Prieur’s readings (October 20, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Gerard Lyons (Times Online): Discovering if we learnt the lessons of Black Monday, October 19, 2009.
Today (Monday) is the twenty-second anniversary of Black Monday. On this day in 1987 stock markets around the world crashed. The Dow Jones fell 22.6 per cent in one day, London shed one fifth of its value over two days. The newspapers and television were full of pictures of traders in panic. Sound familiar? Reflecting on 1987 is interesting in its own right and has lessons for today.
• Allan Dodds Frank (The Daily Beast): Hedge fund dominoes, October 18, 2009.
Friday’s insider-trading charges against the founder of Galleon could be the tip of the iceberg. Other hedge funds and the McKinsey consulting firm face scrutiny.
• Rolfe Winkler (Reuters): Einhorn on gold, sovereign default, and more, October 19, 2009.
Two years ago, when he spoke at the Value Investing Congress, David Einhorn said Lehman was in deep trouble. Turned out it was a good call. Today he gave another keynote at the conference in which he argued the policies of the administration have put us on a very dangerous path, one which has encouraged him to buy physical gold as insurance against sovereign default(s).
• Martin Weiss (Money and Markets): Bernanke gone berserk! Bank reserves explode! October 19, 2009.
Fed Chairman Bernanke has dumped so much funny money into the U.S. banking system and has done so little to manage how that money is used, the fate of our entire economy has now been cast under a dark shadow of doubt. This is not conjecture or exaggeration. Nor are the underlying facts subject to debate. They are blatant, unambiguous, and fully supported by the Fed’s own data …
• Alan Blinder (The New York Times): Comedy aside, an Obama report card, October 17, 2009.
First, “Saturday Night Live” parodies President Obama’s “achievements.” Then Mr. Obama wins the Nobel Peace Prize, bringing yet more head-scratching. Clearly, the nation’s attention is focused squarely on a question few presidents want to answer just nine months into their term: What has your administration accomplished?
• Paul Krugman (The New York Times): The banks are not all right, October 18, 2009.
It was the best of times, it was the worst of times. OK, maybe not literally the worst, but definitely bad. And the contrast between the immense good fortune of a few and the continuing suffering of all too many boded ill for the future. But it’s not a simple case of flourishing banks versus ailing workers: banks that are actually in the business of lending, as opposed to trading, are still in trouble.
• Roger Lowenstein (The New York Times): US savings bind, October 14, 2009.
The government faces a trade-off on financial chastity. This will enter into all sorts of policy decisions, like when to start paying down its deficit. It is the same trade-off – spending now or saving for later? – that the private sector thoroughly botched.
• Jean Pisani-Ferry and Adam Posten (Financial Times): Why the euro is not the next global currency, October 19, 2009.
As the world debates the potential end of dollar dominance, what is striking is that there is little talk of the euro replacing it.
• Gideon Rachman (Financial Times): How small nations were cut adrift, October 19, 2009.
After the Great Recession, the economic and political tide has turned against small nations. It is the smalls that have fared worst – Iceland, Ireland, the three Baltic states. Iceland has not only suffered a catastrophic economic and banking collapse. It is also being bullied by Britain and the Netherlands into paying back billions lost by their citizens when Icelandic banks collapsed.
• Michael Skapinker (Financial Times): Brazil is the 21st-century power to watch, October 19, 2009.
For all its problems with crime, the country has outstanding potential, a welcoming and richly diverse people and several world-class companies.
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