The 3-D Hurricane and the New Normal
June 27, 2011
Today's Outside the Box is from an old friend, but one who is new to my readers. Jason Hsu is a partner at Research Affiliates and helped create the Fundamental Indexes with Rob Arnott. Starting at Cal Tech, he went on to a PhD in economics, and is now a professor at UCLA and teaches in China and Taiwan. Wins all sorts of awards and has won the Rising Star of Hedge Funds award. In short, he is really smart.
He sent me this piece last week, and I asked if I could use it. He graciously acceded. It is on what Jason and Rob call "the 3-D Hurricane of Debt, Deficits and Demographics."
"Whether deficit spending truly has any significant impact on subsequent growth is rather irrelevant to the discussion; voters and politicians alike would simply misinterpret the economic literature and assume more consumption today will drive more growth tomorrow. In other words, and as scientific as one can put it ñ the Boomers have screwed Generation X."
As the hurricane season approaches, this is not a forecast for fair weather, but it's one we need to prepare for. This is a thoughtful piece with a lot of red meat, so let's jump in.
And if you like this, be aware that I read scores (if not hundreds) of pieces each week for Outside the Box. And now I'll bring you the 5-10 best of the best each week through my new subscription service, Over My Shoulder. If you like Outside the Box, then you're going to love Over My Shoulder. It's like having your own personal filter, with decades of analyst experience and access to exclusive resources. If your time is as valuable to you as your investments, click here to find out more about how I help you home in on the essentials.
Your looking for his all-weather gear analyst,
John Mauldin, Editor
Outside the Box
subscribers@mauldineconomics.com
The 3-D Hurricane and the New Normal
Debt, deficit, and demographics – the 3-D hurricane – is heading to the shores of all developed economies. It threatens to derail the lukewarm economic recovery and to alter forever the heretofore path of robust growth for the developed world. In a sense, debt, deficit, and demographics will reset the world to a "New Normal" – an extended period of…