David Cottle asks "Are These Havens Really the Safest Places to Go"?

David Cottle in the Wall Street Journal looks at the so-called safe havens of the bond markets (i.e.US, Swiss, Japanese and German bonds) and wonders why in times of downturn these bonds are perceived as being less risky despite their connection to the global downturn (Germany's funding of it's Eurozone partners bailouts) or their own endogenous problems ( US debt, Japan's stagnant economy).

Cottle highlights a report by UBS which concludes that, to some extent at least, this may be investors from these safe havens coming home to roost by investing back in domestic bonds after having invested abroad during times of global growth.

Article here.

Brady Bonds to the rescue ?

Alright, everybody come back out from behind their couches. Morgan Kelly's buggered off for another four months so we can all get back to reading less scary and more constructive  opinion pieces. Like this one by Barry Eichengreen.

The Berkley professor discusses using a system of financial instruments and regulations similar to the Brady Bonds of the 1980s to deal with Greece and the increasing likelihood that it is facing default. Eichengreen cites a plan devised by two veterans of the Brady Bonds: Gary Evans and  Peter Allen. He also points out that another veteran of the Brady Bonds was a certain Mr. Trichet...

Mohamed A. El-Erian: How Risky is the Global Economy?

Rather than just stretching his arms as wide as possible and saying "about this much" Mohamed A. El-Erian discusses four potential risks that the weakened global economy still faces. These are:

• The world as a whole has yet to deal fully with the economic consequences of unrest in the Middle East and the tragedies in Japan.
• The debt crisis in the EU's periphery.
• Housing in the US is weakening again.
• The increasingly visible fiscal predicament in the US: having used fiscal spending aggressively to avoid a depression, the US must now commit to a credible medium-term path of fiscal consolidation

It is not a pessimistic or alarmist view and makes for interesting reading. It would however have been helpful for El-Erian to include his opinions on what could be done to counter these risks.

This Project Syndicate article is taken from a lecture Mr. El-Erian gave at Princeton.

Wall Street Journal's Top 25 Economics Blogs

Hi apologies on my absence from the blogosphere.

As I'm sure you were all freaking out over my disappearance, I vow to make sure that you guys won't ever be left staring blankly at The False Economist homepage, refreshing it every fifteen seconds for days on end again.

So please enjoy a veritable cornucopia of other economics blogs as rated by Wall Street Journal.

List available here.