The investing world started the new year in a really positive mood. Us, stocks for example are up nearly 20% from their 2008 lows just two months ago. However, there is a lot of work to be done as evidenced by the news flow from the real economy. There are a lot of layoffs and corporate bankruptcies hitting the wires in the past few days, some of which you will see reported below in the links.
My general take here is that we should not underestimate the severity of the downturn. We should overestimate it and act accordingly. In so doing, we are more likely to see a stronger recovery.
Zero Growth in China Is 2009 Black Swan Event: William Pesek – Bloomberg.com
South Koreans Quit China as Yuan’s Gain Raises Cost of Living – Bloomberg.com
Alcoa cuts 13,500 workers’ jobs – BBC News
Hochtief Falls After Writedowns Hurt Leighton Profit – Bloomberg.com
Mr. Rajan Was Unpopular (But Prescient) at Greenspan Party – WSJ.com (this was an article I had missed but subsequently found after I profiled Rajan yesterday)
Be Careful Where You Get Your Stimulus – FiveThirtyEight.com
Laura Bush: First Memoirs: The Talk of the Town – The New Yorker (This is a fairly snarky piece saing that publishers were underwhelmed by the First Lady’s memoir proposal. Personally, I like Laura Bush)
Irish public workers face pay cut – Guardian (I reckon the Irish are not the only who will be forced to cut government workers’ pay)
Toyota closes domestic factories for 11 days – Guardian
Property: British second-home owners suffer as French house prices fall – Guardian (is the French property market headed for the rails?)
Euro inflation hits two-year low – BBC News (forget about inflation. this is exactly what I warned would happen last year)
More Money for Robert Rubin – Dean Baker (Bob Rubin seems to be taking one hell of a PR thrashing)
Where Is Our Ferdinand Pecora? – Ron Chernow, New York Times
‘Buy USA’ push may see America slip from free trade church – Ambrose Evans-Pritchard, Telegraph (Protectionism is coming)
Adolf Merckle suicide gives crisis grim defining moment – Telegraph (this was just a tragic death)
US Treasuries Decline Before Record $30 Billion Debt Auction – Bloomberg.com (This story and the next story imply a rise in interest rates)
Record UK Gilt Sales Raise Risk of Auction Failure – Bloomberg.com