This post provides links to some thought-provoking articles I have read over the past few days that you may also find of interest.
• Anne Kates Smith (Kiplinger): Why three bears turned bullish, June 2009.
Veteran analysts tell why they think stocks are heading up.
• John Hussman (Hussman Funds): The destructive implications of the bailout - understanding equilibrium, May 18, 2009.
In order to understand the impact of these interventions, you have to think in terms of equilibrium - recognizing that all securities that are issued must also be held by someone - and then follow the money.
• Robert Shiller (Project Syndicate): Story time for the economy, May 16, 2009.
Starting an economic recovery is like launching a new movie: nobody knows how people will react to it until people actually get to see it and talk about it among themselves. Our efforts to stimulate the economy should be focused on improving the script for those stories, making these stories believable again. This means making capitalism work better, and making it clear that there is no threat of protectionism. But the rationale must be to get the world economy out of its current risky situation, not to propel us into yet another speculative bubble.
• Wolfgang Münchau (Financial Times): Germany needs more than an accounting trick, May 17, 2009.
While US banks have already written off a fair proportion of the bad debts, the Europeans are adopting schemes that allow the banks to postpone resolution.
• Simon Johnson (The Baseline Scenario): Is the crisis over yet? The CBO weighs in, May 15, 2009.
• John Authers (Financial Mail): Wanted: joined-up data for a realistic forecast, May 15, 2009.
• Simon Schama (Financial Times): America's phobia of banks, May 15, 2009.
Unaccustomed as they are to being told to stand in the corner wearing dunces' hats, American bankers, so it's been reported, are getting grouchy about the stress tests inflicted on them by the Treasury as a condition of receiving bail-out funds. They have, it's rumored, been pushing back against restrictions on executive pay. Beggars, it seems, can be choosers. But before they get just a bit above themselves, perhaps they should ponder the long history of the love-hate relationship between banking and government in America.
• The Economist: Three trillion dollars later..., May 14, 2009.
There is no single big remedy for the banks' flaws. But better rules - and more capital - could help.
• Samuel Brittan (Financial Times): Green shoots and dud forecasts, May 14, 2009.
New mathematical theories provide insights but no alternatives. We just have to accept that the future cannot be foreseen in the way many governments and businessmen would like.
• Knowledge@Wharton: Why economists failed to predict the financial crisis, May 13, 2009.