Europe
The IMF has recently issued a report on China’s financial system’s stability that has grabbed plenty of headlines, and yet today it seemed that there were pessimistic articles about banking all over the world. European and US banks are also the subject of stories that highlight risk, interconnectedness, poor balance sheets etc.. While the financials’ situation isn’t necessarily news, it is the trend that’s interesting. Inside we collect quite a few articles about the world’s financial system, all of them very from yesterday or today. Collectively they plant a bleak picture, one that seems very different from what we (still) observe in Brazil’s banking system. It’s very hard to separate signal from noise, especially so in the middle of a crisis, but it’s great food for thought.
After a brilliant article on Greece, posted here almost a year ago, Michael “Moneyball” Lewis is back with a look at the other side of the European “equation”: the Germans. It is a huge piece, almost a mini-book, and one can guess what Mr. Lewis probable new book is about: Europe. Great weekend reading.
The Financial Times has published several columns over the last week written by their own staff and by big-name guests such as Mohamed El-Erian, Larry Summers and Nouriel Roubini. When we say “big names” there’s no endorsement involved – we’re merely acknowledging the fact that these writers have high profiles. The danger in “big names”, “experts” etc. is pre-judging their opinions, always a bad idea – especially so when the subjects involved are economics, fiscal policy, governance structures, financial crises and so on.
We worried about implied expectations for 2010 in our Q4 2009 report and said that we were increasing the percentage of cash in our funds. Enter Greece and other European peripheral countries. Macro issues are not our core by any measure, and our point is just that volatility, that friend of the long-term investor holding a lot of cash, is on the rise. The post collects, as food for thought, interesting FT articles on Greece’s and Europe’s woes.
