Prieur’s readings (January 8, 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.

• Financial News Express: Economic crisis quotations 2009, January 2, 2010.

• Ron Surz: Perspectives on 2009 and beyond, January 4, 2010.
An examination of the stock market performance of the past year and decade relative to the long run history.

• Daniel Fisher (Forbes): Jobless numbers may signal next risk: inflation, January 7, 2010.
After apparently hitting a peak of 10.2% in October, unemployment fell to 10% in November. Another month like that could indicate the economy has stopped shrinking and is even beginning to expand. Now the question looms: Is inflation next? With the Treasury and Federal Reserve essentially printing US currency and handing it to banks and overstretched lenders like Fannie Mae, there is always the chance that too many dollars chasing a fixed amount of goods will lead to higher prices.

• Krishna Guha (Financial Times): Fed warned on interest rates, January 8, 2010.
Tom Hoenig, president of the Kansas City Fed, on Thursday warned against keeping rates too low for too long. “Experience both in the US and internationally tells us that maintaining large amounts of stimulus over an extended period risks creating conditions that lead to financial excess, economic volatility and even higher unemployment at some point in the future,” he said. Mr Hoenig rejected Mr Bernanke’s argument that the Fed decision to keep rates low after the dotcom crash did not contribute meaningfully to the housing and credit bubble. “Low interest rates contributed to excesses,” he said.

• Isabelle Mas and Simon Kennedy (Bloomberg): Stiglitz Says Wall Street ‘Talking Up’ Recovery, January 7, 2010.
Nobel laureate Joseph Stiglitz said investors are “talking up” signs of a global economic recovery in a bid to boost equities. “Wall Street is talking up the recovery because it would like to sell stocks,” Stiglitz told reporters at a conference in Paris.

• John Cassidy (Financial Times): Is Ben Bernanke descended from the Bourbons? January 7, 2010.
Is it really plausible to suggest that record low mortgage rates did not contribute much to the rise in US house prices?

• Randall Forsyth (Barron’s): Follow the money – into a double-dip, January 6, 2010.
Shrinking real money supply is likely to nip any recovery in the bud.

• Bloomberg: China guides bill yields higher, seeking to curb record lending, January 7, 2009.
China’s central bank sold three-month bills at a higher interest rate for the first time in 19 weeks after saying its focus for 2010 is controlling the record expansion in lending and curbing price increases.

• Ambrose Evans-Pritchard (Telegraph): Euro brinkmanship escalates as ECB shuts door on Greek bail-out, January 6, 2010.
The European Central Bank has given its clearest warning to date that there will be no EU bail-out for Greece if it fails to control its spiralling deficit, raising the stakes in a game of brinkmanship over the future of the euro.

• Philip Stephens (Financial Times): A political fight set to reach well beyond Britain’s election, January 7, 2010.
As the election campaign unfolds it seems that the most interesting political choices will come after rather than before Britain votes. The tensions within the two main parties are as compelling as anything seen so far in the contest between them.

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