong company, with apparent links to the Chinese government. This couldn't have come at a better time to embarrass the NZ government, people are still angry over AIAL and what ever the decision (and process the government takes to reach that decision) will be under intense scrutiny. To my mind at least an electricity distribution network, especially the one distributing electricity to the nation's capital, is far more nationally important and strategic then an airport. An electricity network is a true monopoly, the people in that area cannot turn to another distribution network for their power, if it fails or is mismanaged, the people of Wellington will have nowhere to turn. AIAL on the other hand, may be NZ's most important airport, but other ones do exist. As for sensitive land, no doubt parts of Vector's network exist on such land (although the land is most likely leased rather than owned). Labour are in quite a quandary, do they stick to their new principle and veto the Vector sale? or do they admit the rejection of the CPP AIAL bid was just a political stunt to appeal to those jealous to the 'rich pricks' who can afford to invest in an airport.

Biofuels

• This article discusses biofuels and the need to abolish quotas. Stopping biofuels won't fix food prices like some think, but allowing free trade in biofuels will allow countries like Brazil who are converting ex-pasture into sugar cane for biofuels to produce them cheaper and without the deforestation that the current distorted production (from tariffs and subsidies) costs and causes.

UBS and Subprime losses

• UBS released its report to shareholders on its write downs from subprime mortgage losses. Essentially UBS stopped looking beyond the AAA ratings on its bonds through to the loans they were packaging behind them and did not examine the loans as they normally would have in the normal lending situation. As those loans comprised subprime loans, UBS was hit hard when the crises started late last year. UBS should be commended for releasing such a frank report into the reasons behind its own loses. This is essentially a lesson in maintaining proper standards when it comes to investing. In summary: No matter who you are, massive bank or retail investor, you should always understand what you are investing in and what risks you are taking BEFORE you invest.