Freefall by Joseph Stiglitz - A Book Review
I must admit I was a bit impatient when I saw the book being postponed for publishing for February 2010. Not only because “Freefall - America, Free Markets, and the Sinking of the World Economy” by the famous Joseph Stiglitz is a book which promissed to demistify the current prolonged global crisis in a more academic manner (read - with some stone hard economic analysis behind, not the small talk books written usually on the topic). I was expecting it with impatience also because Stiglitz is a non-compromises author - he does not fiddle around the topics, but shoots and moves ahead. And my expetations were actually a bit exceeded.
So, an “Freefall” is an economics book about the recent global crisis and how it spread from US to the rest of the world. I think that besides me, the first one thousand copies were bought by the following characters:
- president Obama and his financial advisors;
- ex- double president Bush, Alan Greenspan and all the economic advisors who accompanied him and
- the bankers who invented lots of arguments to get trillions of dollars in cheap loans from the US government to make even more profits.
This piece of news is interesting not because it would impact on any investment strategy…but rather because we are in July 209 and the subprime crisis still haunts the US Treasury. The US government was simply forced to bail out one more bank - this time the smaller CIT bank was impacted.
Today Rio Tinto PLC (RTP), the world’s largest mining company, has announced that it stroke an agreement with Nippon Steel on reducing its prices for the ore iron it supplies to the Japanese manufacturer. The price reduction (contractually agreed) amounted to as much as 30% of the previous year’s prices.
The International Monetary Fund (IMF) has recently published a comprehensive report called “Global Financial Stability Report - Responding to the Financial Crisis and Measuring the Systemic Risk.”. The IMF paper covers the history of the recent global financial crisis, as well as the measures taken by the governments and the companies to fight against it.
The US Treasury Department is considering giving banks and investors billions of dollars in fresh incentives to modify troubled mortgages and save homeowners from foreclosure, sources familiar with official deliberations said.
Here we go again with one more doitinvest.com survey on how long might still last the current financial crisis / recession. Compared to the last two surveys we had a couple of months ago, this one seems to be pretty more optimistic. This optimism is fueled by the recent slow recovery of the stock markets (see the Dow Jones recovering sharply in the last two weeks), as well as by the pace of the bad news pouring in at a slower pace.
This looks kind of obvious, but when it comes from a markets guru such as the IMF managing Director Dominique Strauss Kahn it can be taken quite seriously. The Director also mentioned that the first recovery will come in the first two quarters of the next year.