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John Mauldin's Outside the Box

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  • A Tale of Two Depressions

    This week's Outside the box looks at some very interesting research done by two economic historians, Barry Eichengreen of the University of California at Berkeley and Kevin O'Rourke of Trinity College, Dublin They give us comparisons between the Great Depression and today's downturn. They continue to update their data from time to time, the link to their work is at http://www.voxeu.org/index.php?q=node/3421. I have not previously heard of www.voxeu.org, but it is a collection of the work of well regarded international economists that seems quite interesting for those who enjoy readings in the dismal science.

    This week's OTB will print long, but it is primarily charts. Please note that I have re-arranged some of the new charts to cut down on space because of some duplications. Word count is not all that much and it reads well. I will be referring to their work in future letters as well. Have a great week!...
  • Fear for a Lost Decade

    Before we get into this week's Outside the Box, let me give you a few pieces of data that came across my desk this morning, which will help set the stage for the OTB offering.

    Fitch (the ratings agency), in a downgrade of yet another 543 mortgage-backed securities of 2005-07 vintage, gives us the following side notes: 'The home price declines to date have resulted in negative equity for approximately 50% of the remaining performing borrowers in the 2005-2007 vintages. In addition to continued home price deterioration, unemployment has risen significantly since the third quarter of last year, particularly in California where the unemployment rate has jumped from 7.8% to 11%... The projected losses also reflect an assumption that from the first quarter of 2009, home prices will fall an additional 12.5% nationally and 36% in California, with home prices not exhibiting stability until the second half of 2010. To date, national home prices have declined by 27%. Fitch Rating's revised peak-to-trough expectation is for prices to decline by 36% from the peak price achieved in mid-2006. The additional 9% decline represents a 12.5% decline from today's levels.'...
  • China: Exports Drop

    When I read the headline, 'China: Exports Drop,' plastic toys, cheap sneakers and milk scandals come to mind. But the impact of China's financial health is more far-reaching than simply affecting the Wal-Mart consumer; China matters on a global investing stage. So that's why I don't just read headlines; I read STRATFOR. My friend George Friedman's team of analysts will take the numbers and explain to me what they mean and how they impact the country, without bias or partisanship. They don't make value judgments, they outline the full financial picture so I can make my own. Understanding China is critical to anyone with investments. In the following piece, STRATFOR graphically presents the decline in exports in a historical context, and outlines other critical measurements in the Chinese economy -- giving me the frame of reference I need. I highly recommend that you start reading STRATFOR for this kind of focused analysis....
  • Reality Bites

    This week's writer of the Outside the Box is no stranger to long time readers. Michael Lewitt writes the HCM Market Letter and is one of my favorite writers and truly deep thinkers. He has recently decided to turn his letter into a subscription based model and is meeting with some success, as he should. So, sadly, he will no longer be a regular feature of OTB, but he did allow me to use the current letter, as I think it is one of his more provocative letters. This is a piece you want to think through. Michael discusses the continuing series of bailouts, the consequences of the stimulus package, the various policy options and the likely response of the economy to all of the above. Plus he makes a few market calls and some interesting observations. I am truly pleased to be able to send this to you....
  • Europe On the Ropes

    This week we look at the European bank markets through the eyes of my London partner Niels Jensen, head of Absolute Return Partners. I continue to believe that this is a brewing crisis which could have far more significant implications for the global economy than the Asian Crisis of 1998. In this week's Outside the Box, Niels has compiled a sobering set of data that suggests that only massive government involvement in Europe on a scale that is unprecedented will keep the wheels from coming off in Europe and the global economy. I have worked closely with Niels for years and have found him to be one of the more savvy observers of the markets I know....
  • Global Transitions

    Introduction With a new year just weeks away, investors are weighing expectations and asking questions about what lies ahead. Each year presents its own set of opportunities and challenges, especially in are ever-increasing global economy. Today's...