Sunday, July 4, 2010

What Is Goldman Sachs Thinking? « The Baseline Scenario

(c) 2010 F. Bruce Abel

This is a simple piece but very profound.  Please click on and read on.  This type of piece by Simon Johnson nips dangerous thinking in the bud.  But to what avail?  The smart guys start something and then the dumb guys plow in and overdo it just as the smart guys are doing a 180.  It's the nature of capitalism.  Do it until Goldman Sachs calls you up and says "you owe us 3 gazillion; pay up," and then does (already did) a giant squid-sucking vehicle that drives the previous-good-thing down and the taxpayers have to pay.  But the taxpayers can't pay. Thus chaos.

What Is Goldman Sachs Thinking? « The Baseline Scenario: "Financial Times (p.13, front of the Companies and Markets section):
“Debt-to-GDP ratios in the developed world are about double those in emerging markets and they’re growing. This makes emerging markets interesting because you’re pick up incremental spread [higher interest rates compared with developed world rates], and in return you’re actually taking less macroeconomic risk.”This is a dangerous view for three reasons."