Mauldin Hits Two Home Runs……………..with reminder
John Mauldin, who we comment on frequently, has put out two excellent pieces in the past two days, one written by A. Gary Schilling and one by himself. Yesterday we mentioned the Schilling article. Links for both articles are given below. In the article “Economic Singularity” that John wrote today he talks about the difficulty in Washington to find a solution when neither side know the whole answer, Compromise is critical if a real solution is to be found. See an excerpt of John’s article here with a insert by Lawrence Summers.
“Concern about politics and the processes of international co-operation is warranted but the best one can hope for from politics in any country is that it will drive rational responses to serious problems. If there is no consensus on the causes or solutions to serious problems, it is unreasonable to ask a political system to implement forceful actions in a sustained way. Unfortunately, this is to an important extent the case with respect to current economic difficulties, especially in the industrial world.“While there is agreement on the need for more growth and job creation in the short run and on containing the accumulation of debt in the long run, there are deep differences of opinion both within and across countries as to how this can be accomplished. What might be labelled the ‘orthodox view’ attributes much of our current difficulty to excess borrowing by the public and private sectors, emphasises the need to contain debt, puts a premium on credibly austere fiscal and monetary policies, and stresses the need for long-term structural measures rather than short-term demand-oriented steps to promote growth.“The alternative ‘demand support view’ also recognizes the need to contain debt accumulation and avoid high inflation, but it pushes for steps to increase demand in the short run as a means of jump-starting economic growth and setting off a virtuous circle in which income growth, job creation and financial strengthening are mutually reinforcing. International economic dialogue has vacillated between these two viewpoints in recent years.”– Lawrence Summers, The Financial Times, October 14, 2012
Reminder at 12:45 PM CDT: The S&P today has bounced up to the 1454 trap swingpoint.