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Recommended Weekend Reading

Posted by Larry Doyle on July 11, 2009 1:28 PM |

I found these two pieces of writing to be insightful and hope you find them to be enlightening, as well.

The Crisis is Morphing Again
by Mohamed El-Erian
Pimco; July 2009

Are we entering a new stage in our economic crisis? A stage in which government officials are ill equipped to handle upcoming challenges? El-Erian maintains:

The bottom line is a simple yet powerful one. The global crisis is morphing again. Having already contaminated (in a sequential and cumulative manner) housing, finance and the consumer, it is now threatening the potency and credibility of the economic policy making apparatus. As far as I can see, there are no first best policy responses that are readily available and easy to implement. Instead, the economy will continue to struggle, navigating both the adverse implications of last year’s financial crisis and the unintended consequences of the experimental policy responses. Given the inevitable socio-political dimensions, this story will play out well beyond the realm of the economy, policymaking and markets.

Ouch….not exactly very calming.

The second treatise I recommend is one I addressed last December, but it is so powerful and so encompassing that I am compelled to resubmit.

The Aftermath of Financial Crises
by Carmen Reinhart of the University of Maryland and
Kenneth Rogoff of Harvard University
December 19, 2008

This 13-page historical economic review of past recessions is widely referenced. Please save it and use it for your own reference purposes as you navigate your own economic landscape.

Reinhart and Rogoff provide insightful analysis supported by compelling charts of housing, employment, GDP, equities, and overall debt levels. What did they learn and share? I won’t steal their thunder, but I’ll give you a hint . . . we may be here a while.

Do yourself a favor and review their work so you can have a broader perspective from that offered by our government officials, market analysts, and media mavens. Do your friends a favor and share it with them as well.

Enjoy!!

LD

  • mountainaires

    “On average unemployment rises for almost five years with an increase of 7 percentage points…” .

    That’s sobering, to say the least.

    Mauldin’s latest newsletter has some truly astonishing numbers about Japan’s demise, and its effects on the rest of the world…

    And, there’s this:

    Doomsville

    Posted by Neil Hume on Jul 10 10:17.

    Lest anyone was thinking of turning bullish after listing to the siren calls of Bond and Winder, we present the following counterpoint.

    From an email doing the rounds in the City of London on Friday morning (The author is an MD at one of the big banks):

    http://ftalphaville.ft.com/blog/2009/07/10/61406/doomsville/

    • Larry Doyle

      Mountainaires….thanks for sharing. Not everything is as they may want us to think.

      Fool us once shame on them, fool us twice, shame on us…

      “we won’t get fooled again….”






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