Prieur’s readings (October 30, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Richard Ennis (CFA Institute): The uncorrelated return myth, November/December 2009.
• Peter Clarke (Financial Times): How to avoid a repeat of the Great Crash, October 28, 2009.
The chain of events leading from a collapse in stock prices on Wall Street to a Great Depression has leapt from history with an entirely fresh verisimilitude.
John Authers (Financial Times): GDP grows, but pain remains, October 29, 2009.
US GDP numbers were a good enough reason to halt the return of risk aversion, but the key to whether risk appetite can return depends on US employment data.
• Economist.com: As joyless recovery, October 29, 2009.
New figures suggest that America has at last moved out of recession. A lot of third-quarter growth was the result of temporary government stimulus.
• Kelly Evans (The Wall Street Journal): Goldman, JP Morgan economists debate shape of recovery, October 29, 2009.
The recession might be over, but how goes the recovery? The Journal posed that question to two prominent Wall Street economists with two very different views of 2010. Bruce Kasman, chief economist at JP Morgan, sees the US growing at about a 3.5% pace for most of next year. That appears optimistic compared to Jan Hatzius, chief economist at Goldman Sachs, who sees gross domestic product growth of 2% or so at the start of the year tapering off to just 1.5% by year-end.
• Samuel Brittan (Financial Times): Goodbye to the pre-crisis trend line, October 2009.
The latest IMF World Economic Outlook points out that much of the loss of output in a severe recession is permanent.
• Ambrose Evans-Pritchard (Telegraph): Central banks chill asset rally, October 29, 2009.
The liquidity tide is turning. Authorities across large parts of the world have either begun to tighten the spigot or are taking steps to wean their economies off emergency stimulus. This is a treacherous moment for markets.
• The New York Times: Ongoing agony of the banks, October 28, 2009.
It is nigh impossible for economic recovery to take hold when credit is sputtering as it is. For the Obama administration’s financial strategy to be a success, the banks must do more than survive. They must lend again.
• Nouriel Roubini (Forbes): Are capital controls in fashion again? October 29, 2009.
With portfolio investments to emerging market countries rising, policymakers need to figure out how to avoid losing international competitiveness while also containing asset inflation and the emergence of asset bubbles.
• Martin Feldstein (Financial Times): Why the renminbi has to rise to address imbalances, October 29, 2009.
Making Chinese exports more attractive helps lift gross domestic product and jobs in China but prevents a reduction in global imbalances.
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