Wall Street Journal (August 8)
The sky is not falling according to Burton G. Malkiel, a former Princeton professor and author of “A Random Walk Down Wall Street.” In the U.S., “the headwinds restraining the economy are many” and further complications arise because “Europe has not really fixed its economic problems.” Still, Malkiel doesn’t believe this is a good time to sell. Valuations are likely to climb in the future. Stocks are currently cheap in terms of P/E ratios and the results of many U.S. corporations are driven less by what happens in Japan, Europe and the U.S., than by sales in emerging markets. “My advice for investors is to stay the course.”
Barron’s (August 8)
S&P diverted attention from the real problems facing the global economy. The U.S. debt “is perhaps the least of the clear-and-present problems besetting the world’s economy.” Bigger problems include the soft U.S. economy, the European debt crisis and a growing bubble in China linked to local debt, “which at $1.7 trillion equals 27% of that nation’s 2010 gross domestic product.” As for the U.S. downgrade, “the U.S. government may be the world’s largest debtor, but its liabilities still are the safest assets in the world.”
Tags: Chinese debt, Europe, Global economy, S&P downgrade, U.S. debt
