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John Mauldin's Outside the Box

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  • Spain: The Hole In Europe's Balance Sheet

    Today's offering for this week's Outside the Box starts off with a quote from Titus Maccius Plautus: 'I am a rich man as long as I don't pay my creditors.' Even 2200 years ago, it seems that problems of credit were an issue.

    I talked last Friday about the US being faced with a number of bad choices. But it is not just the US. Today we look at a piece from my friends at Variant Perception based on London. They are a relatively new institutional research house. I have been reading their material for some time and have begun to look very much forward to it. They do some very good in-depth analysis. I asked then to shorten a piece they did on Spain and Spanish banks for this week's Outside the Box. Spain will soon be faced with a number of very uncomfortable choices, but for now they appear in denial.

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  • Between a Rock and a Hard Place

    There is the strong possibility that policy makers in the US and UK will not time the transition from the current quantitative easing to a more tightened monetary policy. That is not because they are no competent. It is because the task is very tricky and there is no play book outlining the steps. This is not Tom Landry (former Dallas Cowboy coach) pacing the field with a play for every situation already planned and practiced well in advance.

    The odds favor they will either be too late or too early. Getting it 'just right.' The Goldilocks play, would be more than fortunate. In fact, there may be no right play to call. They may be forced to choose between a slower economy and/or inflation/deflation. And as this week's Outside the Box authors note, there is also the possibility of yet another asset bubble, making the choices even more risky.

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