This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest. Please also add the links to any other thought-provoking articles you would like to share to the comments section.

• Paul Marson (Financial Times): Cause for caution on US earnings, August 12, 2009.
The US second-quarter earning season is now ending, apparently on a good note as nearly three quarters of US companies have beaten consensus expectations. But a closer look at these earnings shows there is cause to be more cautious about the health of corporate America than the headline numbers would suggest. The cloud of euphoria that followed recent results had more to do with extraordinarily low expectations, than to any meaningful and lasting improvement in prospects, which still require a rapid recovery in economic activity. This suggests the recent equity rally off the back of these results is overdone.

• The Washington Post: “Is America through the worst of the recession?“, August 13, 2009.
“The Post asked economists if they agreed with the Federal Reserve’s statement Wednesday, following a better-than-expected employment report and brisk auto sales, that the economy is “leveling out”. Responsese from Douglas Holtz-Eakin, Alice Rivlin, Diane Lim Rogers, Kenneth Rogoff, Rudolph G. Penner and Mark Zandi are included in the article.

• Nouriel Roubini (Forbes): A “jobless” and “wageless” recovery?, August 13, 2009.
It is very difficult to argue that the US economy is not still in a recession while the labor market is still weak. But the interesting question is not whether the US economy is still technically in a recession, or whether the recession will end in Q3 2009 or Q4 2009 – or later. What is interesting is understanding the implications of this severe downturn and financial crisis for the recovery.

• Jonathan Guthrie (Financial Times): If the recession did not get you, the recovery might, August 12, 2009.
The darkest hour comes before the dawn. Business collapses are likely to rise even as healthy growth resumes.

• John Taylor (The American Prospect): Reversing the damage, August 13, 2009.
So let’s tell Congress: You’ve taken care of the banks. It’s time to assure that those who elected you at least have the chance to start or expand businesses or to become homeowners the old-fashioned way, borrowing money from a lender that is not predatory, usurious, or disengaged.

• George Magnus (Financial Times): How to release the next boom, August 13, 2009.
Investors will have to use their judgment to identify winners and losers, but new growth drivers will emerge.

• Randall Kroszner (Financial Mail): Central banks must time a “good exit”, August 11, 2009.
Seventy-three years ago, a sharp tightening of monetary policy stopped the robust recovery that had been in train since 1933, precipitating a “double-dip” contraction in 1937-38. Today, central banks must not repeat this premature exit mistake.

• Andy Xie (Caijing.com.cn): China counts down to the next bubble burst, August 5, 2009.
Naive retail investors and China itself will suffer a lot when the nation’s overvalued property and asset markets collapse.

• Simon Johnson (The Baseline Scenario): China rising, rent-seeking version, August 11, 2009.
The rise of China does not necessarily imply slowdown or demise for the United States. But if they specialize in making things and we specialize in finance, they will eat our lunch.

• Michael Spence (PIMCO – Viewpoints): Emerging financial markets after the global financial crisis, August 2009.
What might be expected from the emerging countries? They will stay with the growth strategies that have served them well, but focus more on resilience in the face of shocks and on stability. They will become broadly more conservative for awhile. They will push for the continuing and restored openness of the global economy.

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