Should Value Investors Care About the Debt Crisis? - By Zeke Ashton
The 2011 debt crisis is largely about whether or not the largest and most credit-worthy nations have the balance sheets, the willingness, or the credibility to bail out the smaller and less credit worthy nations. Given that the governments of even the world’s wealthiest countries such as the United States, Germany, and Japan are in dangerous territory in terms of debt sustainability, there is considerable doubt as to whether any such rescue is even possible. There are two important questions that every investor is forced to confront in this environment. The first is whether a sustainable solution can be found that will prevent various countries from defaulting on their debt in the near term and offer sufficient time for the process of repair and repayment to take place in the long term. As time passes without a comprehensive response to the problem, the more likely it appears that sovereign defaults will occur. The second question is the harder one: what happens if there are multiple sovereign defaults? Will it cause the massive global economic contraction that was so widely feared and which was so narrowly averted back in 2008? Or will it simply cause an extended head-wind to global economic activity that will be slowly repaired over many years?
- John Mauldin: You Can’t Be Serious
I admit to being surprised by Cyprus. Oh, not the banking crisis or the sovereign debt crisis or the fact that its banks were eight times larger than the country itself or even the fact that the banks were bloated with Greek debt that had been written...
- John Mauldin: Unintended Consequences
Let me introduce Mauldin's Rule of Thumb Concerning Unintended Consequences: For every government law hurriedly passed in response to a current or recent crisis, there will be two or more unintended consequences, which will have equal or greater negative...
- John Mauldin's Outside The Box: A Primer On The Euro Breakup
It's one thing to say that peripheral eurozone countries are better off leaving the euro, but how, exactly? And how severe can we expect the consequences to be, not only for those nations but also for the entire eurozone – and for the rest of us,...
- Bill Gross – December 2011 Investment Outlook: Family Feud
Proposals from the German/French axis in the last few days have heartened risk markets under the assumption that fiscal union anchored by a smaller number of less debt-laden core countries will finally allow the ECB to cap yields in Italy and Spain and...
- The Economy Can’t Grow With Debt - By Carmen M. Reinhart And Kenneth S. Rogoff
As public debt in advanced countries reaches levels not seen since the end of World War II, there is considerable debate about the urgency of taming deficits with the aim of stabilizing and ultimately reducing debt as a percentage of gross domestic product....