Charlie’s month-end reading list

fortpitt in Wealth Management 4 August, 2015

Over the last few weeks, we came across a handful of articles that caught our interest. We’ve shared them below for our Ramparts readers, check it out:

The first piece is a CNBC special, “How to tell if a CEO is lying” by Elizabeth MacBride. This segment explains how technology is being used to analyze earnings calls made by company chiefs. These investigative tools use forensic accounting methods and human cognitive analysis to detect deception from management. Between audio analysis and transcripts of earnings calls, the technology can detect inflection and other behaviors that indicate a CEO or CFO may be downplaying risks. “Proponents of the approach don’t position the technology as its own investing discipline, but rather, an additional tool for investors with an already well-defined philosophy about stock-picking,” one expert says.

The next piece, “Why I was right to oppose Euro from the start,” appeared in the Brisbane Times. Author William Hague said in 1998 that he believed the Euro would worsen recessions in some countries, and make downturns inescapable for others. The economic crisis in Greece is exactly what Hague warned about. He points out that the crisis isn’t the Greek’s fault, but instead results from a fundamental flaw in the single currency zone, which he forecasted many years ago.

In “Germany, not Greece, should exit the Euro” by Ashoka Mody in Bloomberg View, Mody also examines the economic crisis in the Eurozone, and explains why it would benefit the Eurozone if Germany exited rather than Greece. “A German return to the Deutschmark would cause the value of the Euro to fall immediately, giving countries in Europe’s periphery a much-needed boost in competitiveness,” he says.

Lastly, Zero Hedge’s recent article, “Greece enters its crack-up boom phase – when fridges become money” explains the sudden increase in consumption and inflation in Greece. According to the Austrian School of economics, a “crack-up boom” occurs when “a critical mass of people conclude their government is actively trying to devalue their currency.” Inflation rages as merchants hike prices ahead of consumers spending every cent they can on hard goods in an effort to avoid devaluation, and the cycle escalates until the economy cracks.

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