Recommended Reads, 7 October
I last did one of these round-ups 9 days ago, and in the intervening time investors destroyed the last few remaining shreds of believability in economists' credo or rationality. Not that the idea of economic rationality hadn't already imploded like the Metrodome under the weight of a December snowstorm, but come on - investors are supposed to be smart! One fund manager in California changed jobs, and markets went wild.
What I've written
US Credit Rating Reform Comes Up Short: US legislators have proposed several reforms of the US credit rating system. Yet, incentives for credit agencies remain misaligned, while a new subprime market begins to grow.
Inversion Rules Transform Tax Reform Debate: The new US rules to discourage tax inversions are surprisingly tough, and set the table for tax reform debates in 2015.
Argentina is still in a know-down, drag-out fight over its default 10 years ago. It's so bad that they've defaulted again, and it's all thanks to a couple "vulture hedge funds" who are using home field advantage in US courts to claim massive amounts of cash from Argentina. It's not just one fund or one country, however. Many countries have dealt with similar problems and now the UN General Assembly is trying to act. (Boston Review)
Don't you wish the US had bullet trains like Japan? Well, those trains have been around for 50 years and here's the impact they've had so far. (The Atlantic)
I don't know how many times in the last three months I've heard those in finance and banking totally misunderstand the Fed. The Fed is "criminal," hatching hyperinflation, about to hike rates now , or single-handedly destroying the US economy. These are all real things that people with control of a lot of money think. For those misguided souls, here is a primer on how Fed economists think. (Bloomberg View)
Remember that famous investor who changed jobs? He changed jobs because, among other things, he hadn't done a good job for 3 years. He hadn't done a good job because he made a bad prediction about the economy. This is how bad his call was. (Brad DeLong)
On the other hand, just having some sort of wacky 'philosophy' about the economy isn't a big enough part of a fund manager's job to totally destroy him or her. It's a lot more complicated than that. (Felix Salmon)
Wow, you might say, this recommended reads post is really heavy on a bunch of boring economic stuff. Wow, I might say, you have a very different definition of boring that I do. Either way, the world is more than Bill Gross parading out to the melodies of Rob Thomas and Santana. Here's a podcast from Sound Opinions about the best guitar riffs ever, not that I agree with all of them. Please note the egregious omission of the swirling masterpiece that is "Heroes" by David Bowie and "The Trooper" by Iron Maiden.