This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.
• Matt Taibbi (Taibblog): An inside look at how Goldman Sachs lobbies the Senate, September 29, 2009.
Samuel Brittan (Financial Times): A cool look at the current deficit hysteria, October 1, 2009.
In the early Victorian period the debt ratio was nearly 200 per cent and almost reached that level again in the early 1920s.
• Edmund Conway (Telegraph): An inconvenient truth: financial crises are inevitable, October 1, 2009.
The IMF’s new early warning system to avoid crises such as the credit crunch is doomed to disappoint.
• Edward Harrison (Credit Writedowns): The recession is over but the depression has just begun, October 1, 2009.
This post discusses why we are in a depression, not a recession and what this means about likely future economic and investing paths.
• James W. Hughes and Joseph J. Seneca (Advance & Rutgers Report): America’s new post-recession employment arithmetic, September 2009.
It is vitally important to have a set of realistic economic expectations of what is to come. Consequently, the subject of this first Advance & Rutgers Report (formerly the Rutgers Regional Report) is developing the daunting arithmetic of employment recovery in the United States. The implications and conclusions of this sobering arithmetic can be instrumental in shaping the economic, business, and real estate markets as the new decade evolves.
• Jonathan Weil (Bloomberg): Banks have us flying blind on depth of losses, October 1, 2009.
Just when the conventional wisdom suggests the banking crisis might be under control, along comes a reality check that tells us we’re still flying blind.
• Raghuram Rajan (Financial Times): More capital will not stop the next crisis, October 1, 2009.
The emphasis should be placed on “contingent capital” infused when the institution or system is in trouble, writes Raghuram Rajan.
• Robert Barro and Charles Redlick (The Wall Street Journal): Stimulus spending doesn’t work, October 1, 2009.
Our new research shows no evidence of a Keynesian “multiplier” effect. There is evidence that tax cuts boost growth.
• Frank Luntz (Los Angeles Times): What Americans really want, September 27, 2009.
For business and political elites, the message should be clear: Restore trust. Politicians should be hosting more town hall meetings even if it means encountering surly voters. Business leaders should be seeking input from their hard-pressed customers and workers, and they should stop paying themselves huge bonuses while everyone else suffers. If those in power shut up and listen, they’ll hear what I’m hearing. It’s time to heed the anger and reinforce the positive values behind it.
• Nina Koeppen (Real Time Economics): Q&A: Shiller sees 5 years of stagnant home prices, September 30, 2009.
Robert Shiller, the Yale University economist who famously predicted the housing bust, was awarded the Deutsche Bank Prize in Financial Economics today. In this interview, he talks about the state of the housing market and the implications of low interest rates.
• Eliot Brown (The New York Observer): Commercial real estate seeks a bailout, September 29, 2009.
Almost from the moment that the financial industry entered its tailspin a year ago, landlords and developers began to sound the warnings that commercial real estate would be the other shoe to drop in the economy.
• Doug Kass (TheStreet.com): Mission accomplished, September 30, 2009.
I feel at home with my top call now, even though it is deeply out of favor, as the fear of being left out has brought out the animal spirits and has replaced the fear of being in, which was prevalent at the market’s bottom. As I have described, what is much more important than the swing back toward positive sentiment from a negative sentiment extreme in March is that a wide range of outcomes must now be considered against a consensus that looks for the certainty and smoothness of rapid 20%-plus year-over-year S&P growth.
• Nouriel Roubini (Forbes): Obama’s world, October 1, 2009.
Geopolitical headaches abound for the president.
• Jonathan Spence (Financial Times): China’s sixty years of living dangerously, September 30, 2009.
Again and again, by dint of his persistence and ideological self-confidence, Mao was able to impel his political allies and subjects to follow him into utterly unknowable terrain.
• Leo Lewis (Times Online): Beijing moves to halt growth as supply starts to outstrip demand, October 1, 2009.
The Government of China has launched an attack on overcapacity in its heavy industries with a series of stinging curbs on new factories, smelting plants and port-building projects. The government crackdown, unleashed a day before the country enters a ten-day holiday to celebrate the communist revolution, comes amid rising fears that China’s economy may be blundering into a destructive boom-bust cycle.
• Mure Dickie (Financial Times): Hatoyama faces daunting economic in-tray, September 30, 2009.
The new Japanese prime minister faces gross national debt climbing toward 200 per cent of gross domestic product; unemployment at a record high; accelerating deflation; and anaemic exports.
