Even market cheerleaders are struggling to find good news to rally around these days. With labor, capital, finance, real estate, and consumer markets all reeling from a half-decade of credit-fueled gluttony, and commodities markets cresting near all-time highs, it might seem a bit clichéd to highlight yet another bearish commentator — unless that bear is David Rosenberg, one of the few bulge-bracket economists to voice frequent and convincing skepticism about the “resilience” of modern capital markets and highlight the irrational optimism of the average investor.

It’s no surprise that financial crises – like intercourse, pro sports, and agriculture – run in alternating cycles of boom and bust. Classical economic theory suggests that such cyclicality can be overcome through innovations in resource use, factor productivity, and leverage. Classical history suggests otherwise. In the following rant, celebrity economist Jeff Sachs tackles the two-headed plague of stagflation — part stagnant economic growth, part inflation — and offers the 1970s as an illustrative case study in how to keep a resource-hungry, debt-ridden, war-wearied hegemon from spinning its economic wheels…

Further commentary on the interconnected themes of income disparity, agricultural inflation, and selective de-globalization, this time by Nobel Prize-winning economist Amartya Sen. Perhaps most compelling is the charge that a rising tide doesn’t lift all ships, and those who have benefited least from a “flattening” of our economic superstructure are often the most exposed to rising prices and shifting patterns of supply and demand. Also of note is the graphic artist chosen to visualize our scramble for scarce natural resources, yet another gifted Walrus alum…

As financial institutions continue to navel gaze in the aftermath of the credit crisis, confidence in their ability to self-regulate continues to decline. With little trust in their assets, their markets, or even their peers, these global banking titans have sworn off their independence and, like disenchanted teens, are returning home to be cared for by risk-averse, populist policy-makers and their never-ending pool of taxpayers’ dough. The danger here is that both sides are still reacting to deeds already done, and nobody has yet proposed a solution to avoid similar financial chaos going forward. With threats to global income in the order of nearly a trillion dollars, whoever ultimately grabs this hot potato better have pretty thick skin…

In this recent Times OpEd, Rochester economics professor Steve Landsburg points out how easily John Q. Public overlooks cause and effect in 21st century markets.
Let’s review: 1) goods and services require labor and capital to produce; 2) the price of labor and capital impact an item’s ultimate price; 3) factors of production are much less expensive in the developing world; 4) a decades-long public war on inflation in the developed world has prevented the price of goods from increasing in step with wages; however, 5) wage growth is now slowing and inflation has reached a 17-year high; thus 6) in their quest to find the lowest price, consumers who rebel against off-shoring jobs are simply biting the hand that …

With international markets still reeling from the “sub-prime meltdown” and investors already bracing for the next financial quake, it’s good to know that some of the world’s economic shepherds are well aware of the wolves on the horizon, however unprepared they might be to fight back. Unlike their more political and rhetorical peers, enlightened stewardship from the IMF and its sister organizations may be the global macro-economy’s only hope against the coming valuation storm, as risk quietly shifts from sophisticated financial institutions into the hands of the unsuspecting Everyman…

Another great piece of well-deserved fear-mongering from the keyboard of a financial doomsayer, who also happens to be one of my favourite investment commentators. With this effort, as usual, he contextualizes simple and unavoidable shifts in biotechnology and boomer demographics and explores the implications of the resulting squeeze on modern social security and society at large…
The Boomers Break the Deal
by John Mauldin
My grandfather’s generation made a deal with my children’s generation. It goes like this. If you will pay into Social Security and pensions so we can retire now, we agree to die on time, or at least in a predictable manner. The Boomer generation is going to break the deal. We are going to live longer, and maybe a …

November 23, 2006—More dour news about the coming financial apocalypse, this time by noted economic strategist Dr. Gary Shilling. The augur, once again, is a hyper-inflated housing market, driven principally by excessive leverage, scandalous consumer spending, and inexhaustible financial optimism. “And why not?” you might ask. Everyone and their uncle has made money in real estate over the past five years, from the slummiest crack house to the most decadent penthouse. The more money everyone has, the more money everyone spends, and most developed economies have profited handsomely from that arrangement.
To get a sense of why the experts are now tempering such myopic enthusiasm, and why these so-called “speculative episodes” are inherently not in the economy’s best interests, read some …

Recent reports have pegged open interest in the world’s largest IPO at nearly US$400 billion. That’s a lot of capital ready to speculate on a still unproven Chinese macroeconomy, particularly in the face of its ongoing structural woes. Could this be the end of the beginning for capitalism in China? Or perhaps the beginning of the end…
The Enduring Allure of China
by Peter Zeihan, Stratfor.com

The Industrial and Commercial Bank of China (ICBC) is expected to raise nearly $22 billion in an initial public offering (IPO) — the largest in history — after shares are made available to retail investors Oct. 27. The ICBC offering is the latest in a series of IPOs involving Chinese banks, into which Western investment firms have …

“I can calculate the movement of the stars, but NOT the madness of men.”
- Sir Isaac Newton, after losing a fortune (£20,000) in the South Sea bubble.
I’ve been meaning to write about the impending real estate crash for quite some time, but until I get around to it, this piece is worth a read. Roubini is a Professor of Economics at the Stern School of Business at New York University, and the work below is taken from his blog. Though the prose is somewhat awkward, anyone who produces “seminal work in international macroeconomics, global macro policies, financial crises in emerging markets and their resolution, and the reform of the international financial architecture” deserves at least a few …