Archive for September 4th, 2012

The Unfair Trade. How our broken financial system destroys the middle class. Michael J . Casey

G20 Leaders Summit on Financial Markets and th...

The Unfair Trade. How our broken financial system destroys the middle class. Michael J . Casey. 2012. ISBN 9780307885302.  As managing editor of the Wall St Journal, Casey  has a cat bird seat on the world economy. This is an eminently readable book, which presents a reasonably balanced view of what happened, who pulls the strings and what mistakes were made y govt and business world wide.  But, and this is why I like it when journalists write these books, Casey points out what we can do looking forward.  As investors this is a good book to use to measure govt responses and help plan your own moves.

One  good point made is that China’s internal credit and currency policies have exported deflation to the rest of the world, by killing off sections of our economies.  If they stumble ( and many expect they will) .Australia, Brazil, South Africa, Indonesia and Canada will have massive resource sales slowdowns followed by big economic hits, which could trigger social disruption.

Another is that the massive debt burdens in Us and Europe will restrain growth in those economies for decades, forcing investment into the stoked up younger economies in the pursuit of profits.

His suggestions?

  • Stop backing the to-big-to fail banks by having a capital surcharge which will force them to break up . as well we shoudl look to Iceland which forced the bankers and bank shareholders to take the hit. Governments should protect taxpayers not bankers.
  • Oust the US dollar as the world reserve currency. This will force US to live more within its means and help politicians to make the tough decisions.
  • Force hedge fund managers to be  personally liable for their client’s losses.