Zulauf and Donlan in This Week's Barron's

Plenty of interesting stuff in this week's Barron's -- though I have to wonder how many people spent time on the luxury vehicle articles in this environment. A couple of pieces stood out. One is the interview with Felix Zulauf, based in Switzerland and member of Barron's annual Roundtables.

You know I'm not much of a top-down guy, but reading Zulauf in the Roundtables over the years leaves me convinced he's not a bomb-thrower or has any axes to grind. From the linked article:

The leveraging-up in this cycle is reversing, and we are now deleveraging. When a huge system -- that is, the global credit system dominated by the investment-bank giants that have been the major creators of credit in the last cycle -- turns down, the fallout is going to be terrible.

Deleveraging is a very painful process, and will run longer and deeper than anybody can imagine. I've been fearful of this.

So far, what we're seeing is the pain in the financial system. Later on, we'll see the echo effect of the pain in the real economy. I can't understand economists talking about no recession or mild recession. This is the worst financial crisis since the 1930s. It's different than the '30s, but is the worst since then, and the consequences will be very, very painful for virtually everybody in our economies.

There's more, so read the whole interview if you subscribe to Barron's. And the second piece is from the inimitable Thomas Donlan, THE BEST editorial writer in American print journalism, IMHO. A sampling:

Just as the Weimar Republic printed money to pay war reparations that the Germans couldn't afford, the United States of America is putting its full faith and credit -- until neither remains -- behind mortgages that its citizens can't afford. All investors can do is hope that the ultimate sacrifice of capital destruction won't be necessary.

A needed voice. And now more than ever.

Comments

[Alex]

What, no comment about Fairfax? Anyway, I agree that Zulauf has no axe to grind, but Donlan certainly does - his writing is entertaining to read, but I think he would be at best an inconsistent source of investment ideas.

If Zulauf is right, then that put that Warren Buffet sold last year is looking like a huge, career-marking mistake. Maybe it was, and I don't own any Berkshire Hathaway, but I hate to write off Buffet.

[David]

John, just posted on this Zulauf article myself. What did you make of his thoughts on the recent US bailout actions and the latest Treasury plan to buy up all those "troubled assets"?

[John]

Alex: I'll add a post about Fairfax in a bit. About Donlan, I don't read him for investment ideas, I just enjoy a major US publication letting him write editorials, with every other publication having the usual Left/Right split.

David: I'm no big fan of the bailout, and it seems the plan has been changing daily, if not hourly. Or so it seems -- but just following this story could fill up a work week.