Economist May 9 2009

• 'Inflation is bad, but deflation is worse' was the title of one of The Economist's editorials in their May 9 2009 issue. I've read it twice so far.

“Inflation or deflation

tell me if you can:

will we become Zimbabwe

or will we be Japan?”

This was the opening paragraph “Merle Hazard, an unusually satirical country and western crooner, has captured monetary confusion better than anyone else.” The Economist said. Some other thoughts from the Economist editorial: ♣ “America's worst recession since the 1930s” ♣ the decline of house prices “is forcing households to reduce their debt which could subdue economic growth for years ♣ “In truth, the data suggest only that the economy is contracting at a slower pace than before. Nevertheless, the figures seem to point to a deepish recession, rather than the rerun of the Depression that was feared a few months ago.”

• Buttonwood headline May 9 2009 “Investors' optimism has returned very quickly. Too quickly” (Title: Happy days are here again) Other thoughts from Buttonwood's Philip Coggan who won the title of Senior Financial Journalist of the Year: ♣ “The world is still drowning in debt.” ♣ Bear markets are normally pitted with some vigorous rallies, as investors in Japan have discovered over the past 20 years.”
• Mergers: “To get a takeover right is extraordinarily hard. the majority of defaults fail: managers overpay, overestimate the savings deals will generate and often clobber their firms' balance sheets by trying to make a great leap forward.” These were the opening two sentences of 'Buying on the dips'. the people at The Economist can write. The Economist is expensive, but worth every cent. It is a pleasure to read even topics I'm not interested in.
• 'Off their trolleys' headline was “Consumer spending may have hit bottom, but America's mountain of debt means the climb back up will be slow and painful. This column too was most interesting. For instance, “Last year household wealth fell by 18%, or by $11 trillion”
• Infrastructure investment - there was an interesting column on this topic too - beware of heavy debt (the amount of leverage) and light volumes.