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Good Reading -- February 2014


"The world has never seen the likes of China’s credit frenzy. From year-end 2008 through the third quarter of 2013, assets on the balance sheets of Chinese banks grew by $15.1 trillion to $24.3 trillion. That growth in assets is greater than today’s $14.6 trillion stock of assets at American commercial banks. For further perspective, China’s GDP is reported to sum to $8.9 trillion, America’s to $16.7 trillion. (U.S. national income data should be taken with a grain of salt; for China’s, empty the cellar.) China’s bank footings represent 33.1% of world GDP, though China’s economic output amounts to just 12.2% of world GDP. In 1994, when Japan had the world on a string, Japanese output peaked at 17.9% of global production; in the same year, Japanese banking assets topped out at 27.3% of world GDP. Nineteen years later, Japan’s share of earthly GDP has shrunk to 6.8%, its banking assets to 11.8% of that all-in figure." -- Jim Grant, Grant's Interest Rate Observer

Facts and Figures

  • The U.S. population grew just 0.72% from July 2012 to July 2013, the weakest growth rate since the Great Depression. The growth rate was 1.2% p.a. in the 1990s and 1.8% in the 1950s. (Source: U.S. Census Bureau)

  • Pension funding levels of S&P 500 companies improved approximately $300 billion in 2013, taking the average pension up to 93% funded from 78% a year earlier. (Source: ISI Group, WSJ)


  • "The 1-Hour China Book" -- Jeffrey Towson, author of "What Would Ben Graham Do Now? A New Value Investing Playbook for a Global Age" and former associate of Prince Alwaleed, and Jonathan Woetzel, a McKinsey partner, look at the major trends affecting business in China.

  • This book is a quick read, as advertised. It is organized around six "Mega-Trends," each of which is described with several key points and a story or anecdote. I thought it would be somewhat promotional or pro-China, given that both author live there and have nothing to gain by looking at the situation critically. But every time I thought I would have an issue to make, the authors took a pragmatic high road. Certainly it's a more optimistic take than you might get from many prominent skeptics (notably Jim Chanos and Jim Grant, both of whom I admire and often agree with), but I thought this was an enlightening and fair book from two people who live there and know their subject quite well. Highly recommended for anyone interested in the subject. (Full disclosure: the author sent me a copy and asked me to review it.)


  • "John Malone talks of his past and future" -- This is from 2009 but it's still a great read. (Apologies -- I can't remember how I found this article, but someone is due credit for digging it up.)

  • What Alan Greenspan has Learned Since 2008 -- Following up on prior material, here's more wow from Alan Greenspan. The candor admirable but the content of the candor is terrifying.

  • "A Book-Length Defense of Big Banks Goes Long on Straw Men and Conspiracy Theories" -- Part of me agrees with some of the major points made in this book: we need healthy banks; big banks don't have to be bad; regulators often screw up. But based on what I can tell from this Roger Lowenstein review, the other part of me thinks Dick Bove is still slightly crazy.

  • "Tornadoes and Severe Convective Events: Insurance Trends and Challenges in an Era of Climate Volatility" -- This might set a new low for reader interest, but it combines two of my favorite subjects and it is a great read for anyone interested.

  • "2013 Natural Catastrophes Year in Review" -- If you loved "Tornadoes and Severe Convective Events"...

  • Greg Maddux: A Hall of Fame Approach that Carried an Average Arm to Cooperstown -- I won't stretch too far with an analogy to anything business/investing-related, but in any case I thought this was a really interesting article.


  • "What Does a P-E Multiple Mean?" -- I usually like Mauboussin's writing, and this one is a great back-to-basics read for the new year.

  • "Outside the Box: Netflix and the future of television" -- I don't know much about the companies involved, but this was a pretty interesting look at the competition and evolution within the industry. (Thanks to Thom for passing it along.)

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