This week we have a special double treat for Outside the Box. Peter Bernstein, the venerable editor of Economics and Portfolio Strategy, has sent two pieces our way. The first is a brief treatise on the dollar which appeared in the Financial Times the day before Greenspan's speech last Friday. It clearly points out the issues facing the dollar and the world if there is a lack of cooperation among nations. In fact, even with full cooperation, there could be quite stormy periods.
The second piece comprises research on the quality of earnings. Bluntly, you can't trust them, and the current system is working against shareholders. I know that is hardly a surprise, but the evidence of how the books get cooked is important.
Peter is the dean of economic writers. The first and long time editor (now serving as a consulting editor) of the prestigious Journal of Portfolio Management, Peter has been observing the investment world for almost 60 years, after serving as a captain in the Air Force in WW2. During his career, he has rubbed shoulders and influenced the movers and shakers in our world. He is the author of nine books on economics and finance plus countless articles in professional journals such as The Harvard Business Review and the Financial Analysts Journal, and in the popular press, including The New York Times, The Wall Street Journal, Worth Magazine, and Bloomberg publications.
His book, Against the Gods - the Remarkable Story of Risk is one of my top five, you gotta read it books. (www.amazon.com) His next book, Wedding of the Waters, due out in late January and which I am reading now, is a powerhouse of historical economic story-telling. (OK, it is nice to be able to get early review copies.)
You can find out more about my friend Peter by going to http://www.peterlbernsteininc.com/. His newsletter is a must read for serious investors and institutions. I would say he has forgotten more than most of us know, except at 80 plus years, he has not forgotten anything. I am proud to offer you his work today in Outside the Box.
John Mauldin, Editor
Outside the Box
The Dollar Is In Trouble
The dollar is in trouble, but it has been in trouble before. Perhaps the past holds the solution everyone seeks.
On September 22 1985, the ministers of finance and governors of the central banks of France, Germany, Japan, the UK and the US signed an accord at the Plaza Hotel in New York City. It stated that signatories "were of the view that recent shifts…