Prieur’s readings (November 6, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Mohamed El-Erian and Ramin Toloui (Financial Times): How to fill the gaps left by dollar decline, November 5, 2009.
We should expect to see more discussion in the next few years on new types of reserve assets.
• James West (GoldSeek): Gold price is no bubble, November 4, 2009.
The price performance of gold recently has all sorts of armchair economists waxing philosophical on the idea that this is the advent of a price “bubble”. While certainly everyone has and is entitled to their opinion, there are other features of humanity that we all possess, and much like many opinions, are best obscured from view. Declaring that gold is in a “bubble” demonstrates complete ignorance of or disregard for the fundamental drivers of the almost ten year ascent of gold. And saying that the price is forming a bubble implies that, like the real estate bubble, the tech bubble, and the tulip bubble, the price must necessarily “pop” and return to a sustainable long term average.
• Peter Brimelow (MarketWatch): Is India clearing the way for gold “moonshot”?, November 5, 2009.
Does India like gold, or dislike Washington’s anti-gold dollar domination?
• Roger Vincent (Los Angeles Times): Commercial property market to hit bottom in 2010, November 5, 2009.
After spending more than a year in suspended animation, the commercial real estate industry is expected to hit bottom in 2010 with a wrenching thud. Owners of business properties such as office buildings, warehouses and malls will suffer a surge of painful defaults, write-downs and workouts with their lenders as the market finally faces up to the reality of its diminished conditions, according to a report set for release today.
• Jeremy Warner (Telegraph): It’s the economy, stupid, not asset prices, that should worry us, November 4, 2009.
The Met Office forecast for St Andrew’s this weekend is for rain with the possibility of brighter spells later. As G20 finance ministers assemble at the famous Fife golf course for the latest in a seemingly never-ending circus of self-congratulatory meetings – oddly, nobody else seems minded to thank them for saving the world – they might reflect on the weather as a metaphor for the economy.
• Nouriel Roubini (Forbes): “Too big to fail” revisited, November 5, 2009.
Although the G-20 finance ministers pledged stronger prudential regulation and financial oversight of systemically important firms at their September meeting, there is no consensus yet among regulators, lawmakers and academics on how best to proceed. I noted recently that the problem of banks being too big to fail is even bigger now than it was before the crisis.
• Damian Paletta (The Wall Street Journal): Clash looms on banks, November 5, 2009.
A key Senate lawmaker is readying legislation that would dramatically redraw how the financial system is regulated, setting the chamber on a collision course with both the House of Representatives and the Obama administration, which have championed markedly different approaches. The bill, which is being readied by Senate Banking Committee Chairman Christopher Dodd (D., Conn.), would strip almost all bank-supervision powers from the Federal Reserve and Federal Deposit Insurance Corp., according to people familiar with the matter. In their place, the bill would create a new agency in charge of supervising all banks and bank-holding companies, even the country’s largest and most complex institutions.
• Adam Lashinsky (Fortune): The decade of Steve, November 5, 2009.
How Apple’s imperious, brilliant CEO transformed American business.
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