Prieur’s readings (January 3, 2009)

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

• Martin Wolf (Financial Times): The challenges of managing our post-crisis world, December 29, 2009.
The underpinnings of our global economy and so of our globalised civilisation remain dangerously fragile. Instead of patting ourselves on the back for a job well done, now that a limited recovery has begun, we need to sustain the effort to return the world economy to vigorous health. That will require much co-operative intellectual and policymaking effort. But, first, we must eschew perilous complacency.

• Arianna Huffington and Rob Johnson (The Huffington Post): Move your money: a New Year’s resolution, December 29, 2009.
JP Morgan/Chase, Citi, Wells Fargo, and Bank of America may be “too big to fail” – but they are not too big to feel the impact of hundreds of thousands of people taking action to change a broken financial and political system. Let them gamble with their own money, not yours. Let’s turn big banks into smaller banks. We’ll all be better off – and safer – as a result. Make it your New Year’s resolution to move your money. We can’t think of a better way to start 2010.

• Vikas Bajaj (The New York Times): Heart-stopping fall, breathtaking rally, December 30, 2009.
This was the year that Wall Street turned a crash into a bang. Stock markets will ring out one of their most volatile periods in history Thursday with an incredible rally that replenished half the losses caused by the financial crisis. But whether investors continue to see these gains will depend on more than an economic recovery.

• Doug Kass (The Squawking about the headwinds, December 30, 2009.
A summary of Doug Kass’s surprises for 2010.

• Richard Wolf (USA Today): US in fiscal peril with $12.1 trillion debt, December 30, 2009.
After $787 billion in stimulus spending and $700 billion in bank bailouts, 2010 is fast shaping up to be the year of the federal budget diet. Bipartisan support is growing in Congress for action to stabilize the nation’s bulging debt, which is now $12.1 trillion.

• Francesco Guerrera (Financial Times): Banking after the kindness of strangers, December 31, 2009.
Predicting what 2010 holds in store for US finance in the first year after the great banking bailout of 2009.

• Evan Newmark (Deal Journal): Mean Street: Caveat Lector! Ten Predictions for 2010, December 30, 2009.

• Joseph Stiglitz (China Daily): Harsh lessons we may need to learn again, December 31, 2009.
The best that can be said for 2009 is that it could have been worse, that we pulled back from the precipice on which we seemed to be perched in late 2008, and that 2010 will almost surely be better for most countries around the world. The world has also learned some valuable lessons, though at great cost both to current and future prosperity – costs that were unnecessarily high given that we should already have learned them.

• Los Angeles Times: Trimming the lifelines, December 31, 2009.
The administration should demonstrate to consumers and investors that huge deficits are stopgap measures, not a permanent realignment.

• Gold Anti-Trust Action Committee: GATA sues Fed to disclose gold market intervention records, December 30, 2009.
GATA today brought suit against the US Federal Reserve Board, seeking a court order for disclosure of the central bank’s records of its surreptitious market intervention to suppress the monetary metal’s price.

• Paul Krugman (The New York Times): Macroeconomic effects of Chinese mercantilism, December 31, 2009.
We know that China is pursuing a mercantilist policy: keeping the renminbi weak through a combination of capital controls and intervention, leading to trade surpluses and capital exports in a country that might well be a natural capital importer. We also know, or should know, that this amounts to a beggar-thy-neighbor policy – or, more accurately, a beggar-everyone but yourself policy – when the world’s major economies are in a liquidity trap.

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1 comment to Prieur’s readings (January 3, 2009)

  • Prieur, you and I seem to be on the same page regarding future prospects. Grim. Let’s face it, Ben Bernanke’s efforts only help banks get free money. This is very dangerous as free money creates massive bubbles as we saw in this decade alone. If indeed these bubbles pop – which I assume they will – then the real pain will begin as deflationary forces take hold. All investments could be wiped out and we could see an interesting scenario where equities fall because of uncertainty, and bonds, currencies, and treasuries fall because of overleverage. While this scenario seems bleak, it’s not out of the realm of possibility. Add to the Fed’s gamble an inept Congress hell bent on issuing freebies to anyone that wants one, passing legislation that will further cripple US Manufacturing, and an ever increasing global unrest and nuclear warfare and it get’s even scarier. Bottom line, this rally could be nothing but smoke and mirrors.

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