Hussman Weekly Market Comment: We're Speaking Japanese Without Knowing It
If one seeks analysis about the recent financial crisis, and what most probably lies ahead, it would be wise to place particular weight on the views of economists who saw it coming (and ideally those who provided careful analysis rather than hyperbole). I've cited a paper by Reinhart and Rogoff above, which was published by the National Bureau of Economic Research in January of 2008. At a speech at the Princeton Club last week, economist Carmen Reinhart reiterated that by propping up unhealthy banks, the
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With the financial markets cheerily celebrating the end of the recession, credit spreads back to 2007 levels, and analysts referring to the mortgage crisis as largely a thing of the past, it is natural to ask why I would start pounding the tables again about debt restructuring. Old news. Problem solved. Why even bring it up?
The simple answer is that we have not solved the mortgage mess. We have temporarily buried it under a pile of public money, bailing out bank bondholders at public expense. As I've noted before, the best time to panic, in the financial markets, is before everyone else does. Similarly, the best time to consider responses to credit strains is before they surface. My sincere hope is that if, and I believe when, financial trouble resurfaces, we will be wise enough as a nation to prevent policy makers like Geithner and Bernanke from making the same bailout mistakes twice, protecting irresponsible lenders, and further burdening the nation with debt in the process.
- Where Does The Future Of Investments Lie? Ray Dalio On The Japanese & World Economies
Found via ValueWalk. With economic malaise in Europe, lagging growth in the BRICS, gradual recovery in the US and Abenomics in Japan, there is a great deal that remains uncertain about the short-term and long-term future of the world economy. Ray Dalio,...
- Hussman Weekly Market Comment: Simple Arithmetic
As I've noted several times in recent months, bond market spreads imply very low near-term (3-6 month) probability of default in any Euro-area country. A sovereign default is much more likely to occur near the end of the next bear market, whenever...
- Hussman Weekly Market Comment: House On Ice
On the surface, the U.S. economy is gradually recovering. Based on mean reversion to potential GDP (which generally occurs over a 4-year horizon absent an intervening recession), we would expect GDP growth over the coming 4-year period to average 3.8%,...
- Wsj: Reinhart And Rogoff: Higher Debt May Stunt Economic Growth - By Mark Whitehouse
To all the reasons to worry about the rapid rise in government debt in the wake of the financial crisis, add another: It’ll stunt our growth. In a new paper presented Monday at the annual meeting of the American Economic Association, Carmen Reinhart...
- Hussman Weekly Market Comment: Credit Crises Generally Require Multi-year Adjustments
There are some good graphs and quotes from Ken Rogoff and Carmen Reinhart’s book in the latest Hussman piece linked below. Some things in this piece reminded me of something Howard Marks wrote in his memo entitled The Long View: “In my opinion, there...