The following are some thought-provoking articles I have read over the past few days that readers may also find of interest:
• John Hussman (Hussman Funds): Wishful thinking, April 20, 2009.
At present, the advance we’ve seen over the past several weeks is looking increasingly speculative. We certainly cannot rule out a further advance, but the basis for expecting one is currently weak. Better internals, higher-quality leadership, broader sponsorship, and needless to say, a credible foreclosure abatement plan, would all be helpful “legs” if this advance is to be durable. For now, we don’t observe enough of that evidence.
• Martin Feldstein (Financial Times): Inflation is looming on America’s horizon, April 19, 2009.
The link between fiscal deficits and money growth will be exacerbated by “quantitative easing”, so when the economy begins to recover the Fed may be faced with an inflationary explosion, writes Martin Feldstein
• Sarah Childress (The Wall Street Journal), South Africa’s delicate dance, April 18, 2009.
As Jacob Zuma prepares to take power, the controversial populist tries to soothe business.
• Charles Millard (Financial Times): Vampire pensions could be a corporate nightmare, April 16, 2009.
The law that was designed to protect worker pensions runs the risk of draining the very companies workers depend on for their livelihood and retirement benefits.
• (Knowledge@Wharton): Hope, Greed and Fear: The Psychology behind the Financial Crisis, April 15, 2009.
• Mark Kiesel (Pimco): US Credit Perspectives – opportunities in high-quality credit, April 2009.
Financial turmoil, economic weakness and widespread deleveraging in global markets over the past year have raised some historical opportunities in high-quality corporate bonds for investors that know where to find them.
• Viral Acharya, Matthew Richardson and Nouriel Roubini (Financial Times): Concorde’s fate offers a lesson for finance, April 15, 2009.
The goal is not to have the most advanced financial system, but one that is reasonably advanced and robust.
• Edmund Phelps (Financial Times): Uncertainty bedevils the best system, April 14, 2009.
The future of capitalism: Unfortunately, there is still no wide understanding among the public of the benefits that can fairly be credited to capitalism and why these benefits have costs. This has left capitalism vulnerable to opponents and to ignorance within the system. Regaining a well-functioning capitalism will require re-education and deep reform.
• Martin Wolf (Financial Times): Cutting back financial capitalism is America’s big test, April 14, 2009.
Decisive restructuring is necessary, because bankruptcy – and so losses for unsecured creditors – must be a part of any durable solution to this economic crisis.
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