This Week’s Most Popular Posts

This week’s posts pointed to commentary from some of the top analysts: Meredith Whitney, Hugh Hendry, Andy Xie, David Tepper, and David Rosenberg. Of note was the situation in Ireland and the cabinet shuffle in the Obama White House. A lot more in the archives here.

• Meredith Whitney: Next Shoe to Drop Is Municipal Bonds: Whitney released a 600-page report on 15 states, giving each ratings. She found California the worst and Texas the best of these states. Overall, her analysis pointed to municipal finance as a stress point in the economy
• Hugh Hendry interview on the BBC: This is the full three-part video of Hendry on the BC’s HARDtalk, one of Hendry’s toughest interviews yet.
• Andy Xie is much less bearish on Chinese housing market: Xie, the former Morgan Stanley analyst, is moderating his bearish tone on China. Read this to find out why.
• David Rosenberg on Why David Tepper is Wrong: A review of David Rosenberg’s bearish arguments in response to successful hedge fund manager David Tepper’s performance on CNBC (videos included). Tepper sees a Bernanke put as categorically bullish for equities.
• Barack Obama, The Departure of Larry Summers, Voter Anger and the Bailouts: My fairly harsh assessment of what the cabinet shuffle in the Obama Administration means about the success of the President to date. In my view, much of the problem was created by Obama’s decision to further the bailouts started by Bush.
• Stat of the Day: Ireland now fifth for highest government default probabilities in the world: Ireland is now at the centre of European sovereign debt crisis.
• Where is the Bottom for Housing? We May Not Know for Years: John Lounsbury takes a look at housing, concluding that more downward price pressure may be coming.
• The politics of Chinese adjustment: Michael Pettis gives us an inside look into the three alternative ways China can rebalance its economy. He lists who the winners and losers would be in each case.
• Video: Cutting back in Spain: A look at the property bust in Spain and its effects on the real economy. The editorializing has a neoliberal bias (i.e. Spain’s problems are mainly a lack of labour market reform). However, in my view Spain’s main problem was a property boom and the associated high wage rates followed by a bust and uncompetitiveness.
• The Federal Reserve is Not Going QEII Until After the Election: The Fed is a political organization and is unlikely to announce anything until early November. Will they turn on the QE taps nonetheless?
• Balance Sheet Recessions and The Psychology of Deflation: What policy makers are looking to avoid is not just deflation but the psychology of deflation. It’s not clear that this psychology is yet embedded but it is taking form.
• Market Is Out On A Limb: Comstock Partners thinks the stock market is overextended and expects a pull back due to soft economic data.