This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Charles Munger (Slate): Basically, it’s over: A parable about how one nation came to financial ruin, February 21, 2010.
Basicland is now under new management, using a new governmental system. It also has a new nickname: Sorrowland.
• John Mauldin (Thoughts from the Frontline via InvestorsInsight.com), The Pain in Spain, February 19, 2010.
• George Soros (Financial Times): The euro will face bigger tests than Greece, February 21, 2010.
The survival of Greece would still leave the future of the euro in question. Even if it handles the current crisis, what about the next one? It is clear what is needed: more intrusive monitoring and institutional arrangements for conditional assistance.
• Richard Parker (The Nation): Athens: The first domino? February 18, 2010.
If help isn’t forthcoming, little Greece – whose economy is just 3 percent of Europe’s GDP – could, against its will, set off a chain reaction that pulls down Portugal, Ireland, Spain, perhaps even Italy, and thereby throws Europe’s, and then America’s and the rest of the world’s, fragile recoveries into reverse.
• John Hussman (Hussman Funds): Notes on a difficult employment outlook, February 22, 2010.
Unfortunately, the high debt burdens and weak employment conditions cannot coexist without producing credit strains. Simply put, current employment levels are incongruous with servicing existing levels of household debt.
• Peter Goodman (The New York times): Millions of unemployed face years without jobs, February 20, 2010.
Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits. Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed.
| Reading break:
Considering the short-term technical picture of gold bullion, Adam Hewison (INO.com) provides a short analysis arguing in favor of a multi-month trading range. Click here to access the presentation. |
• Wolfgang Münchau (Financial Times): Inflation must not become a moving target, February 21, 2010.
Price stability is a critical component of the social contract we call money. We accept money as a means of payment, a unit of account and a store of value and trust that the central bank does not debase it.
• Robert Shiller (Project Syndicate): Engineering financial stability, February 18, 2010.
The severity of the global financial crisis that we have seen over the last two years has to do with a fundamental source of instability in the banking system, one that we can and must design out of existence. To do that, we must advance the state of our financial technology. Contingent capital, a device that grew from financial engineering, is a major new idea that might fix the problem of banking instability, thereby stabilizing the economy – just as devices invented by mechanical engineers help stabilize the paths of automobiles and airplanes. If a contingent-capital proposal is adopted, this could be the last major worldwide banking crisis – at least until some new source of instability emerges and sends financial technicians back to work to invent our way of it.
• Chris Farrell (BusinessWeek): Amid gigantic deficits, the bond market shrugs, February 19, 2010.
With the US budget gap reaching a mind-bending level, why are Treasury yields lower than when the government ran a surplus more than a decade ago?
• Paul Sullivan (The New York Times): Real estate looks risky, but less so for bargain hunters, February 19, 2010.
EVEN a cursory glance at recent events in commercial real estate would make you think the next big collapse is upon us. Yet, financial advisers are telling their wealthy clients that there is tremendous opportunity in real estate. What is equally intriguing is that these investors are looking again at something as illiquid as a building, which goes to show just how quickly people can reacquire their appetite for risk if it means higher returns.
