Some writings I’ve enjoyed over the past few days:
Buy American. I am. by Warren E. Buffett – It doesn’t get any better than this quote – “A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful.” And I also love this bit: Over the long term, the stock market news will be good. In the 20th
century, the United States endured two world wars and other traumatic
and expensive military conflicts; the Depression; a dozen or so
recessions and financial panics; oil shocks; a flu epidemic; and the
resignation of a disgraced president. Yet the Dow rose from 66 to
11,497.
The Trust Crunch by James Surowiecki – This piece revolves around the need for relationships in banking. The failings we are seeing now is because no one wanted to look behind the curtain. Whereas in the past there wasn’t a curtain to begin with.
The Economy Really is Fundamentally Strong by Justin Fox – The writer concentrates on Productivity numbers. And I’m a little surprised more people aren’t talking about Productivity on the whole. But the part I agree with is this: The country’s other most prominent productivity guru, Harvard’s
Dale Jorgenson, is more sanguine. He sees large swaths of the economy —
health care, education, government — still waiting to be transformed by
information technology and expects that to bring us another decade of
high productivity growth. We’ll have to wait and see who’s right. In
the meantime, if we average their latest projections, we get
productivity growth of just over 2%, which isn’t bad at all.
And here is a follow up Justin Fox did called Unpacking Casey Mulligan’s argument about Strong Fundamentals
Wall Street and the Real Economy by Steve Coll – This writing highlights the seemingly unknown path economic fortunes take, like a hurricane. But the I.M.F. studied many financial situations over the past century has come to the conclusion that a the recent Wall St situation isn’t isolated. A recession is likely and severe. And I agree with most of it, except…
Big Hole by Martin Hutchinson – This breakingviews.com entry focuses in on some recent economic data (factory orders, home construction starts, retail, and inflation) to say the inevitable recession is going to be deep and prolonged. But I think he only gets it half right. It will be deep. It has to to clear out much of the excess and to change behavior. But it won’t be prolonged. (Q1 of 2010 times will be positive again). Part of the reason I say that is because the cuts are going to be deep and the changes are already underway and are going to be swift.
Some executives have been waiting for this opportunity to justify shifts in the corporations. And fortunately, people clearly know what they need versus what they want. Also, the slowdown after the internet bubble resulted in a wageless/jobless recovery, so many workers are already mentally ready for this oncoming period. Does that mean people aren’t worried? No. But it does mean people aren’t naive anymore. The world is flat and I believe many advantages will come back to the US as a result of this global down period. But the typical American will be much more prepared for the benefits this time.
Working Thoughts 