Prieur’s readings (December 14, 2009)
This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.
• Justin Lahart and Jon Hilsenrath (The Wall Street Journal): “Titan of Economics”, December 14, 2009.
Paul A. Samuelson, whose analytical work laid the foundation for modern economics, died Sunday. He was 94. Actively publishing into the 2000s, Mr. Samuelson’s career in economics spanned eight decades. In 1970, he was the first American to win the Nobel Prize in economics, the second year the prize was offered.
• Anthony Faiola (The Washington Post): Nations’ mounting debts worry global investors, December 12, 2009.
With big banks returning to health, the financial woes of entire nations have emerged as the biggest threat to the global economy.
• Jonathan Burton (MarketWatch): Grit and bear it, December 11, 2009.
Stocks are on a short fuse, but so are stock investors. Call these past 10 years for the U.S. market “lost,” “losing,” “lapsed” or anything you want; Jack Bogle, founder of mutual-fund giant Vanguard Group, calls it a “tin” decade after the “golden” one of the 1990s. The fact is this was a dismal decade where many investors’ hopes, plans and expectations were dashed.
• Rich Karlgaard (Forbes): Report from the latest Forbes Investor Cruise, December 4, 2009.
• Michael Santoli (Barron’s): A really different rally, again, December 14, 2009.
A forecaster worth listening to sees more gains ahead.
• Jon Hilsenrath (The Wall Street Journal): Economists revising up fourth quarter growth projections, December 11, 2009.
A string of stronger-than-expected economic reports provoked several analysts to revise up their projections for fourth quarter gross domestic product. The reports show that businesses are rebuilding inventories at a faster pace than many economists thought, consumer spending has been firmer than expected and the US trade deficit narrowed. GDP expanded at a 2.8% annual rate in the third quarter. Now it looks like it’s going at a fast pace in the fourth quarter. If it’s sustained, that could help to bring down the unemployment rate.
• Mark Thoma (CBS MoneyWatch): Why it may take almost seven years for unemployment to reach five percent, December 11, 2009.
The time can be shortened with effective policy. Since seven years is far, far too long to wait to return to something like full employment, and since we have the means to do something about it, we should move quickly to give labor markets the boost that they need.
• David Streitfeld (The New York Times): Interest rates are low, but banks balk at refinancing, December 13, 2009.
Banks that once handed out home loans freely are now imposing such stringent requirements that many homeowners who might want to refinance are effectively locked out.
• Serena Ng and Carrick Mollenkamp (The Wall Street Journal): Goldman fueled AIG gambles, December 12, 2009.
Goldman Sachs Group played a bigger role than has been publicly disclosed in fueling the mortgage bets that nearly felled American Insurance Group Inc.
• Matt Taibbi (Rolling Stone): Obama’s big sellout, December 9, 2009.
The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway.
• Phil Izzo (The Wall Street Journal): Hypocrisy in Senate grilling of Bernanke? December 10, 2009.
Federal Reserve Chairman Ben Bernanke was grilled by senators in his confirmation hearing, but one economist is wondering if there might be some hypocrisy in the Senate. Paul Kasriel of Northern Trust notes that Bernanke’s hands aren’t totally clean when it comes to the causes of the financial crisis, but he also asserts that some of his critics don’t exactly have sparkling fingernails either.
• Mark Whitehouse (The Wall Street Journal): American dream: Default, then rent, December 10, 2009.
People’s increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery. Thanks to a rare confluence of factors – mortgages that far exceed home values and bargain-basement rents – a growing number of families are concluding that the new American dream home is a rental.
• Aline van Duyn (Financial Times): Why a return to boring would be very welcome, December 11, 2009.
There is not a single investment play that was “boring” in the last 12 months. That includes even the staid world of stock dividends, not often regarded as the raciest of investment ploys. Indeed, the appeal of buying stocks for their dividends is the historically predictable nature of the pay-outs. Boring is not likely to make a comeback anytime soon, in dividends or anywhere else.
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