Prieur’s readings

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This post provides links to some interesting articles I have read over the past few days that you may also enjoy.

• Martin Wolf (Financial Times): It is in Beijing’s interests to lend Geithner a hand, June 10, 2009.
If China wants its claims on the US to be safe, it must facilitate an adjustment in the global balance of payments. If it and other surplus countries wish to run huge surpluses and accumulate vast financial claims, they should expect defaults.

• Gordon Chang ( Geithner in Beijing, June 5, 2009.
The US has more leverage with China than it thinks.

• Mark Gongloff (Wall Street Journal): Land mines pockmark road to recovery, June 9, 2009.
The stock market has erased almost all its losses for the year, yields on long-term government debt have returned to something like normal, and commodity prices have been surging – all evidence that the worst of the economic crisis may have passed. But the road to recovery is far from smooth, or even assured. As investors ponder their next moves in this unusually unpredictable cycle, they are confronted with a confounding array of potential risks.

• John Hussman (Hussman Funds): Context matters, June 8, 2009.
… what will matter at any given time is the full context of valuations and market action, as well as economic fundamentals, sentiment, and other factors. We have no “buy” level or “sell” level for this market. Context matters. At present, that context holds us to a defensive stance.

• Robert Shiller (The New York Times): Why home prices may keep falling, June 6, 2009.
Home prices in the United States have been falling for nearly three years, and the decline may well continue for some time. Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.

• Sandy Lewis and William Cohan (The New York Times): The economy is still at the brink, June 7, 2009.

• Ambrose Evans-Pritchard (Telegraph): The depression quietly deepens, June 6, 2009.
It is lonely in the diminishing camp of bears.

• Joseph Stiglitz (Project Syndicate): America’s socialism for the rich: Corporate welfarism, June 9, 2009.
With all the talk of “green shoots” of economic recovery, America’s banks are pushing back on efforts to regulate them. While politicians talk about their commitment to regulatory reform to prevent a recurrence of the crisis, this is one area where the devil really is in the details – and the banks will muster what muscle they have left to ensure that they have ample room to continue as they have in the past.

• Ernest Christian and Gary Robbins (Investor’s Business Daily): Obama’s plan for a debt-ridden future, June 5, 2009.
President Obama has officially begun the era of bigger big government by proposing to go on a multitrillion dollar borrowing spree that risks doing to the “full faith and credit of the United States” what excessive borrowing during the housing bubble did to private credit.

• Prof Kjell Nordström (Credit Suisse – Global Trends): Capitalism faces massive changes in years to come, June 4, 2009.
Businesses will have to radically adapt, in order to survive the massive societal changes that will occur in the years to come. The feminization of the workforce, rapid urbanization and increased importance of innovation are some of these upcoming changes.

• Wolfgang Münchau (Financial Times): Down and out for the long term in Germany, June 8, 2009.
The classic export nations hope for a miraculous bail-out from the US consumer – which is not going to happen this time, writes Wolfgang Münchau.

•Ambrose Evans-Pritchard (Telegraph): Europe swings Right as depression deepens, June 8, 2009.
The establisment Left had been crushed across most of Europe, just as it was in the early 1930s. Don’t count on the political fabric of Europe holding together if our green shoots shrivel and die in the credit drought of the long hot rainless summer that lies ahead.

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